Isn't the exposure making people less likely to trade? No-one wants to spend bitcoins because they're afraid they'll grow in value and they will have wasted money.
Funnily enough, my grandparents were telling me about how they were suspicious of debit/credit cards when they first started. Now of course, they feel very comfortable using them. Not directly comparable with bitcoin, but interesting in the sense that it was a significant paradigm shift in the way money was spent - initially met with skepticism, but eventually it caught on.
One key difference right now, though, is that I can use my Mastercard to pay for just about anythying just about anywhere I happen to be. In comparison to this worldwide acceptance as a means of payment, BTC seems just about worthless.
BTC is the gold of cryptocurrency. Bitcoin's strength is not being a practical payment system. Instead, with Bitcoin, you can trade with any other currency.
Perfectly right. This will only change if several factors converge to create the right conditions. One big factor would be a new "Google" of bitcoin, namely a disruptive new entry in the payements space, marketing BTC for the end user and threatening the incumbents to the point of forcing them to drop barriers to entry, and even start adopting the new technology.
True, however BTC isn't that different from a credit card in terms of liquidity. Plastic is accepted at more merchants, BTC can be digitally cashed in anytime with only a short delay.
I've got two credit cards, a Visa and a MasterCard, both of them backed by my Bitcoin wallet. Where's the problem? I can pay with Bitcoin anywhere I could've paid with Visa/Mastercard .. this isn't about BtC vs. Visa/Mastercard.
The price of bitcoin is totally fraudulent, driven by a couple of exchanges literally printing money, and gullible people doing arbitrage and exchanging bitcoin for tether.
The current price increase was driven almost entirely by a major US-based exchange which doesn't accept tether and has fairly substantial volume. Somehow this doesn't falsify the idea that the price is driven by tether-printing because it seems there's no possible turn of events that can falsify that belief - it doesn't matter whether Bitcoin is going up or down, or whether the trading driving the price involves tether, it's always tether.
The question is, say I had a million dollars worth of bitcoin. Or 10 million, or 100 million. How easily could I exchange them for a traditional hard currency, GBP, CHF, USD? What is the depth of the liquidity of this market? Without that, the valuation is meaningless.
The 24hr volume for bitcoin is currently at 6.2 B.
Selling 10 MM of bitcoin in a day would not affect price very much. Looking at the largest American exchange (6% of daily btc volume), GDAX, a 10 MM market sell order would drop the price to around 9400 USD from 9750 USD currently.
Selling 100 MM of bitcoin in a day would affect the price significantly. Looking at GDAX, a 100 MM market sell order would drop the price to around 7000 USD from 9750 USD currently. Although this would be arbed pretty quickly and I would think that it would recover to maybe 8500 USD.
I'm a bit weary. Say this cryptocurrency thing does take of and it's not a bubble. Then wouldn't this have similar effects that quantitative easing would have? I understand quantitative easing as 'printing money', because I'm not an economics person.
But if this would take off and get a strong foothold at the prices that we're seeing now (bitcoin almost 10K in dollars), then didn't some subset of techies print a lot more money than there is?
To me it seems there might be a chance that we're devaluing real currencies by quite a bit over the course of the next couple of years. Of course, the bigger chance is that this is a bubble and it will pop, but what if it isn't?
I know this is quite an unnuanced comment. I'm putting it out here, because I feel other people have the same concern and would like to see people who know a bit more comment on these ideas.
> But if this would take off and get a strong foothold at the prices that we're seeing now (bitcoin almost 10K in dollars), then didn't some subset of techies print a lot more money than there is?
Over the course of history, people crated money out of many physical objects that had the "money" properties. Money is a tool to represent value of exchange. As long as we all agree on it's value.
In the fiat world, the value of money is artificially fixed by the central banks and backed by the military power of its governments. it has effectively an unlimited supply. Quantitative easing is one of the techniques used to quickly increase the supply as it fits the central banks. You, me and all fiat money users have no say in it.
Bitcoin, is a limited amount of money supply that will ever exist. It is backed by math and cryptography and an open source ecosystem. It was decided so by us the people and not central banks. We didn't ask for their permission the same way as they don't ask for ours when they decide to print more.
Many of us believers in Bitcoin do not agree with the way central banks handle the most important tool of our civilization (Money) and do not agree with the current mainstream economic theory. So we decided to exit that system and try our own.
> To me it seems there might be a chance that we're devaluing real currencies by quite a bit over the course of the next couple of years. Of course, the bigger chance is that this is a bubble and it will pop, but what if it isn't?
If fiat currencies get devalued, and they will if the Bitcoin experiment works, then it would just mean fiat money is a weaker money than bitcoin (see Gresham Law[1]). In that case, is it the fault of the inventors if they invented a better system ?
As of the "speculative" nature of bitcoin, yes it is. What drives speculation is greed. Bitcoin at the protocol level is just a communication system. If you couple greed and Metacalfe's Law[2], you obtain a very powerful incentive for the system to grow.
I think of this incentive as a the trojan horse to the current financial system. People will come through greed and stay once they discover and learn about this new system, since it's not likely the central banks will "objectively" assess the value of Bitcoin.
The biggest part of humanity does not benefit from our current central bank system, so it has to get disrupted and replaced with a better one.
Either this, or we're stuck with the current unhuman, exploiting system. As an optimist, I'm betting on the former.
I'm curious how you define "better"? If you go by wealth equality, Bitcoin is worse than USD because Satoshi Nakamoto, the inventor of Bitcoin, owns more than 1/21 of all ever available Bitcoin. Several other early adopters claim to own a few hundred thousand Bitcoin.
If you are talking about income inequality, it cannot be fixed with money as it is just a tool. If our economic system is based on hoarding capital, then you end up hoarding it. If the best and safest way to hoard is Bitcoin, they you will use it.
However, you cannot go further than hoarding or using it. What the central banks do is much worse, they print it out of nothing and it ends up in the hands a few individuals, with impunity. So on scale of bad to worse, I would argue bitcoin is the lesser evil since at least it would allow for true free markets to exist.
Regarding Satoshi and the early adopters, why do you care ? When using fiat money, do you care about the fact the US dollar got an unfair advantage when it forced the Bretton Woods system on all of us ? As a matter of fact, the US dollar has been the strongest currency and international settlement one exactly because of that unfair advantage.
And if you do care, the problem is not within the money but the economic system. It's an other topic for a bigger problem ...
[1] Bitcoin is not there yet, still a lot of progress to be done on the fungibility side of it.
1) Your tax office requires your taxes to be paid with local currency
2) Because of this, you are obliged to routinely measure your economic activity relative to the yardstick of your local currency
Bitcoin doesn't have the same special place. My beefs with quantitative easing are:
1 - Whoever spends the money first is treated by the economic system as having done something useful for their money; when they have not.
2 - it distorts the yardstick we measure everything with. Eg, someone born in the 60s probably hasn't really adjusted their gut-feel for how much $1,000,000 is really worth these days. This just seems like confusing people for no reasons, and hence a bad idea.
Bitcoin ain't doing neither of these things. It is fine by me. Wealth creation even, if it doesn't bust spectacularly.
Quantitative easing (QE) is when central bank does large scale longer maturity assets financial asset purchases in order to lower interest rates and increase the money supply. This is supposed to stimulate economy. QE exchanges short term asset (cash) for long term assets (bonds and other debt instruments).
QE works by increasing the money flow trough real economy (the part of the economy that is concerned with actually producing goods and services rather than the part that consists of financial services such as banks, stock markets).
Bitcoins is the opposite. It's speculative asset that moves money into financial realm.
Quantitative Easing injects new money into the economy, devaluing money. But my bitcoin is only worth $10,000 USD if that's the amount you agree to pay me for it. And you will pay me using existing money. So there is no new money being injected and so it would seem there is no devaluation of old money.
But it feels like maybe you're right. I think existing money is essentially being devalued every time someone decides to spend their USD on bitcoin, demonstrating that a new thing that came out of (more-or-less) thin air now has value, and thus those who own it can 'claim' dollars, and thus there are less dollars for all the people who don't yet own bitcoin. Which means they are getting poorer.
My head hurts. Can someone smarter than I figure this out?
Like any other product or service, when you exchange your money for BTC all that has happened is someone decided to sell you BTC and you gave them money.
BTCs exchange rate is dependent on someone else offering money. If there's a market panic, the price quickly drops due to a race to beat other orders.
Your newly printed stack of $100 bills is also only worth $10000 if someone is willing to exchange it for goods and services worth that much. I don't see how newly mined $10000 worth of Bitcoin is injecting any less artificially created value into the economy.
This is not QE. BTC is treated like a physical asset with a fixed quantity, if x reserves of y mineral were found that would not be QE. Discoveries that increase net global value are completely different from altering the amount of a circulating currency.
Think of currencies as placeholders of value. When you work you create value and unless you want to trade that value directly for an asset that isn't a currency (think barter) you exchange the value for a currency. The currency acts as a placeholder for the value you created. One of currency's attributes is it's easy to divide into equal units. These units then become the "price" of your work. The currency makes it easy to compare units are prices of any other asset. So you can compare how much you want to charge for your work by comparing the units of currency across other stuff (e.g. cars, rent, food, etc.). Not all assets make good potential currency. Think of comparing televisions priced in houses. The Sony is 1/10000 of Alice’s house, the Visio is 1/100000 of Bill’s house, etc.
Currencies are just another asset with some additional properties. The most important additional property is that people are willing to exchange it for any other asset. The point at which an asset crosses over to the currency or medium of exchange is elusive.
The paradox is, a modern society needs currency in order to function (barter doesn’t work because of the double coincidence of wants), however, determining when to add/subtract currency (i.e. the money supply) from the world is imperfect. So the question is, how do you do this where all participants are treated the same?
The US dollar’s money supply is managed via lending. That is, currency is lent into existence. This methodology is extremely flexible through the use of inflation and generally depends upon prices going up, however, it’s not a panacea. If loans are not collateralized “fairly” then a bank's special ability to create loans in this closed system can harm everyone that holds dollars.
Currently, the Bitcoin money supply is managed through mining up to a finite number of Bitcoins. This is considered deflationary and has the potential downside of everyone holding Bitcoins and prices going down.
Bitcoin, imho, is not a currency because it isn’t used as a medium of exchange, yet or maybe never. However, it is a store of value (not saying it’s a good or bad store of value) with a limited supply. In time, we’ll learn whether that in and of itself is useful and therefore justifies the price or just a speculative bubble.
Quantitative easing (stealing value of money from others by priting it) is the main reason Bitcoin was created (just look at the message in the genesis block). Bitcoin has limited supply, which makes it a unique digital currency (as opposed to fiat currencies, that are also mostly digital, but centrally controlled/printed).
The comments on Bitcoin in here are almost all made by people who don't understand what they're talking about, spewing lies and half truths. Zero understanding, zero facts, 100% angry. It's hilarious.
gold has $7 Trillion and I fail to see how gold is a better store of value, I fail to see why would anyone buy gold bullion for example, is just a piece of metal.
Well, gold owes it's continued existence to the continued holding of the laws of physics.
Practically, I suspect Bitcoin relies on the reach bitcoin mining networks. If, eg, China's bureaucrats go mad and split China off from the main internet for a decade, what happens to bitcoin? I've been led to believe the serious mining pools are Chinese. Gold doesn't care about that sort of thing at all, it just keeps existing.
There are arguments for both. Storing metal is a cost.
It would still exist, but split into two blockchains. They would diverge, effectively becoming two completely different things, with different values. What kind of asset you have would depend on what network you are connected to.
This situation already exists for gold: gold (the physical stuff) in China and in the EU are loosely coupled: try to move your gold bar around.
> I fail to see why would anyone buy gold bullion for example
To make electronics out of it. The comparison of Bitcoin with gold falls short because gold is useful even outside of being a commodity or payment method.
imho the biggest difference is: gold is currently the preferred reserve by the world governments, which hold 30k tons, including the government with the largest military in the world. There is a chance that those in power will put a bit of effort to keep it more or less stable.
and they store it because there is a market for it, because people find it valuable, if the millennials don't get why a piece of metal has value, there isn't much governments can if no one buys their shiny metal.
except when it's e.g. required to manufacture the electronics these millennials use. gold might be over-valued in your opinion, but it has intrinsic value, unlike bitcoin.
People who understand that past performance is no guarantee of future results? If you entered and made a good return, you might want to save it in something considered safer. Also, you might want to use the money for something else.
I couldn't tell from the article - how do they define 'market cap'? Nr of currently mined coins * current value? Because if so, how does that make sense - nobody knows how many coins are 'lost'. Is there anyone watching e.g. how many coins haven't moved wallet since, say, 2013? Like, satoshi's coins - does it make sense to include those in any metric?
(maybe they're using an entirely different definition in which case the above is moot)
Yes, number of coins in circulation * price is how the cryptoscene defines it. There're studies that calculate the amount of lost coins around 4million
I believe it is calculated based on the amount of coins in circulation. Maybe those that had a movement in last N days or something like that, not sure about the exact details.
Daily transaction volume might be a better indication though..
I've bought a bunch of bitcoins: it's a fantastic investment in the vast and indubitable stupidity of humans.
People don't sell, they only "hlod" (it's no coincidence that the rallying cry for the numbnut bitcoiners is a typo), and the market is incredibly thin, driven up by people's willingness to buy smaller and smaller slices of the wretched things.
Downside will always be limited, as sell-offs can always be stanched by whales holding up prices and people's training to hlod and hlod and hlod.
It's such a headfvck, and all these bog-country paddies telling me in the wide suits on youtube about the future of internet currencies, convinces me that spivs and idiots will chase the value of bitcoin up for a long time to come. Bleeuuuurrrgggghhhhhh.
60 comments
[ 4.7 ms ] story [ 126 ms ] threadAs a vehicle for trade? Not there yet, we need more adoption, aided by exposure.
Will the buyers be willing to use those bitcoins to buy other things than fiat currencies? Once more products are sold in btc, why not?
Its about BtC vs. US$, &etc.
If you use Visa/MasterCard, you will not pay _in_ BTC but in dollars/euros/whatever.
There are quite a few others, but this is the one I know about.
Selling 10 MM of bitcoin in a day would not affect price very much. Looking at the largest American exchange (6% of daily btc volume), GDAX, a 10 MM market sell order would drop the price to around 9400 USD from 9750 USD currently.
Selling 100 MM of bitcoin in a day would affect the price significantly. Looking at GDAX, a 100 MM market sell order would drop the price to around 7000 USD from 9750 USD currently. Although this would be arbed pretty quickly and I would think that it would recover to maybe 8500 USD.
But if this would take off and get a strong foothold at the prices that we're seeing now (bitcoin almost 10K in dollars), then didn't some subset of techies print a lot more money than there is?
To me it seems there might be a chance that we're devaluing real currencies by quite a bit over the course of the next couple of years. Of course, the bigger chance is that this is a bubble and it will pop, but what if it isn't?
I know this is quite an unnuanced comment. I'm putting it out here, because I feel other people have the same concern and would like to see people who know a bit more comment on these ideas.
I think it's quite important that you watch this:
https://www.youtube.com/watch?v=4AC6RSau7r8
If you feel extremely angry afterwards, you're not alone.
Over the course of history, people crated money out of many physical objects that had the "money" properties. Money is a tool to represent value of exchange. As long as we all agree on it's value.
In the fiat world, the value of money is artificially fixed by the central banks and backed by the military power of its governments. it has effectively an unlimited supply. Quantitative easing is one of the techniques used to quickly increase the supply as it fits the central banks. You, me and all fiat money users have no say in it.
Bitcoin, is a limited amount of money supply that will ever exist. It is backed by math and cryptography and an open source ecosystem. It was decided so by us the people and not central banks. We didn't ask for their permission the same way as they don't ask for ours when they decide to print more.
Many of us believers in Bitcoin do not agree with the way central banks handle the most important tool of our civilization (Money) and do not agree with the current mainstream economic theory. So we decided to exit that system and try our own.
> To me it seems there might be a chance that we're devaluing real currencies by quite a bit over the course of the next couple of years. Of course, the bigger chance is that this is a bubble and it will pop, but what if it isn't?
If fiat currencies get devalued, and they will if the Bitcoin experiment works, then it would just mean fiat money is a weaker money than bitcoin (see Gresham Law[1]). In that case, is it the fault of the inventors if they invented a better system ?
As of the "speculative" nature of bitcoin, yes it is. What drives speculation is greed. Bitcoin at the protocol level is just a communication system. If you couple greed and Metacalfe's Law[2], you obtain a very powerful incentive for the system to grow.
I think of this incentive as a the trojan horse to the current financial system. People will come through greed and stay once they discover and learn about this new system, since it's not likely the central banks will "objectively" assess the value of Bitcoin.
The biggest part of humanity does not benefit from our current central bank system, so it has to get disrupted and replaced with a better one.
Either this, or we're stuck with the current unhuman, exploiting system. As an optimist, I'm betting on the former.
[1] https://en.wikipedia.org/wiki/Gresham's_law [2] https://en.wikipedia.org/wiki/Metcalfe%27s_law
I'm curious how you define "better"? If you go by wealth equality, Bitcoin is worse than USD because Satoshi Nakamoto, the inventor of Bitcoin, owns more than 1/21 of all ever available Bitcoin. Several other early adopters claim to own a few hundred thousand Bitcoin.
If you are talking about income inequality, it cannot be fixed with money as it is just a tool. If our economic system is based on hoarding capital, then you end up hoarding it. If the best and safest way to hoard is Bitcoin, they you will use it.
However, you cannot go further than hoarding or using it. What the central banks do is much worse, they print it out of nothing and it ends up in the hands a few individuals, with impunity. So on scale of bad to worse, I would argue bitcoin is the lesser evil since at least it would allow for true free markets to exist.
Regarding Satoshi and the early adopters, why do you care ? When using fiat money, do you care about the fact the US dollar got an unfair advantage when it forced the Bretton Woods system on all of us ? As a matter of fact, the US dollar has been the strongest currency and international settlement one exactly because of that unfair advantage.
And if you do care, the problem is not within the money but the economic system. It's an other topic for a bigger problem ...
[1] Bitcoin is not there yet, still a lot of progress to be done on the fungibility side of it.
1) Your tax office requires your taxes to be paid with local currency
2) Because of this, you are obliged to routinely measure your economic activity relative to the yardstick of your local currency
Bitcoin doesn't have the same special place. My beefs with quantitative easing are:
1 - Whoever spends the money first is treated by the economic system as having done something useful for their money; when they have not.
2 - it distorts the yardstick we measure everything with. Eg, someone born in the 60s probably hasn't really adjusted their gut-feel for how much $1,000,000 is really worth these days. This just seems like confusing people for no reasons, and hence a bad idea.
Bitcoin ain't doing neither of these things. It is fine by me. Wealth creation even, if it doesn't bust spectacularly.
https://www.dollartimes.com/inflation/inflation.php?amount=1...
QE works by increasing the money flow trough real economy (the part of the economy that is concerned with actually producing goods and services rather than the part that consists of financial services such as banks, stock markets).
Bitcoins is the opposite. It's speculative asset that moves money into financial realm.
But it feels like maybe you're right. I think existing money is essentially being devalued every time someone decides to spend their USD on bitcoin, demonstrating that a new thing that came out of (more-or-less) thin air now has value, and thus those who own it can 'claim' dollars, and thus there are less dollars for all the people who don't yet own bitcoin. Which means they are getting poorer.
My head hurts. Can someone smarter than I figure this out?
BTCs exchange rate is dependent on someone else offering money. If there's a market panic, the price quickly drops due to a race to beat other orders.
Currencies are just another asset with some additional properties. The most important additional property is that people are willing to exchange it for any other asset. The point at which an asset crosses over to the currency or medium of exchange is elusive.
The paradox is, a modern society needs currency in order to function (barter doesn’t work because of the double coincidence of wants), however, determining when to add/subtract currency (i.e. the money supply) from the world is imperfect. So the question is, how do you do this where all participants are treated the same?
The US dollar’s money supply is managed via lending. That is, currency is lent into existence. This methodology is extremely flexible through the use of inflation and generally depends upon prices going up, however, it’s not a panacea. If loans are not collateralized “fairly” then a bank's special ability to create loans in this closed system can harm everyone that holds dollars.
Currently, the Bitcoin money supply is managed through mining up to a finite number of Bitcoins. This is considered deflationary and has the potential downside of everyone holding Bitcoins and prices going down.
Bitcoin, imho, is not a currency because it isn’t used as a medium of exchange, yet or maybe never. However, it is a store of value (not saying it’s a good or bad store of value) with a limited supply. In time, we’ll learn whether that in and of itself is useful and therefore justifies the price or just a speculative bubble.
Definitely is money in a relatively new form, that millions of people are using to facilitate exchanges. Why wouldn't BTC be considered currency?
Practically, I suspect Bitcoin relies on the reach bitcoin mining networks. If, eg, China's bureaucrats go mad and split China off from the main internet for a decade, what happens to bitcoin? I've been led to believe the serious mining pools are Chinese. Gold doesn't care about that sort of thing at all, it just keeps existing.
There are arguments for both. Storing metal is a cost.
This situation already exists for gold: gold (the physical stuff) in China and in the EU are loosely coupled: try to move your gold bar around.
To make electronics out of it. The comparison of Bitcoin with gold falls short because gold is useful even outside of being a commodity or payment method.
Germany was recently "discouraged" of claiming their gold reserves back.
(maybe they're using an entirely different definition in which case the above is moot)
Daily transaction volume might be a better indication though..
[1] https://bitcoin.stackexchange.com/q/845/9479
People don't sell, they only "hlod" (it's no coincidence that the rallying cry for the numbnut bitcoiners is a typo), and the market is incredibly thin, driven up by people's willingness to buy smaller and smaller slices of the wretched things.
Downside will always be limited, as sell-offs can always be stanched by whales holding up prices and people's training to hlod and hlod and hlod.
It's such a headfvck, and all these bog-country paddies telling me in the wide suits on youtube about the future of internet currencies, convinces me that spivs and idiots will chase the value of bitcoin up for a long time to come. Bleeuuuurrrgggghhhhhh.