Wow, 10 pages! My input would be that I have read few of books on investing and often come across the story about the "shoe shine boy giving investment tips". Well yesterday I overheard two people in work talking about Bitcoins and one saying "I couldn't take the volatility anymore, I cashed out!". The other person was saying "ugh I was offered 10 Bitcoins for a nixer back in 2012, I'd be loaded now". Personally I have never heard anyone in work talking about index funds or regular share purchasing. That particular overhead conversation about Bitcoin reminded me of what it must have been like before dot com bubble. This is my first experience of hearing watercooler speculation talk like this, and to me it sounds bubblicious!
Key Post Bitcoin is a clearly identifiable economic bubble
- Thread starter Brendan Burgess
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Dan Murray
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Interesting post. I've been reading like billy-o about this bitcoin "bubble". I have even coined (obviously intended - mined would just have been too corny!) my new law which provides that as any internet discussion regarding bitcoin increases, the probability of tulips being mentioned approaches 1.
The question that I have is one that has been asked many times by others on this thread and is at what price (or price range) did BTC enter bubble territory (and why)? The why is important. Do you share Brendan's valuation or do you have a different view? Well-respected AAM posters have said stuff like "it's surely a bubble at this stage" which to me seems to suggest that there was a point when the price was deemed reasonable. I'd just like to understand why people say this!
Duke of Marmalade
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Former president of Dutch Central Bank:
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Dan Murray
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So goose egg, zilch, nada, zip, zero...........not for the first time, we must agree to differ!
Very possibly, a tangent to the central theme (didn't want to set up yet another thread) but I think Cremeegg raises a very interesting question which I think has not been answered. Can anybody comment on relative price differences between exchanges and whether such differences can be exploited, etc.?
Very possibly, a tangent to the central theme (didn't want to set up yet another thread) but I think Cremeegg raises a very interesting question which I think has not been answered. Can anybody comment on relative price differences between exchanges and whether such differences can be exploited, etc.?
Duke of Marmalade
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I have been studying this quite a bit and one thing strikes me. The overwhelming balance of informed opinion is that BTC is a bubble, many going as far as to agree with the Boss that it is completely without value. I'm afraid I concur with that view. Let me explain.
First of all let us dismiss the smarty pants claim that conventional currencies have no value. These days they do, like BTC, inhabit a digital world, they are mere numbers in our bank accounts. But these numbers mean something, they are evidence that we have a debt from society. In fact under the Fractional Reserve system this is very plain. As a gross simplification imagine the pensioner with €300K in her bank acccount. That €300K is lent to a young accountant as a mortgage. The accountant undertakes to provide accounting services to the value of €300K to settle his debt. Of course this is far more accounting services than the pensioner could ever want but you know how it works. One of the unknowns in this is the price level at which the accountant will provide his services. That is a key function of society, to manage the pricing process.
Now with BTC ALL you have is a number in an account. Other than the entitlement to transfer this number to another account there is no other claim on society or anybody else, implicit or otherwise. Is it a fraud? I certainly would not accuse its enthusiasts including those in this forum of being frauds in the colloquial sense. But its terminology is borderline fraudulent. Calling itself a currency in the first place is a bit shaky but where things get distinctly suspect is in the "mining" metaphor. fpalb has given us an excellent and stark description of the process. Here's how the metaphor goes. The miners expend enormous amounts of electricity and CPU power to extract as the reward for this effort fresh new BTC. This is highly suggestive and seductive. It suggests that an awful lot of effort was needed to find something of value. In fact nothing of value is found. At the end of the effort, if they win the race against other miners, they are alloted new BTC as a simple number in their account. The BTC could have been added without any of this effort. Its a game, an incredibly crude brute force game of trial and error, totally artificially devised to manage the development of the BTC supply. There is no added value whatsoever here, though I will not get on the high horse of the negative environmental value of the electricity usage (after all I am not convinced of that one either).
First of all let us dismiss the smarty pants claim that conventional currencies have no value. These days they do, like BTC, inhabit a digital world, they are mere numbers in our bank accounts. But these numbers mean something, they are evidence that we have a debt from society. In fact under the Fractional Reserve system this is very plain. As a gross simplification imagine the pensioner with €300K in her bank acccount. That €300K is lent to a young accountant as a mortgage. The accountant undertakes to provide accounting services to the value of €300K to settle his debt. Of course this is far more accounting services than the pensioner could ever want but you know how it works. One of the unknowns in this is the price level at which the accountant will provide his services. That is a key function of society, to manage the pricing process.
Now with BTC ALL you have is a number in an account. Other than the entitlement to transfer this number to another account there is no other claim on society or anybody else, implicit or otherwise. Is it a fraud? I certainly would not accuse its enthusiasts including those in this forum of being frauds in the colloquial sense. But its terminology is borderline fraudulent. Calling itself a currency in the first place is a bit shaky but where things get distinctly suspect is in the "mining" metaphor. fpalb has given us an excellent and stark description of the process. Here's how the metaphor goes. The miners expend enormous amounts of electricity and CPU power to extract as the reward for this effort fresh new BTC. This is highly suggestive and seductive. It suggests that an awful lot of effort was needed to find something of value. In fact nothing of value is found. At the end of the effort, if they win the race against other miners, they are alloted new BTC as a simple number in their account. The BTC could have been added without any of this effort. Its a game, an incredibly crude brute force game of trial and error, totally artificially devised to manage the development of the BTC supply. There is no added value whatsoever here, though I will not get on the high horse of the negative environmental value of the electricity usage (after all I am not convinced of that one either
).TheBigShort
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See, there it is again. This morning I was all "Bitcoin is the consequence of impending geopolitical conflict and fraudulent monetary system, BUY! BUY! BUY!"...and now I'm " it's just a number. A number in an account with no value. SELL! SELL! SELL!"
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Dan Murray
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See, there it is again. This morning I was all "Bitcoin is the consequence of impending geopolitical conflict and fraudulent monetary system, BUY! BUY! BUY!"...and now I'm " it's just a number. A number in an account with no value. SELL! SELL! SELL!"
The Big Short,
As you are one of those BTC holders, I thought I'd add insult to the above injury! Apologies in advance but I figured a little humour wouldn't go amiss.
So a bitcoiner hops into a taxi.
Taxi driver: Where to, bud?
Bitcoiner: Ah, I don't really mind.
Taxi driver: I doesn't really work like that, bud. You have to name your place.
Bitcoiner: Oh - can't you just take me for a ride?
TheBigShort
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BUY! BUY! BUY!
Duke of Marmalade
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Oh dear. The discussion is getting scattered around a few threads. Hard to make reference quotes. Both fpalb and ant dee have made useful replies. I accept fpalb’s assertion that I am only half way there i.e. my grasp is up to about 15%
ant dee makes the point that the brute force miners’ game is necessary for the integrity of the Blockchain. Yes I can see that it does do that but is it the primary purpose? I thought it was just a by product and the integrity is not reliant on the challenge of the game. The primary purpose seems to be to limit the BTC creation to 10 minute duration. In theory if mining power was much less as I presume it used to be the game would be made much easier without compromising integrity. When all 21m BTC have been created the miners will live off transaction fees only. I presumed then that scarcely any proof of work would be needed. Transaction fees amount to 0.5% of miners’ income. The game to earn these fees will need to be greatly simplified if we are not going to have a miners’ strike
fpalb yes gold extraction and custody is messy. If the alchemists had been successful in converting base metal to gold they wouldn’t nevertheless insist that all that messy effort should still be done so as prove you earned it.
ant dee makes the point that the brute force miners’ game is necessary for the integrity of the Blockchain. Yes I can see that it does do that but is it the primary purpose? I thought it was just a by product and the integrity is not reliant on the challenge of the game. The primary purpose seems to be to limit the BTC creation to 10 minute duration. In theory if mining power was much less as I presume it used to be the game would be made much easier without compromising integrity. When all 21m BTC have been created the miners will live off transaction fees only. I presumed then that scarcely any proof of work would be needed. Transaction fees amount to 0.5% of miners’ income. The game to earn these fees will need to be greatly simplified if we are not going to have a miners’ strike
fpalb yes gold extraction and custody is messy. If the alchemists had been successful in converting base metal to gold they wouldn’t nevertheless insist that all that messy effort should still be done so as prove you earned it.
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Brendan Burgess
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Because you posted this in another thread with a list of warnings about Bitcoin.
Try to keep posts in line with the thread title.
Brendan
PaddyBloggit
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Brendan Burgess
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Hi Paddy
-15% in one day is nothing really. It will probably go up by 25% tomorrow.
Brendan
-15% in one day is nothing really. It will probably go up by 25% tomorrow.
Brendan
A short video about the volatility of Bitcoins - didn't know there are "Bitcoins ATMs" already available...
https://www.facebook.com/wsj/videos/10157030223933128/
https://www.facebook.com/wsj/videos/10157030223933128/
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....
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....
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Dan Murray
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I don't really want to get involved in the various ways one can bet on Bitcoin. It's the subject of another thread which I am not keen to involve myself in.
Just want to say (since it has already been addressed in that other thread) that PPOW has some markets available on BTC. In one of these markets, the implied probability that BTC will be in excess of $15,001 as at 1st Jan 2019 is c. 55% (i.e. more likely than not to be higher than $15,000).
The implied probability that it will be less than $15,001 is c. 45% which translates to even money (or 1/1) after the bookie takes its margin.
I feel myself that this is yet another validation of the opinions of those who just would not go along with the narrative regarding the apparent certainty that BTC is worthless or next to worthless.
Just want to say (since it has already been addressed in that other thread) that PPOW has some markets available on BTC. In one of these markets, the implied probability that BTC will be in excess of $15,001 as at 1st Jan 2019 is c. 55% (i.e. more likely than not to be higher than $15,000).
The implied probability that it will be less than $15,001 is c. 45% which translates to even money (or 1/1) after the bookie takes its margin.
I feel myself that this is yet another validation of the opinions of those who just would not go along with the narrative regarding the apparent certainty that BTC is worthless or next to worthless.
AGREED!!! I have a large holding of both gold and silver and I believe the precious metals are good hedge against Bitcoin and vice versa. I believe gold and silver may be massively over sold at the moment
Brendan Burgess
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Is PPOW Paddy Power? A maximum bet of €30 is hardly the type of validation you Bitcoin millionaires need.
Brendan
Duke of Marmalade
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PP now go 5/1 less than $5,000 on 1st January 2019. Boss its seems your bet of €30 or threat of same has moved the market
We should note that PP, in setting prices, is not expressing any personal or corporate opinion he is attempting to assess market demand.
We should note that PP, in setting prices, is not expressing any personal or corporate opinion he is attempting to assess market demand.
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Dan Murray
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Boss its seems your bet of €30 or threat of same has moved the market
Of course, it is possible that Burgess sweeping in Soros-like could have caused much nervousness and thought adjustment at PPOW HQ.
There, of course, is an alternate, more prosaic rationale - whether you are open to hear it or not - is uncertain.