Bitcoin in a hyperbolic bubble

[tecate]

Or if you're going to make the comparison then at least be accurate about it. Fedwire was down for a short while but all activity was transacted before end of day.

I was making a point about the comparative reliability of the bitcoin network. If you'd like to expand on the implications of the fedwire outage, that's fine. However, it doesn't make my comment inaccurate.

The BTC network is certainly more distributed. But it also handles a tiny fraction of the volume and value of something like Fedwire.

Fedwire is for transfers between financial institutions. Therefore, of course they're worlds apart in terms of overall $ value transferred. However, on volume/transactions, that gap isn't as large as you'd imagine. My understanding is that if transaction batching is taken into account, bitcoin and Fedwire do about the same number of transactions. Bitcoin settles around $10billion/day whereas Fedwire settles $3.3T/day. Yet we've identified that transaction volume is similar - thus scaling up to act as a base settlement layer isn't an issue.

It also had much longer processing time and significantly higher transaction charges than Fed - or similar.

Well, on processing times, we're comparing a centralised database with a decentralised blockchain so of course transaction costs and times can be lower - but the trade offs have to be recognised. Anyone on the planet can access that bitcoin settlement base layer. You need a banking license as a prerequisite and permission beyond that to access Fedwire directly.

That's not to invalidate BTC. It's just that it would struggle to replace existing networks.

See above. It currently executes similar transaction volume to Fedwire. If we're talking about other layers stacked on top of Fedwire (visa, ach, atm networks, etc), then bitcoin can run with that too (via it's developing layer 2 - lightning network).

I don't think most people / corporates would accept a $20 charge for every transaction and a wait of up to days to complete. Fedwire is a cent or two and seconds to confirm

Lets compare like with like. Fedwire is centralised and so it costs a couple of cents. However, the average Fedwire transaction is $2 million so the btc fee you refer to is inconsequential when moving large amounts. Wire transfers that businesses and individuals use cost $25 and upwards.

 

[tecate]

Trust me @joe sod I have not lost the faith.
I believe in Nouriel.
I believe in Yellen.
I believe in Paul "Fax Machine" Krugman
I believe in Joseph Stiglitz

Just because I can cite from the Koran does not make me an Ayatollah!

You've brought 'Merkle Trees' into the discussion, Dukey - I think you're not going to be able to find your way out of the crypto rabbit hole at this point. One things for sure though, Roubini/Yellen/Fax Machine Guy/Stiglitz didn't bring you up to speed on that. I guess props go to either Gary Gensler or Andreas Antonopoulos on that...

On this topic, Jack Mallers is probably the guy doing the most in the bitcoin ecosystem to improve the payments use-case.

On the waiting list for product roll-out. This should put an end to the big fat fees these remittance services & money service businesses are charging on cross border transfers.

 

[DublinHead54]

Volatility and manipulation are two different things.

 

[DublinHead54]

@EmmDee unfortunately many treat it as a zero-sum game and you can only exist as either a naysayer or bitcoin maximilist. There is no acceptance of the often valid critique of BTC use cases and comparison to comparable technologies/processes. You will see this as Tecate refuses to respond to somebody like myself who has worked on crypto projects, is part of the community but still criticizes it.

For example, BTC / Blockchain allow for immutable transactions on a decentralized network, whilst something like Fedwire will rely on a host of external/internal controls to try and make transactions immutable. Migrate Fedwire onto DLT and you've negated one of the differences with BTC. The only remaining piece is the decentralized aspect, which I argue is not necessary for every situation.

The potential real game-changer is blockchain, and I firmly believe the term was coined to separate itself for BTC and gain legitmisation allowing people to sell it as a solution.

I don't believe that BTC is the solution to everything, but it has brought interesting concepts and incumbent markets will react and leverage to stay relevant. Perfect example is Central Bank Digital currencies, they don't really need them but they are trying to stay relevant.

 

[EmmDee]

I wonder what exactly this means. Several aspects come to mind. A chain of blocks of data, time stamped and linked by their hashes. Private/public keys. Compression of multiple transactions into Merkle trees. All these things might have a usage in conventional banking. But Proof of Work? Please don't tell me banks are engaging in zillions of hash puzzles per second. As Yellen said, the most inefficient mechanism one could imagine.

The most common (I believe) is Ripple Net. Has about 100 bank members I think

 

[Steven Barrett]

But I'm not sure why you feel the need to make it a "zero sum game" vs traditional banking networks.

I have found this about Bitcoin investors in general. I wrote a blog last week about why I wouldn't be investing in Bitcoin. I got the most emails for this post as I have for any of the 350 blogs I have written over the last 7.5 years. I then read another blog by someone with a must bigger following than me who got over 900 comments when he sold halve of his Bitcoin position in line with his defined investment strategy.

It reminds me of people investing in property during the Celtic Tiger. That was the only investment you could make and anything else is wrong. No, there are different forms of investing. Bitcoin is here and will probably be here to stay but that doesn't mean people are wrong because they don't want to invest in it.


Steven
www.bluewaterfp.ie

 

[tecate]

I wrote a blog last week about why I wouldn't be investing in Bitcoin. I got the most emails for this post as I have for any of the 350 blogs I have written over the last 7.5 years.

These days people usually write blogs for engagement - so I guess you got engagement in that instance!

No, there are different forms of investing. Bitcoin is here and will probably be here to stay but that doesn't mean people are wrong because they don't want to invest in it.

I agree - and in 4 years of discussion of the topic here, I have never suggested otherwise - nor have I seen anyone else suggest that. On EmmDee's 'zero sum game' comment, I'm not sure what he has in mind there. On a number of occasions, I've pointed out that this doesn't have to be (and won't be) black or white - winner or loser. Sovereign currencies and banks aren't going away. However, people will have other options available to them and options are good. We'll probably see sovereign currencies and banks perform a hell of a lot better in the future because of that.

As evidenced by the Tether/Bitfinex saga, over a number of years attempts were made to suppress crypto by shutting the industry out of banking services. That's still going on - albeit there has been a change in approach in the US that will filter through elsewhere. Central and establishment bankers have torn strips off crypto up until recently (some still do). I think its more than reasonable to express a counter-view. Hence my comment re. Yellen and the irony of her speaking out within 24 hours of the centralised Fedwire system going offline. I take EmmDee's point that the outage may have been brief but it's still significant in terms of it being essential banking infrastructure.

 

[WolfeTone]

Trust me @joe sod I have not lost the faith.
I believe in Nouriel.
I believe in Yellen.
I believe in Paul "Fax Machine" Krugman
I believe in Joseph Stiglitz

Jeez Duke, you have gone full circle here with the cult-like following.

What will happen when one of them changes tack and says bitcoin has value?

 

[Duke of Marmalade]

What will happen when one of them changes tack and says bitcoin has value?

@tecate claims he has a gotcha on Nouriel for that.

 

[tecate]

What will happen when one of them changes tack and says bitcoin has value?

Nouriel tried to walk it back in November but there's zero goodwill to let his 'fax machine' moment go... and so he's quadrupled down on it again instead. If Ian Paisley hated bitcoin, Nouriel is the Italian-American version of what that looks like.

Jeez Duke, you have gone full circle here with the cult-like following.

I'm not sure about any of them changing tack, Wolfie. However, I'd say by the time the next hype cycle comes round, Nouriel will have retired and the Duke will have flipped to full merkle tree mode.

 

[Duke of Marmalade]

If Ian Paisley hated bitcoin, Nouriel is the Italian-American version of what that looks like.

Ian Paisley came to love Martin McGuinness. Nouriel supporting btc would be on the same shock level.

 

[WolfeTone]

My money is on Yellen to jump ship first, if she hasn't done so already.

 

[Duke of Marmalade]

What will happen when one of them changes tack and says bitcoin has value?

Wolfie my faith is stronger than the behaviour of any one prophet. All the same if Roubini were to endorse btc it would be akin to the pope advertising durex, it would be hard to take.

 

[DazedInPontoon]

Charting website cryptowat.ch has a neat new feature where you can paste a link to a tweet on the chart and it anchors it at the time it was tweeted:

Those lucky retail suckers eh!

Pity this can't be done with AAM posts.

 

[Lisboa]

Energy consumption was discussed here two weeks ago but some may find this new BBC article interesting; https://www.bbc.com/news/science-environment-56215787

 

[jim]

My bitcoin investment, which i made immediately sfter Tesla's investment, is currently worth less than what I invested. How does this make sense? Please discuss.

 

[WolfeTone]

My bitcoin investment, which i made immediately sfter Tesla's investment, is currently worth less than what I invested. How does this make sense? Please discuss.

Because the price people are willing to pay is less than the price you paid for it?

 

[WolfeTone]

Energy consumption was discussed here two weeks ago but some may find this new BBC article interesting; https://www.bbc.com/news/science-environment-56215787

The energy use has been a concern of mine, but less so now. For all the talk of bitcoin using the same energy as Denmark or Argentina, I never hear calls from anyone to shutdown Denmark or Argentina

Seriously though, we are in an era where there is a move towards converting to clean, renewable energy sources. Bitcoin is in the same boat as everyone. The earth is abundant with clean renewables, it is just a matter of investing in the technologies to harness all that clean energy.
Bitcoin miners have an in-built incentive to reduce their costs. If clean, renewable sources are economically cheaper than fossil fuel sources, then that is where they will go.

 

[jim]

Makes absolute sense, now i feel a tad sheepish.
Hurray to Bitcoin.

But wait..hang on...

If i bought immediately after tesla did does that mean that currently the price people are willing to pay is just about less than what Tesla paid and therefore their investment is currently worth less than their orig investment of 1.5bn?! So they must be distraught.

 

[tecate]

But wait..hang on...

If i bought immediately after tesla did does that mean that currently the price people are willing to pay is just about less than what Tesla paid and therefore their investment is currently worth less than their orig investment of 1.5bn?! So they must be distraught.

I'm sure Elon thanks you for your empathy but I don't think you need to worry about the Tesla corporation! :-D
Tesla's purchase averaged out at $34,200/btc.
I think it's more of a case of focusing on what makes sense to you based on your own assessment and your own circumstances. There are also other entities entering the market. Here's a recent example. It's diversified alternatives fund won't be able to gain exposure to btc until April 26 at the earliest.