# If Bitcoin was worth $1 each in 2011, why are they worth $12,000 each now?



## Brendan Burgess

What has changed in the intervening 6 years? 

Brendan


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## PaddyBloggit

Brendan Burgess said:


> What has changed in the intervening 6 years?



Economic instability?

People looking elsewhere to put/hide their money?

or just plain stupidity?


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## fpalb

I hadn't heard of bitcoin until 2013, but I can say that even since then a LOT has changed

- Almost no one had heard of it 2011, since bitcoin isn't a company it doesn't have a marketing department, it relied on word of mouth and it's difficult to understand so it took time.
Most people need to hear about multiple times over a few years before they say "Bitcoin is a still a thing? I better actually look into it".
- There were no good educational resources, so even when you did want to learn about it there were no books or good youtube videos like there are now.
- Even by 2013 they were difficult to buy, there were no regulated exchanges where you would want to deposit any large amount. I mean I was ready to write off the first 50 quid I experimented with. I had to use bitcoin.de as escrow and actually do a SEPA transfer direct to the seller, not knowing if I was going to get scammed. Mt Gox was doing something like 90% of the exchange trading, an exchange run basically by one guy with no financial and you would have to send money to Japan to trade on it, I never even bothered to try.
- There was a poor choice of wallets, I'm not certain but I expect that in 2011 the only wallet available was probably the one Satoshi wrote, and it required you download the entire blockchain before you could use it. There were no mobile wallets, no web wallets.
- There were no hardware wallets at all.
- There were almost no merchants accepting it, there still aren't many in the grand scheme of things, but there are more now.
- A LOT of people I spoke to about bitcoin wanted to wait until it was more mature before bothering with it. They figured it was a fad that would be gone in a year or two, so they'd wait around to see if it survived before buying any - especially after the 2014 crash and Mt. Gox failing.
- Bitcoin didn't get any mainstream media attention - this is related to the previous point, the media treated it as a fad, they've taken it more seriously in recent years.
- At lower values bitcoin had less mining power, making it less secure. The threat of a company or government overpowering the network seemed trivially easy compared to now.
- Governments and regulatory bodies had not made their stances clear on it. Many (me included in 2013) felt that the US government being hostile towards it would drive it underground and prevent any kind of mainstream or institutional adoption.

About the only aspect of bitcoin that was actually better then is that there were so few transactions that even ones with zero fees would get confirmed by miners pretty quickly.

Metcalfe's Law applies somewhat to bitcoin since it is a network: https://en.wikipedia.org/wiki/Metcalfe's_law so an increase in the number of users makes bitcoins more valuable.


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## john luc

how is this $12,000 valuation arrived at. Are there people paying this for 1 bitcoin.


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## ant dee

john luc said:


> how is this $12,000 valuation arrived at. Are there people paying this for 1 bitcoin.


€12,445 at the moment, yes. About 10k btc 24h volume on the kraken exchange.
https://www.kraken.com/charts


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## Dan Murray

ant dee said:


> €12,445 at the moment, yes. About 10k btc 24h volume on the kraken exchange.
> https://www.kraken.com/charts



Hi Ant Dee,

Just be careful not to confuse one "currency" with another!


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## TheBigShort

That's a pretty comprehensive answer to the OP from fpalb.


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## elacsaplau

TheBigShort said:


> That's a pretty comprehensive answer to the OP from fpalb.



Agreed. Another very helpful contribution from Fpalb. It's interesting (probably due to our different backgrounds, mind-sets, etc.) that I would have explained it in somewhat different terms but we'd still arrive at the same place!

I feel that it's a bit of a pity that given Fpalb took the time to prepare such a considered response to Brendan's question that his reply has not even been acknowledged.

At the end of the day, we should all remember the words of Jack Bogle (my investment God the Father). Please look at the following clip (lasts less than a minute) -  https://www.youtube.com/watch?v=A0gQiz0pCyI


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## ant dee

elacsaplau said:


> I feel that it's a bit of a pity that given Fpalb took the time to prepare such a considered response to Brendan's question that his reply has not even been acknowledged.


Brendan will probably show up and say that Bitcoin is surely totally absolutely worthless, zero value.


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## TheBigShort

elacsaplau said:


> At the end of the day, we should all remember the words of Jack Bogle (my investment God the Father). Please look at the following clip (lasts less than a minute) - https://www.youtube.com/watch?v=A0gQiz0pCyI



I agree with this guy. All investment is speculation  - to lesser or greater degrees.


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## TheBigShort

ant dee said:


> Brendan will probably show up and say that Bitcoin is surely totally absolutely worthless, zero value.



Which would be somewhat disingenuous in my opinion. Considering the OP question and fpalb response to it, is it beyond reason to take up a position that considers bitcoin has some value? Even if that value is €1?
Certainly the onus is on those who think bitcoin has zero value to explain why they think that. 
Tulip like bubble answers don't suffice as even a tulip still holds some value.
So why does bitcoin have zero value?


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## noproblem

Zero value? I think it's around $15k at the moment.


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## jhegarty

noproblem said:


> Zero value? I think it's around $15k at the moment.



It's been a while since your post , so $16,383

How many tulips can I buy for that ?


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## Brendan Burgess

Hi fp

Unfortunately, not one point you made in that long reply actually relates very much to the value of Bitcoin. I can fully understand that Bitcoin zealots see this long post and feel that, in some way, it supports their case.

Back in 2011,  Tulip plc made €1 per share profit and the share price was €10.    Today, it makes €3 per share profit and interest rates have fallen, so the market values Tulip plc shares at €30 per share.

That is the sort of explanation I was hoping for.

Tulip plc didn't have many shares back then. Now it has lots. Doesn't change the underlying value, very much, if at all.

Tulip plc wasn't well known back then, now it's very well known. OK, a brand name makes the price higher, but doesn't really change the underlying value.

Stockbrokers didn't cover Tulip plc back then. They do now.  Again, not much impact on the underlying value, but it does affect price.

Back in 2011, Tulip plc was dealt on the grey market - today, it is a listed company.  OK, again, affects the price a bit, but not the underlying value.

So taking all these factors together, probably means that Tulip plc was underpriced a bit in 2011 and may be a bit overpriced today. I instead of being worth €10 a share back in 2011, it's real value was €12. And maybe these factors since  means that it is overvalued by about 10% so it's really worth only €27.  But the underlying value has still increased from €12 to €27 for very good fundamental, rational, reasons.

Back in 2011, the market valued Bitcoin at $1 despite the fact that it wasn't used very widely.
Today, it values it at $15,000, despite the fact that it still isn't used very widely.

I have not seen any reason for changing its valuation. Which means that it really was worth $15,000 back in 2011 and was underpriced, or else it's worth $1 now, and is overpriced.

You didn't mention its use by criminals as a support for the increase in its price.  At $1 each, it was of no interest to criminals for laundering money. At $1,000 it became more interesting. I know that doesn't change the underlying value,  but it sure boosted the underlying as distinct from the speculative demand.

Bitcoin was worth zero back in 2011. It is worth zero today.  It may well have a price of $150,000 by the time I finish posting this, but eventually, it will fall to zero.

Brendan


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## azerogo

The biggest issue i can see based on multiple response on a lot of other sites also is the confusion between blockchain - the underlying technology bitcoin is built on which has potential future potential and
bitcoin  - simply the first mover of this technology.

Nearly ever pro-bitcoin reply is "this is the future to change the world" and once again yes that might apply to blockchain but not bitcoin.

The most likely outcome should blockchain become a main stream technology is an agreement between all financial institutions and central governments and the creation of a brand new digital currency which will wipe out the value of every other one including bitcoin.

I bought bitcoin some time ago and have sold with no regrets as the crash is not if but when.

“If it’s too good to be true, it isn’t true. But people didn’t care. They were greedy.”  Bernard 'Bernie’ Madoff


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## fpalb

Brendan Burgess said:


> Hi fp
> Unfortunately, not one point you made in that long reply actually relates very much to the value of Bitcoin. I can fully understand that Bitcoin zealots see this long post and feel that, in some way, it supports their case.



Well a simple summary is, the utility of bitcoin has increased over the years and when you increase the utility of something scarce, its value increases. When the user-base for a network grows, the value of the network to all users increases.
If you try to value bitcoin like a company you won't get anywhere, because it isn't a company.
I don't know what else to say.



azerogo said:


> The most likely outcome should blockchain become a main stream technology is an agreement between all financial institutions and central governments and the creation of a brand new digital currency which will wipe out the value of every other one including bitcoin.


Governments already have digital fiat currency. Services like paypal already exist. Maybe SWIFT settlement times can be improved by using a private blockchain somehow, but the idea there will be a government or corporate blockchain that competes directly with bitcoin seems unlikely to me. If it's controlled by a government or a company, then it isn't open, and the government or company is responsible for complying with regulation in every country in the world. This is why paypal is not available everywhere for example. It will also mean that the system cannot be permission-less. 

What it boils down to is a blockchain is useful for decentralised systems where there is no authority to trust, and therefore the idea of a centralised blockchain controlled by an authority makes no sense. I'm all ears if anyone can present an example of one or suggest how one would work.


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## TheBigShort

azerogo said:


> The most likely outcome should blockchain become a main stream technology is an agreement between all financial institutions and central governments and the creation of a brand new digital currency which will wipe out the value of every other one including bitcoin.



Just a slight problem with this in itself. Getting financial institutions like Swiss banks and say, the central government of the Peoples Republic of China, the Federal Reserve, Goldman Sachs, the ECB, Deutsche Bank, Barclays, etc to agree to a blockchain monetary system that they cannot manipulate could be tricky.


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## Brendan Burgess

fpalb said:


> Well a simple summary is, the utility of bitcoin has increased over the years and when you increase the utility of something scarce, its value increases. When the user-base for a network grows, the value of the network to all users increases.



Hi fp 

Has the utility really increased?  Very few used it in 2011. Very few use it in 2017 - apart from speculators, traders and criminals.  

I am struggling to get my head around the utility argument anyway. Can you give some other example of something with no value whatsoever whose utility makes it valuable?  



fpalb said:


> If you try to value bitcoin like a company you won't get anywhere, because it isn't a company.



I  was using Tulip Ltd to show how an increase in valuation might be justified. 

I could just as easily have used an example of a property investment.  Interest rates have fallen. Rents have risen. Earnings have increased. So the value of the property has risen. 

But there is no similar explanation for Bitcoin. 

If it had some value, let's say $100.  Then I could understand why increased confidence and publicity and utility might increase its price from $80 to $120.  But it had no value in 2011 and it has no value now.  Which is really my point. 

Brendan


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## fpalb

Brendan Burgess said:


> I am struggling to get my head around the utility argument anyway. Can you give some other example of something with no value whatsoever whose utility makes it valuable?



And I'm struggling to find a good comparison. Your examples of companies and property are different because they generate income. I think the network aspect (Metcalfe's Law that  I mentioned) is probably the most important part of it, so I guess the best type of thing to consider is something like that.

Imagine in the pre-internet era, if you had the only fax machine in the world it would have zero utility right? Now imagine everyone else in the world gets a fax machine. Because they're so popular there's the guy who can service and repair your machine on your street and the corner shop sells paper and ink. Now suddenly your fax machine is way more useful, as you can use it to contact anyone in the world. But nothing changed in terms of your physical machine or what it was capable of, all that changed is the network grew, and that resulted in supporting services becoming viable (ink selling, repair services).

This analogy fails completely in some other aspects: because the above increase in utility of your fax machine would not necessarily result in much of a price increase of fax machines, because they are not absolutely scarce. Manufacturers would just produce more fax machines to meet demand, and economies of scale would make them cheaper to produce, which would keep the price down. Bitcoin is completely different in this aspect


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## Brendan Burgess

How about if I seal an empty brown envelope and tell everyone that it's worth a lot of money.

They will laugh at me. One sympathetic person might give me 1 € for it as a joke.

Then other people start marketing empty envelopes and they are much more persuasive than I am. They get people to pay €10 for the empty envelopes.  Then it begins to take off and others jump on the bandwagon and the price gets a bit of momentum.


Now my empty envelope doesn't seem to be so outlandish anymore. The guy who paid me €1 for it is laughing because he can sell it for €10,000, sorry €12,000, sorry €15,000.

Brendan


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## fpalb

Brendan Burgess said:


> How about if I seal an empty brown envelope and tell everyone that it's worth a lot of money.



I've just realised where I'm probably going wrong here, you're not seeing any utility in the bitcoin network at all.


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## Brendan Burgess

I am seeing utility. On rare occasions you can exchange it for real goods.  But that is only because of the existence of greater fools. 

When the system runs out of fools, there won't be any value or utility.

Brendan


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## fpalb

That means that the only utility you're seeing is that someone irrational may buy it from you in future? 

Try this, starting at the heading "Why is Bitcoin valuable?": [broken link removed]


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## McGaggs

Brendan Burgess said:


> I am seeing utility. On rare occasions you can exchange it for real goods.  But that is only because of the existence of greater fools.
> 
> When the system runs out of fools, there won't be any value or utility.
> 
> Brendan



A more valid comparison than tulip plc would be to gold or fiat currency.

Your arguement above is exactly my thoughts on any currency. They have no value other than the expectation that someone will give you goods and services in exchange for them. How much goods and services? No one can say because the value changes daily, usually a bit less. We just call these changes in value inflation or deflation. Look at the example of the euro 1 cent coin. It costs more to make than its face value. In a rational market, should I not be able to sell one for more than €0.01? (Assuming it is the value of the metal that makes the cost >€0.01).


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## Brendan Burgess

McGaggs said:


> n a rational market, should I not be able to sell one for more than €0.01? (Assuming it is the value of the metal that makes the cost >€0.01).



The cost of making something is far more than the metal.  If the scrap value was more than 1 cent, they would be collected and scrapped. 

The comparison with gold has been well and truly debunked in this thread 

*Bitcoin is not like gold*


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## ant dee

Brendan Burgess said:


> How about if I seal an empty brown envelope and tell everyone that it's worth a lot of money.


Can you transfer that envelope across borders, near instantly, without permission?
Is it counterfeit - proof?
Can you store it in your head, on a mnemonic phrase? Divide it up to 100 million times, transfer it, put some back together and store it?
The questions can go on and on.
It is a pity we cant find something to accurately compare it to, but the brown envelope analogy is just not even close.


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## TheBigShort

Aside from the fact that if there were actually persuasive people who could sell brown envelopes for €€€ then that is exactly what they would be doing. 
But there aren't, so it is not happening.


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## Brendan Burgess

The brown envelope is not perfect, but it's the closest so far.

It's worthless. 
The price depends on being able to find a Greater Fool 
At some stage, someone would open the envelope and find that there is nothing in it, and then it would collapse completely.

Brendan


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## ant dee

I do not think there is any convincing you Brendan to even be open to the possibility that you are not right.
You have little to none understanding of bitcoin, blockchain, the network, but you are absolutely certain it is worthless.
I am saying the brown envelope analogy is not even close and you are saying it is the closest so far, thus making it more accurate than comparing it with gold, fiat currencies.
How a brown envelope looks anything like bitcoin is beyond me.

Lets just agree to disagree.


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## Brendan Burgess

ant dee said:


> Lets just agree to disagree.



We can of course disagree, but you are facing huge losses by buying or holding on to Bitcoins.  You need to be open to the fact that you are in a huge bubble. There have been loads of them before. The participants always deny that they are in a  bubble and claim that the sceptics don't understand it - tulips, the South Sea, dot com, bitcoin. 

Bitcoin will burst. And in another 10 to 15 years we will have the same discussion under a different brand name.

Brendan


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## TheBigShort

Brendan Burgess said:


> It's worthless.
> The price depends on being able to find a Greater Fool



With respect Brendan, you may or may not be correct in saying that bitcoin is a bubble, you may be correct in saying it is worthless. But from my perspective there is an ample amount of evidence, supported by people who are educated in technology, to _suggest _that bitcoin does hold _some _value. 
What the true value is, is anybody's guess. But to equate bitcoin with brown envelopes is to dismiss the considered views of those who are informed in the area, to the point I would add, that they are nothing more than cheerleaders for a fraudulent ponzi scheme.


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## Duke of Marmalade

fpalb said:


> That means that the only utility you're seeing is that someone irrational may buy it from you in future?
> 
> Try this, starting at the heading "Why is Bitcoin valuable?": [broken link removed]


That link is pure fanaticism.  I personally believe in government or at least in our Wesrern democracy style versions.  I see no merit in the fact that BTC subverts government control.

I could pick holes in that long tirade almost line by line but I will restrict myself to only a few.  Consider the following quote.
“Bitcoin is thus the only currency and money system in the world which has no counter-party risk to hold and to transfer. _This is absolutely revolutionary and you should read the preceding sentence again.”
_
Ok, read it again.  (a) possibly this was true at time of writing but today there are around a thousand such “currencies” (b). So I have a number on my iPhone which has no counter party risk, so what.

He then quotes Paul Krugman Nobel Laureate and subscriber to the Burgess “no value” school.  PK is immediately dismissed by referencing other “wiser/real” economists.  There may indeed be wiser economists than PK but I don’t think there is anything unreal or virtual about him.

It cautions against investing in BTC with the warning that its price could fall to zero tomorrow.  Hmmm


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## azerogo

ant dee said:


> Can you transfer that envelope across borders, near instantly, without permission?
> Is it counterfeit - proof?
> Can you store it in your head, on a mnemonic phrase? Divide it up to 100 million times, transfer it, put some back together and store it?
> The questions can go on and on.
> It is a pity we cant find something to accurately compare it to, but the brown envelope analogy is just not even close.



Once again this is confusing the technology with the product, what you are describing is blockchain which might and could have future value

The product bitcoin isn't cemented to the success of the technology. 

As an investor if you can't with good reason explain the huge leaps in value and then the large drops followed by bigger leaps i stay well away, but that is simply a personal philosophy.


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## ant dee

azerogo said:


> Once again this is confusing the technology with the product, what you are describing is blockchain which might and could have future value
> 
> The product bitcoin isn't cemented to the success of the technology.
> 
> As an investor if you can't with good reason explain the huge leaps in value and then the large drops followed by bigger leaps i stay well away, but that is simply a personal philosophy.



Blockchain by its own, is a fancy word for a database, a spreadsheet.

Bitcoin's blockchain is decentralised, there is no leader, no need for an authority.
The computing power behind it, the miners, the cumulative electricity cost, make it secure and immutable. They make your transactions safe and uncensored.

The huge leaps in are an increase in demand combined with a limited supply. More people want some, and there aren't enough sellers.
Deep pocket traders (in comparison with the current market cap) can cause big moves for their personal profit.
Exchanges that are not well regulated can flood their own books and manipulate the price, and arbitrage traders will just carry on the effect across all other exchanges.

I know I not doing a very good job explaining it, there are others that understand it better and have the language skills to pass the understanding along.


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## landlord

ant dee said:


> I do not think there is any convincing you Brendan to even be open to the possibility that you are not right.
> You have little to none understanding of bitcoin, blockchain, the network, but you are absolutely certain it is worthless.
> I am saying the brown envelope analogy is not even close and you are saying it is the closest so far, thus making it more accurate than comparing it with gold, fiat currencies.
> How a brown envelope looks anything like bitcoin is beyond me.



+1

Brendan For someone who has always argued so intelligently and coherently on other topics I am shocked at the level of inflexibility you are showing on this subject. 
However those bitcoin believers like myself have acknowledged most of the technical deficiencies, are open to much of the criticism and have generally accepted that it’s value may be significantly less than its current price. 
I apologise if this is going too far but I get the feeling that with such a hardlined approach you have become emotionally involved in this and rather than genuine concern for those who may loose money you are wishing for it to fall to zero, if only to say.....

“I told you so” !!!!


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## Brendan Burgess

Hi landlord

You and I can have a different view on the price of housing in Ireland. I may express a view that based on interest rates, the growth of the economy and the lack of supply, that house prices will rise by x%. You may consider that we are in a bubble and that house prices will fall by y%. In truth, neither of us know. You might get to say "I told you so." or, I may get to say it.

But I am telling you now - as many others are - Bitcoin is worthless. This is not an opinion. This is a fact.  It's like telling the few Dutch people that their tulips weren't worth multiples of their salaries or like telling the women involved in "Women empowering women", that they were destined to lose all their money. 

You have faith in something. It's like the blind faith people have in Gods or creationism or whatever.  It's fundamentalism. There is no logical basis for it.  I am not emotionally involved. I do feel sorry for those of you who will lose money, or who will lose profits  you could have made by holding onto blind faith. 

Brendan


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## ant dee

Brendan Burgess said:


> You have faith in something. It's like the blind faith people have in Gods or creationism or whatever. It's fundamentalism.


One could easily say that about us having faith that the Federal Reserve, the ECB etc know what they are doing and have not already ruined the world economy with their choices. We do not really know what they are doing do we? We have a blind faith that it works out okay. When has it ever worked out okay in the past? Where is the logical basis for it, I cannot see.

In bitcoin however at least he have logic on how the code works. We have math on the security of the cryptography and the volume of the hashing power. Everything is open source, all the information is out there for those who want to learn it, check it, understand it or whatever, there are no secrets. You can review the code, download a client, run a node and check verify everything since the genesis block.
There is no ponzi scheme, bitcoin doesn't owe you anything and it makes no promises. No one at the top earning dividends, no referral bonus.
Bitcoin will not deteriorate like a tulip bulb.

I am open minded, sure it could all fail for reasons I do not understand. 
I can't force anyone to buy my bitcoin if they don't want it... If no-one wants it im stuck with it and that's okay. I got some for diversification I am not hoping to be rich out of it, rather maintain my wealth if my bank account and pension fund just go 'poof' one day.


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## Duke of Marmalade

ant dee said:


> You have little to none understanding of bitcoin, blockchain, the network...


I would say that is true of 95% of BTC holders.  However, most people including me (and the _Boss _I presume) are prepared to accept that BTC does what it says on the tin (as do hundreds of copycat cryptos).

Thus we accept that it is decentralised, that it is secure, that it is anonymous, that it can be transferred easily, that it has artificial scarcity, that it is based on very clever technology etc. etc.  But we also know what in the final analysis it is. It is a number or numbers in our iPhone having no meaning or value other than that they are numbers which enjoy the above mentioned attributes.

Now my research has not unearthed anyone that I could respect who defends BTC (rumours that Bill Gates is a huge fan are greatly exaggerated).  On the contrary there is an overwhelming academic and professional consensus that it is a massive bubble.  Its defenders seem to have embraced a cult and are very defensive as we have seen in this very forum and as is typified by commentary that asserts that critics like Paul Krugman are not "real" economists.  The only explanation that I can think of is that those at the core of the cult are hugely impressed by the technology and feel that it must have some value on that score.


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## Brendan Burgess

Duke of Marmalade said:


> The only explanation that I can think of is that those at the core of the cult are hugely impressed by the technology and feel that it must have some value on that score.



But also Shortie's paranoia about the way world governments are plotting to destroy the world. (Apologies to Shortie for that summary of his views, but you know what I mean.)

The only people I know personally who have bought Bitcoin are the same people who camped outside the Central Bank.  It gives them a warm feeling of being an anarchist.

Brendan


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## landlord

A genuine question for the Bitcoin bashers....

Do you guys believe that Bitcoin was designed as a pyramid scheme/scam, or do you believe that it evolved into one? 

Do you believe that Satoshi Nakamoto deliberately set out to deceive others?

Just curious....


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## ant dee

landlord said:


> Do you believe that Satoshi Nakamoto deliberately set out to deceive others?


He / She / They must have a very long term goal because rumour has it Satoshi controls about a million bitcoins and hasn't moved them for years.


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## Merowig

No I don't believe it is a pyramid scheme / scam nor that it was created to deceive others.
But I believe it developed in some kind of cult and further in a huge bubble / hysteria/ get rich quickly scheme.


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## Duke of Marmalade

landlord said:


> A genuine question for the Bitcoin bashers....
> 
> Do you guys believe that Bitcoin was designed as a pyramid scheme/scam, or do you believe that it evolved into one?
> 
> Do you believe that Satoshi Nakamoto deliberately set out to deceive others?
> 
> Just curious....


No I don't believe that it was planned as a fraud.  I also don't think the founders had any idea at all that this would happen.  One of the first transactions was 10,000 BTC for two pizzas - that's over 100 million euro in today's money, hardly the act of someone who plotted this all along.  It is the culture itself which is the fraud with its talk of mining and images of BTC looking remarkably like gold coins and with vicious bubble feedback loops as the prices make silly jumps.  It also thrives on Shortie Syndrome - the belief that all existing monetary arrangements are themselves a fraud.  

Professor Moriarty himself couldn't have planned this fraud.


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## TheBigShort

Just some obs on various comments.



Brendan Burgess said:


> You have faith in something. It's like the blind faith people have in Gods or creationism or whatever. It's fundamentalism



Perhaps. Anything backed by nothing other than public confidence, enforced by over-arching authority, is pretty much fundamentalist. Be it a fiat currency, a religious doctrine or even an economic doctrine.



ant dee said:


> I got some for diversification I am not hoping to be rich out of it, rather maintain my wealth if my bank account and pension fund just go 'poof' one day.



This is an underlying factor in the surge of bitcoin price. Whilst wealthy corporations and individuals are ploughing trillions of printed money into property, stocks, bonds, antiques, vintage cars and paintings, reinforcing the 'value' of what they owe, those of us who cannot access the plentiful pickings of QE (until of course it trickles down - or crumbs from the top table!) have found another way to protect their own interests without being exposed to the folly of the centralised command banking economy.



Duke of Marmalade said:


> The only explanation that I can think of is that those at the core of the cult are hugely impressed by the technology and feel that it must have some value on that score



The technology is, apparently, broadly accepted across a spectrum of intellects. Whether it manifests itself in bitcoin only, other crypto currencies or some other form remains to be seen.
Bitcoin however, has stolen a march on potential alternatives. This in itself could be hugely significant.


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## Merowig

TheBigShort said:


> Just some obs on various comments.
> 
> Perhaps. Anything backed by nothing other than public confidence, enforced by over-arching authority, is pretty much fundamentalist. Be it a fiat currency, a religious doctrine or even an economic doctrine.


And here again it shows that either you do not know economics, or you do not understand it or you just ignore them.
The US Dollar is not only backed by believe in it and by the US government but also by the US economy and the ability of the US government to tax each and every citizen (worldwide even) and economic activities.



> This is an underlying factor in the surge of bitcoin price.


Nonsense - the surge is because every tabloid is writing about it and taxidrivers are talking about it..
Everyone wants to get rich fast and without much/any effort. Bitcoin is offering this possibility till the moment some says that the emperor has no clothes on.



> Whilst wealthy corporations and individuals are ploughing trillions of printed money into property, stocks, bonds, antiques, vintage cars and paintings, reinforcing the 'value' of what they owe, those of us who cannot access the plentiful pickings of QE (until of course it trickles down - or crumbs from the top table!) have found another way to protect their own interests without being exposed to the folly of the centralised command banking economy.


Every simpleton can have nowadays a share account and properties are also popular... via Linkedfinance and Mintos you can even create your own loan book...
Properties and shares have an underlying value as you get returns in form of rent or dividends, loans provide interest...
Bitcoins create nothing of value.


----------



## Brendan Burgess

Merowig said:


> No I don't believe it is a pyramid scheme / scam nor that it was created to deceive others.
> But I believe it developed in some kind of cult and further in a huge bubble / hysteria/ get rich quickly scheme.



Fully agree with that analysis.


----------



## TheBigShort

Just some more obs...



Brendan Burgess said:


> But also Shortie's paranoia about the way world governments are plotting to destroy the world. (Apologies to Shortie for that summary of his views, but you know what I mean.)



I never suggested that world governments are _plotting _to destroy the world, but what I do believe is that in a manner of each protecting what they believe to be their own self-interests, the world is on a collision course for economic and environmental disaster. 



Duke of Marmalade said:


> It also thrives on Shortie Syndrome - the belief that all existing monetary arrangements are themselves a fraud.



I don't believe all monetary systems themselves are fraudulent. I do however believe they are susceptible to fraud. And currently the levels of fraud are on a grandiose scale never witnessed before. Perpetuated by centralised commverand banking system, facilitated by subservient governments, tolerated by passive populations.




Merowig said:


> Nonsense - the surge is because every tabloid is writing about it and taxidrivers are talking about it..
> Everyone wants to get rich fast and without much/any effort. Bitcoin is offering this possibility till the moment some says that the emperor has no clothes on.



To an extent yes, but I think the media are behind the curve here. I first heard of bitcoin at €80. I didn't buy any until it was €2,500, around six months ago. From €80 to €2,500, would expect shouts of 'bubble'. It was barely in the news aside from some business page articles. 



Merowig said:


> Every simpleton can have nowadays a share account and properties are also popular... via Linkedfinance and Mintos you can even create your own loan book...
> Properties and shares have an underlying value as you get returns in form of rent or dividends, loans provide interest...
> Bitcoins create nothing of value.



How do i open a legally held tax avoiding bank account in Panama?


----------



## ant dee

Merowig said:


> Every simpleton can have nowadays a share account


Perhaps everyone of us privileged simpletons, that live in a first world country.
What about the billions of unbanked and underbanked?

There are uses for cryptocurrencies that we don't appreciate because we have them for granted.


----------



## fpalb

Duke of Marmalade said:


> Professor Moriarty himself couldn't have planned this fraud.



I don't even know where to start with all the things I could reply to on this thread, but on the subject of Satoshi, it's actually interesting how muted his announcement of bitcoin and subsequent posts about it were. For those curious, the paper was first announced with this email on a cryptography mailing list https://www.mail-archive.com/cryptography@metzdowd.com/msg09959.html Everything he ever said is archived here: http://satoshi.nakamotoinstitute.org/

I'm more impressed bitcoin got from 0 to 1, than 1 to 15k, and it almost got abandoned in the early days. The book Digital Gold by Nathaniel Popper is very good read about the whole story of the origin and early years of bitcoin if anyone is interested.

Satoshi didn't really go for the hard sell or hype bitcoin up much, famously once replying to someone with "If you don't believe me or don't get it, I don't have time to try to convince you, sorry."

And then hilariously in his last email he ever sent anyone in April 2011, he simply said "I have moved on to other things.”


----------



## Duke of Marmalade

ant dee said:


> I got some for diversification I am not hoping to be rich out of it, rather maintain my wealth if my bank account and pension fund just go 'poof' one day.



So you are getting insurance against a particular event.  That event is that everything goes "poof" but BTC survives.  That would seem even more unlikely than NK winning the next war - why don't you have a little stash of NK currency to insure against that possibility?


----------



## Brendan Burgess

ant dee said:


> I got some for diversification I am not hoping to be rich out of it, rather maintain my wealth if my bank account and pension fund just go 'poof' one day.



Hi Ant

Don't mind the Duke's maths - although the North Korean suggestion is a good one. 

There is no diversification in buying something which has no value. 




Brendan


----------



## Duke of Marmalade

Brendan Burgess said:


> Hi Ant
> 
> Don't mind the Duke's maths - although the North Korean suggestion is a good one.
> 
> There is no diversification in buying something which has no value.
> 
> 
> 
> 
> Brendan


I have removed the math reference.


----------



## BreadKettle

Brendan Burgess said:


> You didn't mention its use by criminals as a support for the increase in its price.  At $1 each, it was of no interest to criminals for laundering money. At $1,000 it became more interesting.



That makes no sense whatsoever and seems to show how little you know of what you're talking about. 

Why would the value per individual btc have any effect whatsoever on it's use case for anything?


----------



## ant dee

Duke of Marmalade said:


> So you are getting insurance against a particular event.  That event is that everything goes "poof" but BTC survives.  That would seem even more unlikely than NK winning the next war - why don't you have a little stash of NK currency to insure against that possibility?


That is simple to answer really.
I don't believe in North Korea.


----------



## fpalb

Duke of Marmalade said:


> So you are getting insurance against a particular event.  That event is that everything goes "poof" but BTC survives.  That would seem even more unlikely than NK winning the next war - why don't you have a little stash of NK currency to insure against that possibility?



It doesn't have to be all or nothing. Even a single country betraying the trust of its citizens by devaluing the currency, seizing some of the citizens money or placing capital controls on access to money or payment services is enough to make people consider and desire alternatives. These things are not some fantastical events, they've all happened already in recent history. 

Maybe you get a place like Ukraine where there's instability due to pro-Russian separatists, people aren't sure if they can access their money, or if they'll be able to get across a border with it. Are you confident there won't be corrupt soldiers or police looking to pocket that gold watch on your wrist at the airport?

Oh what have we here: Three Ukrainian MPs – Oleksandr Urbansky, Dmitry Belotserkovets and Dmitry Golubov – turned out to be the owners of a vast amount of bitcoins:


----------



## tecate

Whether BTC is in a bubble or not is one thing.  However, decentralised cryptocurrencies are here to stay regardless of how this pans out.  Its akin to the development of the internet.  Applications are being developed on top of crypto platforms.  The crypto's themselves are being improved on an ongoing basis.

In the first few years, the talk was simply of their use by criminals, terrorists, pedo's etc.  All of these guys use cash - should we ban cash?  HSBC were found to be complicit in offering a bespoke service to the cartels in their laundering of USD.  Bitcoin has come through that nonsense. Now its being suggested that its a ponzi scheme....or that blockchain is ok (provided its centralised and controlled by big banking) but bitcoin is not.

I get the argument of it having no intrinsic value. The same could be said of the usd - although i accept that it has a history.  Like it or loathe it, crypto (it may not end up being bitcoin - OR - it may be bitcoin for certain uses and other crypto's for others) is here to stay.


----------



## Brendan Burgess

Hi tecate 

Cryptocurrencies may well be here to stay. They may well have a useful and legitimate function. 

But Bitcoin is worthless or as close to worthless as makes no difference. 

Brendan


----------



## TheBigShort

Brendan Burgess said:


> Cryptocurrencies may well be here to stay. They may well have a useful and legitimate function.



Brendan has been as cold as a polar ice cap on this subject.
I detect climate change.


----------



## landlord

Brendan Burgess said:


> But Bitcoin is worthless or as close to worthless as makes no difference.



Keep pushing lads I think he’s starting to bend....I sense a chink in the armour!!


----------



## tecate

Brendan Burgess said:


> Hi tecate
> Cryptocurrencies may well be here to stay. They may well have a useful and legitimate function.
> But Bitcoin is worthless or as close to worthless as makes no difference.
> Brendan


Ok, so Bitcoin - has no redeeming features whatsoever?  Do you acknowledge at least the upside of the decentralised nature of it?  Do you acknowledge the benefit that it cant be tampered with by central banks and that it has a finite quantity?  Do you acknowledge the role it plays in countries in turmoil eg. Venezuela. Do you acknowledge the potential it has in terms of social inclusion of the billions of 'unbanked' citizens on the planet.

Do you not see it's potential in terms of remittance payments?
Do you not see it's potential in terms of cross border payments?

I say potential as clearly there are currently stumbling blocks in that respect.  However, with lightening network on the way, that will be resolved.

Ethereum is being championed as the best fit potentially for smart contracting solutions. However, bitcoin still has potential in this respect too.


----------



## Brendan Burgess

They do have some useful features. But that does not make them worth $15,000 or $150. 

Personally I would prefer a currency which is supported by Central Banks that one which is not supported by anything. 

Brendan


----------



## tecate

Brendan Burgess said:


> They do have some useful features. But that does not make them worth $15,000 or $150.


I honestly don't know on the price.  At the end of the day, people dictate the price of anything.  There is merit in the argument that the price continues to rise on the basis that BTC is finite and BTC is only scratching the surface.  If institutions come in, then even a fraction of the pie would mean a higher price for bitcoin.   Trading of BTC futures just started in the last hour on the CBOE.



Brendan Burgess said:


> Personally I would prefer a currency which is supported by Central Banks that one which is not supported by anything.


Supported or manipulated - and to whose gain or loss?  Bear in mind the background which led to the writing of the BTC White Paper back in 2008.


----------



## landlord

Brendan Burgess said:


> Personally I would prefer a currency which is supported by Central Banks that one which is not supported by anything.



What is ironic is that any whiff of central bank/government interference/regulation will more than likely cause Bitcoin to tank (initially). One of Bitcoins fundamental selling points for me and I suspect for others is its decentralized nature. After the financial crisis of 2008 many have queried the role of governments and world central banks for example propping up the fraudulent banks and their obscene employee bonuses at the expense of the average tax payer. I wonder if this was a driving force for Satoshi Nakamoto in 2009, a year after the financial crisis.


----------



## tecate

landlord said:


> After the financial crisis of 2008 many have queried the role of governments and world central banks for example propping up the fraudulent banks and their obscene employee bonuses at the expense of the average tax payer. I wonder if this was a driving force for Satoshi Nakamoto in 2009, a year after the financial crisis.



Its commonly acknowledged that Satoshi wrote that white paper in the aftermath of (and influenced by..) Leyman Brothers & the financial crisis.  And  you're quite right - it's decentralised nature is probably the primary attraction of the cryptocurrency.


----------



## Merowig

Bitcoin is not a real currency...
And you had futures as well for Tulips. Only because futures for Bitcoins are available it doesn't make them more legitimate nor is there an automatism that an ETF will be made available.

But yes there are already two new applications for ETFs
https://www.reuters.com/article/us-...r-bitcoin-etfs-as-futures-debut-idUSKBN1E51O4


----------



## Brendan Burgess

tecate said:


> An ETF will really open the door to hedge fund and institutional money.



It's possible, but very unlikely, that genuine institutions would buy Bitcoin.  It's certainly likely that hedge funds would take huge bets against them. 

Brendan


----------



## Dan Murray

Brendan Burgess said:


> ....It's certainly likely that hedge funds would take huge bets against them.



Jeepers Brendan,

If the hedge funds get involved, I fear that BTC may become quite volatile! Fasten de seatbelts!


----------



## Brendan Burgess

I just found this article on Investopedia 

_Why Aren't Hedge Funds Interested in Bitcoin?_


----------



## SoylentGreen

http://www.iii.co.uk/articles/467664/heres-what-happened-when-bitcoin-futures-launched


----------



## tecate

One example ref. the interest of hedge funds in Bitcoin - once they have a means (a regulated entry point) to buy in.

Link

@Brendan: The link you provided goes back to June.  The Crypto space is moving at a rate of noughts.....it's nigh on impossible to keep up with it.


----------



## Brendan Burgess

tecate said:


> The link you provided goes back to June.



Hi tecate 

Investment principles remain the same. Bitcoin does not rewrite them.  All of these arguments against are still valid: 

some managers have suggested that their funds' own strict guidelines for investments were prohibitive when it came to the possibility of Bitcoin at this point.

Beyond these initial concerns, hedge funds seem to be uncertain about the security and volatiity of Bitcoin as an asset class. Louis Gargour of LNG Capital said that "Bitcoin's extreme volatility doesn't sit well with managers working on a risk-adjusted return basis. Furthermore, there are valid concerns that digital currency assets can be hacked or stolen."

One major way to improve Bitcoin's position would be for major banks around the world to provide services like settlement for Bitcoin and other digital currencies.


----------



## fpalb

In October, there were apparently already over 120 hedge funds that were *exclusively* cryptocurrency related: 

That doesn't include others which might just have partial exposure.


----------



## Firefly

Firefly said:


> I read this morning in the Irish Times (they have a large article re: bitcoin today) that an investment of $1,000 in Bitcoin in July 2010 would today be worth $200m  200 million !!!!
> 
> If this is not a bubble can someone explain the rise? Was it just insanely undervalued in 2010 and if so, has the use of the currency exploded since then (or even expected to?).
> 
> The crazy valuations of companies like Pets.com or our own, beloved Baltimore Technologies never even approached this.
> 
> I think a short is the clever bet here, or else buy some gold as this is where the money will go when this whole thing comes crumbling down....




I've been trying to get my head around this explosion of the bitcoin price.

To put this into context, I've tried to compare it to one of the most successful companies and operators in history, Berkshire Hathaway.

Berkshire, as we all know, has been a very successful company since approx 1964, where time and again it has beaten the market. It holds some very successful investments as well as part/full ownership in a plethora of performing companies.

According to this article
https://www.businessinsider.com.au/warren-buffett-berkshire-hathaway-historical-returns-2015-3

$1,000 invested in Berkshire in 1964 would be worth about $11.6m today

But, $1,000 invested in Bitcoin in 2010 would be worth about $200m today

Can someone please explain how this growth can be justified?
Was Bitcoin so undervalued in 2010 or did billions of paying users appear, or is it based on future growth, or simply a bubble?


----------



## Dan Murray

Firefly said:


> Was Bitcoin so undervalued in 2010 or did billions of paying users appear, or is it based on future growth, or simply a bubble?



Firefly,

The fact that someone of your standing is asking this question does not prove categorically one of my thoughts about BTC but it certainly adds significant validation!

The point in question relates to "clearly identifiable" part of the title. There are been several questions about this point by me and others and it has *NEVER* been answered! (Other than those who initially claimed BTC is worth as absolutely nothing, which then broadly became the more measured "more or less nothing".)

I would argue that BTC's arrival in bubble territory is *not at all "clearly identifiable."* This is why your question makes perfect sense! (If the answers you receive are along the lines: _it's a bubble at pretty much all price points beyond practically zero_, I suspect that your head-scratching activity is destined to continue, fellah!)

I know you've gone into the prediction business (on another thread) - but I will confidently predict that your question will not be sensibly answered, nor will there be a proper explanation as to how this mystery is apparently so "clearly identifiable."!!

[I would also argue that it's not even a bubble in the traditional sense - but let's deal with one element at a time!]


----------



## kickstart

Firefly said:


> But, $1,000 invested in Bitcoin in 2010 would be worth about $200m today



I wonder about the depth of liquidity for bitcoin. Would someone with $200m of bitcoins be able to sell them in a short space of time and realise their current potential, or would they quickly exceed the liquidity available in one or more brokers? 

Are there any easy ways to look at the depth of liquidity of bitcoin?


----------



## Firefly

Dan Murray said:


> [I would also argue that it's not even a bubble in the traditional sense



It's a fair point though. The last bubble that comes to mind was the dot.com bubble where, thanks for the advent of the internet, all sorts of companies sprung up, such as Pets.com. In fact, anything with the .com after its name seemed to join the share price rocket. People then had no idea idea what these companies were worth but we driven by the expectation that the companies would one day make lots of money once the whole e-commerce thing took off.

I'm stumped with Bitcoin though. Even if it used by more people for purchasing more things, how is its price increase justified on any level?

If the demand for Bitcoin was driven buy people trying to buy it, to in turn buy other stuff, I would get it. But as far as I can see people are just buying it to sell it on for more money.

And there there are reports of people mortgaging their homes to buy Bitcoin and buying Bitcoin using their credit card.


----------



## Firefly

It seems like someone has invented something which people may use to a greater degree in the future (but who knows) but that very few people use today. The only redeeming feature is that it is in limited supply, but so what?


----------



## Firefly

brianb said:


> I wonder about the depth of liquidity for bitcoin. Would someone with $200m of bitcoins be able to sell them in a short space of time and realise their current potential, or would they quickly exceed the liquidity available in one or more brokers?
> 
> Are there any easy ways to look at the depth of liquidity of bitcoin?


True, but if they wait until next year they'll be worth 1bn so what's the rush?


----------



## kickstart

Firefly said:


> True, but if they wait until next year they'll be worth 1bn so what's the rush?



Well, you don't want to hang around with these regular polygon schemes. 
https://www.youtube.com/watch?v=GPQTVyKO8EU


----------



## tecate

Brendan Burgess said:


> Investment principles remain the same. Bitcoin does not rewrite them.  All of these arguments against are still valid


I'm not going to go so far as to disagree 'strongly' with any of you guys.  I don't come from an investing backround.  I've never dabbled in that.  The concept of bitcoin appealed to me back in 2013 and I invested on that basis.
I won't trawl through the web.  However, I agree that there is a volume of naysayers - naysayers who are significant figures in wall street, establishment banking, etc.  Having said that, there are also former hedge fund managers and other significant people who are of the opposite opinion.   
Whose right...only time will tell. Can there be a correction - resulting in consolidation and bitcoin starting back up the way again?  - I believe that's plausible (in my unqualified opinion).



Brendan Burgess said:


> Furthermore, there are valid concerns that digital currency assets can be hacked or stolen."


Yes, that's quite right.  But if someone dabbles in Crypto, the first thing they learn is that you do NOT hold significant funds on a bitcoin exchange for any longer than is necessary.  Funds can be held in cold storage - very, very securely.  If you're prudent and responsible, this is a non-argument.




Firefly said:


> It's a fair point though. The last bubble that comes to mind was the dot.com bubble where, thanks for the advent of the internet, all sorts of companies sprung up, such as Pets.com. In fact, anything with the .com after its name seemed to join the share price rocket. People then had no idea idea what these companies were worth but we driven by the expectation that the companies would one day make lots of money once the whole e-commerce thing took off.



That analogy has been made ad-nauseum - over the past few weeks.  It may well be right.  A different type of 'investor' has gotten involved in BTC in recent months.  Not sure if it's a good thing....I was quite happy with steady organic growth.




Firefly said:


> I'm stumped with Bitcoin though. Even if it used by more people for purchasing more things, how is its price increase justified on any level?


It was designed to be of a finite amount.  Currently 16 million bitcoin in circulation (aside from those that have been lost) - although of those 16 million, many 'hodl' (they're keeping them and using them as a store of value).  BTC has 8 places of decimal.   There's still enough to go around - but with a finite amount (the maximum 21 million will only be realised by 2040), the price must go up.




Firefly said:


> I'm stumped with Bitcoin though. Even if it used by more people for purchasing more things, how is its price increase justified on any level?


Currently, it's being used as a 'store of value'  - to compete with gold and such.  When I first got involved (and I believe this was the mindset of many others), I was thinking in terms of it being the currency of the internet.  However, it's been hit by teething problems;

1. Volatiliy
2. Issues with confirming transactions (delays, etc.  - and also higher transaction costs than were ever envisaged).
3. It's still hard for ordinary people to get to grips with

Having said all that, it's a young and developing 'currency'.  Work is being done by a very talented pool of developers.  When 'lightening network' comes on stream, that's going to change things drastically.  It *may* bring microtransactions back into the mix once more.

Governance is also an issue.  Everything in bitcoin is done by consensus.  However, due to vested interests between the varying groups (developers, miners, end users, etc.), this has led to very cumbersome decision making.  I like the consensus based approach and I don't know what the solution is - but decision making has to be more agile to advance the project.



Firefly said:


> It seems like someone has invented something which people may use to a greater degree in the future (but who knows) but that very few people use today. The only redeeming feature is that it is in limited supply, but so what?



See above.


----------



## Duke of Marmalade

tecate said:


> It was designed to be of a finite amount.  Currently 16 million bitcoin in circulation (aside from those that have been lost) - although of those 16 million, many 'hodl' (they're keeping them and using them as a store of value).  BTC has 8 places of decimal.   There's still enough to go around - but with a finite amount (the maximum 21 million will only be realised by 2040), the price must go up.
> 
> Everything in bitcoin is done by consensus.



So why don't they agree to stop mining now.  Indeed why not reduce everybody's BTC holding pro-rata.  Imagine if there was only 1 BTC, wow what would its price be?

Far, far too much is made of this scarcity aspect.


----------



## IdesofMarch

Since this thread has started you could have bought a bitcoin at 12,000 usd and sold to day for 16300 usd, not a bad return.


----------



## tecate

Duke of Marmalade said:


> So why don't they agree to stop mining now.  Indeed why not reduce everybody's BTC holding pro-rata.  Imagine if there was only 1 BTC, wow what would its price be?
> 
> Far, far too much is made of this scarcity aspect.


Mining is necessary in order to verify and confirm transactions.  The white paper set out 21 million as the threshold figure.  I'm not sure of the point that you are making?

Again, in my unqualified opinion, my understanding is that he wanted to create a currency that couldn't be interfered with - a la quantative easing, etc.


----------



## ant dee

IdesofMarch said:


> Since this thread has started you could have bought a bitcoin at 12,000 usd and sold to day for 16300 usd, not a bad return.


Now that would be a pure gamble, and only sounds good in hindsight.
Like watching a football match be 0-0 at Half Time and then say :
Since the start of the match you could bet 1000 for correct score 0-0 and cash it out now for 2000, not a bad return!


----------



## fpalb

Duke of Marmalade said:


> So why don't they agree to stop mining now.  Indeed why not reduce everybody's BTC holding pro-rata.  Imagine if there was only 1 BTC, wow what would its price be?
> 
> Far, far too much is made of this scarcity aspect.



The units are arbitrary, just like the number of shares issued for a company are arbitrary. Shares splits or share consolidations don't affect the value of anyone's holdings, all that matters is the market cap.

The scarcity doesn't come from the number of units, it comes from the fixed rate supply of new bitcoin which reduces over time, so if you own 1 bitcoin, you own 1/21 millionth of all of the bitcoin there will ever be. If the units are changed to milli-bitcoins you now have 1000 units instead of 1, but you still have the same 1/21 millionth of the total supply there will ever be. The fact that percentage remains constant is the scarcity. The fact that the scarcity is not enforced by an authority is the breakthrough. Everything digital and scarce up until bitcoin needed trust in a centralised authority to enforce that scarcity.


----------



## Brendan Burgess

Firefly said:


> If the demand for Bitcoin was driven buy people trying to buy it, to in turn buy other stuff, I would get it. But as far as I can see people are just buying it to sell it on for more money.



This is the nub of the issue.  No one needs Bitcoin to buy other legitimate stuff, they can do so with conventional currencies.  So the demand is only for anonymous payment for black market stuff.


----------



## Duke of Marmalade

tecate said:


> Mining is necessary in order to verify and confirm transactions.  The white paper set out 21 million as the threshold figure.  I'm not sure of the point that you are making?
> 
> Again, in my unqualified opinion, my understanding is that he wanted to create a currency that couldn't be interfered with - a la quantative easing, etc.


Mining stops in c.2040 but presumably transactions will continue to be verified by the community.  The point I am making is that if scarcity is so important why not stop now at 16M?  Maybe that's because miners are in the majority.  But then what's to stop the miners changing the rules to increase the supply to, say, 31M?

Actually, I think I know the answer to these questions.  If there was such a major change in the rules it would blow the mantra that BTC is tamper proof, unlike fiat.  But will that paradigm still hold in 2040?


----------



## ant dee

Duke of Marmalade said:


> Mining stops in c.2040 but presumably transactions will continue to be verified by the community.  The point I am making is that if scarcity is so important why not stop now at 16M?  Maybe that's because miners are in the majority.  But then what's to stop the miners changing the rules to increase the supply to, say, 31M?
> 
> Actually, I think I know the answer to these questions.  If there was such a major change in the rules it would blow the mantra that BTC is tamper proof, unlike fiat.  But will that paradigm still hold in 2040?


The miners still collect the transaction fees.
There will be incentive to mine, even after the block reward dries out.


----------



## tecate

Duke of Marmalade said:


> The point I am making is that if scarcity is so important why not stop now at 16M?  Maybe that's because miners are in the majority.  But then what's to stop the miners changing the rules to increase the supply to, say, 31M?


The miners cannot dictate mining further coins.  However, I do accept that the community/project has hit an issue in terms of the needs/wants of various stakeholders.  That's what I was referring to with regard to the need for better governance.  How that its resolved I personally don't know.  However, you can be sure that there are smarter minds than me working on it.

Bitcoin has hit crisis after crisis in it's 8 years of existance.  It has overcome them.  They've been replaced with new challenges  - I've every confidence it will overcome those too.  Such is the nature of a developing and emerging disruptive technology.


----------



## tecate

Oh...and in terms of the issue with cost of transactions and speed of transactions, 'lightening network' is in the works.


----------



## Duke of Marmalade

tecate said:


> Oh...and in terms of the issue with cost of transactions and speed of transactions, 'lightening network' is in the works.


Maybe I am misunderstanding your point, in fact maybe I am misunderstanding everything

The problem with the speed of transaction verifying is that it is far too fast.  As a result the difficulty of the hash puzzle has had to be increased from 1 at the beginning to around 4 billion  so as to target the 10 minutes settlement time.  And while I'm here I do not buy that all this puzzle solving is to ensure the integrity of the blockchain - why were single figure difficulties okay in the early days but have to be 4 billion today?


----------



## fpalb

Duke of Marmalade said:


> Mining stops in c.2040



Mining actually stops in 2*1*40. That's something for our great grand kids to worry about, assuming bitcoin still exists by then.


----------



## Duke of Marmalade

ant dee said:


> The miners still collect the transaction fees.
> There will be incentive to mine, even after the block reward dries out.


Exactly, so why not pull up the ladder now at 16M to maximise the scarcity effect? (that's what this line of the thread is about).  If its because the miners call the shots (majority consensus) then what's to stop them increasing the 21M when the party looks like ending?


----------



## fpalb

The miners can't change the rules unilateraly, because the rules are also enforced by user wallets, the nodes that exchanges run etc. The block they mined that had the incorrect reward included as a transaction would be rejected by the rest of the network, and they would have wasted money on mining it.


----------



## Duke of Marmalade

fpalb said:


> Mining actually stops in 2*1*40. That's something for our great grand kids to worry about, assuming bitcoin still exists by then.


Ooops  Though my question is still valid, why not pull up the ladder now?


----------



## Duke of Marmalade

fpalb said:


> The miners can't change the rules unilateraly, because the rules are also enforced by user wallets, the nodes that exchanges run etc. The block they mined that had the incorrect reward included as a transaction would be rejected by the rest of the network, and they would have wasted money on mining it.


Okay, this has been a bit of a cul de sac, apologies


----------



## fpalb

brianb said:


> I wonder about the depth of liquidity for bitcoin. Would someone with $200m of bitcoins be able to sell them in a short space of time and realise their current potential, or would they quickly exceed the liquidity available in one or more brokers?
> 
> Are there any easy ways to look at the depth of liquidity of bitcoin?



You can view the order books of most exchanges on their own sites. You can also view the books of various exchanges here http://bitcoinity.org/markets/coinbase/USD (click links at the top to change between them). Exchanges which support it may also have hidden orders on the books, we can't know how many of these there are. Based on the non-hidden orders alone market selling $200m (over 10,000 coins) on any exchange would suffer massive slippage, and even spreading it over a few exchanges would still suffer significant slippage.


----------



## TheBigShort

Brendan Burgess said:


> This is the nub of the issue.  No one needs Bitcoin to buy other legitimate stuff, they can do so with conventional currencies.  So the demand is only for anonymous payment for black market stuff.



Im not buying into the criminality element of it. Its another headline grabbing tatic to deter people from considering crytocurrency as an alternative means. Its up there with 'NK Korea hackers' (as if _only _the big, bad NK hackers would be engaged in this activity), or 'Bitcoin uses the same electricity as Ireland'.

Taking a simple example of a drug-dealer. Im assuming that drug dealers get into the business to obtain wealth for themselves in order to bring themselves out of relative poverty and enjoy a far more luxurious lifestyle than they currently enjoy. But if there isnt anything you can buy with bitcoin, then criminals are forced to sell their bitcoin to avail of their ill-gotten gains.
So just as criminals are buying bitcoin to cover their transactions, driving up the price, they would also be selling in order to realise their gains, thus driving down the price.


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## landlord

IdesofMarch said:


> Since this thread has started you could have bought a bitcoin at 12,000 usd and sold to day for 16300 usd, not a bad return.



It’s tripled since I started this post....

https://www.askaboutmoney.com/threads/bitcoin-wallets-and-exchanges.205649/#post-1542225


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## kickstart

TheBigShort said:


> So just as criminals are buying bitcoin to cover their transactions, driving up the price, they would also be selling in order to realise their gains, thus driving down the price.



I think it goes a bit further than that. Bitcoin has enabled some crimes that just were not possible beforehand. I'm thinking of large scale desktop/laptop ransomware in particular. We've seen this kind of malware now routinely asks endusers for bitcoin to unlock their desktop once they've been caught by it. Police forces are unable to follow the money, a key route to catching malware authors up until now.


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## TheBigShort

brianb said:


> I think it goes a bit further than that. Bitcoin has enabled some crimes that just were not possible beforehand. I'm thinking of large scale desktop/laptop ransomware in particular. We've seen this kind of malware now routinely asks endusers for bitcoin to unlock their desktop once they've been caught by it. Police forces are unable to follow the money, a key route to catching malware authors up until now.



Yes but the point was made that bitcoin isnt being used to buy stuff, so what use is it?
If I received 1,000 BTC through a malware scam, happy that the cops cant trace me, what good is a 1,000 BTC (€14m) if I cant spend it?
Typically, I would imagine, I would sell all or part of it, putting downward pressure on price of BTC.


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## tecate

brianb said:


> I think it goes a bit further than that. Bitcoin has enabled some crimes that just were not possible beforehand. I'm thinking of large scale desktop/laptop ransomware in particular. We've seen this kind of malware now routinely asks endusers for bitcoin to unlock their desktop once they've been caught by it. Police forces are unable to follow the money, a key route to catching malware authors up until now.


So what!?  Technology can be used for good or bad.  That doesn't create a justification to throw the baby out with the bathwater.  Remember, the 'currency' that is most heavily used in crime and particularly organised crime such as the drugs business has always been  the usd.   Are you suggesting we should ban the usd or that usd has no other legitimate use? 
Desktop/Laptop randsomware wouldn't be possible without the internet.  Should we tar and feather the internet and then ban it? This is Daily Mail logic. 

What of personal responsibility?  People need to educate themselves and safeguard themselves against such scams. I got a spam email the other day saying that some nice person had gained access to my laptop.  He claimed to have accessed the camera on the laptop during a time when I was supposedly surfing pornhub and reacting to the content on pornhub!  The pitch was that I send him $500 in bitcoin and all would be fine. The chancer didn't see any funds from me but no doubt some fool sent him money.


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## tecate

@Duke : In recent times, the bitcoin network has struggled with the transaction volume resulting in two issues;

1. Delays in having transactions confirmed.
2. Additional costs in executing transactions - users end up paying much more in fees.

These factors fly in the face of what bitcoin was originally intended for i.e. as a means of payment/to act as a currency.

The implementation of Segwit helped the above somewhat.  However, when 'lightening network' is eventually incorporated/activated, it will change all this.  We will then be back to fast, inexpensive transactions - which will allow merchants to use btc again without any hangups.

Also, to answer your question ....the value of the coin increases when the difficulty of mining increases.


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## tecate

Brendan Burgess said:


> This is the nub of the issue.  No one needs Bitcoin to buy other legitimate stuff, they can do so with conventional currencies.  So the demand is only for anonymous payment for black market stuff.


We are slowly moving towards a cashless society - with or without bitcoin.  Do you have to be operating in the black market to want anonymity?   Centralised forms of digital payment mean that someone somewhere knows everything about you - in terms of location and buying habits.  If you decided to give money to Greenpeace, Amnesty International or a political group, whomever runs the regime in a country has access to this information.   You may be comfortable with that scenario but I am not (and yet, I don't operate on the 'black market'). It's a case of civil liberties.
Secondly, why would I want to go through a centralised third party to achieve such a payment? Remember what happened when the US government strongarmed visa, mastercard and paypal in cutting off wikileaks?   Over and above that, why involve a third (centralised) party when there's simply no need?


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## kickstart

TheBigShort said:


> Yes but the point was made that bitcoin isnt being used to buy stuff, so what use is it?
> If I received 1,000 BTC through a malware scam, happy that the cops cant trace me, what good is a 1,000 BTC (€14m) if I cant spend it?
> Typically, I would imagine, I would sell all or part of it, putting downward pressure on price of BTC.



The point is that you can effect a transfer via bitcoin. If you can extort 1000 BTC, you can happily cash it in for € and spend away. The key point is that your BTC has been amassed without anyone knowing where  or who it came from. This is fundamentally different to extorting money via other currency types. Credit Card payments would be trivial for police to follow. Cash transfer would be impractical for many reasons, in that your criminal needs to be physically available to collect (useless for worldwide distributed ransomware attacks).


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## kickstart

tecate said:


> So what!?  Technology can be used for good or bad.  That doesn't create a justification to throw the baby out with the bathwater.  Remember, the 'currency' that is most heavily used in crime and particularly organised crime such as the drugs business has always been  the usd.   Are you suggesting we should ban the usd or that usd has no other legitimate use?
> Desktop/Laptop randsomware wouldn't be possible without the internet.  Should we tar and feather the internet and then ban it? This is Daily Mail logic.



I'm not casting a moral judgement on bitcoin, or suggesting its be made illegal. I'm simply saying that it has brought an innovation to criminal enterprise that did not exist before it. Extortion beforehand always had some weakness where the criminal needed to expose themselves at some stage to collect payment. Bitcoin has removed this risk. I can't think of any other asset, currency or protocol for value transfer that has achieved this so completely and effectively before.


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## fpalb

brianb said:


> The point is that you can effect a transfer via bitcoin. If you can extort 1000 BTC, you can happily cash it in for € and spend away. The key point is that your BTC has been amassed without anyone knowing where  or who it came from. This is fundamentally different to extorting money via other currency types. Credit Card payments would be trivial for police to follow. Cash transfer would be impractical for many reasons, in that your criminal needs to be physically available to collect (useless for worldwide distributed ransomware attacks).



Just one point, if you've been infected with ransomware and it has put your data at risk, you had a security hole. You can blame the money but ultimately whether there is ransom or not that security hole still exists and your data is still threatened by it, anyone else could hack you and just delete your data indiscriminately anyway.


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## ant dee

Criminals will use whatever technology is out there to suit their needs.
Cars, airplanes, the internet, smartphones, encryption, everything really.


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## fpalb

brianb said:


> I'm not casting a moral judgement on bitcoin, or suggesting its be made illegal. I'm simply saying that it has brought an innovation to criminal enterprise that did not exist before it. Extortion beforehand always had some weakness where the criminal needed to expose themselves at some stage to collect payment. Bitcoin has removed this risk. I can't think of any other asset, currency or protocol for value transfer that has achieved this so completely and effectively before.



I can make the same claim about credit cards, they require sensitive information to be hoarded in central databases which create a huge target (no pun intended) for hackers, and you get this happening: http://www.foxbusiness.com/markets/2017/05/24/target-to-pay-18-5m-to-settle-hacking-probe.html 40 million people having their sensitive payment details stolen. When I make a bitcoin payment no sensitive information is shared, the merchant never receives any details that they need to keep secret regarding the payment.


----------



## TheBigShort

brianb said:


> The point is that you can effect a transfer via bitcoin. If you can extort 1000 BTC, you can happily cash it in for € and spend away. The key point is that your BTC has been amassed without anyone knowing where  or who it came from. This is fundamentally different to extorting money via other currency types. Credit Card payments would be trivial for police to follow. Cash transfer would be impractical for many reasons, in that your criminal needs to be physically available to collect (useless for worldwide distributed ransomware attacks).



I don't agree, but I think we are talking about two different things. The rapid increase in value in BTC has been, its alleged, in no small part to criminal activity. I'm merely questioning that view on the basis that I believe any criminal activity that uses BTC will in fact, put a downward pressure on the price of BTC.
If I buy 1,000 BTC it puts upward pressure on the price of bitcoin. If I cant spend it, it sits in my account, or wallet. If that 1,000 is stolen out of my wallet, for what purpose, if it cant be spent? The logical conclusion is that anyone (or most) criminal activity involving extortion or ransom or whatever is so that the criminal can sell the BTC into S € or £ or other fiat currency so as to spend the fiat currency. Is that a logical assumption? I would say it is. As such, criminal activity is more likely to put a downward pressure on the price of BTC rather than contribute to an upward price swing.

As for cash being impractical, that would depend on who the mules are;

https://www.theguardian.com/commentisfree/2015/feb/15/hsbc-has-form-mexico-laundered-drug-money


----------



## kickstart

fpalb said:


> Just one point, if you've been infected with ransomware and it has put your data at risk, you had a security hole. You can blame the money but ultimately whether there is ransom or not that security hole still exists and your data is still threatened by it, anyone else could hack you and just delete your data indiscriminately anyway.



I'm not blaming the money. I would note though that all of us right now are using computers with active security vulnerabilities, which can and will be exploited, given time. So, I'm not blaming the victim of the crime either - there, but for chance and timing of OS updates, go I. 

The case for Bitcoin is not lessened by the ignoble uses some put it to. Crime has not become rampant because of it, nor do I think it likely it will. The innovation it has made may well make law enforcement more difficult in future for crimes which suit it though. It is not like any other currency in this regard.


----------



## kickstart

fpalb said:


> I can make the same claim about credit cards, they require sensitive information to be hoarded in central databases which create a huge target (no pun intended) for hackers, and you get this happening: http://www.foxbusiness.com/markets/2017/05/24/target-to-pay-18-5m-to-settle-hacking-probe.html 40 million people having their sensitive payment details stolen. When I make a bitcoin payment no sensitive information is shared, the merchant never receives any details that they need to keep secret regarding the payment.



If you are claiming that Credit Cards created opportunities for new ways of doing crimes, I'm with you 100%.


----------



## fpalb

brianb said:


> If you are claiming that Credit Cards created opportunities for new ways of doing crimes, I'm with you 100%.



While also true, that's not my point. My point is that if I buy something from target and pay with credit card, now my identity and credit card information are dependent on their security not mine. It's no longer under my control. If I pay with bitcoin the security of my remaining bitcoin is still 100% in my control, and as an added bonus since paying with bitcoin doesn't require identity to validate the payment the merchant doesn't need to gather and/or store as much personal information about me.


----------



## kickstart

fpalb said:


> While also true, that's not my point. My point is that if I buy something from target and pay with credit card, now my identity and credit card information are dependent on their security not mine. It's no longer under my control.



No, you are not entirely dependant on the merchant's security - you have the protection of the bank, who guarantee not to hold you responsible for fraudulent use of your card. They in turn are insured against loss, and build the cost of this into the cost of the card (which of course they pass indirectly to you). You don't need this protection with bitcoin, as your remaining balance cannot be tampered with. The downside is accidental loss of your remaining balance is not insured against - either via your online wallet provider or if you've kept it on a local device and lost it.


----------



## tecate

brianb said:


> The downside is accidental loss of your remaining balance is not insured against - either via your online wallet provider or if you've kept it on a local device and lost it.


People don't keep all their bitcoin on a mobile app. Significant amounts are kept in cold storage via paper wallets or devices such as trezor.  You only keep a small proportion of funds on a mobile app - for day to day use.
You never keep significant amounts on a bitcoin exchange - other than for a small window of time when you have no other choice i.e. when you are about to buy or sell. Even then, you could reduce your exposure by breaking up trades into smaller amounts.


----------



## Merowig

tecate said:


> People don't keep all their bitcoin on a mobile app. Significant amounts are kept in cold storage via paper wallets or devices such as trezor.  You only keep a small proportion of funds on a mobile app - for day to day use.
> You never keep significant amounts on a bitcoin exchange - other than for a small window of time when you have no other choice i.e. when you are about to buy or sell. Even then, you could reduce your exposure by breaking up trades into smaller amounts.


Do you have a source for this ? - I would believe the majority of people (not the majority amount of Bitcoins though) who are holding Bitcoins are doing it in a online wallet.
Only because enthusiasts are doing this (offline wallet) I have doubt that the housewife or taxidriver who bought bitcoins because it is in the papers are doing the same.


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## Leo

Criminal usage is being overplayed. While it is being used in particular as the payment method of choice of cyber criminals based in countries whose governments tolerate or even sponsor their activities, tools now exist that can trace bitcoin transactions. These have already been used to secure convictions involving the online drugs trade.


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## Leo

brianb said:


> or if you've kept it on a local device and lost it.



Chainalysis reckon between 2.8 and 3.8M bitcoins have so far been lost forever!


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## tecate

Merowig said:


> Do you have a source for this ? - I would believe the majority of people (not the majority amount of Bitcoins though) who are holding Bitcoins are doing it in a online wallet.
> Only because enthusiasts are doing this (offline wallet) I have doubt that the housewife or taxidriver who bought bitcoins because it is in the papers are doing the same.


A source - in terms of stats and the percentage that store their bitcoin in various ways?  No - I don't have any such source. However, it's basic common sense.  If you only have a fraction of a bitcoin, then perhaps it doesn't matter.  However, if you have a substantial amount of bitcoin, only a moron would walk around with it - on a mobile wallet.  

At the end of the day, it's down to personal responsibility.  Lets use the cash analogy.  Lets say you have 100k. Do you walk around all day every day with that 100k in your pocket? Of course not.  You carry around what you need in your wallet and you secure the balance elsewhere - be that a bank, a safe deposit box, or whatever.

Bitcoin has been lost - no doubt.  However, so has cash.  I'd imagine more bitcoin has been lost - particularly early on - when people would have been more blazé about it....they didn't give it the respect it deserved as it wasn't worth much.  Otherwise, it's true to say that BTC is unforgiving and requires personal responsibility.  That's a learning curve that people can quickly overcome.  Other than that, cash can just as easily be lost or stolen.  Any stats on the amount of cash that's MIO?


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## Merowig

I claim then that enough people behave without common sense - by buying bitcoins in order to sell them later with a profit and by holding significant amounts in online wallets.


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## tecate

Merowig said:


> I claim then that enough people behave without common sense - by buying bitcoins in order to sell them later with a profit and by holding significant amounts in online wallets.


I have no idea whether they do or they don't.  I have no problem with working on the assumption right now that you're correct in your claim.   However, that's not the fault of bitcoin.  Those are the actions of the irresponsible. 

Its like the analogy I provided....you wouldn't walk down the street with 100k in your pocket. 

If  you mean they're shorting, then that may be true - but that's not my world.  That said, if we are talking about selling bitcoin - you can have bitcoin in cold storage and move it rapidly - be that to an exchange or elsewhere.  

Buying is more precarious - ironically due to the fact that it takes so long by conventional means to move FIAT into your trading account.


----------



## TheBigShort

Leo said:


> Chainalysis reckon between 2.8 and 3.8M bitcoins have so far been lost forever!



And the first seven words of that article is " Just like bars of gold at sea..."

In truth, no such claim can be made. Just as technological advances assist deep sea treasure hunters, so too will technological tools for searching for lost bitcoin.


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## kickstart

TheBigShort said:


> And the first seven words of that article is " Just like bars of gold at sea..."
> 
> In truth, no such claim can be made. Just as technological advances assist deep sea treasure hunters, so too will technological tools for searching for lost bitcoin.



That would be an uncomfortable innovation for many. Would the tool (and it's owners) be able to discriminate between lost bitcoins, and those that were just sitting around waiting to be used by their rightful owners? I'm sceptical that such a tool can be made without finding flaws in the bitcoin crypto hashing algorithm that would leave it completely undermined (ahem).


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## fpalb

brianb said:


> That would be an uncomfortable innovation for many. Would the tool (and it's owners) be able to discriminate between lost bitcoins, and those that were just sitting around waiting to be used by their rightful owners? I'm sceptical that such a tool can be made without finding flaws in the bitcoin crypto hashing algorithm that would leave it completely undermined (ahem).


Correct, if the private keys to any bitcoins have been lost completely - i.e. no copy of the data actually exists anywhere, then they are unspendable forever, because if you could find a way to spend them, then it would be a fatal vulnerability in bitcoin. We can't know for sure how many coins are lost though, as there is no way to prove that a private key for any particular address has really been lost.


----------



## TheBigShort

I stand corrected.


----------



## Firefly

OK (long post warning!)

I've thought about this a bit further and would like to make the following points to argue that I believe Bitcoin to have some value but at the current price it is clearly a bubble


*Users of Bitcoin*
Bitcoin is synonymous with the Dark Web where drugs, guns and the worst form of trade in materials realting to children take place.
In addition to the Dark Web, there seems to be a few token, trendy coffee shops accepting Bitcoin.

Apart from the Dark Web though, I cannot think of anywhere where payment is demanded in Bitcoin, never mind accepted. I cannot use Bitcoin on Amazon or at my local Tesco for instance.

If it was reported the Bitcoin was going to be accepted in Amazon or Tesco I would expect its price to increase, and if these stores announced that they would ONLY accept Bitcoin for payment, I would obviously expect the price of Bitcoin to surge.

I cannot see any potential for mass take-up of Bitcoin for online transactions in either the near or distant future.

So that leaves us with the Dark Web and a few trendy coffee shops.

Now, I've heard it argued here that the baddies use FIAT money to trade in illicit goods too. But there's a difference......only a tiny portion of the global FIAT currencies are used in this way by a moniority of people. Legitimate uses are the majority, from poeple buying food to cars to everything in between. Whilst I don't have any actual figures (and I doubt anyone has) I would estimate that a much larger portion of trading in Bitcoin is represented by illegal trading compared to illegal transactions with FIAT currency.

During the dot.com bubble, all sorts of stocks went up and nobody really new with any certaintity if the companies behind them were going to be successful. Some were but many weren't. The ones that became successful, by and large, were those whose numbers of users have continued to grow and who have figured out a way to monetise this, such as Google, Facebook and Amazon.

Can anyone point me to a likely case where such numbers of people will use Bitcoin and where Bitcoin (rather than FIAT) will be the only payment accepted?

*Store of Value*
Here is where I have my biggest problem. It's argued that Bitcoin is a store of value for the following reasons:
It is a safeguard against central banks printing money
It is scarce (So are Lada cars!)

I think Bitcoin could store _some_ value, and I'll get to that, but for the life of me I cannot see how its value has risen to such an extent that 1,000 dollars in Bitcoin 7 years ago is now worth 200 _million_.

For this kind of price increase to be justified I would expect :

(1) People to be pushing wheel-barrows to Tesco to buy a loaf of bread such would be the scale of QE undertaken by the central banks of this world.
(2) People to think it's the end of the world (in which case an entry on a computer isn't going to be of ANY use!)

The nub of the issue for me though, is that for hundreds of years we have had a comoditity synonymous with storing value called GOLD.

If either (1) or (2) was likely, I would expect that value of Gold to also have risen, but no.....Gold is trading at pretty much what it was trading at in 2010!!!


I think as long as Bitcoing is used by someone to purchase something it has some value, but unless it is the only form of payment accepted or the printing presses are due to go on a bender I can't see this being anything other than a bubble.

Firefly


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## Firefly

tecate said:


> That analogy has been made ad-nauseum - over the past few weeks.  It may well be right.  A different type of 'investor' has gotten involved in BTC in recent months.



Hi tecate,

You're right there....crazy speculators who will lose their shirts!



tecate said:


> There's still enough to go around - but with a finite amount (the maximum 21 million will only be realised by 2040), the price must go up.


Just because something is scarce does not mean it's value must go up to the extent is has. VW has stopped making the original Beetle. They are a store of value, but will their value increase by 10,000% do you think? (At least with a VW you can use it!)



tecate said:


> Currently, it's being used as a 'store of value'  - to compete with gold and such.


If Bitcoin has risen by over 10000% in recent years, why hasn't gold?



tecate said:


> Work is being done by a very talented pool of developers.


And a bunch of even more talented developers who now have an extremely lucrative payload to chase...



tecate said:


> Governance is also an issue.  Everything in bitcoin is done by consensus.


How? Are there meetings and minutes or something?


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## kickstart

Firefly said:


> Apart from the Dark Web though, I cannot think of anywhere where payment is demanded in Bitcoin, never mind accepted. I cannot use Bitcoin on Amazon or at my local Tesco for instance.
> 
> If it was reported the Bitcoin was going to be accepted in Amazon or Tesco I would expect its price to increase, and if these stores announced that they would ONLY accept Bitcoin for payment, I would obviously expect the price of Bitcoin to surge.



This bit intrigues me - bitcoin was initially posited as a currency. So it was meant to facilitate the exchange of goods and services, just like any other currency. A euro represents a unit of work, or a portion of a good. If I found out by holding onto my euro for a week, I could buy twice as much with it next week, I'd be extremely worried. Thus, bitcoin is clearly not operating as a normal currency, but instead as some kind of appreciating asset of it's own accord. It is appreciating now at a rate that far exceeds what a cautious central banker would be happy with (which we repeatedly hear, is close to but less than 2% per year).

Another clear warning sign is that liquidity appears to be quite shallow. One early adopter seeking to cash in would clear out all the orders for bitcoin in a relatively short period of time. This would spook everyone with a bitcoin who then has to wait longer than normal to cash out. The only trajectory then is a run, and a short one at that. That one or just a few people could cause this makes this a very fragile asset. To give an example, the enigmatic creator of bitcoin was recently judged the 53rd richest person in the world by the current valuation placed on it, and what is known or suspected to be his position from the early days.


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## tecate

Firefly said:


> Just because something is scarce does not mean it's value must go up to the extent is has. VW has stopped making the original Beetle. They are a store of value, but will their value increase by 10,000% do you think? (At least with a VW you can use it!)


People determine supply and demand and what the value of something is...at least to a large extent. By the way, since you posted,the euro in your wallet has shed some value.  As regards the valuation of bitcoin right now, I have no earthly idea as to what it should be. Equally,the flimsy piece of paper (be that euro or usd) - which is backed by vapourware - I equally have no idea what that should be valued at right now.



Firefly said:


> If Bitcoin has risen by over 10000% in recent years, why hasn't gold?


Perhaps it isn't BTC that's rising of it's own accord...perhaps the rise in BTC is symptomatic of an effective devalutation (comparitively) of FIAT and Gold.



Firefly said:


> And a bunch of even more talented developers who now have an extremely lucrative payload to chase...


I'm not sure what you're getting at here  - please elaborate.



Firefly said:


> How? Are there meetings and minutes or something?


Decisions with regard to BTC are carried out by consensus between the various stakeholders. In theory, it's a good system.  However, in recent times - due to disagreement betweenv various stakeholder groups, reaching consensual results has been difficult....meaning that the development of the currency is not agile.



			
				brianb said:
			
		

> This bit intrigues me - bitcoin was initially posited as a currency. So it was meant to facilitate the exchange of goods and services, just like any other currency. A euro represents a unit of work, or a portion of a good. If I found out by holding onto my euro for a week, I could buy twice as much with it next week, I'd be extremely worried. Thus, bitcoin is clearly not operating as a normal currency, but instead as some kind of appreciating asset of it's own accord. It is appreciating now at a rate that far exceeds what a cautious central banker would be happy with (which we repeatedly hear, is close to but less than 2% per year).


When I first got involved in 2013, I was excited about the prospect of it developing as a currency.  That has not come to fruition - due to a number of technical issues. However, it doesn't mean that said issues will not and cannot be addressed.   I referred to lightening network on a number of occasions - but Im unsure if anyone took the time out to check it out.
With regard to volatility, clearly that's also a problem.  I personally don't know how to resolve that but I know there are teams working on resolving same.  However, bear in mind that by comparison, this is a young currency.  It's normal that it should have growing pains.


----------



## Firefly

tecate said:


> When I first got involved in 2013, I was excited about the prospect of it developing as a currency.



Even if Bitcoin was accepted as a method of payment by say Amazon, why on earth would anyone be bothered? They would have to open a Bitcoin account and unless they wanted to risk the volatility in its worth, they would have to constantly purchase Bitcoin with real money, buy whatever they wanted to buy and then go and sell their Bitcoin again for real money. Why would anyone bother?? I'll tell you why....because they want to conceal what they are buying that's why...and that's why it is so popular on the Dark Web. It makes zero sense anywhere else to go through the rigmarole of paying in Bitcoin when you can do so with real money.


----------



## tecate

Firefly said:


> Even if Bitcoin was accepted as a method of payment by say Amazon, why on earth would anyone be bothered?


Firstly, it's been speculated about amazon - but if they do start to accept, it will be a game changer.



Firefly said:


> They would have to open a Bitcoin account


The establishment has made that a difficulty - yes.  However, you have to jump the same hoops to open a bank account do you not?  People jumped through the same hoops to open paypal accounts did they not?  Furthermore, in the last 2 weeks, services such as Revolut and Square have made it easy to buy bitcoin.  Craigslist have added (or are about to add?) the option for sellers to offer the option of bitcoin as an accepted form of payment.  You seem to forget that this is a fast moving space.  What you are looking at is ongoing technological development. It is not the finished article.




Firefly said:


> unless they wanted to risk the volatility in its worth, they would have to constantly purchase Bitcoin with real money, buy whatever they wanted to buy and then go and sell their Bitcoin again for real money. Why would anyone bother??


Volatility is an recognised issue.  However, work is being done on this.  I don't expect that it will be something that will be resolved in the short term - but this is not a short term project.  With regard why would they risk that or bother with that, if its not a substantial amount of money, they may be ok with it.  Even if it is, volatility can roll in two directions - if it's money they can afford to speculate with, then they may not be bothered.



Firefly said:


> I'll tell you why....because they want to conceal what they are buying that's why...and that's why it is so popular on the Dark Web. It makes zero sense anywhere else to go through the rigmarole of paying in Bitcoin when you can do so with real money.


You and your bloody dark web!  We have been moving towards a cashless society for some years now.  Ireland may be a lagard in that regard but there is still evidence of it.  Some other countries are almost there already (eg. Scandinavia).  Do you want people working in a government to have access to every single transaction you make?  Do you place ANY value on your privacy at ALL?  Are you happy that a government or government official could cut down your access to your hard earned money in a matter of seconds!? At least with cash, unless they physically confiscate it from you, then you can spend it!  With bitcoin, it cannot be confiscated (at least not without your cooperation). 
If that's the society that you want to live in - good for you.  This has NOTHING to do with the dark web.  Power corrupts and corrupts absolutely.  Why set up a system where someones privacy can be invaded and where their lives could be turned upside down by a bureaucrat!

Over time, it will become much easier to buy and sell bitcoin.   Will that happen tomorrow?  No - it will take time.  It took 2 hundred years to move from coin to paper.  It took 40 years to move from cash to plastic.  It will take 20 years to move to crypto or digital currency.


ps.  Please also be aware that a few years back - in trying to lodge money to bitcoin exchanges in both the UK and Ireland, there were plenty of reports of the establishment high street banks interfering with that process - sometimes refusing to allow customers to transfer to the accounts of a Bitcoin exchange - switching that access on and off.  This happened across a number of high street banks - not just one or two.


----------



## TheBigShort

tecate said:


> ps. Please also be aware that a few years back - in trying to lodge money to bitcoin exchanges in both the UK and Ireland, there were plenty of reports of the establishment high street banks interfering with that process - sometimes refusing to allow customers to transfer to the accounts of a Bitcoin exchange - switching that access on and off. This happened across a number of high street banks - not just one or two.



In the event that banks resort to such practices again anytime in the future, what can be done about it? What effect on bitcoin? 
What effect on the assumption that we live in a free open democratic society?


----------



## Duke of Marmalade

tecate said:


> Firstly, it's been speculated about amazon - but if they do start to accept, it will be a game changer.


Please, none of the household names are accepting BTC.  Some are allowing you to think you are paying with BTC but in fact an intermediary changes your BTC into the fiat currency for passing on to the retailer. (Think about it, they can't quote prices in two currencies or else they would be wide open to being gamed against).

Why would anybody want to incur those intermediation costs unless there are folk out there whose only source of income is BTC?  Ooops! I forgot, there are miners whose only source of income might be BTC but the mining community hardly amounts to a game changer.


----------



## ant dee

TheBigShort said:


> In the event that banks resort to such practices again anytime in the future, what can be done about it? What effect on bitcoin?
> What effect on the assumption that we live in a free open democratic society?


They pretty much interfere all the time. They call it KYC / AML and censor transactions to exchanges.

In their defence, there  are on occasions people that get their bank accounts / credit cards stolen, thieves dump the fiat to a bitcoin trader or something bitcoin related, and get to keep the bitcoin as the transaction can't be reversed.
Then the victim shows up to the bank and claims fraud, draining workhours and resources from the bank.
So bank accounts that are associated with crypto are probably too much trouble for the banks and they get shut down.


----------



## ant dee

Duke of Marmalade said:


> Please, none of the household names are accepting BTC.  Some are allowing you to think you are paying with BTC but in fact an intermediary changes your BTC into the fiat currency for passing on to the retailer. (Think about it, they can't quote prices in two currencies or else they would be wide open to being gamed against).
> 
> Why would anybody want to incur those intermediation costs unless there are folk out there whose only source of income is BTC?  Ooops! I forgot, there are miners whose only source of income might be BTC but the mining community hardly amounts to a game changer.


Duke, since bitcoin transactions are irreversible, some companies can enter the market of some high fraud risk countries.

E.g.
Maybe it is too much of a risk for Netflix / Amazon to accept customers from certain African countries, since the amount of credit card charge-backs will be too high.
Accept bitcoin however, and once a payment is confirmed thats it, the merchant keeps the money.
But, at the moment the high transaction fees to use the bitcoin network prevent all this from even being considered as an option.


----------



## fpalb

There was a reasonably big merchant adoption push around the time of the 2013 hype. Bitpay.com are still a company specialising in making it easy for merchants to accept bitcoin, coinbase used to be fairly focused on this too, but ended up focusing more on being an exchange. A lot of companies, even big ones like Microsoft and Dell tried it, as on the face of it there are some really good reasons a merchant should want to accept it, as bitpay say:
*Keep more of your money.*
Credit cards take up to 3% in processing fees on every transaction. Accept bitcoin with BitPay and get direct bank deposits in your own currency for a simple, flat 1% settlement charge.

*Sell to anyone, anywhere.*
Connect to the world’s first borderless payment network - Bitcoin. Receive payment in any amount, from anywhere in the world, from any computer or mobile device.

*End chargeback fraud and identity theft.*
Other payment methods force customers and businesses to shoulder the risks and costs of payment fraud. With bitcoin, customers can pay without handing over sensitive personal information, and refunds are made through the merchant — no chargebacks.

There are three problems though:
1) Volatility, not a big deal really as bitpay can do the currency conversion for you and eliminate it.
2) Not enough customers owned bitcoin (and many of those that did wanted to hold on to it) to make it worthwhile to support the option of accepting it.
3) As the user-base of bitcoin has grown, the transaction capacity issue has come to the fore, meaning transactions without sufficient fees can be delayed a lot (bad for both merchants and customers) and transactions are more expensive (bad for customers).

The issue 2) is currently changing rapidly as we're seeing huge numbers of new people buy cryptocurrency. If/when issue 3) can be addressed sufficiently we might see a second attempt at the retail merchant use-case, but not until then.


----------



## Duke of Marmalade

I was challenging the notion that Amazon accepting BTC will be a game changer.  I presume they will continue to price in fiat.  I hope you are not seriously arguing that routing BTC through an exchange will be cheaper than conventional payment mechanisms.  I can't see any anonymity advantage unless the goods are to be delivered to some untraceable PO Box or other.  Miners whose only income is BTC and who don't have any conventional payment options will welcome it.  But all in all I do not see a game changing demand to have BTC because Amazon will accept it.


----------



## fpalb

I agree that I don't think amazon accepting it in and of itself would make anyone go to the trouble of buying BTC just to spend it straight away again on amazon. But there might be other reasons you would choose to spend it at amazon:
1) you already have BTC
2) as ant dee pointed out, amazon would not need to restrict BTC orders from any country based on payment fraud, if you are in such a country it might be the only way you can use amazon.
3) amazon could offer a discount for BTC (or the Ryanair approach, charge a processing fee for other payment methods) and share some of the savings they make on it with the customer. This might be only be useful for the customer for large orders, as it needs to be greater than the btc transaction fee itself that the customer is paying for it to appeal to the customer.


----------



## fpalb

Firefly said:


> OK (long post warning!)
> Apart from the Dark Web though, I cannot think of anywhere where payment is demanded in Bitcoin, never mind accepted. I cannot use Bitcoin on Amazon or at my local Tesco for instance.



I guess I could write another of my long comprehensive posts exhaustively listing every possible current and potential future situation where bitcoin is preferable to fiat for someone in some context, but instead I'll make a general statement on why you probably can't think of any and then look at one example, using amazon which you've mentioned.

As a regular poster on a financial advice forum in a first world country, I'm guessing you earn over $30k per anum, maybe everyone posting on this thread does. That's makes us all part of the global 1%. We are the rich, relatively, and we live in a first world country that has one of the most stable (touch wood!) currencies as the legal tender, we also have access to first world financial services. So maybe it's a kind of a "let them eat cake" situation. 40% of the world don't have a bank account. I'm not saying bitcoin solves the problems of the unbanked, I'm saying that there are lots of frictions and problems out there for other people that you or I don't experience.

As an example of just one friction that bitcoin is solving, lets look at the purse.io website. This is at first glance an unusual and somewhat convoluted service. It's a middleman that matches people who want to sell amazon store credit (or a gift gard balance) for bitcoin, and people who want to pay bitcoin and receive goods from amazon. Not only that but the person paying the bitcoin can request that they receive a substantial discount - up to 33%. So it might go like this:
- I want to buy something on amazon that is 60 euro, I use purse and state I want a 33% discount and I add it to my wishlist
- Eventually someone takes me up on it, I pay them 40 euro worth of bitcoin and they pay for the item using their amazon credit and it gets delivered to me by amazon

Purse acts as the escrow, and takes a small cut too.

The site has been running for a few years now, at this point you must be asking, who the hell is using this? why would people effectively pay such a premium for bitcoin with amazon credit. How many people even have a need for this kind of service? Well I was really curious too, so I dug into it.

It turns out amazon credit is almost like its own currency and has its own little economy going on. Amazon will pay affiliates or people doing work such as their mechanical turk service in amazon credit. The purse CEO says 60% of the people using his service to acquire bitcoin are in India, followed by the Philippines and Indonesia. They are earning amazon.com credit, which they can't use directly and isn't liquid for them, effectively trading it at a significant discount for bitcoin, which they are then liquidating into local currency.

The purse CEO estimates (based on amazon financial statements and giftcard research) that amazon has $10-20 billion outstanding store credit liabilities, and issues about $1 billion new credit per year.

(NOTE: I'm not endorsing purse.io, I've never even used it, DYOR).


----------



## Fella

Would the people that are bullish on Bitcoin be prepared to do a deal?
Sell some or all your Bitcoin now and give Brendan the cash now.
On 1st January 2019 he will give you back 2 x the amount of bitcoin (or 3/4/5 whatever multiple yous agree)
Everyone's a winner then , if you are truly a Bitcoin believer getting back n* your Bitcoin in a years time is surely a great deal. 
Just an idea.


----------



## fpalb

It's already possible to go long bitcoin at leverage without using the Bank of Brendan.


----------



## Fella

fpalb said:


> It's already possible to go long bitcoin at leverage without using the Bank of Brendan.



But you could get a better deal off Brendan


----------



## fpalb

There's no way I'm risking all my coins to engage in counterparty risk


----------



## TheBigShort

Fella said:


> But you could get a better deal off Brendan



Wait a second, Brendan hasnt even made the offer! You have, on his behalf!!


----------



## Fella

TheBigShort said:


> Wait a second, Brendan hasnt even made the offer! You have, on his behalf!!



you "could" get a better deal off Brendan , if he thinks truly it will be worthless by the start of Jan 19 and some others think it will be worth more , just do a deal and cut out the middle man! I'm sure Brendan in his mind could buy you back 5x the amount you hold now if they are only $100 each , of course if they go up in value he might need to sell everything and you could end up owning askaboutmoney


----------



## TheBigShort

Fella said:


> you "could" get a better deal off Brendan , if he thinks truly it will be worthless by the start of Jan 19 and some others think it will be worth more , just do a deal and cut out the middle man! I'm sure Brendan in his mind could buy you back 5x the amount you hold now if they are only $100 each , of course if they go up in value he might need to sell everything and you could end up owning askaboutmoney



 I will hold my bitcoin thks (or the small amount of a bitcoin that I hold).
Im looking into the history of the tulip mania at the moment. Ive always been aware of it, but always took it for granted that it was all true. But apparently, there are conflicting accounts as to what actually happened.It appears clear that there was a mania, centred around tulips, but given the lack of financial data, it is not wholly clear in what manner it manifested itself.
I did however come across a chart that was somewhat ominous for us bitcoiners (cant locate it at the mo), as it somewhat mirrors the price rise of tulips with the current price of bitcoin - only for everything to crash, by next Feb!

Here is that tulip chart*







But then again, charts - farts


----------



## fpalb

TheBigShort said:


> But then again, charts - farts



Numbers and technical analysis of charts are like people - if you torture them enough they'll tell you what you want to hear.

As a counter to the usual bubble chart that gets trotted out, bitcoin's bubbles might just be growth spurts on the common S curve: https://fs.bitcoinmagazine.com/img/images/Screen_Shot_2017-12-08_at_9.57.15_AM.original.png


----------



## Brendan Burgess

> if you torture them enough they'll tell you what you want to hear.



And you have done just that...

Those charges appear to show adoption rates. In other words,  by 1945, almost  100% of citizens in the US had a phone.

It has nothing to do with the price curve for Bitcoin.

Bitcoin has a close to zero adoption rate.  Its usefulness and adoption rate might increase when it falls back to being worth $1 or less.  While it is at $16,000 it is useless.

Brendan


----------



## fpalb

Brendan, nothing you just said makes any sense.


----------



## Brendan Burgess

Hi f

Have you linked to the wrong chart by any chance?  Check your link? It has nothing to do with the price rise of Bitcoin.

Brendan


----------



## fpalb

firstly my post was mostly just poking a bit of fun, but anyway do you not agree that the long term price of bitcoin is related to demand, which is related to adoption? it doesn't matter much which you chart, they'll look the same.


----------



## BreadKettle

Brendan Burgess said:


> And you have done just that...
> 
> Those charges appear to show adoption rates. In other words,  by 1945, almost  100% of citizens in the US had a phone.
> 
> It has nothing to do with the price curve for Bitcoin.
> 
> Bitcoin has a close to zero adoption rate.  Its usefulness and adoption rate might increase when it falls back to being worth $1 or less.  While it is at $16,000 it is useless.
> 
> Brendan



Brendan you are embarrassing yourself.

Again, can you explain to me how the price per bitcoin would have any effect whatsoever on any use case?

Clue: I can send or receive $1 worth of bitcoin now, or if one bitcoin is $1,000,000, or if it's 10c. Makes no difference to it's 'usefulness'.

With such a glaring lack of any basic grasp of the subject matter, how can you possibly feel qualified to make your constant sweeping assessments of it?


----------



## tecate

Im guessing there is  a segment of society that doesn't want the status quo disrupted....that it would be an inconvenience.

To the naysayers - I will go so far as to say that there is a volatility issue with bitcoin currently (which is being looked at) and that it's hard to determine what the price of bitcoin should be (what with the ever devaluing FIAT currencies) but like it or loathe it  (and whether those of us hodling bitcoin right now lose our shirts, cryptocurrency is going to eat the lunch of the bankers and those in allied/associated professions.  It's just a question of when.

Does bitcoin have technological and practical issues to overcome?  Yes, it does - but nobody has ever claimed that it is the finished article.  Quite the opposite.  It's work in progress - and the development of those improvements in many cases is transparent or at least known.


----------



## Brendan Burgess

You claimed 


fpalb said:


> As a counter to the usual bubble chart that gets trotted out, bitcoin's bubbles might just be growth spurts on the common S curve:



You showed a chart for one thing and claimed it was comparable to something else. It's not. 



fpalb said:


> but anyway do you not agree that the long term price of bitcoin is related to demand, which is related to adoption?



I am guessing that the price of everything in the other chart went down, as adoption went up. 

It's likely that the adoption of Bitcoin will be hindered by its high price and manic rise. 

Brendan


----------



## Dan Murray

There's a dot.com company that I've a financial interest in. (As a by the by, its share price rose like a fire-cracker - dropped like a stone - and is now more or less back to all time highs.) I've always seen it as a "disruptive" company. In many respects, its motto reminds me of BTC's battle:

_First they ignore you,
then they laugh at you,
then they fight you,
then you win...._


----------



## Brendan Burgess

BreadKettle said:


> can you explain to me how the price per bitcoin would have any effect whatsoever on any use case?



Hi BK

I gather that in the past Bitcoin was used for buying coffee and pizzas.

I understand that the transaction costs now mean that this is no longer feasible.

If I am happy paying €1 for something, I would be very reluctant to pay €0.0000555 for it a few years' later. 

Of if I pay €3 for a cup of coffee in January, I would be reluctant to pay whatever 3 divided by 18,000 is a few months' later.

Brendan


----------



## Brendan Burgess

Dan Murray said:


> First they ignore you,
> then they laugh at you,
> then they fight you,
> then you win....



Dan - don't cod yourself by making false comparisons. 

In Tulipmania, most people just laughed at the guys. 

In the .com boom most people just laughed - there was no fighting. 

The majority are just laughing at you.  

You can win big now, by selling at this ridiculous price.  Go for it.

Brendan


----------



## fpalb

Brendan Burgess said:


> You claimed
> You showed a chart for one thing and claimed it was comparable to something else. It's not.
> 
> I am guessing that the price of everything in the other chart went down, as adoption went up.


To say that a chart showing the adoption of mobile phones was comparable to the price of mobile phones individually would indeed be misleading, but there's a huge difference between that and bitcoin:

If adoption and demand for something that can be manufactured in greater number to meet demand goes up, more of that item is generally mass-manufactured and due to economies of scale the price goes down.
If adoption and demand for something with hard scarcity goes up, price must go up. If everyone for whatever reason decided they wanted an ounce of gold tomorrow, the price would go up.



Brendan Burgess said:


> It's likely that the adoption of Bitcoin will be hindered by its high price and manic rise.


Obviously lots of people are buying now due to FOMO, many (maybe most) of the them will walk away when the hype cycle ends, some of them will 'get it' and stay. History has shown that bitcoin typically finishes each of these hype cycles with more users than it started with though, that's why I don't think we go below $1000 again unless the whole thing has failed or been surpassed.


----------



## fpalb

I will add there's never been something like this, we've never had something that could scale to adoption like all of the technologies on the S curve chart but that is also scarce. There's nothing to directly compare it to.


----------



## Brendan Burgess

fpalb said:


> There's nothing to directly compare it to.



There was nothing like _Semper Augustus_ before it came along.  It is a direct comparison. It was worth nothing, or almost nothing. But it was hyped up to something extraordinarily valuable. And then it crashed back to nothing.

It is a direct comparison. 

The dot.com bubble is pretty comparable. An irrational bubble. The faithful claimed that the rest of us "didn't get it".  

It's comparable really to any other bubble. 

Brendan


----------



## Duke of Marmalade

I am trying to picture who has €1M in bitcoin and sleeps easy at nights. I can think of 4 categories.

1)  Nerves of steel (_elac_)
2)  Blind faith (_ant dee_)
3) Squoodles of other assets, BTC is a hobby (_fpalb_)
4)  Somewhat challenged in the common sense department (_The B/S)_


----------



## ant dee

oh i wish...


----------



## BreadKettle

Brendan Burgess said:


> Hi BK
> 
> I gather that in the past Bitcoin was used for buying coffee and pizzas.
> 
> I understand that the transaction costs now mean that this is no longer feasible.
> 
> If I am happy paying €1 for something, I would be very reluctant to pay €0.0000555 for it a few years' later.
> 
> Of if I pay €3 for a cup of coffee in January, I would be reluctant to pay whatever 3 divided by 18,000 is a few months' later.
> 
> Brendan



The transaction fee issue I agree is definitely a valid concern, it has shot up recently as the network has become congested. Like most new technology it will have it's teething problems. This is due to be addressed by the incoming lightning network upgrade. Alternatively you could just look at Bitcoin Cash. 

The second point I don't really get at all.  What is the issue there?


----------



## landlord

Duke of Marmalade said:


> I am trying to picture who has €1M in bitcoin and sleeps easy at nights. I can think of 4 categories.
> 
> 1) Nerves of steel (_elac_)
> 2) Blind faith (_ant dee_)
> 3) Squoodles of other assets, BTC is a hobby (_fpalb_)
> 4) Somewhat challenged in the common sense department (_The B/S)_



I wonder in years to come if we might be saying the same for those sitting on 1M in FIAT currency...... B/S back me up here.


----------



## TheBigShort

Duke of Marmalade said:


> 4)  Somewhat challenged in the common sense department (_The B/S)_



Im wondering...as somewhat offbeat as it obviously is,
...if bitcoin was worth $12,000 on Dec 6, why is worth $18,000 ten days later?


----------



## Fella

landlord said:


> I wonder in years to come if we might be saying the same for those sitting on 1M in FIAT currency...... B/S back me up here.



I'm struggling to see how Bitcoin or any crypto can replace money. Say I have 1million in the FIAT currency I don't understand this talk of it devaluing (granted I'm not the most educated ! ) but how does my money devalue? Can someone explain it to me ? So for example Bitcoin keeps rising and shops only start taking Bitcoin or maybe they take Bitcoin and normal FIAT? 

So I go to Tesco and want to buy a weeks shopping and it's in Bitcoin now so my normal 1million has devalued to say 100k (i'm probably ok to buy some shopping and convert my 1million to Bitcoin) so I do a very expensive shop and i'm running out of money fairly quick as I go to buy petrol next . But lets take someone on social welfare are they going to be paid in Bitcoin? if not they are not going to get much for there money and everyone else that didn't start off as a millionaire in FIAT is not going to able to buy much at all. How can they borrow to buy ? are there Bitcoin banks? what if you don't pay the bank back ? This would need to be adopted surely by each Government before its any way at all practical. 

For me saying FIAT currency will collapse makes no sense , I understand currencies devaluing against each other but one falls and one rises. I don't see a mainstream place for crypto currencies unless its recognised by governments and central banks to me it looks worthless.

I'm not closed minded on it though , if someone could explain how it will work and how people can Borrow Bitcoin to buy on credit like with normal FIAT then I'm interested. 

Thanks


----------



## ant dee

Fella said:


> I'm struggling to see how Bitcoin or any crypto can replace money. Say I have 1million in the FIAT currency I don't understand this talk of it devaluing (granted I'm not the most educated ! ) but how does my money devalue? Can someone explain it to me ?


Hi, Fella
This is a 30 minute video that sort of explains money printing.
https://www.youtube.com/watch?v=iFDe5kUUyT0&list=PLE88E9ICdipidHkTehs1VbFzgwrq1jkUJ&index=4

Of course Mike Maloney is a precious metals dealer, his views are very biased so take all that with quite a bit of salt.
The important thing is take from this is to understand why money just sitting in a bank account is devaluating. One of the main reasons we all invest.


----------



## landlord

ant dee said:


> Hi, Fella
> This is a 30 minute video that sort of explains money printing.
> https://www.youtube.com/watch?v=iFDe5kUUyT0&list=PLE88E9ICdipidHkTehs1VbFzgwrq1jkUJ&index=4
> 
> Of course Mike Maloney is a precious metals dealer, his views are very biased so take all that with quite a bit of salt.
> The important thing is take from this is to understand why money just sitting in a bank account is devaluating. One of the main reasons we all invest.




I have to say those videos from Mike Maloney are extremely well made.
There are a series of them...start with the first one.  I would imagine anyone invested in precious metals has watched those videos.


----------



## Fella

This post will be deleted if not edited immediately lads I only watched the first 15 mins of that video , I am very open minded but that is a lot of bull if it was true then inflation would be huge.
This is tin foil hat stuff , its very hard to good impartial videos on stuff nowadays i'll have a look elsewhere cause them videos are a joke.
Thanks for links though.

Brought to you buy goldsilver dot com , come on lads , we all probably came to this forum for the same reason to ask for money advice and savings. I have made a lot of money in my life and I never learned any secrets from youtube. Do your own research into everything nearly everything online someone else is trying to make money off of you. 
Nobody showed me how to make money gambling I thought myself , nobody is going to tell you if Bitcoin is a good investment or not you have to figure that out for yourself , but I'm going to tell you for free them videos are a waste of time. 

Bitcoin may be useful i'll have to figure this one out myself also , there is so little good impartial information about anything online its ridiculous. If the people watching these videos and believe them also believe in Bitcoin it doesn't bode welll for Bitcoin .


----------



## ant dee

Mike is a doomsayer indeed...


----------



## TheBigShort

Fella,
My tuppence worth is that bitcoin is not going to replace fiat anytime soon. Its possible it has the potential to do that, but not in short to medium term.
Instead it will, it is, acting as a store of value. Why is it doing this?

Well, ant dee, has linked Mike Maloneys video and I would recommend they as viewing too. I would also recommend the previously mentioned economist Jim Rickards. Both put forward compelling and convincing arguements for gold. But neither are convinced of bitcoin.

I had good fortune to engage Mr Rickards on an online forum once and posed the question "what advice for the working poor? Access to gold is hardly feasible?" Mr Rickards somewhat fudged his answer, without any specific response to the point I raised.
The point being, that Rickards and Maloney, whilst convincing in their advice to invest in precious metals are not talking to people who are struggling to stand still. They are talking to people who already have skin in the game, people with wealth in property, stocks, bonds, art, antiques etc...etc.... They advise, that those people should keep a store of gold to protect themselves from on-coming economic turbelence, due to currency instability from QE, market manipulation and widespread fraud.

David McWiiams has an interesting piece in IT yesterday focusing on how much productivity has grown in Ireland, but wage increases, in comparison, are stagnant. Its not just an Irish issue, but an issue across Western economies, resulting in political turbelence such as minority governments, Trump, Brexit etc...

So if, economic turbelence is on the cards, via fiat devalutions, as Rickards, Maloney and others forecast (I think their arguements are compelling). And if you are a wage earner with little to no access to other funds, how can you protect yourself, and what you value, in the event of economic instability, or the next recession which may threaten your job? 
Can you save your cash deposit? Whats the interest rate? Can you invest in stocks? Perhaps, but with fees etc and in general value of stocks will fall as recession looms. Can you invest in gold? Not practical.
Or can you embrace the onset of the digital age and invest in cryptocurrency, built on blockchain technology, that is easily accessible and disposed of? Well, yes you can.


----------



## TheBigShort

Fella said:


> This post will be deleted if not edited immediately lads I only watched the first 15 mins of that video , I am very open minded but that is a lot of bull if it was true then inflation would be huge.



You need to get past the Hollywood type production and wait for the substantive issues to be dealt with in detail.

Also, just because the official figures say inflation is low, doesnt mean that is the case.
We had 26% gdp growth last year, and the economy is continuing to surge ahead. If inflation was low, our (wage) incomes should have a lot more purchasing power and interest on savings would be rising. Instead, assets are rising fast to all-time highs once again. Putting access to important things like, housing, out of reach for so many, unless of course, they take on huge debt.


----------



## landlord

TheBigShort said:


> Well, ant dee, has linked Mike Maloneys video and I would recommend they as viewing too. I would also recommend the previously mentioned economist Jim Rickards. Both put forward compelling and convincing arguements for gold. But neither are convinced of bitcoin.



This is not true. Mike Maloney has a substantial crypto holding that he has discussed in many of his recent videos. 
Although he has recently sold some to purchase precious metals.


----------



## TheBigShort

landlord said:


> This is not true. Mike Maloney has a substantial crypto holding that he has discussed in many of his recent videos.
> Although he has recently sold some to purchase precious metals.



I stand corrected.


----------



## Firefly

landlord said:


> I wonder in years to come if we might be saying the same for those sitting on 1M in FIAT currency...... B/S back me up here.



Anyone sitting on 1m of FIAT lacks common sense too to be fair.


----------



## Firefly

Fella said:


> But lets take someone on social welfare are they going to be paid in Bitcoin?



That's a very interesting question!

I would ask a related question those who are fans of Bitcoin, would they be happy to be paid some of their salary next year in Bitcoins based on today's Bitcoin vs Euro price?

i.e. Would someone earning 90k Euro be happy instead to receive circa 3 Bitcoins as salary next year?

Firefly.


----------



## Firefly

fpalb said:


> Purse acts as the escrow, and takes a small cut too.
> 
> The site has been running for a few years now, at this point you must be asking, who the hell is using this? why would people effectively pay such a premium for bitcoin with amazon credit. *How many people even have a need for this kind of service? Well I was really curious too, so I dug into it.*



Thanks for the post (genuinely) and I agree this does seem like a legitimate use of Bitcoin. I have to ask you however, did you not find it a bit strange to have to "dig into" the question of the uses for Bitcoin? And if so, how on earth does the price explosion seem justified? The use you have outlined may be legitimate (as opposed to most other Bitcoin transactions I would guess), but it's still kinda niche isn't it?

I guess the other reason why the price has gone so high, is the "store of value" argument. But again, what's behind this? Why has gold not risen too, or are wise & conservative holders in gold dumping their assets for Bitcoin?


----------



## Brendan Burgess

Firefly said:


> i.e. Would someone earning 90k Euro be happy instead to receive circa 3 Bitcoins as salary next year?



I don't think that anyone would want next year's salary paid in Bitcoin.  But is that really an indictment of Bitcoin? 

I might agree to have my salary paid in sterling.  But if sterling crashes, I would want my salary in euro or I would want an increase in the sterling payment.


----------



## Firefly

Brendan Burgess said:


> I don't think that anyone would want next year's salary paid in Bitcoin.  But is that really an indictment of Bitcoin?



It's not a knock / indictment of Bitcoin..more the current value of Bitcoin I am getting at. If those who are championing Bitcoin were so confident in it, I presume getting next year's salary based on today's Bitcoin price would be very attractive, afterall some think the value next year will be a lot higher than today. More than double in fact. For that someone on 90k this could mean a pay packet of 200k next year!


----------



## cremeegg

TheBigShort said:


> David McWiiams has an interesting piece in IT yesterday focusing on how much productivity has grown in Ireland, but wage increases, in comparison, are stagnant.
> 
> So if, economic turbelence is on the cards, ... And if you are a wage earner with little to no access to other funds, how can you protect yourself, and what you value, in the event of economic instability, or the next recession which may threaten your job?
> Can you save your cash deposit? Whats the interest rate? Can you invest in stocks? Perhaps, but with fees etc and in general value of stocks will fall as recession looms. Can you invest in gold? Not practical.
> Or can you embrace the onset of the digital age and invest in cryptocurrency, built on blockchain technology, that is easily accessible and disposed of? Well, yes you can.



I think that you raise some very pertinent questions here.

Wages are not keeping pace with productivity. The return to capital is increasing at the expense of the return to labour. This is likely to continue even speed up with automation and AI becoming more widespread.

I think the developers of bitcoin are exploiting this fear to sell tat to the naive.

That does not of course answer your question. Perhaps you should start a new thread. I know the answer which has worked for me over 25 years.


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## Brendan Burgess

Firefly said:


> If those who are championing Bitcoin were so confident in it, I presume getting next year's salary based on today's Bitcoin price would be very attractive



Hi Firefly

Again, I am not sure that is fair. I am a great believer in shares. But if I were dependent on my salary, I would not want it paid in shares. 

Brendan


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## Firefly

Brendan Burgess said:


> Hi Firefly
> 
> Again, I am not sure that is fair. I am a great believer in shares. But if I were dependent on my salary, I would not want it paid in shares.
> 
> Brendan



Updated to "some" - it's a currency rather than a share, so you would think it should broadly hold its value.


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## Brendan Burgess

Technically, it's a currency. But it's not acting as a currency. 

If it falls to $1 per Bitcoin and remains stable at that level, people probably would be happy to be paid in it. 

The high price and volatility wrecks any chances it has of being widely accepted as a currency - but its potential as a currency is what makes it valuable, but its value destroys its use as a currency ... 

Brendan


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## fpalb

Firefly said:


> Thanks for the post (genuinely) and I agree this does seem like a legitimate use of Bitcoin. I have to ask you however, did you not find it a bit strange to have to "dig into" the question of the uses for Bitcoin?


Thanks for reading it and replying. Well I had heard of purse.io previously but had not used it as I was suspicious, what I had to dig into was the reason people were willing to pay a premium for bitcoin using it. The reason I didn't know that is as I said, I'm part of the 1% in a first world country, so I had no idea about the need for people in Indonesia to earn income working remotely for amazon or the difficulties they have liquidating their payment into local currency. When something is completely global like bitcoin you have to consider all the possible use-cases globally and you can't do that without some digging. 



Firefly said:


> And if so, how on earth does the price explosion seem justified? The use you have outlined may be legitimate (as opposed to most other Bitcoin transactions I would guess), but it's still kinda niche isn't it?


The price explosion is largely unrelated to purse.io or any other 'medium of exchange' uses of bitcoin, it's to do with the speculative 'store of value' use. In fact the 'medium of exchange' uses CAN'T grow right now as bitcoin is already constantly bumping off the daily transaction limit. It was like this before most of the recent price run up, so I don't expect any significant part of the recent rally to be due to an increase in demand for bitcoin as a medium of exchange, and the uses for that will remain niche until there is a drastic improvement to the transaction capacity of bitcoin.

Many people speculating on the price will leave when it's no longer going up (i.e. when the current bubble bursts), but those niche uses as a medium of exchange will continue, and be more attractive as fees reduce, until something else better serves as a medium of exchange.



Firefly said:


> I guess the other reason why the price has gone so high, is the "store of value" argument. But again, what's behind this? Why has gold not risen too, or are wise & conservative holders in gold dumping their assets for Bitcoin?



There are probably a mix of reasons:
- While gold is scarce, it's nothing like bitcoin, especially if you are comparing ounces to bitcoins. There are apparently 2500 tons mined per year, which is 80million ounces (Someone correct me if I'm wrong on that, it's more than I expected!)
- Gold (in it's use as money) already reached market saturation a long time ago, and the demographic is probably older. Every day some old timer goldbugs die, and some teenagers get their first crypto.
- Gold has been getting relatively less practical in terms of it's 'medium of exchange' use as technology progresses - not just crypto. If someone in Kenya is using m-pesa on their phone to pay for things, it makes gold seem all the more impractical than it did beforehand.
- Some people are definitely either diversifying some of their precious metals to crypto, or moving to crypto entirely. Many early bitcoiners were goldbugs first.
- This one may or may not be a valid point - I haven't researched it thoroughly yet, but I'm skeptical of how the gold price is determined. Gold is so impractical as a medium of exchange that it can't even find a price in real time on the free market like bitcoin can. This has two consequences - many people buy paper gold instead of gold and the price is calculated and published as a spot price.


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## jman0war

Brendan Burgess said:


> Technically, it's a currency. But it's not acting as a currency.
> If it falls to $1 per Bitcoin and remains stable at that level, people probably would be happy to be paid in it.
> The high price and volatility wrecks any chances it has of being widely accepted as a currency - but its potential as a currency is what makes it valuable, but its value destroys its use as a currency ...
> Brendan


Medium of Exchange vs Store of Value.
I believe it's a sort of pendulum that swings between these two.
In the early days it was a medium of exchange, today we are in the next economic era of bitcoin.

https://medium.com/@rusty_lightning/the-three-economic-eras-of-bitcoin-d43bf0cf058a


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## fpalb

jman0war said:


> Medium of Exchange vs Store of Value.
> I believe it's a sort of pendulum that swings between these two.
> In the early days it was a medium of exchange, today we are in the next economic era of bitcoin.
> 
> https://medium.com/@rusty_lightning/the-three-economic-eras-of-bitcoin-d43bf0cf058a


Damn, I hadn't read that and was looking forward to it after seeing it was authored by Rusty but I don't like a lot of the conclusions he's jumping to without considering other possibilities.


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## jman0war

Like what?

In my view, the primary utility for Bitcoin is not that one can spend it to buy things.

It's that no one can stop you.


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## fpalb

The idea that bitcoin 'requires' the current hashrate and working backwards from that to assume a required cost - "in 10 years they would be paying $700M per year to secure the network at current levels_" _

Presuming that bitcoin exists in a vacuum, that is that participants will not just leave (this is really common among people making arguments about the 'power' various bitcoin stakeholders have). Saying that miners or businesses will find the 3rd era difficult instead of considering if they'll move to an alternative.


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## fpalb

Bill Miller is number 13 on Investopedia's list of greatest investors.
If you're still not getting it, you might find this interview with him interesting: https://www.youtube.com/watch?time_continue=2&v=vwp2RwRVrzs


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## Duke of Marmalade

Interesting video which does nothing to change my views.  Some comments/extracts.

Invest no more than 1% of your liquid net worth in BTC.  There is a non trivial chance it will go to zero but there is also a non trivial chance it will go to €1M.  In other words hold it as a diversified punt.  Absolutely no attempt to assess its true value.

His hedge fund has 50% in BTC because of its spectacular recent rise.  He acknowledges that is a problem and he is going to address it without selling.  Any clues?

The interviewer reads out a list of luminaries who rubbish BTC confirming my overall impression from my researches that the overwhelming consensus of mainstream thinking is that BTC is worthless.  Bill ripostes by saying it's because they don't understand the technology.  Warren Buffet is simply typical of old white men who rubbished technology break throughs in the past.

So Bill sees that the value of BTC is in its wonderful technology.  Yet he is very skeptical of Initial Coin Offerings which uses similar technology.  He states that there is nothing behind these ICOs, you might as well give your money to the Salvation Army.  OMG so after all there has to be something behind these crypto currencies rather than mere technology.

Amazon fell 95% in the dot com bubble but people who bought at its height are okay now.  But Amazon is making money.  BTC will never ever make money.


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## jman0war

Duke of Marmalade said:


> So Bill sees that the value of BTC is in its wonderful technology.  Yet he is very skeptical of Initial Coin Offerings which uses similar technology.  He states that there is nothing behind these ICOs, you might as well give your money to the Salvation Army.  OMG so after all there has to be something behind these crypto currencies rather than mere technology.


Nothing behind it, i take to mean that there is no actual functioning network.

Like, there's no testnet


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## fpalb

Duke of Marmalade said:


> Invest no more than 1% of your liquid net worth in BTC.  There is a non trivial chance it will go to zero but there is also a non trivial chance it will go to €1M.  In other words hold it as a diversified punt.  Absolutely no attempt to assess its true value.


He did talk about it eating into golds market as thatdeversification.



Duke of Marmalade said:


> His hedge fund has 50% in BTC because of its spectacular recent rise.  He acknowledges that is a problem and he is going to address it without selling.  Any clues?


I don't know, maybe he'll hedge it with the new futures?



Duke of Marmalade said:


> The interviewer reads out a list of luminaries who rubbish BTC confirming my overall impression from my researches that the overwhelming consensus of mainstream thinking is that BTC is worthless.  Bill ripostes by saying it's because they don't understand the technology.  Warren Buffet is simply typical of old white men who rubbished technology break throughs in the past.


I agree with him. If there's a 20 minute interview with Buffett detailing his issues with bitcoin showing that he undestands what it is and what it's capable of I'd love to hear. I love Buffett, but this isn't specialty, he's pretty much missed every winner during the computer revolution so far by choosing not to get involved.



Duke of Marmalade said:


> So Bill sees that the value of BTC is in its wonderful technology.  Yet he is very skeptical of Initial Coin Offerings which uses similar technology.  He states that there is nothing behind these ICOs, you might as well give your money to the Salvation Army.  OMG so after all there has to be something behind these crypto currencies rather than mere technology.


The ICOs are where the real bubble is/was. It's completely crazy. Here's what's been happening using Tezos as an example. A whitepaper detailing some vague system which will provide a product/service via a blockchain is released. [broken link removed] The systems typically depend on some limited token to work, with the idea being that if the product or service becomes useful the value of the tokens will increase. The tokens are created in advance by the creator and auctioned off as a crowd sale. Whether any actual code or product/service ever follows this is not certain. Tezos raised 1/4 billion dollars by the way.

I might be too harsh with what I've just said, and I've not even looked into Tezos itself to any degree (though I did listen to an interview with one of its guys that did not full me with confidence) maybe there are some ICOs of merit, but there's no doubt most are a way of doing a tiny bit of work producing a whitepaper to scam speculators out of money.



Duke of Marmalade said:


> Amazon fell 95% in the dot com bubble but people who bought at its height are okay now.  But Amazon is making money.  BTC will never ever make money.


BTC isn't a company with the purpose of making money... it IS money.


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## Firefly

The price of Bitcoin has risen above 15,000 Euro in the past 2 weeks, representing a 25% increase.

Can the OP please update the title of this tread to make it more meaningful?


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## Duke of Marmalade

jman0war said:


> Nothing behind it, i take to mean that there is no actual functioning network.
> 
> Like, there's no testnet


My understanding (I could be wrong) is that ICOs use the same Blockchain technology.  They have all the attributes of BTC but they purport to actually represent something.  BTC doesn’t purport to represent anything.  It’s a bit contradictory for Bill to dismiss ICOs because you don’t know what they are really representing whilst accepting that BTC represents nothing at all.


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## fpalb

The proof is in the pudding. Bitcoin functions as a monetary system which now exceeds the Australian Dollar in value. The only other blockchain-based system I know of that raised crowd-sourced funds in advance of release and delivered anything of use is Ethereum... and that is mostly used so far for other ICOs.

I don't know about anyone else, but as much as I like bitcoin, I sure wouldn't have been giving Satoshi money up-front for bitcoins based only on the whitepaper before the code was written and we could see it working.


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## jman0war

Duke of Marmalade said:


> My understanding (I could be wrong) is that ICOs use the same Blockchain technology.  They have all the attributes of BTC but they purport to actually represent something.  BTC doesn’t purport to represent anything.  It’s a bit contradictory for Bill to dismiss ICOs because you don’t know what they are really representing whilst accepting that BTC represents nothing at all.


I don't know what you mean that BTC doesn't represent anything.
Bitcoin the protocol is just recording a transaction on an immutable blockchain and bitcoin is the currency.
The generation of new coins is hard coded into the protocol.

ICO's on the other hand can be absolutely anything.
Generally speaking ICO's are a fund-raising campaign.
Instead of bootstrapping their project by raising funds from VC's the old fashioned way, they are issuing a 'token' and basically pitching to an existing niche market of possible investors.


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## fpalb

Yeah, and unlike a share issued in an IPO, a token issued in an ICO is not any legal ownership of the 'company'. The value of the token will purely be based on what the demand of those tokens is.


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## Duke of Marmalade

fpalb said:


> The proof is in the pudding. Bitcoin functions as a monetary system which now exceeds the Australian Dollar in value. The only other blockchain-based system I know of that raised crowd-sourced funds in advance of release and delivered anything of use is Ethereum... and that is mostly used so far for other ICOs.
> 
> I don't know about anyone else, but as much as I like bitcoin, I sure wouldn't have been giving Satoshi money up-front for bitcoins based only on the whitepaper before the code was written and we could see it working.


I can see that difference, yeah.  But is it not true that the honest ones have all the technological attributes of BTC?  Yes I understand that without the critical mass alt coins and ICOs are not a rival of BTC.  But Bill was extolling the virtues of BTC purely on the basis of its technology and then dismissing that same technology in ICOs because there was nothing behind them.  Hope this does not become another semantic debate ala _Water and Black Tea_


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## jman0war

Duke of Marmalade said:


> I can see that difference, yeah.  But is it not true that the honest ones have all the technological attributes of BTC?  Yes I understand that without the critical mass alt coins and ICOs are not a rival of BTC.  But Bill was extolling the virtues of BTC purely on the basis of its technology and then dismissing that same technology in ICOs because there was nothing behind them.  Hope this does not become another semantic debate ala _Water and Black Tea_


It's hard to say since he didn't cite any particular ones.
It's difficult to paint them all with the same brush since some are creating their own blockchains but many are not.
In my opinion "nothing behind them" means there is no testnet, no network and potentially no development team.


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## Duke of Marmalade

fpalb said:


> BTC isn't a company with the purpose of making money... it IS money.


Oh but no it isn't.

It isn't a medium of exchange.
It isn't a store of value.
It isn't a unit of account.


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## jman0war

Duke of Marmalade said:


> Oh but no it isn't.
> 
> It isn't a medium of exchange.
> It isn't a store of value.
> It isn't a unit of account.


How so?
People transact with bitcoins - MoE
People store their wealth in bitcoin - SoV
not sure about unit of account as yet. (it is on cryto exchanges, prices denoted in BTC)


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## fpalb

We'll have to agree to disagree on that. I've laid out my case for it in previous posts already.


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## Sarenco

Surely Bitcoin is a medium of exchange Duke, no?  I mean there is no legal obligation on anybody to accept payment for anything in Bitcoin (unlike legal tender) but that hardly means it isn't a medium of exchange.

Is it a useful store of value?  Well advocates presumably hope/expect that it will become widely accepted as a useful store of value in the future but I think most would accept that it's not there yet.

Interestingly, the IRS considers crypto currencies to constitute property - not a currency - for tax purposes.


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## Duke of Marmalade

Sarenco said:


> Surely Bitcoin is a medium of exchange Duke, no?  I mean there is no legal obligation on anybody to accept payment for anything in Bitcoin (unlike legal tender) but that hardly means it isn't a medium of exchange.
> 
> Is it a useful store of value?  Well advocates presumably hope/expect that it will become widely accepted as a useful store of value in the future but I think most would accept that it's not there yet.
> 
> Interestingly, the IRS considers crypto currencies to constitute property - not a currency - for tax purposes.


_Sarenco_, my estimate is that 99.9% of BTC transactions are either speculative or perceived hedges against Armageddon. So ok .1% are for purposes of medium of exchange. Nobody actually needs or wants  it to enact an exchange for goods. To me that means that in effect it is not acting as a medium of exchange.  Please don't get like _Water and Black tea_ expecting 100% precision in all statements.


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## jman0war

Duke of Marmalade said:


> _Sarenco_, my estimate is that 99.9% of BTC transactions are either speculative or perceived hedges against Armageddon. So ok .1% are for purposes of medium of exchange. Nobody actually needs or wants  it to enact an exchange for goods. To me that means that in effect it is not acting as a medium of exchange.  Please don't get like _Water and Black tea_ expecting 100% precision in all statements.


I don't know, but I doubt very much your numbers.
Argentines are currently fleeing their Peso and buying USD, Gold and Bitcoin.
Same in Venezuela and Zimbabwe and there's a growing interest in Iran.

There's some girls in Afghanistan that are depending on bitcoin.
http://digitalcitizenfund.org/
Since 2014 a non-profit has been standing up internet/digital learning schools for girls.
They write blogs i guess and get paid in bitcoin.
Bitcoin is good because girls have full control, they can't open bank accounts in Afghanistan, not without a male relative.
It's dangerous to have cash and often the cash they have gets taken from them by family.
https://news.bitcoin.com/afghan-entrepreneur-empowers-women-through-bitcoin-in-afghanistan/


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## TheBigShort

Excellent stuff jman0war. It's activities and events like that that inspire confidence in Bitcoin having value. Gets away from all noise of the detractors whose only interest in Bitcoin is mostly to hope it crashes and burns so they can say "I told you so".


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## joe sod

jman0war said:


> I don't know, but I doubt very much your numbers.
> Argentines are currently fleeing their Peso and buying USD, Gold and Bitcoin.
> Same in Venezuela and Zimbabwe and there's a growing interest in Iran.
> 
> There's some girls in Afghanistan that are depending on bitcoin.
> http://digitalcitizenfund.org/
> Since 2014 a non-profit has been standing up internet/digital learning schools for girls.
> They write blogs i guess and get paid in bitcoin.
> Bitcoin is good because girls have full control, they can't open bank accounts in Afghanistan, not without a male relative.
> It's dangerous to have cash and often the cash they have gets taken from them by family.
> https://news.bitcoin.com/afghan-entrepreneur-empowers-women-through-bitcoin-in-afghanistan/



so thats a big aspect to bitcoin investing now ,its virtue , if their are poor women in afghanistan depending on it, then it must be a good thing and it must be a legitimate investment seems to be the logic. The dollar is bad, gold is bad but bitcoin is good , therefore im also a good guy because I invest in something that women in afghanistan depend on. I think that is also a big part of the attraction and why certain people like to associate themselves with bitcoin.


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## Duke of Marmalade

I know I'm starting to get repetitive so apologies to those that have heard it all before.

In this very complex world we all have to trust experts in those fields we are not expert ourselves.

We trust doctors and statisticians when they say smoking increases mortality.
We trust pilots to get us from A to B by what _a priori_ are most implausible means - rushing tons of metal into the air!
We trust professionals of all sorts.
We even trust our Central Banks to manage the value of our currency.

When it comes to bitcoin I should have known to trust computer technicians as to its technological attributes.  However, I have enjoyed delving into that mysterious box but it was as unnecessary as studying aeronautics before taking my next passenger flight.

As to the value of bitcoin as money, I have a modicum of economic expertise by my own profession, but lest I have a closed mind I prefer to trust to the wisdom of mainstream commentators and Nobel laureates.  And their view is almost unanimous.

Let's put it another way.  If the economists were telling me this was the way forward for money I would have to go along with that even though _a priori_ I would be as skeptical as I would be that Bernoulli's Law can make tons of metal defy Newton's Law (of gravity).  Computer folk telling me it is the future for money doesn't do it for me at all.

Now and again experts differ in their own field like on climate change.  It is then left to us laymen to make a judgement call.


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## TheBigShort

Duke of Marmalade said:


> I prefer to trust to the wisdom of mainstream commentators and Nobel laureates. And their view is almost unanimous.



That is a broad sweeping assumption

In this part of the world have embraced a debt-based, consumption driven society. The wealth creation in this period is the greatest levels ever generated. The scientific advances are arguably been the greatest ever generated. 
The debt created in this period, is also the greatest levels of debt ever generated. The pollution and environmental damage is also at the greatest level ever created.
The system, in its insatiable appetite to engineer 'economic growth', defined by such measures as inadequate as GDP, it is creating the most unstable  - climate, political, social, financial environment ever seen.

Instability induces conflict. Conflict will be paid for using my fiat currency, like it was to save the financial sector.

I now have an option, at least for now, to store some wealth in digital, electronic form, outside the influence of that system.


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## jman0war

Duke of Marmalade said:


> Let's put it another way.  If the economists were telling me this was the way forward for money I would have to go along with that even though _a priori_ I would be as skeptical as I would be that Bernoulli's Law can make tons of metal defy Newton's Law (of gravity).  Computer folk telling me it is the future for money doesn't do it for me at all.
> 
> Now and again experts differ in their own field like on climate change.  It is then left to us laymen to make a judgement call.


Why are governments looking to copy Bitcoin?


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## Duke of Marmalade

jman0war said:


> Why are governments looking to copy Bitcoin?


Copying bitcoin is a completely different thing from using it.  If it is Venezuala you are referring to, I believe they are going to back the currency with real assets such as oil.  What they are saying here is "look we're using the blockchain technology, that guarantees you that we can't increase the money supply".  

I am sure economists do not deny that there are uses for blockchain technology in giving confidence to a national currency which would otherwise lack it.  What they don't accept is that entries on a ledger without any backing get value as money simply because they are secure, transferable, limited in supply and de-centralised.


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## fpalb

Duke of Marmalade said:


> Copying bitcoin is a completely different thing from using it.  If it is Venezuala you are referring to, I believe they are going to back the currency with real assets such as oil.  What they are saying here is "look we're using the blockchain technology, that guarantees you that we can't increase the money supply".


Whatever new digital currency Venezuala releases (if they even do) I bet it won't be a crytpocurrency, it won't be permission-less or transparent or decentralised. If they wanted to make a currency that wasn't garbage they'd just stop wrecking the one they already have. If they do make something new it'll probably be digital only making it even more centralised than one that is a mix of digital and physical notes and coins. Digital fiat is going to give corrupt and bad governments way more control over money than they've ever had in history, and we'll see the effects of it in the basket case countries.


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## jman0war

I don't know Duke of Marmalade, that just doesn't sound right.
If others are recognizing the technology of bitcoin and copying it, that suggests that bitcoin has some sort of value.


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## Duke of Marmalade

Credit Card technology, Debit Card technology, online bank transfers; these are all valuable technologies and its developers and providers no doubt make good money.  But none of these things convey any value on the bank account entries that they transfer.

Similarly Blockchain technology may have some value* but that does not mean the entries on a Blockchain ledger have any value.

* “use” is probably a better term since being open source they hardly have any value


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## jman0war

The entries on the blockchain carry the value that people give it.


----------



## Duke of Marmalade

Absolutely, that's a truism.  Tulips also carried enormous value at one time.


----------



## jman0war

Duke i believe the crux of this are competing theories of value.
I am subscribing to the Subjective theory of value, while i think you might be subscribing to the Instrinsic theory of value.

_An *intrinsic theory of value* (also called *theory of objective value*) is a theory of value in economics which holds that the value of an object, good or service, is intrinsic, meaning that it can be estimated using objective measures. Most such theories look to the process of producing an item, and the costs involved in that process, as a measure of the item's intrinsic value._


----------



## TheBigShort

Duke of Marmalade said:


> Absolutely, that's a truism.  Tulips also carried enormous value at one time.



Tulips perish and whither and die, quickly.


----------



## cremeegg

TheBigShort said:


> That is a broad sweeping assumption
> 
> In this part of the world ...The pollution and environmental damage is also at the greatest level ever created.



This is simply untrue.

Air quality in the cities and water quality in the rivers of England are incomparably better than they were 100 years ago.


----------



## TheBigShort

cremeegg said:


> This is simply untrue.
> 
> Air quality in the cities and water quality in the rivers of England are incomparably better than they were 100 years ago.



I live in Ireland.


----------



## joe sod

If you are worried about money printing by central banks around the world then invest in assets or buy gold. Why restrict yourself to bitcoin, even if you believe in it. That's the problem with bit coin enthusiasts, they can't see beyond bit coin, they are blinded by it. They bring in all this political stuff , they identify bit coin like its a designer label. I'm surprised I havn't seen any t shirts with "I love bitcoin" yet.


----------



## ant dee

joe sod said:


> I'm surprised I havn't seen any t shirts with "I love bitcoin" yet.


There is loads of merchandise out there you really never seen any?


----------



## TheBigShort

"While the system works well enough for
most transactions, it still suffers from the inherent weaknesses of the trust based model.
Completely non-reversible transactions are not really possible, since financial institutions cannot
avoid mediating disputes."

- Bitcoin whitepaper.

Introductory post asked "whats changed", since bitcoin was $1 to $12,000.

Geopolitical events are a considerable factor in determining any investment strategy. Anyone who has a modicum of interest in worlds affairs may have noticed increasing levels of diplomatic tension between worlds leading economic and military powers. With each power making subtle and not-so subtle moves to protect their own vested interests.
The moves can, and do, have effects on the price of currency.
Those that see value in bitcoin can offset potential losses by adding bitcoin, or other cryptos to their portfolio.


----------

