Agreed. I think the current price is close to the price Bitcoin would have had (following the trendline) if China had never entered the game. Price may get a bit lower, because people always panic a bit more than the situation warrants, but ultimately even if the price dips 100 dollars more, it would mean that all expectations of China will have been bled out of the system. Bitcoin can then continue to grow on with normal expectations restored.

Will probably correct some more, but I'm not selling. We all know BTC's ultimate potential. In the end there will be less major price drops, because there will be widespread consensus about its possibilities. That means that people will not be prone to panic selling. I'm not selling. By doing that, the ultimate endgame scenario needs one person less in order to come to fruition.

Yeah, if you could do it, you would be a rich man. But humans aren't stupid enough to fall for such a trick. While value is purely psychological, that value assessment is still based on real world utility. Not to say that it's impossible to trick people into mistaking the utility of an object, because some people have that amount of skill, but it's no mean feat.

This is wrong. This assumes that wealth is finite and that it's a zero sum game to determine marketshare of that wealth. This doesn't take into account how new value springs into existence.

Take the computer for example and assume that an economy only has 1000 dollars of coins circulating. In the past, we had no computers. The first time someone invented a computer, it was still $0 dollars, because new products always have a market value of 0 when they first enter the scene. It's only when people assess the utility of the product that they assign value to it. Assume for a moment that the computer is eventually valued as being worth $500. What is the worth of the entire economy? That would be $1500. Why? Because wealth is not only the coins that circulate. ASSETS are wealth as well. This is how economies grow and it's the reason why people advocate steady monetary inflation in order to match this growth of the economy (which is through the creation of new assets). If the money supply grows evenly with the growth of all the assets, you will have no inflation and no deflation.

Bitcoin is a new product as well and it too started at 0. But it's being assigned value based on its utility. It CREATES new wealth, it doesn't take away money out of the economy.

Value is subjective and essentially exists all in the mind. It's PSYCHOLOGICAL. If humans believe something to be useful, they create wealth through that perception. It's not a zero sum game and even Kenynesian economics wouldn't claim that the economy works this way.

It's BOTH.

Man, I'm not sure if we are watching the same screen. Where did I say that BTC needs backing? The bolded part doesn't say that at all. I KNOW that backing would create counterparty risk.

All BTC needs are secure measures to protect utility. If BTC can retain utility under nearly ALL circumstances, it needs no backing.

My opinion is that Bitcoin (or another cryptocurrency) could probably still use some work on its security, but that it will eventually rival gold (and supplant it) where it needs no backing . Even in its current state it could probably do without backing, though I would still reccommend improving the security (which they are working on now).

As for your opinion, I'm pretty much sure you agree that BC needs no backing.

You didn't answer my question and your replies reveal that you only skimmed my post. But whatever. I'm on your side. I'll summarize.

TL;DR  Bitcoin's security probably needs some work, but it (or another cryptocurrency) will eventually supplant gold and all other government currencies.

Just for clarification, are you claiming that I said that objective value exists or that BC needs backing? Because I get the impression you really didn't grasp my post even if you read it.

Umm, I think you should read my post again. I do agree that I started out with a misleading note.

To illustrate the need for backing, one must first understand why gold itself needs no backing. Gold doesn't need backing, because it has so called "intrinsic value". However, intrinsic value itself is contradictory, because when goldbugs mention intrinsic value, they mean to imply that intrinsic value is value that can be objectively determined and is thus value that can NEVER be stripped away. Hence, this is why gold needs no backing (according to them).

The notion that intrinsic value can be objectively determined is conflating two issues, namely that of intrinsic PROPERTIES and intrinsic VALUE. Intrinsic properties can indeed be objectively determined and much of the intrinsic value that gold has is derived from its intrinsic properties. Even if the entire human species dies out today, the intrinsic properties of gold will always remain. However, if the human species dies out, gold will automatically lose all its value, because only humans can determine value. Hence, ALL value is subjective in nature. There's no such thing as objective value (= intrinsic value). It's a MYTH.

Thus, gold is also subjectively valued. What people call intrinsic value is merely subjective value that is extremely hard to strip away. Why does gold nonetheless have such strong subjective value? Because it has UTILITY under the most diverse circumstances and it has proven that it has the ability to retain this utility over a span of 5000 years. Even so, it's still possible for gold to lose its intrinsic value. If I dropped an atomic bomb on the entire gold supply, it would lose any intrinsic value it had (thus demonstrating that there's no such thing as value that cannot be stripped away). However, the scenarios under which gold can lose its utility are extremely unlikely and it's because of LOW PROBABILITY of these scenarios that gold itself needs no backing.

So does Bitcoin need backing? Depends on the probabilities of the scenarios that Bitcoin can lose its utility. Bitcoin has MASSIVE utility greater than gold and it's this utility that gives it its so called intrinsic value (which is subjective value that is extremely hard to strip away according to my new definition). Some examples that can compromise Bitcoin's utility: 51% attack, encryption hacked, electricty/internet down for extended periods of time, governments banning bitcoin, fatal bugs. IMO, each of these scenarios are unlikely, but they are still far more likely than someone dropping an atomic bomb on the entire gold supply. IMO, gold still wins as a secure store of value because of this (the only place gold can compete with bitcoin), but as technology progresses, the security and robustness of bitcoin (or another alternate currency) to survive under any known circumstances will be improved that the scenarios under which it can fail will be as remote as the scenarios under which gold can fail. Should crypto gain this amount of security, it will wipe the floor with any existing asset, including gold. Gold will then be permanently supplanted as the number one store of value and the death of government currencies is then pretty much a matter of time.

I'm not saying that there aren't multiple factors at play, but it matters what people believe. That's all I'm saying. If people believe they can't buy smaller fractions of a BTC and they believe that it is too expensive, it will stall demand. Just my 2 cents.

No, belief has everything to do with it. The problem is that the FED's belief does not take into account how their policies influence collective belief and how it influences their behaviour. It does not matter what the minority believes. It matters what MOST of the people believe. And sometimes that belief cannot be expressed in words. The shopkeeper raises his prices, because he subconsciously notices that more money is flowing throughout the economy. Little does he know that this money is coming from money printing and is not actual real wealth. But he believes it is wealth nonetheless and he doesn't even think to put this belief in words, but he decides to act on this subconscious belief anyways. Only in the future will this shopkeeper notice how erronous his belief was, but he might never even understand where his error lay or that he made an error at all.

The fact that A belief does not correspond with what is actually taking place and that these beliefs are unable to see the chain reaction caused by their actions does not negate the argument that people's actions are ultimately influenced by what they believe.


Yes, I do think that in THEORY we could inflate BTC to oblivion by forcing people to use more and more altcoins (but only through force). When an altcoin is forced on the people and a new altcoin is introduced consistently with short intervals, the people would notice consistent price inflation and confidence would indeed be shaken. Only under such a scenario do I foresee a collapse of the currencies without printing the traditional way. But in practice, only a few altcoins would be chosen by the market. They would cause only temporary price inflation, but their deflationary nature would soon takeover and we would have overall deflation for each of the succesful coins. The existence of succesful altcoins would indeed steal marketcap away from BTC, but this shouldn't be a problem, because while the added supply of a new currency has actual effects on people's beliefs, ultimately they would still believe that scarcity exists despite this. And THAT belief would lead ultimately that deflation overtakes price inflation with the result of overall deflation.

That's my 2 cents.

Ummm, maybe you guys haven't noticed, but the growth in price started stalling after it passed 1000 dollars through Bitstamp. Usually, the price explodes after passing a psychological treshold, but strangely enough it stalled righ after. I've tried advocating BTC to people the last few days, but many think it's too expensive right now. May I remind you guys that psychological perception has actual effects in reality and that it's perceived expensiveness may have resulted in the price stalling?

We need mBTC and fast or growth will be much slower from here on out.

On the other hand, slow growth might actually be better, because growth might be seen as more healthy. Not to mention that it might give me a chance to obtain more BTC for a cheap price. Well, it's really your choice if you want fast growth or not. But IMO, the perceived expensiveness of BTC DOES have an actual effect on demand.

Ah, now I uderstand your viewpoint. If your example were actually played out in the real world, I would agree that price inflation would occur, even if the currencies were seen as essentially being two seperate currencies. However, this would occur, because these two currencies would be seen as having SIMILAR properties. They would still be seen as two different currencies, but their exchange rates would exhibit similar behaviour. They wouldn't neccesarily have the same exchange rate, but they would react to situations similarly.

However, I must add a few caveats to this situation. Even though price inflation would indeed occur, the fact that these would be seen as different currencies would still remain. Having 100 different currencies with the same properties would lead people to believe that there would be more wealth in the economy and would thus lead them to raise their prices. But CONFIDENCE would still remain in these coins, because they are still seen as being seperate coins. A person must actually believe that the supply has been abnormally expanded for a person to lose faith in a currency. Thus having 100 different currencies with the same properties would indeed lead to price inflation, but the slight differences between the coins would be enough for the average person to believe that a single currency's supply has not been abnormally expanded (yes, belief is everything).

In case of BTC and its altcoins, I would say the benefits of competition outweigh the negatives of the inflation. The market tends to have only a few succesful competitors anyways, so even if the market is flooded with altcoins, only a few would actually be moderately succesful, thus limiting the extent of price inflation. Not to mention that BTC and its altcoins are deflationary currencies and are seen as that way. Because of that, any price inflation that occurs will likely be negated by its deflationary aspects. A person must BELIEVE that the supply of a currency has been abnormally expanded, for that currency to collapse. I say such a scenario only occurs if we actually allow BTC and altcoins to be printed like dollars. The existence of altcoins does not create this belief in the people.

And keep in mind that it´s good for the market to have alternatives. There is no one size fits all solution to everything. The market has niches. Not to mention that we need proper backups in case BTC gets hacked. It serves nobody if there´s no proper coin after BTC that can take up the scepter.

Read my reply to Kleptoid and try answering the question I posed to him. If people don't even know what the heck LTC is, how can they even perceive reduced scarcity? Because that's essentially what is necessary for price inflation. The person must BELIEVE that the scarcity of BTC is reduced by LTC. That can't happen if they aren't even aware of it.

It is scarce. Because I perceive it to be so and because most others do so as well. It's only a very small minority that equate altcoins with bitcoins. Perception is everything.

I find this idea that alts are inflationary a flawed concept. You people do realize that BTC and LTC are digitally more different than the digital version of the USD and the EUR (which makes up most of their supply and is thus the largest factor influencing their exchange rate), right? The only way computers can differentiate between USD and EUR is that each of their digital coins has DIFFERENT LETTERS to identify them. That's about the only difference between the digital version of the USD and the EUR. Yet, most would agree that it's ludicrous to say that the EUR inflates the supply of the USD, even though we can say that these currencies fall in the same asset class (government issued currency).

Fact of the matter is that even slight differences such as a name can make coins lose fungibility. And it's this aspect that determines if a coin can inflate the supply. New coins must be 100% FUNGIBLE with the old coins in order for the new coins to inflate the old supply. If these coins are seen as different, they will be essentially seen as alternates and will achieve their own exchange rate with their own unique behaviour. Perception is everything.

Remember that price inflation results from how we PERCEIVE the scarcity of the money supply and based on that perception do we decide if the coin is valuable or not. People tend to forget that money is all in the mind. It's entirely a psychological concept. SOME people believe that altcoins inflate the supply. If a lot of people believed this, altcoins would indeed be inflationary, because belief is what ultimately decides how we value scarcity. But the average person would disregard any digital currency that's not called Bitcoin.

Average person: "Litecoin? What the hell is that? No, I don't know that coin. I don't want it. I rather stay with that thingy that's been all over the news."

Different perceptions lead to essentially the coins being seen as two seperate currencies (thus losing fungibility) and these coins achieving vastly different exchange rates and having diverging supply and demand. If there exists only 10 BTC in existence (with no monetary inflation) and someone comes along with 10 000 LTC that has yearly inflation of 2%. The average person would still see BTC as being scarce, because they BELIEVE the coins to be different. Try asking the average person what LTC is. If they don't even know what it is, how can they ever perceive LTC increasing BTC's supply thus creating the PERCEPTION of reduced scarcity of BTC? It's a ridiculous idea.

Lol, this reminds me of goldbugs being utterly disgusted with BTC bugs. I guess people just can't help it. May I remind you fellas that competition is a good thing and that it would be in the best interest for the world if LTC did relatively well? If BTC's encryption gets broken or some other fatal bug pops up, we need a plan B to fall back on and that candidate is most likely LTC. It does nobody any good if LTC's growth is stunted and nobody invests any programming time, energy and money in it. With no proper coin to fall back on, we are just too vulnerable.