Assume for this question that whatever caused bitcoin to fail (for example, crypto crack) did not also apply to altcoins (I know that in reality that this isn't realistic).

My prediction is that in the short term altcoin prices would crash too, but in the long term they would absorb the old market cap of bitcoin and (one of them) would head towards world domination. 

My feelings are that as long as you diversify your crypto holdings, you are practically certain to become extremely rich in the future.

There are plenty of altcoins that are already objectively better than bitcoin. But this hasn't been enough to compensate for the huge network effect bitcoin has. Bitcoin doesn't need to be the best to continue to dominate all altcoins, just 'good enough'.

Thanks for your reply buddy but I don't understand the bit I quoted. Surely once you take into account the 4.5% the numbers are even larger? Because it means they can lend (excess reserves) / 0.025? Which is ridiculously massive!?

Further to my previous question, I found this paragraph at wikipedia:

"On March 20, 2013, excess reserves stood at $1.76 trillion.[19] As the economy began to show signs of recovery in 2013, the Fed began to worry about the public relations problem that paying dozens of billions of dollars in interest on excess reserves (IOER) would cause when interest rates rise. St. Louis Fed president James B. Bullard said, "paying them something of the order of $50 billion [is] more than the entire profits of the largest banks." Bankers quoted in the Financial Times said the Fed could increase IOER rates more slowly than benchmark Fed funds rates, and reserves should be shifted out of the Fed and lent out by banks as the economy improves. Foreign banks have also steeply increased their excess reserves at the Fed which the Financial Times said could aggravate the Fed’s PR problem.[20]"

So it seems that the interest comes from taxpayers somehow, or am I misinterpreting? Also, they are paying interest from taxpayers to foreign banks!?!? Why isn't this bigger news?!

https://en.wikipedia.org/wiki/Excess_reserves#/media/File:EXCRESNS.png

Excess reserves, to my understanding, are the reserves beyond which a bank needs to comply with regulations.

It acts as a 'cushion' against loan defaults and people withdrawing deposits.

So it seems to me that excess reserves are SO huge now that a bank can safely have a huge chunk of its loans default and a huge proportion of its depositors withdraw their money in cash and they will still be solvent. Just look at that graph!

So why aren't they offering loans to everyone, no questions asked?

Also what incentives to banks currently have to take appropriate credit risks with such huge reserves?

Thanks chaps you have totally answered my question here. I understand now!!

Out of interest, what are 'excess reserves', are they reserves beyond what the bank needs to comply with regulations? Like 10% of deposits for example?

And when the central bank pays interest, does the extra money come 'from' anywhere or is it printed?

My understanding is that all money created by the Fed has an asset to back it up (usually government loan) but sounds like this isn't true in the case of interest?

"The increase will be executed by raising the interest rate the Fed pays on excess reserves held by banks to 0.5 per cent, effective on December 17, as well as the use of an overnight reverse repurchase programme."

This is from FT.com. I don't understand it. In order for an increase in rates to be transmitted throughout the economy, shouldn't the rates the fed CHARGES on excess reserves go up!?

If they pay banks more for reserves held at the Fed then surely the banks can then lower the rates they charge their customers?

My understanding is that it is bad for your mental health to check the value of your investments too often.

This is because the happiness experienced by an increase in price is less than the unhappiness experienced by an equal decrease in price. The net effect over time is to make us more depressed then if we never checked (assuming an approximately stable price of course).

I try and limit myself to NEVER checking during the week. It is a little treat to myself at weekends that I can check it. Unfortunately it is often not possible to stick to this as I visit bitcoin sites daily to check the news and the gossip etc, and many of these sites mention the price, a lot even have the price prominently displayed on the header. I would far prefer it if non-exchange or price specific sites gave users an option to hide the price if it is prominently displayed.

wut

I don't understand this, please could you elaborate on how this works.

How can a 'whale' push down prices without first pushing them up? In order for them to dump a lot of coins they have to buy a lot first. The net effect on the market will be zero won't it?

I agree with your sentiment that people should stop asking why it's going up, but I do not agree with your reasons.

The reason for this rally is THE SAME REASON BEHIND ALL PREVIOUS RALLIES AND ALL FUTURE RALLIES- INCREASING USER ADOPTION.

Everything else is just details. Yes there may be specific reasons why the rally happened this week and not a week before or a week later, but really it all comes down to the same thing, more people around the world are jumping on the bitcoin bandwagon.

OP that gif made me lol irl.

ty

Europe has very similar problems.

What scams? I am curious

I think OP is on to something. If we enter hyperinflation then the debt will be inflated into nothing, which is 'resolved' in some sense.

Obviously this won't be resolved to the satisfaction of the creditors.

This link is amazing thanks for sharing

Bitcoin is great and all, but what I would prefer is technology which auto ignores all forum posts my short sellers.

That is what the world really needs.

I don't think he did miss the point. Although SHA 256 isn't technically anything to do with encryption as it's a hash, if it was 'broken' it could still be a bad thing- there could be billions of valid blocks produced per second. How would the system cope with that?

I think you misunderstand. When I say 'cracked' I do NOT mean computers brute forcing their way through like you describe. I mean some maths genius comes up with a shortcut so my home pc could get a private key from a public key.

Am I being paranoid?