Why is Bitcoin "digital gold" crashing right now?

[tecate]

Are we suddenly all going to lose faith in the United States or the European Union?

Is the suggestion that someone has claimed that in this discussion? If so, can you provide a link to it?

History would suggest not.

History also teaches us that time and time again, sovereign currencies have been (and continue to be in specific cases) mismanaged. That mismanagement has usually been to the detriment of ordinary citizens. That's indisputable.

I don't see an overwhelming reason for BTC to replace Central Bank issued Currencies

Has someone here called for 'replacement'? Competition is healthy - and that's why the advent of decentralised crypto and corporate digital currency alongside sovereign currency can only be a good thing.

What I find amusing, is decentralized is touted as a benefit, but it is not decentralized, China controls the vast majority of the mining pool.

It's not decentralised to the 9th degree, no. However, to suggest that bitcoin's current level of decentralisation isn't beneficial is foolish. Could bitcoin mining be better distributed? - sure, it could. In the meantime, those mining pools are going to have to ruin themselves to temporarily disrupt the network. That's the only danger that you can be talking about here - because at an individual level, nobody can access that individuals bitcoin and the scenario you're suggesting isn't going to play out to the detriment of a minority of individuals. i.e. it's sufficiently decentralised such that no government, bank or other entity can interfere with an individuals ability to store or move bitcoin on the network. There's some more fuel for your 'great story'.

 

[Leo]

Its rough for you Leo when the answers provided don't match your world view

No, I've been proven wrong here many times over the years, and my world view now is a lot different to what it was when I first started posting. I like to learn.

 

[tecate]

No, I've been proven wrong here many times over the years, and my world view now is a lot different to what it was when I first started posting. I like to learn.

A view I share.

 

[DublinHead54]

i.e. it's sufficiently decentralised such that no government, bank or other entity can interfere with an individuals ability to store or move bitcoin on the network. There's some more fuel for your 'great story'.

I assume you agree that for the vast majority of individuals in 2020 to get Bitcoin you have to convert Fiat to BTC? You transact between the fiat monetary system and the BTC ecosystem via an exchange. A government could shut those connections making it a closed network.

 

[WolfeTone]

I assume you agree that for the vast majority of individuals in 2020 to get Bitcoin you have to convert Fiat to BTC? You transact between the fiat monetary system and the BTC ecosystem via an exchange. A government could shut those connections making it a closed network.

I think this comment should be directed to @tecate ?

 

[DublinHead54]

Is the suggestion that someone has claimed that in this discussion? If so, can you provide a link to it?

I was responded to @WolfeTone, I suggest you read the question I asked and don't take sentences out of context before replying or let him respond.

Why is decentralized good? Why is a trustless currency good? Are we suddenly all going to lose faith in the United States or the European Union? History would suggest not.

 

[DublinHead54]

Is the suggestion that someone has claimed that in this discussion? If so, can you provide a link to it?


History also teaches us that time and time again, sovereign currencies have been (and continue to be in specific cases) mismanaged. That mismanagement has usually been to the detriment of ordinary citizens. That's indisputable.

Has someone here called for 'replacement'? Competition is healthy - and that's why the advent of decentralised crypto and corporate digital currency alongside sovereign currency can only be a good thing.

It's not decentralised to the 9th degree, no. However, to suggest that bitcoin's current level of decentralisation isn't beneficial is foolish. Could bitcoin mining be better distributed? - sure, it could. In the meantime, those mining pools are going to have to ruin themselves to temporarily disrupt the network. That's the only danger that you can be talking about here - because at an individual level, nobody can access that individuals bitcoin and the scenario you're suggesting isn't going to play out to the detriment of a minority of individuals. i.e. it's sufficiently decentralised such that no government, bank or other entity can interfere with an individuals ability to store or move bitcoin on the network. There's some more fuel for your 'great story'.

I assume you agree that for the vast majority of individuals in 2020 to get Bitcoin you have to convert Fiat to BTC? You transact between the fiat monetary system and the BTC ecosystem via an exchange. A government could shut those connections making it a closed network.

 

[DublinHead54]

No, I've been proven wrong here many times over the years, and my world view now is a lot different to what it was when I first started posting. I like to learn.

Alas, technological determinism is here to stay on this thread it would appear.

I bid all goodbye

 

[WolfeTone]

I was responded to @WolfeTone, I suggest you read the question I asked and don't take sentences out of context before replying or let him respond.

Why is decentralized good? Why is a trustless currency good? Are we suddenly all going to lose faith in the United States or the European Union? History would suggest not.

I take these questions were directed to me.

Decentralized is good because it limits power and undue excessive influence.
Trustless is good, it speaks for itself I would have thought.
I don't think we are suddenly all going to lose faith the United States or European Union.

 

[tecate]

I was responded to @WolfeTone, I suggest you read the question I asked and don't take sentences out of context before replying or let him respond.

Respectfully, I'll respond if that's what I want to do Dublinbay12. It doesn't in any way prevent WolfeTone from responding also. As regards taking sentences out of context, I don't see a lack of context in my responses.

I assume you agree that for the vast majority of individuals in 2020 to get Bitcoin you have to convert Fiat to BTC? You transact between the fiat monetary system and the BTC ecosystem via an exchange. A government could shut those connections making it a closed network.

Well apparently it's beneath you but had you bothered to read the thread in which you accused me of 'not [being] willing to do anything other than back Bitcoin in every single situation', you would have seen that I've cited this as a risk which could retard the rate of development of bitcoin. Note that I don't believe that it will kill it. It will just take longer to progress.
Over the course of the next few years, I expect ongoing regulatory battles. However, to my mind, ease of use/user experience is the key determinant. If that's improved, then it won't matter a whole lot what governments do.

 

[Leo]

Alas, technological determinism is here to stay on this thread it would appear.

Resistance is futile

 

[Duke of Marmalade]

The opposite is the same. If I owe you 1BTC in 6months, whats riskier, holding 1BTC in a wallet or buying $$ with your Bitcoin?

Volatility works both ways. Clearly BTC is a volatile asset measured against fluctuating US$. Alternatively, it is the US$ that is a volatile asset against sound money like BTC.
Bitcoin has, durability, portability, scarcity, divisibility, fungibility, and is decentralised and trustless currency.
The US$ is just a mish-mash of central bank keyboard strokes and manipulated government IOU's.

Nice try Wolfie When we talk of volatility we need to have what the economists call the numéraire - the basic standard which we use for evaluation. Obviously the numéraire itself has zero volatility by this metric. Thus if BTC is the numéraire then BTC has zero volatility and USD has mega volatility. Similar observations if we chose Tesla stock as numéraire.
When it comes to reserve assets the correct numéraire is the operational currency of the entity as @Dublinbay12 has stated.
When it comes to currencies qua medium of exchange the correct numéraire is a basket of goods and services (which will vary according to the observer). It is the role of Central Banks to manage stability against a numéraire which is the general price of goods and services in the economy, and thank goodness we have Central Banks tasked with that mission. Measured against the price of goods and services, 1 BTC today might buy a Tesla car in 12 months time or it might be hard pushed to buy a latte.
I will give Saylor a go, though I have my mine sweeper out to avoid rabbit holes.

 

[WolfeTone]

When we talk of volatility we need to have what the economists call the numéraire -

Yes of course, no dispute here. And on a scale which the global economy operates clearly we use the central bank issued currency as the basis which we measure all value. This is a universal approach which offers a very convenient means of communication. So in common universally accepted parlance, BTC will obviously be recognised as where the volatility lies.

But in practice when talking about direct transactions between parties, as offered by @Dublinbay12 the risk, and as such the volatility operate in exact inverse measure to each other.

So if I were to lend you with 1BTC with your promise to return it to me in six months or 12, as you identify yourself,

1 BTC today might buy a Tesla car in 12 months time or it might be hard pushed to buy a latte.

Ditto if I were to trade €10000 in future stocks the risk is the same on both sides of the equation, albeit in common parlance the volatility will be identified with the stock.

 

[tecate]

1 BTC today might buy a Tesla car in 12 months time or it might be hard pushed to buy a latte.

Here's a little snippet from a published by Fidelity Investments last week:

"Another consequence of bitcoin entering a more mature and steady stage of its life cycle is that we expect its volatility to decline in tandem, resulting in continued favorable risk-adjusted returns."

 

[Duke of Marmalade]

Ditto if I were to trade €10000 in future stocks the risk is the same on both sides of the equation, albeit in common parlance the volatility will be identified with the stock.

The point I am trying to make is that I would measure volatility/risk in terms of my purchasing power in respect to the goods and services I consume. BTC and stocks would be risky from that perspective.
I listened to the whole hour of Saylor. Except for a long winded piece on Ethereum it was very interesting. That guy is taking a big risk. Here are some of the notable takeaways.
His expectations are founded in Volcker syndrome, 0% inflation, 5% p.a. on 10 year bonds, 8% p.a. on long bonds and 12% p.a. on equities.
I agree with him that he will get nowhere near that on the traditional asset classes, and I agree that they are way overpriced. But why does he think he will get that from bitcoin? (1) it has achieved 25% p.a. over the last decade, (2) it has moved sideways in the last 2 years compared to other luxury assets which have grown 35% this year. Bitcoin is 1,000 times better than gold, whatever that means.
He expects bitcoin to grow at least 10% p.a. which he says is the rate of growth in the money supply. He doesn't really explain the connection.
He was a critic of bitcoin in 2013 but has had a Damascean conversion. So much so that he just can't understand why anybody would sell bitcoin to him.
There was no attempt here to explain why bitcoin has value. It seemed to me that since nothing else would satisfy his Volcker fantasy, this was the last resort.
He seems to accept that fiat will maintain its value (or maybe lose 2% p.a.) in terms of CPI. Good enough for me but obviously not good enough for someone seeking/expecting 10%/20% p.a.
Didn't convince me.

 

[tecate]

it has moved sideways in the last 2 years compared to other luxury assets which have grown 35% this year.

Bitcoin is up 60% year to date vs. gold's 25%.

Bitcoin is 1,000 times better than gold, whatever that means.

It's digital - meaning ease of transfer globally in minutes. It can be self custodied. It's easier to store - you don't have to insert it up your rectum like this poor Indian did with gold during the week. The transparency with regard to supply is clearer. It's divisible whereas gold isn't.

He seems to accept that fiat will maintain its value (or maybe lose 2% p.a.) in terms of CPI. Good enough for me but obviously not good enough for someone seeking/expecting 10%/20% p.a.

He spoke of 10-20% debasement of the dollar.

 

[DK123]

"Irish seniors Can Get Extra Funding By Doing this"!.[On Yahoo News][Equity Realease] Does anyone know if this is false and if so why is it used and allowed to manipulate people especially senior citizens.Thanks.I was just wondering!Ref=The Journal.i
e

 

[MaxGordon]

Tecate,

Long before I actually registered for this site, I used always read your posts. I would just like to thank you for all your contributions to this thread and to say how impressed I have been with your knowledge and patience. At the outset, I was a big time sceptic of Bitcoin but for the last while have been getting it more and more. I know your purpose is probably not to convert people but nonetheless I just thought that I'd let you know.

 

[WolfeTone]

The point I am trying to make is that I would measure volatility/risk in terms of my purchasing power in respect to the goods and services I consume.

Yes, I have no disagreement with you there.

My response to @Dublinbay12 was specific to his example of borrowing/lending in one asset and converting to another asset.
Either way you look at it, the risk/volatility is inversely shared. Whether it's BTC/Cash, Cash/BTC, Gold/Cash, Cash/Gold, €/$ or $/€.
I don't think it needs explaining any further.

 

[Duke of Marmalade]

He spoke of 10-20% debasement of the dollar.

Yes he did. Versus what he perceives as luxury assets including bitcoin. I see no convincing argument that bitcoin is such a luxury asset. It is a digital entry on a decentralised, censor resistant, ledger signifying nothing.