Why is Bitcoin "digital gold" crashing right now?

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tecate said:
It could be that large traders had to pull money out of BTC to pay for margin call loses on the conventional markets. As regards manipulation, any market with a relatively small market cap is vulnerable to manipulation. That will only change as the market cap of Bitcoin expands.
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That is not correct, Bitcoin has a fixed supply. Market Cap is a metric of coins * price, a higher market cap does not change the percentage ownership. If a person owns 50% of a market, they can manipulate it regardless of the market capitalisation.

Looking at the charts, I would classify what happened on thursday as a flash crash, which happens in conventional markets. BTC has become more like conventional markets in the last two years through the creation of standard financial products (Options, Futures).
 
The premise of this thread is that Bitcoin is digital gold, but this is a false premise, as Bitcoin is a peer to peer electronic cash system. The only analogy to gold is the concept of mining to generate the supply. The concept of it being digital gold is a story told in an attempt at legitimacy, similar to the creation of the term Blockchain.

I am not presenting a case for or against Bitcoin here, but the fact is the very premise of this thread is incorrect and thus Brendan should either change the title or close the thread.
 
JSnowWinterfell said:
I am not presenting a case for or against Bitcoin here, but the fact is the very premise of this thread is incorrect and thus Brendan should either change the title or close the thread.
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:mad: I see you are new in these parts. Brendan is not in any way suggesting that bitcoin is digital gold. He has put the term in quotation marks to indicate that some bitcoin cultists have indeed made this claim. It is legitimate to put to them why it is not behaving as such now. tecate has made the very valid point that it is indeed behaving like gold, which raises the supplementary question "why is the nice shiny stuff tanking at the same time as the markets?"

Boss, our posts crossed.
 
JSnowWinterfell said:
That is not correct, Bitcoin has a fixed supply. Market Cap is a metric of coins * price, a higher market cap does not change the percentage ownership. If a person owns 50% of a market, they can manipulate it regardless of the market capitalisation.
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You're misunderstanding something. If you are a whale with access to billions and there are two markets - one has a market cap of $150 billion, the other a trillion - one of them is going to be far easier manipulate than the other. The fixed supply of bitcoin doesn't come into this particular equation.
 
I apologize for the confusion, but If it is not meant literally and the question is why is Bitcoin Crashing then why include?

Appears there is an intention to belittle those that want to discuss bitcoin constructively or have different opinions to the "Boss".

As a consumer forum, a topic like Bitcoin should be discussed constructively, but as a long time reader I have observed time and time again a set of people arguing their opinions over one and another time and time again.

A consumer who is interested in understanding it, or even worse suffering potential fraud is not going to be helped.

Leave the opinions at the doors lads.


*P.s There is only one "Boss" and I haven't seen Bruce post here
 
JSnowWinterfell said:
The premise of this thread is that Bitcoin is digital gold, but this is a false premise, as Bitcoin is a peer to peer electronic cash system.
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The assertion that bitcoin is in a developmental phase of becoming digital gold has not been invalidated by this week's events. Given gold's 10% drop, it's probably the opposite.
Whilst bitcoin is peer to peer cash, that doesn't in any way mean it can't act as digital gold. It's hard money due to a fixed supply and designed in scarcity.

JSnowWinterfell said:
The only analogy to gold is the concept of mining to generate the supply.
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The analogy with gold rests on its scarcity.
JSnowWinterfell said:
The concept of it being digital gold is a story told in an attempt at legitimacy, similar to the creation of the term Blockchain.
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What on earth do you mean by this? If you mean 'use case' rather than 'legitimacy', then yes , some are of the belief that it is taking on a digital gold use case.
What of 'blockchain' ? It's the overarching technology. What's wrong with the use of the term?
 
Duke of Marmalade said:
He has put the term in quotation marks to indicate that some bitcoin cultists have indeed made this claim.
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Its unbecoming of His Dukeness to resort to the 'cultist' jibe. ;)
Other than that, any claims to the contrary have yet to be validated (despite this week's events).

Duke of Marmalade said:
tecate has made the very valid point that it is indeed behaving like gold, which raises the supplementary question "why is the nice shiny stuff tanking at the same time as the markets?"
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Why did gold tank at the onset of the financial crisis in 2008? As the recession follows shortly, it won't be going up either. Traders pull liquid assets to cover margin calls and market losses. Real people pull liquid assets to carry on when they realise debts and deal with job losses, etc. Once the market bottoms and the recession is priced in, gold and bitcoin should shoot up. .. especially if there's a raft of QE money in play.
 
tecate said:
What on earth do you mean by this? If you mean 'use case' rather than 'legitimacy', then yes , some are of the belief that it is taking on a digital gold use case.
What of 'blockchain' ? It's the overarching technology. What's wrong with the use of the term?
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Tecate, you are clearly a proponent of Bitcoin, and I am not discrediting it or trying to argue against your points.

The importance of legitimacy has been researched by academia, for example, cash is legitimate because it has the backing of the government, the individual notes are legitimate because of the watermarks. I am allowed to drive because I passed a test and have a license issued by the government. These are classic examples of legitimacy through standards and governments.

Technology legitimacy is the theory that new technology will become mainstream through achieving legitimacy. In this case the use of the term gold aids in making bitcoin comparable to something perceived as legitimate. Similarly, the term Blockchain is not present in the Bitcoin whitepaper. Bitcoin can have negative connotations around legality etc but using the term Blockchain allows companies selling / building blockchain solutions not to be directly linked to Bitcoin, it is a clean term.

For example, if tomorrow Amazon said they were only going to accept Bitcoin it would immediately increase bitcoins legitimacy.
 
Brendan Burgess said:
Agreed. But do you think that such a step might affect Amazon's legitimacy?

Brendan
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I was using a very simple example to illustrate but that is a good question.

I actually think they are a big enough company with enough users that they could force people to use whatever payment method they chose. Lets not divert the topic though, my example was just for the theory of legitimacy in helping technology going mainstream, not an opinion on whether amazon would allow bitcoin.
 
JSnowWinterfell said:
Tecate, you are clearly a proponent of Bitcoin, and I am not discrediting it or trying to argue against your points.
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You can discredit or argue away. My views are not set in concrete so I actively encourage it.
JSnowWinterfell said:
Bitcoin can have negative connotations around legality etc but using the term Blockchain allows companies selling / building blockchain solutions not to be directly linked to Bitcoin, it is a clean term.
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Ah, that harks back to the tar and feathering our banking friends tried to affix to BTC with their 'Blockchain not bitcoin' mantra a couple of years back.

Brendan Burgess said:
do you think that such a step might affect Amazon's legitimacy?
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I'd be keen to hear your thoughts on what - to your mind - that would say about Amazon and their 'legitimacy' were they to accept bitcoin directly, Brendan?
 
tecate said:
You can discredit or argue away. My views are not set in concrete so I actively encourage it.

Ah, that harks back to the tar and feathering our banking friends tried to affix to BTC with their 'Blockchain not bitcoin' mantra a couple of years back.


I'd be keen to hear your thoughts on what - to your mind - that would say about Amazon and their 'legitimacy' were they to accept bitcoin directly, Brendan?
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The original reference was to "only" accept bitcoin. They probably already accept bitcoin (or rather facilitate its exchange into fiat for the purpose of purchases). I don't know about legitimacy but their business would immediately collapse as there would only be .000001% of the populace in a position to comply with the decree. Would that %age go up as a result of the decree. It might double to .000002%.
 
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tecate said:
Whilst bitcoin is peer to peer cash, that doesn't in any way mean it can't act as digital gold. It's hard money due to a fixed supply and designed in scarcity.
The analogy with gold rests on its scarcity.
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I am sure we don't want to re-run the Great Bitcoin Debate. But the basic law of economics is that price is a function of supply and demand. There are many, many things in scarce supply. But you also need the demand side. The demand(s) for gold are easy to understand. For the life of me I cannot see any justification for the demand for crypto except speculation. This thread is questioning that other oft posited source of demand, its use as "digital gold" i.e. an insurance against all else falling apart.
 
Duke of Marmalade said:
I am sure we don't want to re-run the Great Bitcoin Debate. This thread is questioning that other oft posited source of demand, its use as "digital gold" i.e. an insurance against all else falling apart.
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I agree there's little need to reopen the 'Great Bitcoin Debate' Dukey. As regards the Digital Gold scenario, it's neither been validated or invalidated, we'll have to wait a while longer for confirmation either way.
 
Duke of Marmalade said:
This thread is questioning that other oft posited source of demand, its use as "digital gold" i.e. an insurance against all else falling apart.
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This wouldn't be my view. Bitcoin acts, or at least has the potential to act, as a safe haven against a corrupted monetary system.
It is not a store of wealth against biological pandemics that are threatening to destabilize economic output and demand.
 
WolfeTone said:
This wouldn't be my view. Bitcoin acts, or at least has the potential to act, as a safe haven against a corrupted monetary system.
It is not a store of wealth against biological pandemics that are threatening to destabilize economic output and demand.
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I accept there is a demand from lefties who wet themselves at the prospect of the corrupt monetary/capitalist system imploding.
 
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