Bitcoin in a hyperbolic bubble

[Duke of Marmalade]

As you well know, the comment I made relates to your wayward claim that Bukele is trying to move El Salvador out of the USD. He's confirmed that he's not doing that.

As you well know, your comment was in your non answer to my request of instances of honesty on the behalf of bitcoin. You dismissed that question as defying logic. I firmly agree with you, but it was not my logic, it was PTJ who claimed btc was honest.
Are you even following your own posts?

 

[letitroll]

Not all bitcoin transactions are being done by criminals and speculators……..but if the marginal purchaser/seller on most days are criminals and speculators it can move in a very dramatic fashion…..and once these market participants are substracted from the ‘network‘…….the underlying non-criminal/gambling utility of bitcoin will be revealed.

My view then is its a ultra minority sport - populated with people like @WolfeTone who are convinced the world economic system is no more than 6 months away (always!) from inevitable collapse…………doomsday prep-ers, digital gold bugs & the tinfoil hat brigade……thats BTC natural constituency once the crims and gamblers bail out.

 

[tecate]

As you well know, your comment was in your non answer to my request of instances of honesty on the behalf of bitcoin. You dismissed that question as defying logic. I firmly agree with you, but it was not my logic, it was PTJ who claimed btc was honest.

I'll humour the notion that you're having comprehension difficulties with this just for sport. Bitcoin is a protocol and as a protocol it hasn't been designed to be dishonest. It's clear what its monetary policy is today, tomorrow, next week/month/year, etc. It provides complete transparency and it can't be tampered with. In that respect it's all of the things that PTJ mentioned -> reliable/consistent/honest/100% certain.

Now on the other hand, with your central bank high priests, we don't know from one second to the next what they're likely to do. What we do know today is that their fudging in Lebanon has seen the Lebanese pound lose 90% of its value. Who knows, maybe they can join a long list of their esteemed colleagues and make it to 100%.

 

[WolfeTone]

but if the marginal purchaser/seller on most days are criminals and speculators it can move in a very dramatic fashion…..

Well are they criminals or not? You are casting doubt on your own previous conviction.

people like @WolfeTone who are convinced the world economic system is no more than 6 months away (always!) from inevitable collapse…………

I have never been convinced of an inevitable crash within 6 months. I know some people however who have predicted the demise of bitcoin on umpteen occasions over the last 4/5 yrs. I can add you to the list.

 

[tecate]

Just to dispel the notion that it has to be expensive and time consuming to transact bitcoin, here's a demonstration of btc being sent across three bitcoin wallets within 20 seconds.

https://twitter.com/x/status/1404707783644168193

 

[Duke of Marmalade]

it's all of the things that PTJ mentioned -> reliable/consistent/honest/100% certain.

The only thing that matters in the end of the day for a currency is its purchasing power or its price, if you like. You yourself keep excusing the poor honest fledgling of being on a voyage of price discovery. You just don't seem to understand (it's Leaving Cert stuff) that price is a function of supply and demand. Having a reliable/consistent/100% certain supply is easy peasy (2,000 cryptos manage it) but absolutely useless if demand is all over the shop.

Now on the other hand, with your central bank high priests, we don't know from one second to the next what they're likely to do.

Because we don't know form one second to the next the level of demand for a currency in the economy. When it comes to bitcoin, demand is so terribly unpredictable that its price can move by over a third one way or another in a matter of weeks and has done so several times in this year alone. It is not helped that demand is influenced by the latest sneeze from El Musk. How anyone can describe any currency with these wild price fluctuations as "reliable/consistent and 100% certain" is beyond me. Taken with the fact that they have a skin in the game I would suggest that such assertions are far from "honest".

@tecate perhaps you do not understand the law of supply and demand. If this is a gap in your comprehension I apologise for any patronising tone to my posts.

 

[tecate]

The only thing that matters in the end of the day for a currency is its purchasing power or its price, if you like.

So in other words, you're moving away from the feigned criticism of PTJ as you knew well what he meant - you just didn't like the sound of it. That's bad faith argument your dukeness.
You want to now discuss purchasing power? Here's a visual representation of the purchasing power of the leading fiat currency in the world:

The Lebanese Pound has managed that same 90% loss of purchasing power - but their central bank high priests are far more expedient - achieving that milestone in a matter of months.

You yourself keep excusing the poor honest fledgling of being on a voyage of price discovery.

From post no. 942:

@dukey : So I asked you how it could have been designed so that it doesn't have to go through a transitory phase of high volatility and you have no suggestion. Understood.

On many occasions - over the course of four years - I've acknowledged that bitcoin's volatility is far from ideal. However, I understand why it needs to be volatile until such time as it matures as a digital asset and a digital currency. On the other hand, you know well why its volatile but try and pass it off as if there's no logic to it. That's more bad faith argument.

You just don't seem to understand (it's Leaving Cert stuff) that price is a function of supply and demand.

You knew that statement was disingenuous before you even wrote it. From post no. 938:

explain to us how there can be any other route to its maturity other than a multi-year process of price discovery that is directly related to adoption - and thus, demand?

How about this one from last year?:

Price is a function of supply and demand.

Is this where I don't understand that 'price is a function of supply and demand'?
How about this one from 2019?:

How are commodities valued? Is it less scientific than the assessment of the valuation of an equity stock? Is it based on the supply and demand dynamic? To me it's the latter - and it's the very same for Bitcoin as a digital asset. It has designed in scarcity. If it has NO utility, then that won't make a difference. There has been (and it seems will continue to be) a debate on here as regards whether it has utility. My view is that it has. My view is that whilst that utility is still coming forth - it will eventually drive pricing through that supply/demand dynamic.

Having a reliable/consistent/100% certain supply is easy peasy (2,000 cryptos manage it) but absolutely useless if demand is all over the shop.

That statement is factually incorrect. It is in no way easy to provide for a fixed supply currency. The originators of the bitcoin project have been lauded in cryptography and computer science for solving the double spend issue - and thus providing for a tamperproof, fixed supply digital asset and currency. For that reason, it's the most finite financial asset that exists in the world today - nothing comes close.
Name ONE fiat currency that achieves a 'certain supply' - just one? You can't because such a thing doesnt exist, has never existed and will never exist.
As regards demand, we know that demand has been consistently going upwards as we work our way through adoption - having started out with no equivalent value to today - where it's worth the equivalent of around $40,000. This adoption process and the demand that goes with it works in cycles. Its said that there are 100 million people who own bitcoin in the world right now. There will be further strains on demand as we get to a billion people. There's a clear logic to the whole process even if the volatility that comes with it is far from desirable.

Because we don't know form one second to the next the level of demand for a currency in the economy. When it comes to bitcoin, demand is so terribly unpredictable that its price can move by over a third one way or another in a matter of weeks and has done so several times in this year alone.

See above.

It is not helped that demand is influenced by the latest sneeze from El Musk.

I agree. However, you'll find that said gentleman is reaching the law of diminishing returns where influence related to bitcoin is concerned. Furthermore, it's all just a part of the development of the digital asset and currency. As we move from 100 million people to a billion people, the 'influence' of individuals will have far less effect on bitcoin.

How anyone can describe any currency with these wild price fluctuations as "reliable/consistent and 100% certain" is beyond me.

And I'll take you to task on this statement. You know perfectly well that PTJ was talking about the monetary policy of bitcoin where everyone knows whats set out from today until the year dot - vs - the 'who the hell knows what the central bank high priests will do' - monetary policy of the USD, euro, etc. It's clear to anyone what PTJ was referring to - when you watch the interview (which I linked to in that previous post). The whole conversation revolved around a discussion on monetary policy relative to inflation.

Taken with the fact that they have a skin in the game I would suggest that such assertions are far from "honest".

That won't do, your dukeness. I would suggest it is your assertions that are 'far from honest'. See above. If not, then prove to us how bitcoin's monetary policy isn't certain/reliable/consistent/honest by a straight up comparison with fiat currency without rambling off into areas that don't implicate monetary policy.

 

[Duke of Marmalade]

So in other words, you're moving away from the feigned criticism of PTJ as you knew well what he meant - you just didn't like the sound of it.

I didn't like the sound of it at all. We all know that it's supply is fixed. But words like "reliable", "consistent" and "100% certain" are pure hype.

That statement is factually incorrect. It is in no way easy to provide for a fixed supply currency.

To please you I will let you have that this is the greatest break through in technology since the fax machine. If Satoshi was not so shy s/he would surely be the owner of several Nobel Prizes - Economics, Physics, Peace you name it. But by return I would hope you would allow me that with 2,000 kopykats and offshoots it is not exactly rare.

reason, it's the most finite financial asset that exists in the world today - nothing comes close.

Am I wrong about those 2,000? For example does Bitcoin Cash not come close?

Name ONE fiat currency that achieves a 'certain supply' - just one? You can't because such a thing doesnt exist, has never existed and will never exist.

The whole point of a fiat currency is that it can be managed for optimal impact for the economy. The idea that we would have the same supply of sterling now as in, say, 1690 is simply batty.
Can you name one, just one, crypto that has successfully completed its voyage of price discovery?

 

[tecate]

I didn't like the sound of it at all. We all know that it's supply is fixed. But words like "reliable", "consistent" and "100% certain" are pure hype.

He was referring to its monetary policy of which - fixed supply and transparency re. issuance from now up until 2140 and beyond are central to. You can in no way claim this to be hype as its stone cold fact. Is bitcoin's monetary policy known today, tomorrow, next month/year/decade/century - yes it is. Do we know what your central bank gurus will do re monetary policy from one minute to the next? No we don't. There is no hype in respect of a comparison on the grounds of monetary policy.

To please you I will let you have that this is the greatest break through in technology since the fax machine. If Satoshi was not so shy s/he would surely be the owner of several Nobel Prizes - Economics, Physics, Peace you name it.

You don't have to take my word for it - the originator(s) of bitcoin has/have been widely acknowledged in this regard in that field.

But by return I would hope you would allow me that with 2,000 kopykats and offshoots it is not exactly rare.

You've trotted that out over four years Duke - and its wayward. The bitcoin codebase is open source - you can copy it and spin up marmalade-coin within a couple of hours. What you can't do is replicate the network. As per the analogy I gave you yesterday, you can copy google or facebook today - you may have their offering replicated to a tee - but you won't be able to copy their actual network. The same with google, twitter, etc. ,etc.

Am I wrong about those 2,000? For example does Bitcoin Cash not come close?

Of the 2,000, only a handful are even designed to fulfill the same use case as bitcoin - the vast majority are not money/store of value related. Of the handful that are left - lets take the one you mentioned - bitcoin cash. You can check it yourself but I think it has around 1-2% of the market cap of bitcoin. It lost the block-size war and to me, its just a zombie project at this point. Further development of lightning network will finish it off. The only reason it managed to get that couple of percent in market cap to begin with - was because it hard forked away from the bitcoin network and couldn't even stand on its own two feet without also robbing the 'bitcoin' brand.

Can you name one, just one, crypto that has successfully completed its voyage of price discovery?

That's a totally unreasonable request Dukey. I'm not aware of anyone - proponent or naysayer - who would even begin to suggest that this sector (and all the projects within it) is anywhere near maturity. You know that price discovery continues whilst adoption continues. Adoption only accounts for a couple of per cent of people.

The whole point of a fiat currency is that it can be managed for optimal impact for the economy. The idea that we would have the same supply of sterling now as in, say, 1690 is simply batty.

I can see a certain logic to the need to have a currency that's flexible in terms of supply. However, this is not binary. If you can drop your flat rejection of btc for a second, maybe you might see that one could benefit the other. The issue with flexible supply currencies is that we can't trust the folk who are taking those supply decisions 100% of the time. Having btc in the background could act as an incentive to central bankers and governments to act equitably and responsibly. Because if they can't, a flexible supply currency is the 'battier' of the two options - as it is today in Lebanon - and a host of other countries.

 

[Duke of Marmalade]

He was referring to its monetary policy of which - fixed supply and transparency re. issuance from now up until 2140 and beyond are central to. You can in no way claim this to be hype as its stone cold fact. Is bitcoin's monetary policy known today, tomorrow, next month/year/decade/century - yes it is.

"Hype" does not mean false it comes from "hyperbole" and refers to describing things in exaggeratedly favourable terms. "stone cold fact" okay I will allow him to use "100% certain" to express that but on top of that we have "reliable", "consistent" "honest" :mad: . The guy is a cultist - this is hype.

I'm not aware of anyone - proponent or naysayer - who would even begin to suggest that this sector (and all the projects within it) is anywhere near maturity. You know that price discovery continues whilst adoption continues. Adoption only accounts for a couple of per cent of people.

So leaving aside the cult's obsession with supply I take it from this that the price of bitcoin for the foreseeable future will be none of reliable, consistent, 100% certain or honest:mad:.
And yet the Miami Bitcoin Love-in cheered to the rafters the imposition of this monetary weeping gelignite on the poor people of El Sal.

 

[tecate]

"Hype" does not mean false it comes from "hyperbole" and refers to describing things in exaggeratedly favourable terms. "stone cold fact" okay I will allow him to use "100% certain" to express that but on top of that we have "reliable", "consistent" "honest" :mad: .

Rubbish! He expressed his view - and having started by suggesting that his viewpoint was inaccurate - now you're resorting to saying that its correct but he's making too much out of it. If something is hard-wired/programmed in, explain to us how it can't be reliable, consistent and honest - without veering away from the topic at hand - which is monetary policy as it relates to bitcoin.

The guy is a cultist - this is hype.

Essentially, anyone who disagrees with you and states anything that is remotely positive re. bitcoin is a cultist - right Duke! PTJ couldn't possibly be described as a bitcoiner - he's a seasoned wall street suit....that you're now calling a cultist. These guys don't get sentimental - but bitcoin doesn't discriminate in terms of who gets to use it - its decentralised and so its available to him or anyone else on the planet to use.

So leaving aside the cult's obsession with supply

You mean you don't want to acknowledge one single positive characteristic of bitcoin and when you can't stomach the thought of it, you resort to the 'cult' tar and feathering? Understood.

I take it from this that the price of bitcoin for the foreseeable future will be none of reliable, consistent, 100% certain or honest:mad:.

I take it from this that you won't engage in honest discussion on the topic. Not that you didn't know already, you have been told that PTJs comments were in the context of a discussion of inflation and monetary policy - relative to the USD and bitcoin. Nothing beyond that.

And yet the Miami Bitcoin Love-in cheered to the rafters the imposition of this monetary weeping gelignite on the poor people of El Sal.

You're referring to Bitcoin 2021 - the Bitcoin conference that drew in 20,000 attendees? They cheered on the ability to chose. Don't claim for a second that you give a fiddlers for the people of El Salvador. Since this topic arose a couple of weeks ago, on several occasions it was pointed out to you (and to @letitroll ) that the 'poor people of El Sal.' as you describe them - have been denied banking. 70% of them don't have access to a bank account. Neither of you acknowledged that fact. Neither of you said that it wasn't in any way equitable - but both of you have been going on about the 'poor people of El Salvador' - that they might choose to use bitcoin for remittances so that they aren't screwed to the tune of 10% by entities like Western Union. That they might accept bitcoin from people who have it and want to spend it.
Why don't you pour yourself a vodka and ask Siri what the currency of El Salvador is? Knowing the hatred you have for it, I'd suggest it may be necessary to leave the bottle on standby.

 

[Duke of Marmalade]

@tecate we agree on one thing anyway. The price of bitcoin will be incredibly unreliable, inconsistent and uncertain for a long time to come. You sugar this reality by calling it a "voyage of price discovery". Heck, I'll let you away with that. I will not ask you to agree with the sequitur but it is the inexorable implication. Until that "voyage" finds its destination bitcoin is entirely unsuitable as a medium of exchange, as a unit of account or as a store of value. And yet there are those that cheer the imposition of this on the poor people of El Sal. And they don't look like the sort of folk who would give a damn for poor people anywhere.

 

[tecate]

@tecate we agree on one thing anyway. The price of bitcoin will be incredibly unreliable, inconsistent and uncertain for a long time to come.

In those prejudicially inaccurate terms, we certainly don't. As I acknowledged four years ago and a gazillion times in between then and now, bitcoin will remain a volatile asset and means of exchange for some years to come.

You sugar this reality by calling it a "voyage of price discovery". Heck, I'll let you away with that.

Eh, no - I dont sugar coat anything. You've been invited to explain in what other way the pricing of bitcoin as a fixed supply currency would be achieved in a scenario where it isn't pegged to the USD (and of course, it isn't because that would defeat the whole purpose) or backed by a physical asset (again, it would defeat the purpose). You declined to go there. You can't have it both ways. What would be a rational and reasonable take would be to say that yes, I understand it - but it's a major impediment. I can live with you opposing the volatility - but not to acknowledge the rationale behind that volatility is bad faith argument. Unless of course you have some other insight into how bitcoin could arrive at a settled price - but over the course of four years, we haven't heard any such explanation from you.

Therefore, I have not sugar coated anything. I've acknowledged bitcoin's volatility - whilst also laying out and acknowledging why it has to be - until such time as it matures as an asset.

Until that "voyage" finds its destination bitcoin is entirely unsuitable as a medium of exchange, as a unit of account or as a store of value.

Incorrect. Bitcoin remains a sound store of value over the longer haul. Shorter term volatility doesn't disqualify it on that basis. You cannot deny the fact that bitcoin has been the best performing asset of the past decade and most of its years of existence - with perhaps the exception of two of those twelve years. Shorter term volatility doesn't in any way rule out bitcoin as a store of value. Gold was just as volatile in the '70's and I don't hear a squeak from anyone complaining about that. How about 2011 to 2015 when it fell from $1,875 to $1,000? Not a word, right?

On unit of account, that's the last of the three that would ever come into play. Personally, I'm quite happy if I'm free to utilise bitcoin to store or to spend at will - without it having become a unit of account.

On medium of exchange - i.e. a currency - you have stated many times that its not. And yet, today it very much is in defiance of your protests. Is volatility ideal for a medium of exchange? Far from it. However, if you're in a developing nation where your local currency is far more volatile - and/or maybe your government is stealing from you - and you become comfortable in the use of bitcoin - you won't care half as much about bitcoin's volatility.
El Salvador was unexpected. What was expected was such a developing nation to put a small proportion of their balance sheet in bitcoin. Then again, it seems the Salvadorans are doing that too - as they're working on a project to mine bitcoin using excess geothermal energy from their volcanoes.

And yet there are those that cheer the imposition of this on the poor people of El Sal.

What imposition? The imposition where they now have the choice between using USD and BTC? That's one hell of an imposition alright! I don't for one second believe this is anything but faux-concern on your part - based on a contrivance.

And they don't look like the sort of folk who would give a damn for poor people anywhere.

Benevolence starts at home. I gave you yet another explicit opportunity to acknowledge that the banking system has screwed the El Salvadorans - and yet, you can't manage it. Pitiful.

What about the the citizen's of Lebanon - can you be objective enough to acknowledge that the central bank and government has failed them?

 

[WolfeTone]

In the last week of El Salvador making bitcoin legal tender, the predominant currency of USD has crashed 17% against the price of 1 BTC.

Of course the exchange rate between the two legal tenders is volatile. But one has a track record, albeit an inconsistent, unreliable, uncertain purchasing power increasing on average by 200% pa since its inception.
The other is reliable, consistent, certain 2% demise pa of purchasing power.

I remember reading somewhere, something about a capitalist free-trade, risk/reward etc?

All I seem to hear now when it comes to poor people - you are poor, you shall remain poor, do not do anything that risks taking you out of poverty.

 

[Duke of Marmalade]

All I seem to hear now when it comes to poor people - you are poor, you shall remain poor, do not do anything that risks taking you out of poverty.

You are consistent Wolfie. Go on poor people of El Sal, have a punt on bitcoin, it could be you.

 

[WolfeTone]

You are consistent Wolfie. Go on poor people of El Sal, have a punt on bitcoin, it could be you.

You still propagating the false premise that the value of bitcoin will demise by 8pm on a Saturday night? I thought BOHA was being quietly retired from your narrative? Silly me!

Your concern for the poor of El Salvador is touching, if a touch patronising. It is the usual typical arrogant, self entitled "I know what's best for you" guff that perpetuates the very poverty that you shed crocodile tears for.

 

[Duke of Marmalade]

@WolfeTone I could never match the sincerity of your concern for the poor not only of El Sal but the world. I just ask you to think twice about your recommendation that the way out of their poverty is to have a punt on bitcoin. Maybe they might not agree with your assessment that they have nothing to lose, which might just seem to them a tad patronising.
I am not sure your mentor would fully approve of your philosophy. I think he sees bitcoin more as a way of escaping central bank gouging than a gamble for untold riches.

 

[WolfeTone]

I could never match the sincerity of your concern for the poor not only of El Sal but the world

Ah c'mon Duke, I think you know you are not engaging with Mother Theresa here. I just saw an opportunity to throw a below the belt punch and took it!

Maybe they might not agree with your assessment that they have nothing to lose, which might just seem to them a tad patronising.

Yeh, quite possibly, or possibly some of them might?

I think @tecate made the point earlier - they (the poor of El Salvador) now have choice (oh! the horror! )

The essence of enterprise? Essence of free markets?

As a side, an interesting if limited podcast by McWilliams this week on 'what is money'.
I recall you are not a big fan of McW and I share the sentiment , but I recognise he does have an impact and does attract interesting guests with thought provoking views.
Bitcoin makes an appearance in this podcast, from both a negative and positive perspective. Im probably disposed to automatically tune onto the positive view as you are to the negative view.
Nevertheless, worth a listen imo.

 

[WolfeTone]

I think @tecate made the point earlier - they (the poor of El Salvador) now have a choice

Actually, I am going to contradict myself here and say they always had a choice with bitcoin.
No different to me or anyone else. An Internet connection and a smart phone, everyone has that choice now.

 

[DublinHead54]

When it's programmed-in and hard wired in to a digital currency and can't be tampered with.

It is simply factually incorrect to say that the Bitcoin code base cannot be changed.