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Many bankers are trillionaires, especially the FED's stock holder, which is a guarded secret. The ownership of banks can become extremely complex thus no one really understand who owns the bank, but bank owners are definitely among the trillionaire club
In fact, the ownership is not important, the most important is the ability to control. Even if you have no money at your personal account, but you can control a bank to drive large acquisition operation, you can achieve much more influence than Bill Gates. And I suppose that banks can freeze Bill Gates' account easily, so Bill Gates really have no control over any bank, he is the game player while the banks are game designer
Before, nobles and kings used to have control over banks, but Rothschild family invented the way to virtualize their wealth into stocks/bonds/asset certificates around the world, thus avoided control from the greedy monarchs
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1 BTC: 250$ right now. 20 years later? Much more.
Gold price might fluctuate but it might never reach the level btc will in a matter of 8/10 years.
We can't be certain. But there is a 100% chance that gold will be having some value in 2035 (i.e. after 20 years from now). The same can't be said about Bitcoin, with 100% surety. There is a chance that Bitcoin can become worthless by then. There are a lot of scenarios in which Bitcoin can become worthless, such as the discovery of a better alternative. Even for fiat money it is not a sure thing after 20 years. A war, government shift, collapse of the monetary system could all happen But since bitcoin's essential is just a consensus, it is very robust. It is a consensus that some people around the world, being aware of the fatal flaw in current monetary system, voluntarily using a currency with limited supply and widest acceptance. Code can change, infrastructure can be rebuilt, but that consensus stays |
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My point is that you can't satisfactorily gauge the Bitcoin risk at all (let alone set it to some specific value), since risk is a measure of deviation between annual returns of a financial instrument or investment, but you just don't have enough input to reach a conclusion that wouldn't be a wild guess. So how are going to accurately measure the risk of Bitcoin if it is only 6 years old and the majority of these years it languished in oblivion with its price next to nothing (yeah, I know it is painful to see)?
Risk is just measured by historical data. In future, any investment could be ruined to nothing. If you bought Russian government bond before 1998 and suddenly they defaulted, and many MBS/CDS etc... busted in financial crisis, they all looked good before the total collapse Typically you don't want any data longer than 5 years to analysis, since market condition changes all the time, those old data are most irrelevant and misleading |
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Hello all. I have been thinking a lot about alternative economic systems and have two hypothetical questions.
OP's question is quite interesting People tends to believe that the currency's value is relatively stable (They use it as a standard unit to measure value, they don't like the value of the unit itself fluctuate, a currency with floating value will make average people's decision making very difficult, they would prefer the value of the currency to be a constant) Following this thought, you will see that the "deflation spiral" is true: When people are hoarding coins more and more, less and less coins will be used on trading. To merchants, less coins means less sale, thus they will scale down the production, laying off workers, and workers get less income, less spending, and even less coins in circulation, a negative feedback loop until almost every spending are cut to minimum So the solution is that people must get rid of the idea that currency's value is constant. If merchants understand that currency's value is floating depends on supply and demand, they would cut the product price, and cut the income for his employees when currency becomes scarce. Theoretically, if currency supply reduced by half, then everything's price inclusive salary would be cut by half, to make the whole economy work as usual. But I'm afraid that this approach will result in the resistance from workers, they don't understand that currency's value is constantly changing. Another problem is that all the merchant must do this at the same time to make it work, and typically they are limited by the lowest wage regulations If everyone accept this, then just like Forex market, this trend will not continue forever, because everyone are facing the same decision making difficulty like a currency trader: Sooner or later, majority of whales who holding the currency will consider current product price is too low, they will spend their money to buy, then the trend will turn and the price of everything will rise up again. After a while the market will reach a new equilibrium around a new price level In fact that is market based currency valuation, should be the most efficient way for economy. Today's system is trying to fix the value of currency, then the value fluctuation is absorbed by FED changing money supply constantly. During normal time, FED does nothing, there is no big difference, but overtime, their influence on market accumulated, and eventually will cause a large volatility, and then they will gain a lot from its operation, they just printed 5x money for themselves because people did not want USD's value to rise a lot when the market said it should Another possibility is: When merchants are running out of currencies, they would issue their own currencies/certificates to carry out the trade (backed by each merchant). With multiple transaction medium running parallel, the effect of each currency is less predictable |
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Isn't it a greater risk to buy bonds when the government is in debt?
Government will never default, they would just print some money to pay back the debt, so the risk of default is almost 0 Many investors have so much money that they don't even bother risk it, even a small interest will give them millions of dollars of income per year. And typically it is the central bank who buy large amount of government bonds to adjust the money supply |
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This might be a future competition for bitcoin's instant worldwide payment feature
If banks use their specially designed blockchain to do the international settlement, then real time payment will be achieved. They will make sure their own blockchain will be powered by their special algorithm and their own mining farms around the world, so basically no confirmation is needed for any transaction
Each customer will pay with their domestic currency, they don't even see the bank's blockchain running in the background. The problem is, banks have to handle the conversion to/from their own crypto currency on both ends, that will bring lots of comlexity, makes it even more complex than today's sytem, where they only need to convert currency once
Another hard part is to find enough banking partners in each region. In sweden, swish mobile payment is a real time payment network, it works because all 7 major swedish banks are connected to this system. Even some of the small swedish banks are not connected to the system, you can imagine, it will be very difficult to find enough international banking partners for using blockchain to do transaction (And that will cause lots of bank employee to lose their job, thus face harsh resistance)
Even banks successfully did this after many years, they just built a transaction network, that still won't provide anti-inflation promise of bitcoin, so it won't threaten bitcoin's position as long term saving medium
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I'm registered on their site very early but still have not seen any major breakthrough in services. They convert your coin immediately to fiat thus you are safe from the volatility of bitcoin (and lose the potential gain too). If I would like to reduce the risk of bitcoin holdings, I can simply reduce the exposure on bitcoin, it is unclear what their service can provide
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Volatility must be compared at a risk adjusted basis. After adjust the risk to same 5% per year level using lower leverage, the bitcoin outperforms every single investment in the world
I think you can't do that without losing touch with reality. While you can safely throw away the probability of the gold price going to zero, but how are going to adjust the risk of the Bitcoin price hitting zero to 5% per year? I guess you could do that mathematically (thus obtaining astronomical annual profits), but would it make any sense economically? When you comparing the financial performance of any assets, you only compare the historical performance, never the future. No one can tell the future, even for gold, it might drop to cents if some central banks decided to cash out their reserves. I can give you many reasons that bitcoin price will never hit zero but that is just subjective opinion like your opinion on gold, no use for evaluating the risk/reward ratio of certain assets I'm curious if you understand that by saying this (namely, "you only compare the historical performance, never the future"), you actually shoot yourself in the foot? It was you, after all, who suggested to "adjust the risk". How on Earth are you going to obtain the risk estimation (and volatility) if not from the past performance? No one can tell the future, even for gold, it might drop to cents if some central banks decided to cash out their reserves I think you may want to learn how much gold all central banks actually have in their stash (in respect to total gold out there, plus paper gold) Risk Adjusted Return is a standard way of comparing return for securities with different risks http://www.investopedia.com/terms/r/raroc.aspIf a government bond have 2% risk (volatility) but 4% return per year, the risk/reward ratio is 1:2, however bitcoin have 90% risk while have 4500% return, the risk/reward ratio is 1:50, 25 times higher than government bond You can always reduce the risk of bitcoin investment to 2% by investing only 1/45 of the capital, achieving the same risk level as government bond, but much higher return at 100% per year. Even if bitcoin's value goes to zero, you lose maximum 1/45 of your capital |
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probably the price will keep rising for the next few days.
but as with pretty much any short term trading prediction, you can only be
right 60% of the time even if you are one of the best.
If you always forecast a price rally for bitcoin, long term wise you have more than 90% of chance to be right |
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Volatility must be compared at a risk adjusted basis. After adjust the risk to same 5% per year level using lower leverage, the bitcoin outperforms every single investment in the world
I think you can't do that without losing touch with reality. While you can safely throw away the probability of the gold price going to zero, but how are going to adjust the risk of the Bitcoin price hitting zero to 5% per year? I guess you could do that mathematically (thus obtaining astronomical annual profits), but would it make any sense economically? When you comparing the financial performance of any assets, you only compare the historical performance, never the future. No one can tell the future, even for gold, it might drop to cents if some central banks decided to cash out their reserves. I can give you many reasons that bitcoin price will never hit zero but that is just subjective opinion like your opinion on gold, no use for evaluating the risk/reward ratio of certain assets |
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Coin mixing is unavoidable, however this will make bitcoin more and more like cash, thus result in the same restrict applied to cash from financial regulation bodies today
And how are they going to put restrictions over coin mixing specifically? It's pretty much impossible to stop. If they try to ban mixing services, there will be tor based alternatives all over the place anyway. Also, any exchange can act as a mixer. If you leave your coins in a exchange for some days and withdraw in small lots its a mess for anyone that wants to tax you or something. They can not restrict mixing, but they can restrict the entry and exit from fiat money system, thus apply similar rules like cash: you have daily/monthly withdraw limit from exchanges, and large amount of bitcoin transaction to exchanges are not allowed Even if you can spend directly at merchant's place, regulators just need to regulate all the merchants and give them a daily/monthly purchase limit for every consumer. Large bitcoin transactions are prohibited just like large cash transactions are prohibited now. If you want to do large bitcoin transactions to exchange fiat money/purchase something, you have to use government registered bitcoin addresses, like a formal bank account. And business maybe all required to register their bitcoin addresses In this way, they can also get rid of the tax headache, actually government can not tax cash transactions easily, but due to those transactions are small, government don't allocate resources to chase those tiny tax income, they chase large enterprises for at least millions worth of transactions |
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Best practice of bitcoin is long term saving, not consumption. For consumption you better spend inflative fiat money as much as possible. Of course you can spend bitcoin after a long term saving period, but as long as there are exchanges, no need to directly spend bitcoin Bitcoin is the most powerful tool in capital virtualization. In future, after bitcoin has established itself as the most credible digital asset, you will never need to spend even a single satoshi of your bitcoin holding, you just need to sign a message with your private key and approve that you are the rightful owner of certain amount of bitcoin, then banks will send truck load of fiat money to you to spend, without interest  |
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Coin mixing is unavoidable, however this will make bitcoin more and more like cash, thus result in the same restrict applied to cash from financial regulation bodies today
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Corp coin like Applecoin or Intelcoin or Ebaycoin etc... all have a fundamental problem to solve: The coin's value
Apple can back the Applecoin's value by one iphone 6. However, if everyone is able to produce apple coin through apple miner, then Apple will be giving out 50 iphone 6 every 10 minutes. So, the mining cost of one Applecoin must be as high as iphone 6's price $700, so that apple won't have a drain of their wealth quickly
However, if I have to spend $700 to mine Applecoin then purchase iphone 6, why don't I just directly purchase iphone 6?
If no one is backing corp coin, then its value will be decided by the mining cost, and it will take corp coin many years, maybe forever to reach bitcoin's total mining cost today. However, if a corporation back the coin with their products, the coin's value will be fixed by their products, thus lose the most attractive character of bitcoin: Long term price appreciation potential
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The religion is on mathematics and network. Natural science has become the new religion for human since 1800. No one can change the mathematics and physics rules, so the power of science is above human and got worshiped like god
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A rule of thumb is to sell 10% when price rose 10x, and sell 1% when price rose 100x, so you basically will ROI, then ride the wave with rest of the coins
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Gold is just not useful as a currency at all. Bitcoin is far better, but if you want to hold something physical buy gold instead.
Gold is not a thing that you need to pay what you buy. So, why using gold as a currency? If you want to, sell your gold into fiat, and buy the stuff with that. Gold is the best way to do investment, because the price is more stable than bitcoin. We can't predict how the bitcoin price is in future exactly, but the gold investment that have been done for all this time prove us that gold is the best. Volatility must be compared at a risk adjusted basis. After adjust the risk to same 5% per year level using lower leverage, the bitcoin outperforms every single investment in the world |
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Police in bad mood! Sometimes a policeman has just been upset by some criminals and want to find some ordinary guy to beat |
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An interesting quote from the article about the HODLers: ......The catch-22 is people buy Bitcoins because they think the price will go to infinity and beyond once everybody uses them, but they don't spend their own Bitcoins because they think the price will go to infinity and beyond once everybody else uses them. And so nobody uses them.
But if nobody uses them, then the price will stay stuck at something a lot less than infinity let alone beyond. So the Bitcoin faithful have tried to not only convert people, but also convince them to martyr themselves, financially-speaking, for the crypto cause..... I was going to quote this as well. It honestly has some truth to it. It's what almost everyone wants the concept of bitcoin to be. "I hold it, 10 years from now, I'll be rich". This isn't the concept of what bitcoin should be about. I feel like some of the "get rich" type of investors will circle around bitcoin like sharks and give people that type of notion about it that Bitcoin is just some investment scheme hoping to one day crash fiat. I do feel he's exaggerating though on title. If everyone hold bitcoin for 10 years and start to cash out a little bit since the 11th year, the bitcoin value will rise forever, this is guaranteed by bitcoin's design There is an academic understanding that fiat money's value is decided by its usage, that is because it has almost zero production cost and forced adoption. However, gold and bitcoin's value does not come from transaction usage, they are mostly decided by the demand of storing value and current production cost In fact, holding will reduce the coin supply on market in a most significant way, while spending will only reduce the coin supply on market for a while (when coins are in the move, they are not available for purchase/spending). Holding 10 bitcoin is equal to spending 10 bitcoin once every hour (suppose the transaction take 1 hour to confirm). The only thing that spending does is to increase the awareness of bitcoin, but you don't really need to make advertisement for something that have true value, you hide it instead, wise people will find it by themselves |
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Let's say, for the sake of the argument, that bitcoin's price will stabilize at around $1000 USD present value in 2030. Sure the marginal cost of creating 1 BTC at that time will probably tend to 1BTC. However, for all the bitcoins created 2009-today, and probably in the forseeable future, the cost of those BTC created is MUCH lower than $1000/BTC. Therefore, by your logic, the cost of creating BTCs will be averaged out too.
Furthermore, the assertion that half of the resources go into the production and securing of bitcoin is simply wrong. A bitcoin is not a plastic fork. You can use it more than once. You can use it thousands of times, millions of times or even more. The money that miners spent on electricity etc doesn't go into the abyss; they go into the hands of other people who will then use that purchasing power to buy other stuff. That money will circulate many, many times. So the creation of BTC will only be a small part of the economy.
Some good points, and more debate  Take a look at Gold: Central banks acquired gold as low as $35 per ounce many decades ago, but its market price is always decided by the current mining cost of one ounce gold. This is because the existance of arbitraging: If gold price is much higher than its mining cost, everyone will mine it and sell it immediately to get an immediate profit, this will drop its price to the cost Furthermore, the resrouces going into gold/bitcoin production is to achieve one goal: To set a reference value for them. People value things using difficulty: The more difficult to get something, the more valuable it is. If it takes one day's mining using an ASIC farm to get one bitcoin, then bitcoin will be much more valuable when it took only one hours using a notebook to mine one bitcoin No matter how many times bitcoin will be used, the lowest possible cost to get it will set its reference value, and that cost typically comes from production Of course, doing something extremely difficult might not necessary generate demand, but if there is sufficient demand for bitcoin, and there is no way to further reduce the difficulty to acquire bitcoin, then cost will set a reference value Gold never dropped back into their old $35 zone, this is obviously caused by fiat money inflation. Banks use printed money to purchase many different assets, and gold is a very popular asset, so the demand is always growing with more fiat money supply. But like described above, gold price can not be much higher than its mining cost due to arbitraging. Money printer who want to purchase as much gold as possible and as cheap as possible will invest in gold mines Similarly, the demand for bitcoin might be extremely high, but as long as the cost is low, all the serious capital will first flow into mining, thus its price will always be close to mining cost. And when there is no way to further reduce the cost due to competition, capital will have to purchase on market, cause the price to surge |
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