Why is Bitcoin "digital gold" crashing right now?

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Ah Wolfie let's dig a rabbit hole. Maybe @tecate will stay out, she is well occupied on the Eastern Front fighting @Dublinbay12
I'm no great fan of the economics profession and I agree they have a very mixed record at accurately predicting economic outcomes. But that is not really at stake here. Bitcoin and other currencies purport to have value even though they patently do not have any intrinsic value. I find it intriguing how easily people can buy into this concept. They swallow the argument that their fiat has no intrinsic value, so what is the difference, and then they get easily persuaded by the scarcity argument.
Let's face it a store of value or medium of exchange that actually has no intrinsic value is quite a leap of faith for the human mind, and I am sure a few breaths were held when there was the official break with the Gold Standard. Without being an historian I bet that that move was hotly disputed by the economics profession of the time and probably in the end had mainstream consensus.
There seems to me a complete absence of any such debate on crypto in mainstream economic circles. They obviously believe the comparison between fiat's lack of intrinsic value and cryptos' is totally irrelevant. I myself see no comparison at all, fiat's value is supported by a whole institutional, cultural and economic edifice and yes by Central Banks entrusted to maintain its value - but hey that is a rabbit hole.
The reason I brought it up again is that @Dublinbay12 drew my attention to the absence of any real institutional support for bitcoin. Against the zeitgeist of the times I for one still trust the experts.
 

Tecate, please show me one inaccurate comment I have made on Bitcoin during this discourse? You seem hamstrung on discrediting my position because you don't believe me to be a proponent in your eyes. I clarified my statement to see if you would move on, but no, you seem hellbent on rather than actually discussing my points to continually try to discredit them based on the fact I can't be a proponent. I guess that is why you admit that you can't embrace this discussion on a reasoned basis.

This just goes to show, that anyone who critiques BTC is a naysayer and can't be neutral?



I was referring to academic papers and not what Duke has to say.


This is the crux of it for me, and where there will never be an agreement. The facts suggest there is no uptick, but in your mind that is just temporary and everything points towards mass adoption. The simple point is, we have been able to buy BTC as individuals for years, if institutions, hedge funds or whatever other large investors wanted to do it there has been nothing stopping them. The simple fact is the demand is not there, and that is what the data shows. How many funds have you got on record for buying it out of the thousands in operation globally? There are probably more funds buying art as investments than BTC.



Why do you continue to try and change the subject? Can't you answer the question? Take a step back and ask yourself that question without thinking about the technology.


For reference, the below is your initial post on Fidelity in which you present it as a trusted opinion. I was not referencing your flip flop when queried on the credibility of Fidelity in this area. If not you should edit the post.



After all of this, I am not sure what your actual stance on BTC is, and is why I keep (in my opinion) referencing you as having blind faith. Or perhaps it is more like, you actively search out articles to support your view, but I am not sure what that is? Is it BTC is going to be a store of value that is treated as an alternative asset similar to gold? Is it going to be a currency for transferring funds for the unbanked around the world? Is it a currency that will be adopted into our daily lives?

A lot of your posts often cite future developments (see above "the path is paved"). So putting you on the spot, what is your 10 year prediction?
 
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MaxGordon said:
I don't believe you, Watson - nobody can be so unaware or in that much denial.

Also, I note, how you've avoided the specific question in my last post. Now, there's a surprise!

You really have some front!
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6 mins for the knee to jerk, I guess she was earlier tied up on the Eastern Front.
What makes me sense that you are stalking me Max? Yes, I remember the Watson reference but believe me my comments on Tesla were extremely peripheral. You seem to have much better recall of my AAM contributions than I do (I wonder should I be flattered).
Really, I can't remember when I read the White Paper, what "gotcha" are you plotting there?
 
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Duke of Marmalade said:
Ah Wolfie let's dig a rabbit hole.
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For sure, so why resusicitate the 'intrinsic value' debate?

Quite simply, money and value are just an efficient means of communication.
Up until now, that means of communication has broadly, but by no means exclusively, been controlled by central authorities like governments and banks.
I suppose what bitcoin is saying, that as long as the digital age exists, the era of decentralised money has arrived. A means of communicating price and value without interference, permission or oversight from a central authority - that is its intrinsic value. What price anyone puts on that intrinsic value will be decided by the market.
 
Dublinbay12 said:
Tecate, please show me one inaccurate comment I have made on Bitcoin during this discourse?
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You've cleared the matter up for us already by confirming that you are not a proponent of bitcoin - so we're all good on that front, thank you.

You just make my point for me with this stuff.

Dublinbay12 said:
I was referring to academic papers and not what Duke has to say.
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Yes....and this particular disagreement came about due to your view of my response to his Dukeness. There's your context.

Dublinbay12 said:
This is the crux of it for me, and where there will never be an agreement. The facts suggest there is no uptick,
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Did I just say that volumes have doubled over recent weeks or are you challenging that information?

Dublinbay12 said:
The simple point is, we have been able to buy BTC as individuals for years,
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Time and time again, we see so many fall at this hurdle. Given the complexity involved, the progress of bitcoin has been quite remarkable. However, you - just like the other bitcoin-skeptics here are 200% confident that as it hasn't hit mass market then it wont hit mass market. I'm quite happy to accept that bitcoin could ultimately not match my expectations but that's flawed logic from you. Particularly so when the technology and its eco-system are still in development.

Dublinbay12 said:
if institutions, hedge funds or whatever other large investors wanted to do it there has been nothing stopping them.
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As I alluded to in my last post, that's not the case at all.

Dublinbay12 said:
How many funds have you got on record for buying it out of the thousands in operation globally?
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And because they haven't, your logic is that they won't? That's flawed logic. Whilst we're on the subject, this whole conversation started with you taking me to task for posting info with regard to first movers along these corporate/institutional lines. If we're both interested to know if there will be take-up from that side of the house, isn't it entirely relevant to acknowledge those moves.

Dublinbay12 said:
Why do you continue to try and change the subject? Can't you answer the question? Take a step back and ask yourself that question without thinking about the technology.
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We've been over this. I'm sorry that its not the answer to the question that you were expecting/hoping for. It is my answer however - so please respect it.

Dublinbay12 said:
The below is your initial post on Fidelity in which you present it as a trusted opinion. If not you should edit the post.
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It is - and we've discussed what followed. EVERYONE has a certain bias - and that has to be borne in mind. That doesn't suddenly mean that everything that they produce is a lie. They are the worlds leading asset manager afterall. Secondly, on this specific point (that their report picks up on) - I can easily go out and find a wealth of respected opinions that take the same position i.e. volatility will dissipate as we progress. Think about it. The overall market for any asset expands exponentially - then of course volatility levels go down with that. It's entirely intuitive.
 
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Only kidding about the rabbit hole, you're already down 6 feet
I was explaining why I found "the dogs that are not barking" very telling in the bitcoin debate; those dogs are the mainstream economists and by and large institutional investors. I didn't really want to open up the intrinsic value debate, just citing it as an example where mainstream economists reject bitcoin. You may disagree with mainstream economists but that is a separate point of rabbit hole propensity.
 
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All that happened is that you said something that was strange and I picked you up on it. Last worders can't hack being tooked up on anything so what should have been an unique post by me took several. My sin, if one exists, is not stalking but that other st word....STUBBORNESS! It just takes yonks for you to acknowledge certain things - and I am reticent to give last worders, well, the last word. Reassuringly, at least you did come out swinging a little in your last post - there's something disconcerting when folk don't revert to type.

Oh, I don't for a second believe that you don't broadly remember when you read the white paper. Nobody can have such a poor memory and in any event the search function here is quite good. The "gotcha" then is obvious - but I feel disinclined to waste anymore time explaining what you already know. Nobody can have such poor powers of deduction and especially not my dear Watson.

Anyways, I'll leave it at that. I don't have Tecate's patience or resilience. I'll leave the last word to you - after all, that's all you really want in all of this, isn't it?
 
Getting back to relevant milestones in the sector...Paypal has now confirmed that it's adding crypto.

LINK
 
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Duke of Marmalade said:
I was explaining why I found "the dogs that are not barking" very telling in the bitcoin debate; those dogs are the mainstream economists and by and large institutional investors.
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I don't really want to be repeating myself but

WolfeTone said:
I can recall an almost complete absence of endorsement from mainstream economic thinking [insert: & institutional investors] for economic crash in 2008
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I'm going to throw this out there, I gather most if not all institutional investors are licensed and regulated by their respective central banks and governments? There may be some element of reluctance of wading into the relatively unknown, and also of stepping outside of the regulatory framework that oils their engines so to speak?

While bitcoin may be a market of €200bn it is relatively small fry compared to the levels of finance that are operating through the regulatory system. So is it reasonable that licensed, regulated, institutional investors are somewhat risk averse given bitcoins volatile history?
That may be one reason.

Other reasons could be that the views of institutional investors and economists are in line with your own views, albeit your own views are shaped by institutional investors and economists!
Isn't there economic theory behind this type of behaviour?
 

Yet again Tecate fails to engage in the actual topic, or actually answer any question posed. It is impossible to have a discussion with somebody who continues to not answer questions.
 
tecate said:
Getting back to relevant milestones in the sector...Paypal has now confirmed that it's adding crypto.

LINK
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Before we launch into debate, what are your thoughts? The questions I would ask, who does this benefit? How does it make BTC more obtainable for the everyday person. This is a step in providing easier access to retail investors but is it actually helping the adoption of BTC? Quoting from the article before, I would assume that there will be some form of bid/ask spread when paying with BTC to reduce settlement risk for Paypal. This undoubtely will be the true to test to whether adoption of BTC will happen, so I am interested to see the outcome.

"Cryptocurrency payments on PayPal will be settled using fiat currencies, such as the U.S. dollar, meaning merchants will not receive payments in virtual coins, the company said."

In the immediate shortterm as Tecate refers to me as a non proponent, I have just benefitted ~5% on this news. It is likely a good time to reduce exposure.
 
Wolfie, those are valid points, though I think the failure of the economists/institutional investors to predict the economic crash is not a very valid argument. There is a difference between predicting economic outcomes and validating an economic proposition. But I think the general failure of the institutional apparatus (economists, bankers, investment firms etc.) illustrated so starkly by the crisis is a part explanation of why the bitcoin narrative has got traction with a disillusioned constituency.

The medical profession did not predict the COVID. But when they agree on a vaccine I will accept their assurance despite that failing. That's probably not a valid comparison either, but I thought I would throw it in.
 
tecate said:
And once again you don't like the answer so this os the reaction we get from you.
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Tecate, there was no answer, I am left pondering your stance. It feels a little like groundhog day again and you have started a cycle of posting articles without reading and reflecting them. I hope you can provide your thoughts on the article you posted per my question in post 595, but I hold my breath.

As you are a self styled proponent of BTC, it would be good to see your take / prediction on this latest development. What area of BTC do you think it will benefit the most?
 
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If you're defining 'actual adoption' as transactions like people buying coffee with crypto. That'll be the last step not the next one. Paypal won't make a difference. Bitcoin (or any current crypto) can't support that kind of adoption anyway as it will be hindered by the transaction limit. The lightning network or some other layer is necessary so that each individual transaction is not needed on the blockchain. This may happen in the future, but it's not close.

The adoption that is happening is people buying it as a store of value. This is a list of the public companies and other institutions that now own bitcoin https://bitcointreasuries.org/

It used to be an empty list, now it's a very small list, but they own 3.74% of the total supply. how far are we into institutional adoption? is this 3.75% the peak for these type of organizations?

As of today Saylor is already 60m in the green, on paper. I'm sure todays volatility is worrying him deeply.
 
Dublinbay12 said:
Tecate, there was no answer, I am left pondering your stance.
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I've answered and responded accordingly thereafter. As mentioned before, you don't like the answers that you're getting as they don't fit your world view. Maybe I should just let you write them for me.
Dublinbay12 said:
I hope you can provide your thoughts on the article you posted per my question in post 595, but I hold my breath.
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Keep your panties on - I'm getting to it. I do have the odd thing to take care of in between times.

Dublinbay12 said:
What are your thoughts? The questions I would ask, who does this benefit? How does it make BTC more obtainable for the everyday person. This is a step in providing easier access to retail investors but is it actually helping the adoption of BTC?
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My thoughts are that it's not a panacea (no one such move implicating crypto is). However, it's a building block that strengthens the emergence of crypto.
In the overall context, it is a further measure in legitimising crypto to the general public. Personally, I can't stand Paypal but that's neither here nor there. Paypal is trusted by 100s of millions of people worldwide. All that ordinary people know about crypto exchanges is that they believe them to be dodgy. The largest crypto exchange has around 35 million customers. Paypal has 350 million active account holders. KYC/AML has been a major point of friction in adoption. That changes here as it allows a whole new swathe of ordinary people to have direct access to crypto without lifting a finger.
Dublinbay12 said:
I would assume that there will be some form of bid/ask spread when paying with BTC to reduce settlement risk for Paypal.
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I expect Paypal to be true to form and that the costs will be Paypal-esque. However, that makes no difference. If you talk to many people that have gotten into this space about the first means by which they obtained crypto, chances are they will tell you that it was a bad deal (in terms of fees/commissions, etc.). They went on to use crypto more and became more discerning in how they bought and sold it. This represents an on/off ramp - and an opportunity to on-board new people into the crypto ecosystem.
Imagine if someone offered to sell you something online - and their deal was so much cheaper than the alternative. However, they insist on crypto payment. If everything you heard about crypto is negative and you've decided you don't need it, you don't understand it, nevermind start to think where or how you'd buy it (or go through KYC/AML to open an account just for this one trade) - you're going to say screw this and run with the more expensive alternative. If you have a paypal account - and you already have access - you trust paypal as you've been with them for years - then its probably still a pain in the ass as you're not used to it - but you'll do it to get the cheaper price.
Dublinbay12 said:
What area of BTC do you think it will benefit the most?
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So as per the explanation above - this is retail-related.
Dublinbay12 said:
is it actually helping the adoption of BTC?
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It's not a panacea in and of itself but it is a very large and significant brick in the wall.

Dublinbay12 said:
In the immediate shortterm as Tecate refers to me as a non proponent, I have just benefitted ~5% on this news. It is likely a good time to reduce exposure.
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I've already explained this to you. I have come across plenty that trade btc/crypto while sledging it every day of the week. If you're trading crypto and that works for you - good for you. But that certainly doesn't make you a 'proponent' of bitcoin.
But then feel free to explain yourself a bit more on that if you wish. I invited you to do that previously. Do you believe that there's anything tangible to invest in (as I've yet to hear a single positive statement on btc from you) or you're smarter than everyone else and you feel you're benefiting from all the stupid people that have put some $ in crypto?

Dublinbay12 said:
This undoubtedly will be the true to test to whether adoption of BTC will happen, so I am interested to see the outcome.
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I didn't need this validation - but it's something that I think is useful to point out to you. With this statement, you're saying that this news has potential significance (which could go either way). It's significant - and that's why I posted about the initial (unconfimed) report to this effect some weeks ago. It's in the same vein, I followed up with other such significant milestones.


Lastly, you asked me to describe what my thoughts were as to how I saw the space play out with regard to bitcoin - going forward. I gave you my best guess (my current guess based on an opinion that is always open to adjustment). I provided you with my thoughts. Given that you've worked on blockchain-related projects, I'd be curious to hear your own view (whether that's about BTC, CBDCs or crypto/blockchain generally). How do you see things developing?
 
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The paypal move as I see it has two benefits, the first it helps legitimize BTC, and it benefits existing holders, who now have more options to buy physical goods with BTC (tax benefits).

The use as a store of value is much more interesting, and if ~30 companies can hold 3.74% of BTC and with further institutional adoption, liquidity will dry up. In turn this will grow the non deliverable futures market. If we compare this to Gold, the reserves are held mostly by governments. So we would have a change with BTC reserves held by individuals (Corporations) which creates an entire different set of economics.

I am not really sure what this does for price stability, if most of the BTCs in the world are held in wallets and not circulating.
 
Duke of Marmalade said:
There is a difference between predicting economic outcomes and validating an economic proposition.
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Of course, and I wouldn't be so mean-spirited as to expect any economist to predict the day and time of the crash commencing. But the economic proposition of a crash was at least two years, if not more, identifiable in the emergence of a property bubble fueled by over-extending credit. Those that gave warnings were dismissed, excluded from the mainstream.
All the information that was needed was readily available to hand, and let's face it, in mainstream economics and finance, no-one shouted stop!

That aside, comparisons between medics and economists, covid and btc may not be so far apart

- nobody predicted Covid19
- nobody predicted BTC
- Covid numbers are volatile
- BTC price is volatile
- We are waiting for a promised vaccine for Covid
- We are waiting for a promised return to zero for BTC

 
Dublinbay12 said:
The use as a store of value is much more interesting, and if ~30 companies can hold 3.74% of BTC and with further institutional adoption, liquidity will dry up.
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That may be an understatement. since less than 12% of total supply now remains to be mined, and at a rate of less than 1.8% of per year from here onwards.

Dublinbay12 said:
In turn this will grow the non deliverable futures market.
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Maybe, though it's a lot easier to take delivery of BTC than gold, so a much higher proportion of investors may choose to do so, especially if they're buying bitcoin to hedge against systemic problems with paper trading markets.

Dublinbay12 said:
If we compare this to Gold, the reserves are held mostly by governments. So we would have a change with BTC reserves held by individuals (Corporations) which creates an entire different set of economics.
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Speaking of which, I guess the list of governments holding reserves in bitcoin is currently an empty list, will it be become a small list any time soon?

Dublinbay12 said:
I am not really sure what this does for price stability, if most of the BTCs in the world are held in wallets and not circulating.
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Personally I think it will be absolutely terrible for stability, as bitcoin is propelled to the moon with this as the catalyst in the next year or so.
 
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