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Merged Bitcoin - Part 3

Mycroft said:
A financial bubble is a significant increase in the price of an asset that does not reflect an increase in its true value. Bubbles are often based on a belief that the asset's price will continue to rise. People pay more because they expect to sell for more. This conviction pushes up prices even more

The definition seems to fit regardless of how long the bubble lasts.
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Buffet and Munger say something similar.

Rat poison.
 
Mycroft said:
A financial bubble is a significant increase in the price of an asset that does not reflect an increase in its true value. Bubbles are often based on a belief that the asset's price will continue to rise. People pay more because they expect to sell for more. This conviction pushes up prices even more

The definition seems to fit regardless of how long the bubble lasts.
Click to expand...

Question is how to determine 'true value' when the bubble lasts for years.
 
With bitcoin correlating nicely with Wall Street and a top nicely in place there we can expect a bear market.
Rat poison.
 
Mycroft said:
A financial bubble is a significant increase in the price of an asset that does not reflect an increase in its true value. Bubbles are often based on a belief that the asset's price will continue to rise. People pay more because they expect to sell for more. This conviction pushes up prices even more

The definition seems to fit regardless of how long the bubble lasts.
Click to expand...
With a definition that vague, every stock in the stock market could be considered to be in a bubble. You never know when an individual stock will crash - even if it takes centuries.

You can try to argue that stocks are different because companies make things but the "inherent" value of most publicly traded companies is little more than that put into it by the stock holders (just like bitcoin). The rest is all balanced out by debts and companies walk a fine line between making enough profit to service those debts / pay dividends and going broke.
 
Samson said:
With bitcoin correlating nicely with Wall Street and a top nicely in place there we can expect a bear market.
Rat poison.
Click to expand...

Samson said:
Meanwhile bitcoin is poised to crash below production cost of 7k.

That is why Buffet and Munger see rat poison.
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It's been almost a month since your prediction of crashing below 7k and it hasn't happened. Just make a new guess each month and on the occasions you happen to be right you can once again pretend your TA is worth something.
 
Dr.Sid said:
Question is how to determine 'true value' when the bubble lasts for years.
Click to expand...

When something has utility, market value will have an underlying attractor that can be used to estimate future market value. Eg For a stock you can estimate all the money the company will earn in the future and convent that into the equivalent value in present day money. For a commodity like copper, you can estimate future production and future demand.


You can’t do this with something like bitcoin where demand is almost entirely other speculators, and at some point speculators will either get bored or frustrated at having bigger players manipulating the price and move on to something where there are long term supply/demand trends driving up the value.
 
lomiller said:
When something has utility, market value will have an underlying attractor that can be used to estimate future market value. Eg For a stock you can estimate all the money the company will earn in the future and convent that into the equivalent value in present day money. For a commodity like copper, you can estimate future production and future demand.


You can’t do this with something like bitcoin where demand is almost entirely other speculators, and at some point speculators will either get bored or frustrated at having bigger players manipulating the price and move on to something where there are long term supply/demand trends driving up the value.
Click to expand...
This is just made-up nonsense. Speculators drive the price of any brokered commodity to the extent that the price bears little relation to its "utility" value.

In any case bitcoin has utility. It can't be counterfeited and it can be transferred across the globe within minutes unhindered by man or machine. So bitcoin speculators aren't going to get "bored" and shoot themselves in the foot by dumping their holdings.
 
psionl0 said:
This is just made-up nonsense.

Speculators drive the price of any brokered commodity to the extent that the price bears little relation to its "utility" value.
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No, it isn't nonsense. If Bitcoin is a commodity then the price should ultimately be set by what the end consumer is willing to pay.

But Bitcoin isn't a commodity in any real sense. It isn't consumed, either directly or by being incorporated into a product. Almost every person who buys Bitcoin expects to sell it again, hopefully for a higher price. So it is really just a vehicle for speculation. Its main 'value' is the warm fuzzy feeling it gives libertarians who HODL it because they think fiat currencies are doomed. But they are a minority of bitcoiners. Most are speculators who are playing the market, hoping to cash in on the next bubble before it collapses. So the actual 'commodity' isn't Bitcoin, it's the addle-headed minds of libertarians.

In any case bitcoin has utility. It can't be counterfeited and it can be transferred across the globe within minutes unhindered by man or machine. So bitcoin speculators aren't going to get "bored" and shoot themselves in the foot by dumping their holdings.
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That makes it a currency, not a commodity. But as a currency it sucks. Very few businesses take it, the price is extremely unstable, transaction times are much longer than other methods, and it has little protection against fraud and theft. Its utility as a currency doesn't explain the high price.

Bitcoin speculators will get bored once they stop being able to make easy money out of it, and/or find something else more profitable. If the HODLers get bored or spooked into selling then the price will collapse and investors will see that it is indeed 'rat poison'.

But hey, even rat poison can be a vehicle for speculation. You just have to convince enough people that it's worth buying (even if they have no practical use for it). I heard from a reliable source that rat poison is an effective treatment for Covid-19...
 
Belz... said:
And you just gave me yet another example of that new fallacy.

Good job. You do realise that what you're doing is dishonest, right?
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So nobody is making up excuses to "explain" why bitcoin doesn't follow the laws of supply and demand that anything else that is traded follows?
 
psionl0 said:
So nobody is making up excuses to "explain" why bitcoin doesn't follow the laws of supply and demand that anything else that is traded follows?
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That has literally nothing to do with my post, which was about you ignoring the content of a post in order to focus on an irrelevant bit you could comment about and dodge the hard discussion.
 
Belz... said:
Low-hanging Fruit Fallacy.
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Not to take sides in this debate, but good one. We often see this here, and more importantly, IRL as well. If this fallacy hasn't been christened yet, this is as good a name as any.
 
I'd be interested in learning the total value of bitcoin and how much goods and services are purchased annually vs the same for US money.

I was only able to do a quick search so hopefully someone can supply better numbers but it looks like the total value of bitcoin is over 100 billion. An article claimed that the last 3 months of 2019 saw 600 million in illegal purchases alone using bitcoin. Though I'm skeptical as to how they're arriving at that number. I would imagine it's a bit difficult to track how much is actually spent on dark web markets.

It's also problematic for both bitcoin and dollars as to where the line is drawn for counting something as a purchase of a good or service vs speculation, investing, or savings.
 
Belz... said:
That has literally nothing to do with my post, which was about you ignoring the content of a post in order to focus on an irrelevant bit you could comment about and dodge the hard discussion.
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I have made the counter arguments so often in the past that repeating them is pointless. I know from experience that my rebuttals will be ignored and those same arguments made as if I had never posted anything at all.

The post consisted mainly about quibbling about the meaning of words and ignoring the substance of my argument or trying by stealth to make it appear that the substance of my argument had been rebutted.

I didn't have to point that out because the post repeated the stupidest argument against bitcoin which means that you can be sure that the rest of the post is of an equally low standard.
 
psionl0 said:
I have made the counter arguments so often in the past that repeating them is pointless. I know from experience that my rebuttals will be ignored and those same arguments made as if I had never posted anything at all.
Click to expand...

So why not just ignore it? Why reply with nonsense?
 
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