Is Bitcoin the Next Big Thing?

[martin-s]

@ausername Bitcoin is only a ponzi scheme to the extent that most other paper currencies are

 

[dee]

https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html

Apparently the big boys at the top are just increasing holdings

 

[Edwin]

https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html

Apparently the big boys at the top are just increasing holdings

Interesting. Presumably they’re having to commit real money on top of (potentially) funny money. By this, I mean that they may have built up their initial position when Bitcoin was only worth a tiny fraction of what it is now...

 

[dee]

Interesting. Presumably they’re having to commit real money on top of (potentially) funny money. By this, I mean that they may have built
up their initial position when Bitcoin was only worth a tiny fraction of what it is now...

Absolutely. Or trade ETH or other coins, though that would probably be counter productive at mo as pretty much everything has tanked. It's probably the same people/funds that sold on way down and are buying more back in.

 

[ausername]

@ausername Bitcoin is only a ponzi scheme to the extent that most other paper currencies are

I didn't say Bitcoin itself was a ponzi scheme, re-read.

ps. None of us have any idea which bitcoin exchanges are operating with a fractional reserve model, and we won't until there is a bitcoin 'bank run', or 'exchange run' perhaps, which the market hasn't seen yet.

Who knows which exchanges have more bitcoin in accounts than they actually have in actual wallets.

 

[websaway]

Gold and Diamond have an inherent value because there is a finite supply. Had the moon been made of gold when we arrived it would have negated most of the value of Gold. Bitcoin is similar in as much as that only 20 million can be mined but did they overlook the fact that there can be an infinite amount of identical coins.

 

[ausername]

Gold and Diamond have an inherent value because there is a finite supply. Had the moon been made of gold when we arrived it would have negated most of the value of Gold. Bitcoin is similar in as much as that only 20 million can be mined but did they overlook the fact that there can be an infinite amount of identical coins.

Correct about gold.

Incorrect about diamonds.

Diamonds are not a rare commodity, the supply is artificially restricted by a cartel and the perceived value inflated by clever marketing. Diamonds are simply not rare... there are already enough diamonds mined to meet consumer demand for the next thousand years.

High clarity Emeralds, Rubies and Sapphires are actually rarer than equal quality diamonds.

(Okay so you are 'technically' correct in the sense that everything is finite, but you catch my drift)

 

[RobM]

Not much use having a currency that can't be used a) without power or b) without internet. As someone said it's trying to 'fix' a problem that doesn't actually exist.

 

[ausername]

As someone said it's trying to 'fix' a problem that doesn't actually exist.

That was me.

In fairness it does serve a purpose as a simple transfer of wealth beyond borders, which will be of particular use to drug traffickers and tax evaders. But you know what else can be used for that purpose? Domain names!

Chinese man in Shanghai purchases a domain name for $50,000 from his cousin living in Switzerland.... boom, $50k of his money is now in a tax haven. Don't need crypto for that.

 

[websaway]

Correct about gold.

Incorrect about diamonds.

Diamonds are not a rare commodity, the supply is artificially restricted by a cartel and the perceived value inflated by clever marketing. Diamonds are simply not rare... there are already enough diamonds mined to meet consumer demand for the next thousand years.

High clarity Emeralds, Rubies and Sapphires are actually rarer than equal quality diamonds.

(Okay so you are 'technically' correct in the sense that everything is finite, but you catch my drift)

yes you make my point, they all have a rarity value . That seems to have been the intention of Bitcoin, there is only 20 million, even down to the mining of them.

 

[ausername]

yes you make my point, they all have a rarity value . That seems to have been the intention of Bitcoin, there is only 20 million, even down to the mining of them.

Well the point is that with fiat currency the central bank can print more of them at any time, which devalues the money that you have (as that then causes price inflation).

But that's only really a problem if you keep your cash in a bank account with an interest rate lower than the inflation rate. You can still choose to invest your money in other ways, e.g. my pensions have grown well above inflation.

And to be honest I don't really like the idea of purchasing a ford fiesta and then having to drive it thinking "if only I'd waited two years, I could have bought a Mercedes for the same amount".

Also... our economy is highly dependent on credit. How is that going to work with Bitcoin? A working class person takes a bitcoin loan of 1 bitcoin for 5 years to renovate their house, and they owe the balance in bitcoin.... which by the time they repay is enough to buy an entire house? Then they have to sell their house to repay the loan?

And you give somebody an employment contract which pays 5 bitcoin per year for a 40 hour week... and then you are bound to pay them that 5 bitcoin per week, whilst that salary becomes increasingly valuable... or will salaries fall with deflation instead of increase with inflation?

A deflationary currency isn't as attractive as some people like to make out. It would be a disaster, frankly.

 

[ausername]

Also..... "Apple has announced that profits have fallen from 500,000 bitcoin to 400,000 bitcoin, but that doesn't matter because 400,000 bitcoin buys more than 500,000 bitcoin did last year, so its basically an increased profit. The markets responded well to the news, which were on track with projections, the share price fell from 0.5 bitcoin to 0.47 bitcoin, less than the global purchase index which means that the share price has actually increased".

That's what Bitcoin as a currency means, which apparently some people see as preferable

 

[Edwin]

As everyone sprints for the exits, the trading volumes on the exchanges are really spiking substantially. I wonder what's happening to all the cash being generated? Are people just tucking it into bank accounts, or are we going to see an increase in other sorts of investment?

 

[ausername]

As everyone sprints for the exits, the trading volumes on the exchanges are really spiking substantially. I wonder what's happening to all the cash being generated? Are people just tucking it into bank accounts, or are we going to see an increase in other sorts of investment?

A 'run' would be interesting to see. A disaster for bagholders of course, and I wouldn't wish it on them, but we'd then see which exchanges are operating honestly and which ones don't have enough bitcoin to cover their liabilities. There must surely be some who have misplaced some bitcoin or been on the fiddle.

 

[RobM]

There's probably a lot of people cutting their losses.

 

[ausername]

There's probably a lot of people cutting their losses.

Some will be attempting to 'buy back in' at the floor, others will be panicking.

Is there a way to place bets on the floor price? Without buying bitcoin? E.g. £5 bet that the price goes below $1000 in 2018 or something?

 

[dee]

As everyone sprints for the exits, the trading volumes on the exchanges are really spiking substantially. I wonder what's happening to all the cash being generated? Are people just tucking it into bank accounts, or are we going to see an increase in other sorts of investment?

I think a lot of people sprinting for the exits are probably first time traders who wanted on the gravy train who will just write it of as an exercise in "the wifes gonna kill me"

 

[Edwin]

A 'run' would be interesting to see. A disaster for bagholders of course, and I wouldn't wish it on them, but we'd then see which exchanges are operating honestly and which ones don't have enough bitcoin to cover their liabilities. There must surely be some who have misplaced some bitcoin or been on the fiddle.

Aren't the exchanges simply matching up buyers and sellers? I didn't think they're holding BTC, except the ones that are operating as vaults as well. Oh, wait a minute...

 

[Edwin]

There's probably a lot of people cutting their losses.

Thing is, once the housewives of Asia get burnt, they're never going to jump in again. So who's going to supply the next round of buying interest?

 

[ausername]

Aren't the exchanges simply matching up buyers and sellers? I didn't think they're holding BTC, except the ones that are operating as vaults as well. Oh, wait a minute...

You actually have to transfer your bitcoin into these places to trade them. Now if an exchange 'lost' some bitcoin, they could try and get away with keeping that quiet.

Only if a large number of people started transferring out their bitcoin at the same time would the pack of cards collapse.... the point at which they didn't hold enough bitcoin to cover transfers out?

Etoro is a strange one isn't it... you 'buy' bitcoin, but can only transfer out in cash. How do we even know that they own a single bitcoin?