There is not a $5 billion bitcoin economy. You dont use market cap to measure economic output.
The $5 billion total value of all bitcoins represents the current perceived value of those bitcoins by the people who choose to hold them. Granted it doesn't represent the network or transmission value of the bitcoins in circulation, that's because part of the value is speculative or as a store of value. However, it does represent the net worth of the bitcoin economy. Thats not an economy. The market cap of Apple is just the current share price times number of shares. Doesnt mean Apple is an economy. Silk Road was a little economy. The goods were priced in bitcoin. You can take a basket of goods from Silk Road priced in bitcoin and compare the same basket priced in usd and get your price discovery. Every bitcoiner keep confusing asset vs currency vs technology (utility) |
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Financial innovation comes from advances in financial products like CDS, MBS, CDO, etc.
All these products have counterparty risk. Counterparty risk in an insolvent system is what nearly brought down global credit markets in 2008. Bitcoin has no counterparty risk, and in my opinion is superior to the current global financial system. Granted bitcoin will struggle to get mainstream adoption until there are long term future contracts so people can use it as a more traditional currency with a more stable value, but these innovations are on the way. You're missing the point. Distributed ledger is not a financial innovation. Its a technical innovation. Just because everyone uses email doesnt mean email has a price. A company that supports email service like Google has a priced stock though. Why do you think VCs invest in ventures like Coinbase instead of just buying bitcoins |
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I like your post and would like to add some other points.
Bitcoin price is purely speculative. There are no fundamentals. The only time we got near a bitcoin economy was silk road. That is when goods are priced in bitcoin. When goods are priced in bitcoin then you can estimate price by comparing the same basket of goods relative to other currencies.
Having a limited base supply means nothing. You want to pay attention to velocity. Whether 1 btc equals 300usd or 10usd it doesnt matter as long as velocity can keep up w transactions
Inelasticity actually inhibits economic growth. Most if not practically all capital money exist as credit. People borrow money to create business that generate future returns to pay off interest. Inelasticity makes it difficult to build financial services. Terrible for creating loans
Hoarding is like stuffing cash in a mattress. It does nothing. Theres no value creation.
Thats why experienced investors don't hoard bitcoin. They either invest in ventures or stay away totally.
The entire bitcoin investment thesis is based on false and ignorant understanding of economics
If you buy bitcoins you are just speculating. Theres a real chance it goes to zero. Personally i dont think itll go to zero cause theres a bunch of cultists who will keep HODLing. But i think homeostasis will only be discovered once there is another real economy like silk road that comes along
Until then buying bitcoins are a gamble. If you wanna use bitcoin then exchange your fiat money right before and spend the bitcoin. The price determines how much the economy can support. No amount of velocity is going to let you keep 10 billion in a 5 billion market cap economy. Loans allow profitable businesses to take off. It also allows unprofitable ones to get started. If loans were not available less successful businesses would start up, but so would less failed ones. It would bring some measure of stability to the economy, and would force people to be very sure they knew what they were doing. Net result likely to be positive. Supply is super important. I do not have the patience to baby you through this one at the moment. Saving money is generally something that people who can't or won't do it complain about. Everything involving money, or indeed resources of any kind, falls under speculation. Be more specific. cul... ok i see. That kind of post. Alright. There is not a $5 billion bitcoin economy. You dont use market cap to measure economic output. |
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Bitcoin is still in its early stages. People are losing money at the moment, just like they did in 2011. This doesn't change the fact that the current market cap of $5 billion is tiny compared to what its potential is. It is technologically so much more advanced that the countless trillions in financial products which currently hold the world economy together.
The experiment may also fail, this has always been true, so don't stake your life on it. But I am completely happy holding through this down trend.
This is the kind of economics & finance ignorance I'm talking about. Market cap just means price times shares. If dealing w money economics you don't use market cap as a measurement. You use GDP or some other similar measure Financial innovation comes from advances in financial products like CDS, MBS, CDO, etc.. Blockchain is a ledger. Its a tool like checks/ ACH are a tool to transmit money. Checks themselves arent commodities and unit of currency dont have to be of any particular price for checks to work. |
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We need to downsize both speculation and excessive mining basically exchanging at any rate and constantly, because they can't hoard at the current rate and need to pay for their expanses etc. tl;dr: going down to 250 maybe worse, in short terms, and then reversing to whatever, we'll see. Bitcoin has seen it before  about the mining: a. there is a point when no new coins are generated, then this downward pressure will stop and price will explode b. in the meantime, when prices drop badly, miners cannot afford to keep mining. Result: miners stop, hardware development stops, hash rate drops. Hashrate and price will reach a bottom. Fewer coins will be sold. Then, the cycle will be reset, and prices will climb again. So a crash will cleanse out the weak hands, and the industrial mining as well, IMHO. So its a game of monopolizing useless internet funbux. In the future it will be 21 guys who hold a million bitcoins each trading amongst themselves for $10K per coin. |
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I like your post and would like to add some other points.
Bitcoin price is purely speculative. There are no fundamentals. The only time we got near a bitcoin economy was silk road. That is when goods are priced in bitcoin. When goods are priced in bitcoin then you can estimate price by comparing the same basket of goods relative to other currencies.
Having a limited base supply means nothing. You want to pay attention to velocity. Whether 1 btc equals 300usd or 10usd it doesnt matter as long as velocity can keep up w transactions
Inelasticity actually inhibits economic growth. Most if not practically all capital money exist as credit. People borrow money to create business that generate future returns to pay off interest. Inelasticity makes it difficult to build financial services. Terrible for creating loans
Hoarding is like stuffing cash in a mattress. It does nothing. Theres no value creation.
Thats why experienced investors don't hoard bitcoin. They either invest in ventures or stay away totally.
The entire bitcoin investment thesis is based on false and ignorant understanding of economics
If you buy bitcoins you are just speculating. Theres a real chance it goes to zero. Personally i dont think itll go to zero cause theres a bunch of cultists who will keep HODLing. But i think homeostasis will only be discovered once there is another real economy like silk road that comes along
Until then buying bitcoins are a gamble. If you wanna use bitcoin then exchange your fiat money right before and spend the bitcoin.
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Some guy tried to convince my retired father to invest in bitcoin when price was 1000. I got really pissed and stopped him from investing 50K. Especially because the economics are all wrong. I also convinced 2 friends not to invest at 650
I think bulltards and hodlers trying to scam new greater fools. Thats why i cant stand bitcoiners. If you made a mistake then just cut your losses. Trying to scam new money to unload your bags is downright immoral behavior
Did the guy actually try to sell your father his own bitcoins?I doubt so... If i was your friend, would you have prevented me to invest at 10? Most of the poeple i know have. Yet it seems to me they were all wrong ... This time you were right but will it be so next time? Bitcoin is not just a price that goes up or down you know. The bitcoin scene is like pennystocks. Its obvious that its a pump and dump No the guy wasnt trying to sell my father his bitcoins. He was pumping the asset on false and ignorant understanding of economics I never tell people what they should buy. I just warn them if I think the asset is overpriced and they should excercise prudence |
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Some guy tried to convince my retired father to invest in bitcoin when price was 1000. I got really pissed and stopped him from investing 50K. Especially because the economics are all wrong. I also convinced 2 friends not to invest at 650
I think bulltards and hodlers trying to scam new greater fools. Thats why i cant stand bitcoiners. If you made a mistake then just cut your losses. Trying to scam new money to unload your bags is downright immoral behavior
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you guys need to understand that ALL previous patterns of BTC are void here, because MTGOX was the lead exchange, which had tons of fraud and manipulation involved.
And you short-term thinking mostly technical bears need to understand that nothing has changed about the long-run fundamentals of bitcoin's potential or trajectory. There's been almost entirely continued support for the long-run bull-case in terms of continued ecosystem development. Honestly, the pace of recognition and development has even exceeded my original bull-case assumptions from 2011/2012. I personally don't pay much mind to the short-term price, choosing instead to value bitcoin more fundamentally and look at Mr. Market like Ben Graham did. tldr: Even if you're right that Gox borked the price (highly debatable), the long-run bull thesis has still only gained support over time. Bitcoin has no fundamentals. Only speculation Fundamentals need to show some earnings or revenue aspect |
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This money isnt free. They dont give it away. Its just reserves
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Max pain applies to options markets. Not applicable to bitcoin
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Why you post a chart of SP500? How much has euro fluctuated against usd this year compared to bitcoin?
Watching ancap videos off youtube doesn't mean you understand economics
i post a chart of the S&P 500 because paper fiat needs to be compared to something real, either companies or commodities, its not stable relative to neither. the chart of the S&P 500 also clearly shows how the interest rate manipulation causes resources to be misallocated causing an unsustainable boom that is followed by a bust. the USD is not stable even compared to other paper fiat. https://en.wikipedia.org/wiki/U.S._Dollar_Index#mediaviewer/File:U.S._Dollar_Index.pngWhat are you yammering on about? SP500 just index of 500 stocks. What does it have to do w your argument about bitcoin and purchasing power? I dont understand what point you are trying to make. That stock prices go up and down? Whats the link to M1 or M2? Dollar is not stable??? Hahaha good one. What do you call bitcoin volatility then? In past 10 years USD only variance of 12pts. In past 4 years only 2pts variance. There might be a more stable currency but USD is pretty stable Im anycase I was talking about all fiats not any particular fiat |
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Besides the miners that HODL since the early CPU and GPU days, and a lucky few who bought and cashed out before the last bubbles had burst, the majority only lost money. Of course. Bitcoin is a zero-sum game. Bitcoin doesn't generate any revenue or produce anything. For every win, someone else loses. Exactly the same as gold. The same as stocks, the same as futures, the same of the universe, the same of the atoms... Welcome to the jungle baby, it's the survival of the fittest you guys are wrong. bitcoin is not a zero sum game, as ultimately it's use is when its converted to fiat for purchases. therefore if it gradually appreciates against fiat, the holders of bitcoin as a group would gain. The holders of the fiat would lose. But bitcoin would be a net winner. Wrong. Bitcoin is a zero sum game. All the purchasing power of bitcoin comes from fiat invested in it. And there is only so much fiat in it as it was invested. It's mathematically impossible for everyone to have more purchasing power than before. Someone has to lose. It only seems that everyone is winning while majority is holding and not trying to realize their profits. bitcoin gains in purchasing power because more and more goods and services are being exchanged for it. the bitcoin economy is growing rapidly while the bitcoin inflation rate is decreasing exponentially. that is another reason why bitcoin's purchasing power is going to be alot higher in the future. Wrong. New goods and services require capital investment. Monetary supply (credit money) expand to meet the demand for new captical. Central bank control cost of credit using monetary policy. These policies try to counteract extreme swings in business cycles. Why do you think fiat is so stable? Because its elastic Your mistake is thinking goods are exchanged for bitcoin its not. Its exchanged for fiat. Bitcoin price is purely speculative Its because you don't understand monetary economics when central banks manipulate the cost of credit they don't only increase capital investment, consumption is equally increased, the net result is zero increase in resource allocation for capital investment. even if the central bankers could only increase capital investment they have no way of knowing what millions of people actually want to consume, any allocation of capital they will make will be wrong. these interest rate manipulation policies are exactly what causes the extreme swings in business cycles, fiat is stable? compared to what? this doesn't look stable to me:  goods are exchanged for bitcoin, the fact that people choose to foolishly convert their bitcoin to fiat afterwards doesn't change that. i understand monetary economics perfectly fine. Why you post a chart of SP500? How much has euro fluctuated against usd this year compared to bitcoin? Watching ancap videos off youtube doesn't mean you understand economics |
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you are not short selling a bitcoin at bitfinex
bitfinex is doing literally nothing when you short sell a bitcoin, other than taking profit on the spread. And then hoping you made a poor trade.
the only way bitfinex prices could actually affect other exchanges, is if other trades see the price is lower on BFX and decide to sell.
however you can be 100% sure that bitfinex is trading directly against its clients AKA you, exactly the same as the cheap Forex trading brokers. Some of them may try partially hedge risk by futures in FX, but there is no such luxury in bitcoinland, there is no solid counterparty to trade futures with.
for example, lets say most of bitfinex clients are long bitcoin on margin, say 3x long on margin.
Lets see the US govt accepts bitcoin as an alternative official currency for the US dollar in a surprise news release, and bitcoin moves to $10 000 within a few seconds of the news.
you can 100% be sure BFX will be broke and you can all kiss your money goodbye. They are not short selling, they are not hedging, they are taking money on the spread and then hoping you are all stupid traders.
The only way you can short is if someone lets you borrow their bitcoin. I dont use bfx or do any btc trading so i dont know. I trade stocks. So if i wanna short TSLA my broker TD Ameritrade lets me borrow their inventory or they find someone who will If BFX doesnt do this then they allow naked short selling which is illegal in the stock world |
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Besides the miners that HODL since the early CPU and GPU days, and a lucky few who bought and cashed out before the last bubbles had burst, the majority only lost money. Of course. Bitcoin is a zero-sum game. Bitcoin doesn't generate any revenue or produce anything. For every win, someone else loses. Exactly the same as gold. The same as stocks, the same as futures, the same of the universe, the same of the atoms... Welcome to the jungle baby, it's the survival of the fittest you guys are wrong. bitcoin is not a zero sum game, as ultimately it's use is when its converted to fiat for purchases. therefore if it gradually appreciates against fiat, the holders of bitcoin as a group would gain. The holders of the fiat would lose. But bitcoin would be a net winner. Wrong. Bitcoin is a zero sum game. All the purchasing power of bitcoin comes from fiat invested in it. And there is only so much fiat in it as it was invested. It's mathematically impossible for everyone to have more purchasing power than before. Someone has to lose. It only seems that everyone is winning while majority is holding and not trying to realize their profits. bitcoin gains in purchasing power because more and more goods and services are being exchanged for it. the bitcoin economy is growing rapidly while the bitcoin inflation rate is decreasing exponentially. that is another reason why bitcoin's purchasing power is going to be alot higher in the future. Wrong. New goods and services require capital investment. Monetary supply (credit money) expand to meet the demand for new captical. Central bank control cost of credit using monetary policy. These policies try to counteract extreme swings in business cycles. Why do you think fiat is so stable? Because its elastic Your mistake is thinking goods are exchanged for bitcoin its not. Its exchanged for fiat. Bitcoin price is purely speculative Its because you don't understand monetary economics |
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He's talking about blockchain. Just means they want to make a Microsoft coin |
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Besides the miners that HODL since the early CPU and GPU days, and a lucky few who bought and cashed out before the last bubbles had burst, the majority only lost money. Of course. Bitcoin is a zero-sum game. Bitcoin doesn't generate any revenue or produce anything. For every win, someone else loses. Exactly the same as gold. The same as stocks, the same as futures, the same of the universe, the same of the atoms... Welcome to the jungle baby, it's the survival of the fittest you guys are wrong. bitcoin is not a zero sum game, as ultimately it's use is when its converted to fiat for purchases. therefore if it gradually appreciates against fiat, the holders of bitcoin as a group would gain. The holders of the fiat would lose. But bitcoin would be a net winner. Wrong. Bitcoin is a zero sum game. All the purchasing power of bitcoin comes from fiat invested in it. And there is only so much fiat in it as it was invested. It's mathematically impossible for everyone to have more purchasing power than before. Someone has to lose. It only seems that everyone is winning while majority is holding and not trying to realize their profits. Yep that's because its inelastic. Fiat money can expand and contract supply to address economic demand. Basic monetary economics that bitcoiners dont seem to understand |
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thats a lot of time and effort to go about exiting bitcoin, are you sure they don't want to acctually make money?
They make money selling their own coins to the ETF. And they make money managing it. I agree its a dump |
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@Robert Paulson: Again, you don't understand how international commerce works. US is not "borrowing" USD from anyone, much less yourself  You don't think the rest of the world is trading with US and not sending collectors after us because we're loved, do you? Srsly, go back to school or study for a GED  i understand how international commerce works perfectly fine. the US is borrowing USD with every bond it sells. the data is clear, the US is running a huge trade deficit on top of its already huge debt to the rest of the world. if the world stops loaning, the US has to start printing 40 billion every month and hope that the rest of the world is stupid enough to continue accepting it as payment. Robert Robert Robert... You keep forgetting that we owe nothing but worthless dollars, dollars dat are "already dead," as you so poignantly pointed out. Dollars you'll certainly agree we just print by the boatload. Not much of a debt, amirite? *And no, you don't understand economics. Let me explain it to you in terms you'll understand: 1. You have lent Anon 1 BTC. 2. Annon now owes you 1 BTC. 3. Anon, as is customary in Bitcoinland, tells you he ain't got it. Who's got whose balls? only in this case if Anon can't borrow anymore he can't pay for any imports anymore and goes hungry. So... Of all the idiots running all of the governments of the world, no one has caught on to just how scammy teh US dollar is? Only you? 'Cause US has no shortage of trade partners, so "Anon can't is borrow[ing]." Our dollar is doing surprisingly well this year  ...especially rel. BTC :p they all caught on to it, that's why they are all working on getting rid of the USD in international trade before dumping it on the market. https://en.wikipedia.org/wiki/New_Development_Bankhttp://www.bbc.com/news/business-23020718If other countries are on to our scam $, why are they still trading with us? You wouldn't keep lending Anon money after learning he will not (and can not) pay, would you? Nvrmnd, you probably would why did people buy .com companies with no income for billions of dollars in 1999? how could all the experts miss the obvious observation that a website that has no income and no viable business plan is not worth anything? why did some of the worlds biggest banks give sub-prime mortgages to deadbeats in 2007? countries are not immune of making mistakes, the fact that they are making them doesn't change the facts. its mathematically impossible for America to ever repay its debt which means that sooner or later it will either default or inflate it away. considering America is completely dependent on its ability to loan money and obviously no one will loan to someone who has just defaulted on his debt, there is no other conclusion except that the endgame for the American economy is near. exactly when this happens depends on China, the second America upsets them those loans are gone, along with the American economy. Are you comparing bitcoin bubble to 99 tech bubble?  |
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And you believe them? Oldest hedgefund trick in the book
Accumulate. Positive PR. Hedge. Short. Negative PR. Accumulate again. Rinse and repeat
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