Is Bitcoin the Next Big Thing?

[dee]

When you look at the last article, consider this: why would Lightning have to use Bitcoin? Why couldn’t the same solution be married to a different cryptocoin?

Guess it makes sense in terms of it being a ready made user market

 

[dee]

When you look at the last article, consider this: why would Lightning have to use Bitcoin? Why couldn’t the same solution be married to a different cryptocoin?

Guess it makes sense in terms of it being a ready made user market

 

[Admin]

Three good “food for thought” articles...
http://time.com/money/5056346/bitcoin-ownership/
https://www.coindesk.com/threat-bitcoin-futures/
https://www.coindesk.com/lightning-bitcoin-scaling-tech-really-know/

When you look at the last article, consider this: why would Lightning have to use Bitcoin? Why couldn’t the same solution be married to a different cryptocoin?

If the answer is “no real reason” then that in itself is interesting...

I think you are looking at it backwards...lightning doesnt have to use bitcoin, nor does it have to pick 'one' crypto. Its the other way around is it not, Bitcoin developers are building lightning for bitcoin, to achieve the scaling and efficiency it needs. Once achieved, and they are very close, it will knock some of the alts pretty bad as their perceived advantage will be removed.

 

[Edwin]

I think you are looking at it backwards...lightning doesnt have to use bitcoin, nor does it have to pick 'one' crypto. Its the other way around is it not, Bitcoin developers are building lightning for bitcoin, to achieve the scaling and efficiency it needs. Once achieved, and they are very close, it will knock some of the alts pretty bad as their perceived advantage will be removed.

I’m not sure I am. Bitcoin has the huge disadvantage when it comes to using it as a currency that, for the moment anyway, it has shown a tendency to zoom up. People exhibit very strong hoarding behaviour around rapidly appreciating assets. So making Bitcoin much easier to spend will not necessarily increase spending.

You need a sharp, protracted correction in the value of BTC before it starts to look attractive as a currency, but that’s when - perversely - it will lose its appeal as a store of wealth.

To a large extent, they’re two sides of the same coin, if you pardon the pun. So “Bitcoin as currency” and “Bitcoin as wealth store” cannot both be simultaneously valid positive attributes of Bitcoin.

Rather like Schroedinger’s cat - you don’t know now whether Bitcoin will end up on the wealth or the currency side, assuming it survives at all. But something to enhance its appeal as a currency (eg Lightning) certainly doesn’t help, and could even hinder, its appeal as a store of wealth.

 

[Admin]

No. They literally only started it on Thursday and its very limited. You can buy bitcoin, ether etc with them and spend them on your revolut card but you cant transfer in bitcoins! Not sure you can sell them with them either. Sure they'll expand their crypto offering in time.

 

[Edwin]

Another good read (point #6 especially)
https://www.forbes.com/sites/jasonb...and-anyone-else-who-will-listen/#688dab23402d

 

[Edwin]

It's interesting to watch a Bitcoin ticker such as http://bitcointicker.co/coinbase/btc/usd/

The price just got "stuck" for over 3 minutes because there was a seller wanting to sell 60 Bitcoin at US$15,600 and a buyer wanting to buy 21 Bitcoin at US$15,599. Since most of the transactions on that exchange seem to be for 0.01-0.2 BTC, those 2 big trades blocked things up like a traffic jam. Once they cleared (I couldn't tell if both completed, or if one or both were taken down unfilled) the price suddenly leapt $250 in about 10 seconds before fluctuating like crazy.

That $250 leap was equal to over $4 billion in total market cap. In other words, a transaction "worth" less than a million dollars was able to totally block over 4,000x more market fluctuation.

I think that begins to answer my question the other day about how much purchases and sales move the market cap. The answer is: a LOT more than the value of the purchases or sales.

In other words, you could add billions (very temporarily) to the value of all BTC by buying a few millon dollars worth of BTC in a very short space of time. Or you could knock billions off the total market cap by selling a block of BTC. Not that either action would necessarily help YOU make money, but it's a measure of how incredibly sensitive the market is.

This also suggests that a single large player could utterly destroy BTC's value if they suddenly get cold feet and decide to get out of BTC completely and into something perceived as safer. Imagine the vertical plunge if the amounts on offer were not 50-60 BTC, but blocks of thousands! And yet, in many ways the entire market is dependent on a game of "chicken" being played out by the very large position holders, because it's likely only ONE will get to cash out any decent amount. So everyone's ok until suddenly nobody's ok.

The above analysis is of necessity simplistic, because the price of BTC ultimately is some kind of amalgam of the price on all exchanges, not on a single large exchange. But it's at least indicative...

 

[Edwin]

Stuck again. $15,659.99 vs $15,660, a total of about 50 BTC piled up by both "sides" on those levels. That held things for nearly 2 full minutes. So it really doesn't take large sums (in the grand scheme of things) to freeze the exchange for a significant period.

 

[RobM]

Strange... 1c in $15,000 that must be really volatile.. in fact more volatile market than forex.... It held for 2 minutes? There must be no volatility in that market..... hmmm hang on... lol Methinks the exchange is fixing the price.

 

[Edwin]

Strange... 1c in $15,000 that must be really volatile.. in fact more volatile market than forex.... It held for 2 minutes? There must be no volatility in that market..... hmmm hang on... lol Methinks the exchange is fixing the price.

I have a different explanation: nearly but not quite everyone is a very small player. So when a big buy or sell position appears, they all (by necessity) sit on their hands until the occasional deep-pocketed buyer or seller comes along who's willing to commit high six figures or seven figures in a single trade. Suddenly, the logjam's broken and all the little players can get on with trading their couple of hundred dollars worth of Bitcoin until the next big trade stops things up again.

 

[Edwin]

Gemini index also got stuck just now with trades for blocks of 20 BTC sitting unfilled in both the BUY and SELL columns.
http://bitcointicker.co/gemini/btc/usd/

So it looks like the big fish little fish problem is not limited to one particular exchange.

 

[RobM]

You never see such tight spreads with low volatility. Because the more volatile a market the more likely a buyer/seller is to place a bid within the spread until eventually it gets to the smallest level it can. In such volatility the price never stays for as long as it did. That is not an interpretation - that is how all markets work and is logical. The only way a spread could be that small in a low volatility market is because someone is sitting in between the buyers and sellers and setting the price. If I'm an exchange and buyers will pay 1.20 and sellers will accept 1.40 I can say the spread is 1.29/130 because I'm going to make 10 of the seller or 9 off the buyer. However in a volatile market I can't do that because the buyers and sellers (there will be far more of them and far more active) reach a spread that I can't sit in between to fix a price. These exchanges are sharks.

 

[Edwin]

I can see where you're coming from.

However, what happens if somebody parks say a 25 BTC buy on $14,999.99 and somebody else parks a 25 BTC sell on $15,000.00 and the exchange doesn't go more granular than that (the one I'm looking at right now quotes 5 decimal places, but the last 3 are always "000" for all positions)?

In other words, there's literally no in between amount that buyers and sellers can trade at. Until one of the two 25 BTC positions is filled, or one of the entities behind the positions pulls it or alters it, the market's gummed up.

(I'm not trying to defend the exchanges here, I'm just taking stabs in the dark based on what the graphs and lists of waiting positions seem to suggest.)

Also, I wouldn't say it's a low volatility market. When there are no large trades waiting in either the BUY or SELL colums, the price bounces up (or down) like crazy. Isn't that demonstrating high volatility?

 

[RobM]

However, what happens if somebody parks say a 25 BTC buy on $14,999.99 and somebody else parks a 25 BTC sell on $15,000.00 and the exchange doesn't go more granular than that (the one I'm looking at right now quotes 5 decimal places, but the last 3 are always "000" for all positions)?

That's not going to happen. The market would move to such a tight spread compared to the amount and volume of the stock. Nobody would not buy or sell a measly 25 coins at 450k for the sake of 25c. The only way this would happen is if the *real* spread was something a lot different and the exchange set the buy/sell spread.

 

[Edwin]

The only snag with the exchange theory is that the same sort of pattern seems to show up across all the major exchanges. So, sure, they could all be price-fixing in theory, but I'm guessing that the more players tried to do that, the more chances there are of being found out... and yet they've not been caught at at.

Not to mention that they can't even seem to keep up with all the trades people want to put through them when a flurry of buy or sell orders turns up.

(Of course it could also be that particular ticker site giving a less-than-accurate view of BTC trading!)

 

[RobM]

Bitcoin wasn't regulated until the middle of this year I believe. That regulation also doesn't cover 99% of the 'exchanges' in operation so there is nobody to 'catch' them. Only when people come to sell large amounts will they wonder where all the buyers have gone and why suddenly the market is moving downwards. The collapse when it comes will be very swift but it will only affect those who paid 4 figures and up in my opinion. A normal person can afford to lose a few hundred but I suspect they will find it harder to recover from the loss of 4 or 5 figures of cash.

 

[Edwin]

I'm just waiting for an ICO to come forward with the stated business plan to "invest in Bitcoin" The snake really would be eating its own tail then...

 

[dee]

Will be interesting to see if anything happens in a couple hours/tomorrow. BTC futures trading starts for the first time. Although only an hour available tonight I think and weekend spread so probably not tonight.

 

[Edwin]

The Treasury is planning moves to remove Bitcoin anonymity...
https://www.theguardian.com/technol...u-plan-cryptocurrency-price-traders-anonymity

I'm not suggesting for one second that anyone reading this thread and engaged in Bitcoin trading is doing anything dodgy, but if you are then better to be aware...

 

[Admin]

Over 20% up in last 24 hours, sold half my btc to usd now.