Bitcoin. Is it a deliberate con ?

[TheBigShort]

Excellent link Paddy. There can be no doubt where this all finishes up.

Where?

Im not being funny or anything, but when I bought bitcoin at €2,350, the word bubble was being tossed around then too. Now its €16,000.
If it crashes, as The Wolf says it will, will it crash to €5,000, €4,000, €3,000 etc...all the way to zero?
Unfortunately The Wolf is not clear on this. In fact, when the interviewer suggests crypto currencies are here to stay, The Wolf avoids a direct answer.

 

[BreadKettle]

Where?

Im not being funny or anything, but when I bought bitcoin at €2,350, the word bubble was being tossed around then too. Now its €16,000.
If it crashes, as The Wolf says it will, will it crash to €5,000, €4,000, €3,000 etc...all the way to zero?
Unfortunately The Wolf is not clear on this. In fact, when the interviewer suggests crypto currencies are here to stay, The Wolf avoids a direct answer.

It was in a bubble when it went from $50 to $250 in 2013 too. It crashes, corrects, recovers, moves on.

 

[Brendan Burgess]

It crashes, corrects, recovers, moves on.

Past performance is no indication of future performance, especially when the underlying "asset" is a bag of hot air.

It may well fall and recover, but at some stage, it must fall to zero and not recover. Once confidence is gone, it will be impossible to recover. The transaction role of cryptocurrency will probably be taken over by some other crypto not subject to such volatility.

Brendan

 

[TheBigShort]

The transaction role of cryptocurrency will probably be taken over by some other crypto not subject to such volatility.

Perhaps, but inherent in your comment is value.
If there is no value in crypto, its hard to see anything replacing anything. It will just return to zero.

 

[john luc]

the only real value I can see is possible the block chain technology. I'm not sure if owning a Bitcoin even gives you any connected ownership of this technology. As I see it this Bitcoin craze is all nonsense and when the confidence slips and people begin to doubt then the fall will be so quick that even trying to cash out will be hard.

 

[Firefly]

The transaction role of cryptocurrency will probably be taken over by some other crypto not subject to such volatility.

I can see (limited) uses for a cryptocurrency. As a central tenet is that it is in limited supply, I could see it revalue to the price of gold (or a fraction/ multiple of it).

 

[Leo]

I'm not sure if owning a Bitcoin even gives you any connected ownership of this technology.

None whatsoever. It's all open-source and free for all, so there are no royalty or intellectual property strategy plays here.

 

[Firefly]

It's all open-source and free for all, so there are no royalty or intellectual property strategy plays here.

As someone who works more and more with open source technologies I do like this part I must confess. The only thing I would say is that, as bad as they are, there is a certain comfort in knowing that the ECB is backing the Euro when it comes to my money. Whether rightly or wrongly we saw in 2008 the lengths the EU/ECB, US etc went to to ensure the stability of the FIAT money system.

 

[cremeegg]

None whatsoever. It's all open-source and free for all, so there are no royalty or intellectual property strategy plays here.

The idea that bitcoin is open source, like the idea that it is limited in supply is true but misleading.

Linux is open source, anyone can develop it and use it for their own purposes. You cannot, mining aside, use bitcoin to buy stuff unless you pay for the bitcoin.

 

[Slim]

There is an interesting documentary I watched on Netflix at the weekend, called Banking on Bitcoin. It explained to a large extent, what Bitcoin and Blockchain is, how it works but, more interestingly, how the large banks are putting a lot of resources in exploring how they can adopt and use BTC and other blockchain technology to use to their benefit. The upshot is, in my view, that while it may be overpriced, BTC and similar is here to stay and will be incorporated into the banking architecture before long.

 

[Leo]

The idea that bitcoin is open source, like the idea that it is limited in supply is true but misleading.

I don't think anyone said bitcoin is open source. The question I replied to asked about blockchain technology.

 

[fpalb]

there is a certain comfort in knowing that the ECB is backing the Euro when it comes to my money. Whether rightly or wrongly we saw in 2008 the lengths the EU/ECB, US etc went to to ensure the stability of the FIAT money system.

I'm going to go with 'wrongly', as they ensured the stability by subjecting me to austerity even then though I've never even taken a bank loan and had no personal contribution to the failure of the system.

Privatised profits but socialised losses. Why? because the banks were too big to fail. OK, I get it the banks fail, no one can get their money, no one can get paid, because we are dependent for modern day-to-day currency use on private institutions that incur systemic risk to themselves via loans.

Seems to me like the right solution would be to no longer make us dependent on those institutions so that if they fail, they can be let fail and the consequences of that would fall on their executives, investors and perhaps customers, but not on me should I not choose to be in any of those groups.

I also don't have much confidence that the problems that Greece or Spain or Italy were having with their economies are fixed or the can was just kicked further on, are we going to be surprised if it all resurfaces again soon? I'm open to being educated on this if someone knows more than I do.

 

[Duke of Marmalade]

I'm going to go with 'wrongly', as they ensured the stability by subjecting me to austerity even then though I've never even taken a bank loan and had no personal contribution to the failure of the system.

Privatised profits but socialised losses. Why? because the banks were too big to fail. OK, I get it the banks fail, no one can get their money, no one can get paid, because we are dependent for modern day-to-day currency use on private institutions that incur systemic risk to themselves via loans.

Seems to me like the right solution would be to no longer make us dependent on those institutions so that if they fail, they can be let fail and the consequences of that would fall on their executives, investors and perhaps customers, but not on me should I not choose to be in any of those groups.

I also don't have much confidence that the problems that Greece or Spain or Italy were having with their economies are fixed or the can was just kicked further on, are we going to be surprised if it all resurfaces again soon? I'm open to being educated on this if someone knows more than I do.

That is disappointing fpalb - I had no idea you were a paid up member of Shortie Syndrome, so much of what you said hitherto-fore was common sense

You say you are a big loser from austerity. The only significant losers from austerity were the public servants.

 

[fpalb]

You say you are a big loser from austerity. The only significant losers from austerity were the public servants.

You really believe that? It's an extreme view for me to feel aggrieved that the cost of the bank failures was socialised?

Fun thought experiment: everyone here should add up the extra USC they paid due to austerity, work out how much bitcoin it could have bought you at the time, and how much it would be worth to you now. There's the upper limit on your opportunity cost
Less fun thought experiment: work out how many people suffered or died either directly or indirectly due to public service funding cuts.

 

[TheBigShort]

The only significant losers from austerity were the public servants.

Actually, in your admirable, but somewhat in-vain, attempt to get your head around bitcoin and crypto etc, you should look beyond Ireland to get a better understanding of austerity.
The consequences of austerity, as has been mentioned, are causing political uncertainty and upheaval. But if you choose to ignore this, demean it as 'Shortie Syndrome', or whatever, you are simply deluding yourself and devaluing the impact of austere measures primarily triggered by the global 2008 financial crisis.
On the other hand, there were those who were not effected, whose wealth increased, perhaps this is where we are?

 

[john luc]

how would we fare if the primary monatory system was crypto currency. As a long term self employed I was hit hard by this financial crisis with for me the most gauling one was getting my annual pension statement showing how much it lost with a final line at the bottom showing how much the government was stealing to pay their unearned pension. but if there was only crypto currency we might all have lost everything.

 

[BreadKettle]

Past performance is no indication of future performance

What would you say is a better indicator of future performance, past performance, or the advice of a person experienced in their bubbles bursting but without any notion whatsoever of the asset in question ?

I will go with the former.

 

[Merowig]

You really believe that? It's an extreme view for me to feel aggrieved that the cost of the bank failures was socialised?

Fun thought experiment: everyone here should add up the extra USC they paid due to austerity, work out how much bitcoin it could have bought you at the time, and how much it would be worth to you now. There's the upper limit on your opportunity cost
Less fun thought experiment: work out how many people suffered or died either directly or indirectly due to public service funding cuts.

Do you think increasing debt was a solution/possibility?

 

[fpalb]

No, I'm not saying I had a better solution, there was no easy way out once the damage was done... I'm saying that I am open to, and motivated to seek out, alternatives to help avoid a repeat in future, and I don't think that should be considered an extreme position.

 

[Firefly]

Austerity means you leave within your means, you do not borrow to finance your lifestyle. What is wrong with that?

Have you lost your mind? Ever seen those L'Oréal ads? We're worth it dude. We don't have to live within our means.

We can borrow, after all "that's what governments do"