Key Post Bitcoin is a clearly identifiable economic bubble

[WolfeTone]

My contention is that bitcoin can never succeed as a transactional currency, because as Satoshi noted and David Marcus belatedly concedes it has no intrinsic value - it is BOTHA

That you apply "never" is the absolute point I made earlier of your inability to grasp concepts of fundamental change that may be occurring.
So you could be entirely right in your beliefs and shown to be so at some unidentified, unspecified date in the future, beyond medium term future (is that 5-10yrs), perhaps?

But even if bitcoin does not succeed as a transactional currency, does that preclude it from succeeding as something else?
Perhaps, perhaps not.

The Libra White Paper and associated Marcus commentary really is an eye opener. It doesn't single out btc for criticism but lists its obvious (fatal in my view) deficiencies.

So are you advocating what Marcus is saying, involved in?
You recommended the Libra White Paper to read, you are now sayings it is an "eye-opener".
Does the Libra project hold value? You mentioned that it could in developing countries, but you could not see a usage for it in developed countries.
I can only take from that, that you accept the Libra project holds some, prospective value at least? If not for you, but for others?

 

[AileenWalsh]

This is Warren Buffett's point: "A check is a way of transmitting money, too. Are checks worth a whole lot of money just because they can transmit money?"

By the way, how would one invest in blockchain technology?

if you want to transfer money try transferwise

 

[tecate]

if you want to transfer money try transferwise

A more cost effective service than the traditional banks for sure. However I have had wire transfers rejected in the receiving country/bank because they were made using TransferWise. I lost a few days in the process.
Bitcoin cuts out the banking system entirely for the transmission of value directly...peer to peer

 

[AileenWalsh]

Its the problem with traditional banks, they are so bound by red tape it's unbelievable. Likewise, they have had the same problem with banks accepting payments in some countries. The problem with the bitcoin price is that it moves all over the place and I don't want to spend my time watching the price. I would rather concentrate on my business

 

[tecate]

Its the problem with traditional banks, they are so bound by red tape it's unbelievable. Likewise, they have had the same problem with banks accepting payments in some countries.

I agree completely. In reaction to the advance of Facebook's Libra Coin, the Europeans have said that they will now look to address international payments. This never needed to be this way but without the emergence of crypto they would likely address nothing. The world will not cave in without KYC/AML (& whilst most here won't agree with me, I firmly believe it's a sham).

The problem with the bitcoin price is that it moves all over the place and I don't want to spend my time watching the price. I would rather concentrate on my business

For sure, that's a fair point. However, both parties are free to exchange back to FIAT on each end in real time.
Otherwise something like stellar is available with a stellar marketplace that allows for the dynamic swapping of one asset for another (inclusive of currencies) - all completed in seconds with little in the way of transaction fees.

 

[NoRegretsCoyote]

Bitcoin will fall to zero at some stage. I am astonished it has not done so by now. So if I bet $1,000 now for the end of the year, I might well lose it. But if I lose it, I will probably get good odds again this time next year.

Bitcoin has been around for more than a decade now and, despite some swings, has retained a lot of value. There is a lot of speculation, but clearly a lot of genuine use as well.

Here's why:

Using the legitimate financial sector for criminal activity is getting harder and harder, which just pushes illegitimate users more and more into virtual assets. Criminal activity is only ever 2% or 3% of GDP, but global GDP is $86 trillion this year! Criminals need a medium of exchange like the rest of us. Despite the downsides, bitcoin is a lot more effective than moving large sums of cash around in suitcases.

I don't rule out some kind of hack or collapse of bitcoin itself. But until regulators and law enforcement get a lot better (and this could take decades) virtual assets will have value.

 

[Leo]

Using the legitimate financial sector for criminal activity is getting harder and harder, which just pushes illegitimate users more and more into virtual assets.

Cryptos are widely used by cyber criminals, those selling on the dark web, and the likes of North Korea who like to steal them to fund their activities, but I don't think there's too many street dealers hanging around for 10 minutes for a transaction to confirm after handing over a single deal.

Regardless, Bitcoin won't be the crypto of choice for criminals in the know. Too easy to trace and the public nature of the ledger means once the catch one offender, they can follow the trail to others.

 

[NoRegretsCoyote]

but I don't think there's too many street dealers hanging around for 10 minutes for a transaction to confirm after handing over a single deal.

Of course not, it is useful at the wholesale level.

 

[WolfeTone]

Using the legitimate financial sector for criminal activity is getting harder and harder

Is it?

which just pushes illegitimate users more and more into virtual assets

The problem with this theory is that bitcoin is still clearly restricted in terms of its actual transactional use.
If I had 10,000 bitcoin and only €5,000 in cash on paper I would be very wealthy. In real terms I couldn't afford very much.
I only assume that the purposes of engaging in criminality is to be to afford a lot of stuff?

The accumulation of bitcoin by criminals is one thing, but the realisation of that bitcoin into cash (to buy stuff) is another thing.

So while some criminals are accumulating driving up the price, others are offloading to exploit the price and are therefore driving down the price.

In such circumstances, it is beyond my rationale as to why it crashed to zero at this stage. There must be something else to it.

 

[Andrew365]

Is it?



The problem with this theory is that bitcoin is still clearly restricted in terms of its actual transactional use.
If I had 10,000 bitcoin and only €5,000 in cash on paper I would be very wealthy. In real terms I couldn't afford very much.
I only assume that the purposes of engaging in criminality is to be to afford a lot of stuff?

The accumulation of bitcoin by criminals is one thing, but the realisation of that bitcoin into cash (to buy stuff) is another thing.

So while some criminals are accumulating driving up the price, others are offloading to exploit the price and are therefore driving down the price.

In such circumstances, it is beyond my rationale as to why it crashed to zero at this stage. There must be something else to it.

Yes it is getting harder. There has been a lot of AML (Anti Money Laundering) regulation put in place over the last 10 years and instances of large scale criminal activity is being found (see Nordic Banks such as Danske). However, criminals are getting smarter and every system can be manipulated and played.

The comment around criminals, I am not sure that can be proven or disproven. However, as a hypothesis the below website goes some way in disproving it. Less than 3% of Bitcoin addresses have more than 1 bitcoin. Outside of the Cold wallets of Exchanges there are a few people that own enough to materially move the market.

Top 100 Richest Bitcoin Addresses and Bitcoin distribution

Top 100 Richest Bitcoin Addresses. Bitcoin distribution.

bitinfocharts.com

Is there evidence of criminals driving up the price?

 

[Leo]

Of course not, it is useful at the wholesale level.

Only if they can convert back to fiat which usually entails KYC/AML checks.

 

[NoRegretsCoyote]

Only if they can convert back to fiat which usually entails KYC/AML checks.

Of course, but with a crypto it's easier to pick a jurisdiction where AML checks are weak to convert back to fiat. In any case drug dealers at wholesale level need funds to make purchases and then wait for payment. This can stay in the crypto world without need for conversion on a regular basis.

@WolfeTone

Yes indeed laundering money is getting harder, in the EU for example by provisions of the the Fifth AML Directive which have to be transposed into national law by next week.

Bitcoin has maintained a value >0 because it is clearly used for illicit transactions.

 

[Leo]

Of course, but with a crypto it's easier to pick a jurisdiction where AML checks are weak to convert back to fiat.

Good point!

 

[WolfeTone]

There has been a lot of AML (Anti Money Laundering) regulation put in place over the last 10 years and instances of large scale criminal activity is being found (see Nordic Banks such as Danske).

Yes indeed laundering money is getting harder, in the EU for example by provisions of the the Fifth AML Directive which have to be transposed into national law by next week.

Fair points.

Bitcoin has maintained a value >0 because it is clearly used for illicit transactions.

I don't doubt that it is. But the extent to which it is being used for illicit purposes remains to be seen.
I would lean to the notion that if it were primarily (>50% usage) or even significantly (say >10% usage) used for illicit purposes, it would have crashed to zero by now.

 

[tecate]

I don't doubt that it is. But the extent to which it is being used for illicit purposes remains to be seen.
I would lean to the notion that if it were primarily (>50% usage) or even significantly (say >10% usage) used for illicit purposes, it would have crashed to zero by now.

That criminals are early adopters of tech is nothing new. This is not in any way exclusive to crypto. Bitcoins use via the Darknet may have been significant back in the day. It still is in play but proportionately it becomes less and less of a factor. As is the case with all new tech.

 

[Leo]

itcoins use via the Darknet may have been significant back in the day. It still is in play but proportionately it becomes less and less of a factor.

Last year bitcoin still accounted for 76% of all darknet payments, the surprise to me was Monero with much more criminal-friendly attributes only accounting for 4%.

 

[tecate]

Last year bitcoin still accounted for 76% of all darknet payments, the surprise to me was Monero with much more criminal-friendly attributes only accounting for 4%.

Internet money being used for internet-based darknet transactions? I mean, I'd question their ability to be accurate with their stats but we'll move on already because it's a non story.
What's relevant is...
- The Bitcoin ecosystem has grown to a point where use of the currency on the darknet is an ever decreasing aspect of its overall use.
- It's established fact that criminals are early adapters of new tech. Why should Bitcoin be any different.
- Any attempts to tar and feather the tech on this basis (without consideration of the societal positives it brings with it) are far from altruistic. Cash remains the biggest mover in illegitimate transactions. Criminals use a variety of other tech in their day to day activities. That's not likely to change.

 

[Andrew365]

This is an interesting read

Crypto Money Laundering: How Criminals Cash Out Billions in Bitcoin and Other Cryptocurrencies

Crypto money laundering sees billions of dollars move through financial crimes. Learn more about the main players in the ecosystem.

blog.chainalysis.com

*Note, I don't mean this article to start a back and forth, simply posting it as it is well done and thorough.

 

[Leo]

Internet money being used for internet-based darknet transactions? I mean, I'd question their ability to be accurate with their stats but we'll move on already because it's a non story.

It's not really, some might consider the real story is how cryptos are facilitating the expansion of the dark web marketplace. Regardless, my point was that it is incorrect to state Bitcoin isn't a significant factor there.

 

[tecate]

It's not really, some might consider the real story is how cryptos are facilitating the expansion of the dark web marketplace. Regardless, my point was that it is incorrect to state Bitcoin isn't a significant factor there.

Eh, no - you've come at this from a different direction. You can look at what percentage of darkweb payments are conducted via Bitcoin. Have at it. What I was referring to was the degree of significance for Bitcoin of such payments back when few knew about it and now - where there is a much more expansive pool of stakeholders in the Bitcoin ecosystem.....ergo....use by criminals is peripheral.
Notwithstanding that, criminals have established a pattern of being the earliest of adopters of new tech. This is not unique to Bitcoin.

As regards the link above to the Chainalysis blog post, Chainalysis don't have any business to pursue without talking up illicit use. The vast majority of money laundering implicates the conventional banking system and cash - not Bitcoin.