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A centralized digital currency run by federal banks... how is that essentially not the system we already have? The majority of USDs are in electronic format anyway. The only difference is that the USD can take physical shape in the form of dollar bills and coins, but the majority of transactions (by value, not volume) are currently electronic.
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This is correct, and a great example. The FED printing all that money after 2008 hasn't resulted in massive inflation because that money hasn't made it all the way to the money supply. If it did, you would see the inflation you would expect, but it's not part of supply right now, even though it exists. Perfect analogy to coins being held off exchanges.
Money supply is a number -- all the money that can be circulated. Market supply is not. It is a curve that shows price vs. quantity. A market depth graph is the supply/demand graph for that particular market at that particular time. Money supply is a number that has no effect on price. Price is determined where market supply meets demand. That's why when a major seller comes into the market, it depresses prices. That total supply was there prior to being on the market, but it doesn't have an effect until it's brought in to trade. We both know that multiplying the money supply by a factor of 100,000,000 would have an effect on the value of a bitcoin, so saying that the money supply has no effect on the price can't be correct. Multiplying the USD supply by 5x since 2008 hasn't, so your point about multiplying money supply by a factor of 100 million (something nobody is talking about) isn't relevant. You're not even having the same conversation anymore. You brought up the difference between market supply and money supply, and then when I agreed with you and distinguished the point further, you started talking about 100,000,000x increase in the money supply. That doesn't even follow logically, and again is refuted by the fact that a 5x increase in the USD supply has not lead to inflation because money supply increase is still not market supply increase. Even if you want to argue the ridiculous point of 100,000,000x increase in money supply, it's still not going to impact the price unless it's part of the market supply. |
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The gemini exchanges doesn't have a stable marketing strategy at the moment.
I think they do. Their plan right now is to appeal to the guys who would never have bought BTC via localbitcoins or through a small exchange whose reputation isn't well established. The bros make BTC available to all investors, even those who don't like to get their feet wet. They're doing some good! But how is this any different from any other bitcoin exchange? Are they doing anything innovative, or just stealing market share by capitalizing on their names? |
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This is correct, and a great example. The FED printing all that money after 2008 hasn't resulted in massive inflation because that money hasn't made it all the way to the money supply. If it did, you would see the inflation you would expect, but it's not part of supply right now, even though it exists. Perfect analogy to coins being held off exchanges.
Money supply is a number -- all the money that can be circulated. Market supply is not. It is a curve that shows price vs. quantity. A market depth graph is the supply/demand graph for that particular market at that particular time. Money supply is a number that has no effect on price. Price is determined where market supply meets demand. That's why when a major seller comes into the market, it depresses prices. That total supply was there prior to being on the market, but it doesn't have an effect until it's brought in to trade. |
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If you buy 100 coins and hold it for 10 years, they will disappear from market for 10 years, thus make the supply decrease by 100 bitcoins
That is simply not true. Neither the money supply nor the market supply decreases when someone holds coins. If someone offered you $100 thousand or $100 million for those coins, would you sell them? Yes, so they are still counted as supply. Only if you destroy the coins would they be removed from the the market supply and the money supply because could never be sold or circulated. Coin holder decide how much money supply there will be in the market, not the bidder. FED has printed 5x more money since 2008, and you never notice anything's price going up by 5x, because banks hold majority of those money and never move them, so they are not entering circulation and will not cause inflation The reserve holder typically have long term plan than simply profit from selling his reserve. If I have 100 bitcoin and someone offered me $100 million for 100 coins, I would maximum sell 5 bitcoin, since that is enough for me to spend for a while and does not affect the exchange rate too much. Similarly , if Satoshi have 1 million bitcoin and someone offered this price, he might still sell maximum 5 bitcoin, but his reserve's value will raise to 1 trillion This is correct, and a great example. The FED printing all that money after 2008 hasn't resulted in massive inflation because that money hasn't made it all the way to the money supply. If it did, you would see the inflation you would expect, but it's not part of supply right now, even though it exists. Perfect analogy to coins being held off exchanges. |
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If you buy 100 coins and hold it for 10 years, they will disappear from market for 10 years, thus make the supply decrease by 100 bitcoins
That is simply not true. Neither the money supply nor the market supply decreases when someone holds coins. If someone offered you $100 thousand or $100 million for those coins, would you sell them? Yes, so they are still counted as supply. Only if you destroy the coins would they be removed from the the market supply and the money supply because could never be sold or circulated. This is not true. The "market" is whatever is trading on the exchanges. Any coins not listed for sale on the market are not increasing supply of bitcoins for sale. Price swings may induce more holders to agree to sell, thereby increasing supply, but coins being used for transactions outside of exchanges cannot be counted as supply until they are listed for sale on an exchange. The number of coins in circulation only matters to the market cap of the coin, but only the coins on the exchanges are part of supply and demand which determines price. |
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Investing in stocks using Bitcoin makes no sense, because:
1. Bitcoin is likely to be a better investment
This is not true at all. If you're buying bitcoin as an "investment" you're only speculating; basically gambling. Investing and gambling are not the same thing. When people go to the blackjack tables, they don't say they're "investing" (actually, some of them do, but they're delusional gambling addicts who can't admit they have a problem). Bitcoin is speculation and not an investment because bitcoin doesn't generate income or profit. Investing in actual companies gives you an ownership stake in the company and a share of the profits. Bitcoin doesn't, it just appreciates or depreciates based on supply/demand and inflation. (If bitcoin is appreciating in value only due to fiat's inflation causing the value of the dollar to drop, then you haven't "made" any money, you only kept what you had before inflation.) Therefore, investing in real companies is a better investment than bitcoin because there are actual profits underlying the business. To the extent you earn higher returns with bitcoin during any period of time, you're just lucky your gamble paid off, it's still not an "investment." That is to say, you can absolutely earn higher returns gambling than investing. But that still doesn't make gambling a good idea. Be aware of the risks of gambling vs. investing. Many investments aren't even a sound idea, and no investment is guaranteed to make money. Gambling is one step further down than that on the spectrum uncertainty. |
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Investing in stocks using Bitcoin makes no sense, because:
1. Bitcoin is likely to be a better investment
This is not true at all. If you're buying bitcoin as an "investment" you're only speculating; basically gambling. Investing and gambling are not the same thing. When people go to the blackjack tables, they don't say they're "investing" (actually, some of them do, but they're delusional gambling addicts who can't admit they have a problem). Bitcoin is speculation and not an investment because bitcoin doesn't generate income or profit. Investing in actual companies gives you an ownership stake in the company and a share of the profits. Bitcoin doesn't, it just appreciates or depreciates based on supply/demand and inflation. (If bitcoin is appreciating in value only due to fiat's inflation causing the value of the dollar to drop, then you haven't "made" any money, you only kept what you had before inflation.) Therefore, investing in real companies is a better investment than bitcoin because there are actual profits underlying the business. To the extent you earn higher returns with bitcoin during any period of time, you're just lucky your gamble paid off, it's still not an "investment." |
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Still, Samman acknowledged Gemini's liquidity problem is one that faces the entire industry, due to weakening demand for bitcoin as an asset and what he called a "distrust" in existing exchange options. Further, he suggested that Gemini's by-the-book approach to launching in New York may have turned off avid traders, including those with libertarian or anti-government leanings.
Because unregulated exchanges were working so well? How many disappeared with bitcoins? Regulation is not always the enemy, and in this case it's inevitable and carries the benefits of legitimizing and stabilizing the currency to a very large and reluctant population of non-adopters. Net good > bad. |
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I think the main thing that I can contribute is the idea that there IS a non-zero floor. Because there will always be price-agnostic bidders who are using bitcoin for non-speculative purpose. There is a floor and it's above zero.
The premise that there will always be price-agnostic bidders defies the laws of economics, and there are too many competing cryptos that fulfill the same function as bitcoin for this to be true indefinitely. What you have is a tremendously small sample size (relative to the whole bitcoin market) that you are projecting into an absolute truth. Litecoin has been "competing" with bitcoin for years and no one is using it for any non-speculative purposes. I'm not saying that the existence of bitcoin's price floor is an absolute truth but it will be true for the next 1-2 years, which is what I'm interested in. Fair enough on the 1-2 year time span, but that's not how you presented your point initially. You said there would always be price-agnostic buyers, an absolute which cannot be true. As far as competition goes, every alt coin that exists is competing with bitcoin, and they all in turn are competing with fiat. All bitcoin is is a method of value transfer, and the same is true of any other cryptocurrency. To the extent any alt coin has a market cap above zero, it means there is some market for it, so it is succeeding to that extent. (A failed coin has a market cap of 0, because no one is willing to trade anything of value for it, whether that be another coin or any physical object.) Litecoin is used for the same purpose as bitcoin: to transfer value from one person to another. Same as Doge, Dash, Clams, etc. They're all competing over the same market of value transfers. |
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I think the main thing that I can contribute is the idea that there IS a non-zero floor. Because there will always be price-agnostic bidders who are using bitcoin for non-speculative purpose. There is a floor and it's above zero.
The premise that there will always be price-agnostic bidders defies the laws of economics, and there are too many competing cryptos that fulfill the same function as bitcoin for this to be true indefinitely. What you have is a tremendously small sample size (relative to the whole bitcoin market) that you are projecting into an absolute truth. |
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If there was any risk-free way to double your money, it wouldn't apply only to bitcoin. The best way to acquire more bitcoin is to work for it and purchase it. Doing anything else is just gambling.
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If you're looking to buy an actual company, 1broker is no help to you. They don't sell stocks, they sell a derivative based on the underlying security, and this is a significant difference. As far as I know, nobody accepts bitcoin for stock trades. If you want to buy an ownership in a publicly traded company, stay away from any broker who isn't licensed and regulated, and definitely stay away from 1broker.
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Personally, I would hold on to bitcoin. I will wait for the price to go up and then I will sell them.
How can you tell the price is up? Well if that is your method then so be it. Holding is nice but rotating is much nicer. You will got my point if one day you will need money and your saved bitcoin is your last hope. When the bitcoin price was $80, I thought bitcoin price peaked. I used the bitcoin to pay for phone bill. That turned out to be 3 times too expensive if we use today's bitcoin price to compare. I'm interested to know what phone provider was so far ahead of the trend as to be accepting bitcoin as a payment method! |
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I like to say i am currently collecting rather than holding. For me i am not collecting to selll at higher price, i want to first collect and than hold. My only intention right now is to reach 1 btc and hold it till july 2016 when there will be halving of block reward.
But is the halving of the reward guaranteed to have that much of an effect on price? It will theoretically, no demand needs to be increased, just mainated. If the demand is maintained and the total supply is cut in half... then we should be at 500 usd at least post halving given current price, so yes, it's good news, but of course, this is all theoretical, we'll see hw it performs under real world situation. You obviously forget two things. 1) Miners are not the only ones who sell bitcoins, and 2) they don't sell all their bitcoins... Though it may happen that they will have to sell even more than what they will be mining after the halving Interesting point, which is what I was thinking about when I asked that question. The price to mine obviously increases, do people think miners will retire/stop, or will technology by then be able to compensate for some of the current problems, like electricity usage etc. I see the new S7's seem to use a bit less electricity. Perhaps it's feasible that mining hardware will just get better, and overall cheaper (not the gear but maybe the overhead, I mean). ? Addressing the bold, it's a state of constant flux. If electricity (or any miner overhead) gets cheaper, miners can afford more hashing power and more hashing power comes into the market. The algorithm is then tweaked and the difficulty rises to compensate, essentially wiping out any gain related to beneficial overhead trends. I think we are constantly left with a situation where the only people who mine are those who can afford to mine, and it's always going to be just barely above breakeven, because every advantage that brings in new hashing power increases the difficulty of mining. |
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Interesting write-up based on your observations, but the conclusions aren't particularly meaningful: 1. Bitcoin has a floor but practically no ceiling. But it's impossible to calculate where the floor is. True of literally any asset. The floor of any asset is 0 and the ceiling is hypothetically infinite.
2. The effect of the halving really depends on market sentiment at the time of the halving. It could be large or insignificant. The halving could be a significant event but it could also be an insignificant event. This is a truism.
As far as the halving goes, it seems more people than not (based on what I've observed on these boards) expect that the halving will result in a rise in price. If this is the case, you should expect the bulk of the effect of the halving to be priced in before the actual halving occurs, not after. i'm not sos ure, take a look at the 2012 halving, the price rosed not only before but after the halving, and on a very generous scale it's not mathematical that the price increase will occur before or in the same date, it can happen at anytime around the date of the halving Developmentally, the bitcoin community is eons past the point where it was at the last halving. I would not draw any conclusions based on how it went last time, because there is very little about bitcoin's public presence now that is similar to how it was 3 years ago. |
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Bitcoin is objectively the best form of money  the problem is we lack the insane monstrious infraestructure of the state, and that's violence monopoly and basically mass acceptance. Those two things are the only things that aren't allowing making 1 Bitcoin = 1 Billion dollars, where it should be if people used the objectively, best, most updated version of money we've ever seen. This is a great chart, I'll be saving this for future reference. But the idea that bitcoin should be at a billion dollars is the type of statement that proves how untethered to reality the bitcoin community is. Just because bitcoin may be an improvement over fiat does not give it such a ridiculous value. There is just one problem with that chart. It is clearly built to make bitcoin look good. The points that are on there are mainly traits of bitcoin that are projected on the other two. I don't see "physical" on there for instance or "tradable on mount everest for a hot chocolate" for instance. It only summarizes postives for bitcoin, not the negatives, which imo should also be done. There is one negative mark against crypto for "sovereign". I don't really think "physical" is a necessary attribute. If you have a million dollars, most probably all you have is an entry against your bitcoin and not physical bills.  It's true that large quantities of dollars are for the most part represented digitally, but they don't have to be. They can be converted to physical form. Bitcoin can't. In terms of benefit-detriment, this is one area where Bitcoin is less versatile than fiat. |
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Why bitcoin will appreciate forever? Bitcoin stopped appreciating in 2013. That fact kinda undermines the credibility of any analysis that promises bitcoin will appreciate forever.
That assumes significant and lasting adoption takes place. If it takes a couple of decades, by that point most of the coins will be mined and transactions will continue to grow. If that is the case then the value goes up. The 2013 appreciation was a hyped, partially crooked, bubble. It had little or nothing do with adoption or demand. If Bitcoin becomes ubiquitous, people won't make money on bitcoin by holding it because it will only retain value, not create value. If you have 1 bitcoin and it rises in price relative to USD over time, that's not making money, it's just retaining the value over time./ Your bitcoin will buy the same amount as it did before, the only thing that has changed is that the dollar is worth less. This seems to be a fundamental thing people don't understand. And a currency that appreciates in value is destructive to the currency anyway because it lures spectators and creates a bubble, as happened in 2013. It would be far better for Bitcoin adoption if the price stayed in the same 5-10 dollar range. Anyone who thinks they're going to get rich holding bitcoin deserves to eat all the opportunity costs of not investing in a real income-generating business. |
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Interesting write-up based on your observations, but the conclusions aren't particularly meaningful: 1. Bitcoin has a floor but practically no ceiling. But it's impossible to calculate where the floor is. True of literally any asset. The floor of any asset is 0 and the ceiling is hypothetically infinite.
2. The effect of the halving really depends on market sentiment at the time of the halving. It could be large or insignificant. The halving could be a significant event but it could also be an insignificant event. This is a truism.
As far as the halving goes, it seems more people than not (based on what I've observed on these boards) expect that the halving will result in a rise in price. If this is the case, you should expect the bulk of the effect of the halving to be priced in before the actual halving occurs, not after. |
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Bitcoin is objectively the best form of money the problem is we lack the insane monstrious infraestructure of the state, and that's violence monopoly and basically mass acceptance. Those two things are the only things that aren't allowing making 1 Bitcoin = 1 Billion dollars, where it should be if people used the objectively, best, most updated version of money we've ever seen. This is a great chart, I'll be saving this for future reference. But the idea that bitcoin should be at a billion dollars is the type of statement that proves how untethered to reality the bitcoin community is. Just because bitcoin may be an improvement over fiat does not give it such a ridiculous value. There is just one problem with that chart. It is clearly built to make bitcoin look good. The points that are on there are mainly traits of bitcoin that are projected on the other two. I don't see "physical" on there for instance or "tradable on mount everest for a hot chocolate" for instance. It only summarizes postives for bitcoin, not the negatives, which imo should also be done. Good point. That's actually a major weakness. On a related note, there's a shared delusion by bitcoin enthusiasts, especially on this board, that if fiat collapses, bitcoin is going to suddenly be worth thousands of dollars. This is ridiculous to believe because if fiat collapses, it means the world economy is falling apart and there is likely mass civil unrest. No possible way bitcoin can thrive in an environment like that. If the USD goes to zero, bitcoin goes right along with it because bitcoin will have even less utility than it does now in a time of mass civil unrest and economic collapse. The only thing that gives bitcoin any value is economic stability, that people feel secure enough to speculate on it. |
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