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Bitcoin - Part 2

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Eddie Dane said:
But why now?

The stock markets have been losing quite badly recently. I thought that Bitcoin would be a refuge of sorts in a downturn. I'm a bit surprised that it is taking a dive now.
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It depends how deep the majority of investors are vested. If they're only in for a few grand of play-money they may as well HODL.
 
psionl0 said:
In a world that relies purely on credit to survive that situation could change in an instant.
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Do you really think so?

I’ll bet you a bitcoin that this will not happen in my life time. I’m 52 btw.


Bitcoin will go to zero long before credit cards backed by fiat currency become useless.
 
psionl0 said:
Of course not! The supply of bitcoins is limited to 21M. There are other cryptos around but there is no evidence that they are tapping into the bitcoin market. In fact, most of them track bitcoin's price.
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Or they are all (Bitcoin included) tracking a general sentiment about whether crypto currencies are worth anything.

It seems to me your argument is based on the premise that brand recognition is enough to save a thing. Well, it isn’t.
 
Belz... said:
So's the supply of money, especially in the digital age. The ability to create more of it doesn't mean that you can take the possible as true.
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This is not true. The money supply is potentially infinite but it is controlled by governments.

When the money supply increases, so does inflation, which is another way of saying the value of units of the currency goes down.
 
jeremyp said:
Or they are all (Bitcoin included) tracking a general sentiment about whether crypto currencies are worth anything.

It seems to me your argument is based on the premise that brand recognition is enough to save a thing. Well, it isn’t.
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Pretty much my point.
Infinite supply tends to zero demand.
Who cares what the currency is called?
Restricting the supply of bitcoin can only be helpful if there is a restriction on licensing cryptos.
This is fundamental to the value of everything, restriction of supply. The value of air to breathe appears zero for now, the value of gold very high for the same reasons.
 
Samson said:
Pretty much my point.
Infinite supply tends to zero demand.
Who cares what the currency is called?
Restricting the supply of bitcoin can only be helpful if there is a restriction on licensing cryptos.
This is fundamental to the value of everything, restriction of supply. The value of air to breathe appears zero for now, the value of gold very high for the same reasons.
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If you didn't know, the supply of bitcoin is limited by its need to be "mined". It's produced by programs running on servers and it requires a lot of time and energy.

For a while many people were producing bitcoin in Venezuela, as they could turn a profit because electricity is subsidized by the government. I'm not sure how that works now.
 
ChrisBFRPKY said:
Of course I could be wrong in my position that BTC will increase again, that would be a first as it always has increased in value after a drop. On the other hand, you're point of view has been proven wrong each and every time it was made in the past record.
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You don't seem to understand my point of view.

I'm not staking a position on Bitcoin being a good investment or not. You may or may not make money on your current investment. I don't know.

The point is you don't know either.

The "evidence" you keep citing doesn't support a conclusion that you will always make money on bitcoin. No matter how much you want it to be true, past performance does not predict future performance.
 
Mycroft said:
If you didn't know, the supply of bitcoin is limited by its need to be "mined". It's produced by programs running on servers and it requires a lot of time and energy.

For a while many people were producing bitcoin in Venezuela, as they could turn a profit because electricity is subsidized by the government. I'm not sure how that works now.
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Yes I did know, my understanding is current price resembles electricity cost.
It will be interesting to see if this establishes a floor to the market. Supply must stop increasing about now. But the paradigm is an utterly disgraceful way to use energy.
Bitcoin is like a globule of puss on the planet.
 
Globule of puss?

Why do you say that?

I'm certainly against the Bitcoin cheerleaders who want to present it as something magical that will reward every investor so long as they have enough faith, but I'm not against Bitcoin itself. It could quite possibly stabalize into something people find useful as a currency.

Can you explain the basis of your misgivings further?
 
Samson said:
Yes I did know, my understanding is current price resembles electricity cost.
It will be interesting to see if this establishes a floor to the market.
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"Between 600,000 and 800,000 bitcoin miners have shut down since mid-November amid declines in price and hashrate across the network, according to the third-largest mining pool. In an interview with CoinDesk, Mao Shixing, founder of F2pool, said his firm’s estimate takes into account the total network hashrate drop and the average hash power of older mining machines that are having a hard time generating profits."


https://www.coindesk.com/600k-bitcoin-miners-shut-down-in-last-2-weeks-f2pool-founder-estimates


Norm
 
Mycroft said:
If you didn't know, the supply of bitcoin is limited by its need to be "mined". It's produced by programs running on servers and it requires a lot of time and energy.
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Samson is saying that all crypto-currencies are the same.

It's like saying that the supply of Nike shoes is unlimited because there are manufacturers making copy-cat brands.
 
Mycroft said:
Globule of puss?

Why do you say that?

I'm certainly against the Bitcoin cheerleaders who want to present it as something magical that will reward every investor so long as they have enough faith, but I'm not against Bitcoin itself. It could quite possibly stabalize into something people find useful as a currency.

Can you explain the basis of your misgivings further?
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I guess I was trying to upstage Buffet and Munger
Warren Buffet said this will end badly, it is like rat poison, and when the cameras turned to Charlie Munger, he said "I like Bitcoin a lot less than Warren". This of course raised high the roof beams with laughter...
 
psionl0 said:
Samson is saying that all crypto-currencies are the same.

It's like saying that the supply of Nike shoes is unlimited because there are manufacturers making copy-cat brands.
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I think this analogy is flawed. I will not say that dropping a shoe on your foot necessarily hurts, but I will guarantee dropping a bitcoin on your foot doesn't hurt.
 
Samson said:
I guess I was trying to upstage Buffet and Munger
Warren Buffet said this will end badly, it is like rat poison, and when the cameras turned to Charlie Munger, he said "I like Bitcoin a lot less than Warren". This of course raised high the roof beams with laughter...
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Yeah, those guys are both long-term value investors and they wouldn't be attracted to Bitcoin. The person who should invest in Bitcoin is someone who is willing to take on a lot of risk and who could take the loss if the value collapses.
 
psionl0 said:
Samson is saying that all crypto-currencies are the same.

It's like saying that the supply of Nike shoes is unlimited because there are manufacturers making copy-cat brands.
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Is he wrong?

Let's say crypto-currencies catch on and the public begins using them extensively. What happens then?

Does Bitcoin become the crypto-currency of choice because it was the first and has the highest value? I don’t think this scenario is very likely as a lot of this value is driven by artificial scarcity from early investors who are hoarding, and also bitcoins in lost wallets that are no longer accessible by anyone. This means its value could still fluctuate a lot if/when some of these investors decide to liquidate. This makes it unattractive as a store of wealth.

Would the general public start accepting all crypto-currencies? This seems unlikely to me also, as anyone can start their own crypto-currency. Would vendors really accept a dozen or more different currencies? A hundred or more? All of which have shifting value in relation to one another and in relation to traditional currencies. Would you be happy to make multiple transactions every day, not knowing if the currency you’re accepting will still have its value the next day?

Would a government or collection of governments (or a conglomeration of banks) issue their own crypto-currency? This scenario seems as plausible as any other, and would likely spell the doom of existing crypt-currencies. Right now your average Joe would be dissuaded from using crypto-currencies because they would have to learn a whole new skillset to manage their crypto-wallets and such. If a large bank like Bank of America or Deutche Bank were to simplify that hassle, then I think the general public would be a lot more likely to buy in.

Crypto-currency may well be the path of the future, but even if it is you don’t know that Bitcoin or any of its variants will still be around. You may see its independence from governments and banks as a feature, but not everyone thinks that way. People who do think that way are going to be disproportionately tax dodgers and criminals.
 
Mycroft said:
Is he wrong?
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Yes.

Mycroft said:
Let's say crypto-currencies catch on and the public begins using them extensively. What happens then?
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More to the point, "What happened"?

The main reason that bitcoin is not useful as a currency (except in a limited number of large transactions) is that bitcoin doe not scale (we can't increase the transaction rate), mining costs are prohibitive and the price is too unstable.

If cryptos "catch on" then that would mean that a new crypto has emerged that overcomes these limitations. If that happened then sure, lots of other programmers will get in on the act and create their own version. However, most will amount to nothing while competition will reduce the others down to a small hand full that are readily accepted by merchants.

The same thing has happened with bitcoin. There are very many varieties of cryptos that try to compete with bitcoin but since they are mainly clones with the same problems, they can't make a dent in the bitcoin market.

I don't know what would happen to bitcoin if a superior crypto caught on. My best guess is that it would remain as the "gold standard" of crypto-currencies and many would still use it as a store of value.

I am assuming here that central banks never wise up. They might decide tackle the crypto market head on and issue e-wallets with independent transaction confirmations that can be used to store and transact with national currencies.
 
I think one point that many in the “I can do the same thing with my bank account” camp are missing is the idea that crypto is an alternative to the banking system and fiat currency in general. I do agree that people in developed nations with stable currencies don’t get much use out of crypto right now (except for shady transactions, maybe) but the real potential is for people in places with unstable banks and currencies.

I can transfer money instantly and painlessly to just about anyone right now, so crypto doesn’t do much for me. But I can see my relatives in Mexico getting a lot of use, especially to send money internationally, if crypto ever exits the speculation stage and stabilizes. It would also be great for world travelers.

I don’t know if BTC will be The One True Crypto, but I do think there will be One someday.


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