Yes thats true. Does BTC have features that would keep it from going to zero?
Except a competitor could have the same features By competitor you mean coin? Well yeah, basically all coins are btc coins, but no company allows basically fee-less transactions, instantly around the world. I mean altcoins or ripple Ripple is going be huge, its a payment system which was meant to complement coins, not compete. Personally, Ripple has much promise and so does Nxt, just gotta wait for the corporates to get a hold of it. I agree. Better to invest in businesses because there is cash flow. Thats why you dont park your money in USD. You buy JP Morgan or Visa Mastercard stock |
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Yes thats true. Does BTC have features that would keep it from going to zero?
Except a competitor could have the same features By competitor you mean coin? Well yeah, basically all coins are btc coins, but no company allows basically fee-less transactions, instantly around the world. I mean altcoins or ripple |
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Yes thats true. Does BTC have features that would keep it from going to zero?
Except a competitor could have the same features |
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Denial about bitcoins price has different phases. Right now we are seeing the conspiracy phase.
During this phase, people will make up all kinds of fantastic stories how the bitcoin price is dropping because of government conspiracy/banking conspiracy/alien conspiracy or all three tied together. There will be plenty of posts like this.
When this phase is over, then there will be a "let's blame each other" phase, where people start to post weird rants about blaming everyone involved for destroying bitcoin. This could also be called the "We could of have heaven, but you sold your coins and ruined it all!" phase. But at first we will get tired of seeing the conspiracy phase before the first posts of the next phase will start to appear.
I like your insights. This is exactly happens in pennystock land. Usually a penny stock can get pumped 2 or 3 times but it usually dies in long run |
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Given the reality of FIAT-FAUX (USD & wannabe's), why not have a PEOPLES FIAT, where nobody can be a billionaires, and people can exchange internationally, as even those in live in the jungle need to trade with city folk and vice versa.
Why not allow the user create currency ex nihilo like how Central Banks do it. That way the currency is worthless and people would only create it temporarily in order to engage in trade Lets say I've got pies that I wanna trade for socks. But the sock guy don't need pies. But lets say there is an electronic exchange w order books w people with things to trade for something else. The exchange would match up all the trades necessary for all transactions to come full circle. Each trader generates some amount of currency (credit for their goods) then the exchange looks for trades to match up the orders. Then the orders are executed all at once and each user ends up with a coupon for what they need and gives a coupon redeemable for exchange of hard goods. In essence each user is issuing currency but only redeemable in assets that they can back. So I issue my pie note convertible for 1 pie. Sock guy issues sock note convertible to 1 pair of socks. The exchange has to find all the orders so that there is no excess currency in the system. All balance sheets close to zero after the orders are complete. The currency itself is ephemeral and not worth anything. No value ever so only the backing asset has intrinsic value. I'm just toying w the idea conceptually as a mental exercise. Probably in practice it would require too much energy compared to centrally controlled currency |
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People get confused w gold because we used to have gold coins then gold notes. But now gold is no longer money but a traded commodity
My central bank seems to disagree. It has its gold assets registered as foreign exchange with a balance of around 5 bn euro. The Fed has a lot of assets on its balance sheet. Treasuries, bonds, swaps, credits, repos. Gold is only a small fraction of its assets I don't see why you would classify gold as money because of this. The 5B Euros is the money part not the gold |
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Except in finance and economics "intrinsic value" is not open to interpretation. Its actually a number because things need to be priced when you trade them.
Different assets gets priced differently so there is not a blanket formula to estimate intrinsic value.
For options its the in-the-money part of the option. For call options, this is the difference between the underlying stock's price and the strike price. For put options, it is the difference between the strike price and the underlying stock's price. The premium part of options is the extrinsic value. Price of options = intrinsic + extrinsic
For equities its a little more complex to calculate. But it's basically the present value of all future net cash flows. Usually analysts use fundamental analysis to estimate. For example earnings per share
For real estate its similar to equities but you use a different formula to calculate. Something like the the net present value of all future net cash flows which are foregone by buying a piece of real estate instead of renting it in perpetuity.
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I'm just trying to explain how "intrinsic value" is used in finance & economics lingo
Also, value is not based on utility. Value is a quantification based on markets
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When you use the term "intrinsic value" in finance, it's not merely a concept its a number.
You are both correct in a way. Nothing has value unless there is a market for it. In this case you can say nothing has intrinsic value. But practically speaking you can't separate things from their markets so you can only say "nothing has intrinsic value" when markets cease to exist.
Also you have to think in hierarchies.
Gold itself has utility value for jewelry, industrial use, etc.. There is a market for gold and the value of gold that can be quantified by market price. In this case you are treating gold as commodity NOT money. But gold coins have notational value when used as money. You need to differentiate between money & commodity
If a king mints gold coins or prints notes. In essence he is printing money (a number) on a material. Doesn't matter if that material is gold or paper.
Compare a $10 note to a $10 gold coin. If the King (issuer) cease to exist. That notational value is lost and the "intrinsic value" remains. With the note it's intrinsic value goes to zero. With the gold coin you can melt that down and sell the raw gold on the gold market. The next King comes along and replaces $ with Y. He then prints 10Y notes & 10Y gold coins. If you held previous held a $10 note & $10 gold coin. They are both worthless in notional value in the Y economy but the coin still has intrinsic value as long as there a gold market. The gold market depends demand. If the next King wants to mint gold coins then there will high demand for gold. If he uses something else then the demand is relegated to demand from jewelers, electronics firms, etc..
All this is moot since we don't use gold coins or convertible notes any longer in the modern times.
BTC doesn't have any intrinsic value. If the market of BTC goes away the intrinsic value goes to zero. Same w USD or any fiat.
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We used barter system before we had money, why use money? You answer this one!!  This is not correct. Money always existed according to historical record and logic. It existed as credit before coins were invented. Mitchell Innes challenged the idea of a barter economies in 1913. The fallacy comes from Adam Smith and became erroreuosly accepted in Economics although there has never been any anthropological evidence of a barter economy. Modern eceonomists don't believe this anymore than scientists believe in Creationism you are incorrect. in the ages of hunters, farmers, and blacksmiths. a baker would trade a loaf of bread for a horse shoe to be fitted to his donkey, so that the baker can make deliveries to the next village, using his trailer pulled by his muel. the baker then accepts clothing for loaves of bread in other villages, maybe some alcohol or fish. he also traded other items to then get wheat to then mill into flour to make more bread. it was only later where one village argued that their "wares" were worth more then other villages, or that one loaf of bread was not worth a horse-shoe. that bartering became an argument instead of friendly discussions and agreements. so the kings invented a centrally recognized system. depending on the area, some kings used tally sticks, some used gold. bt this was way before "money" was invented Lol. What university taught you this? Barters only work if there is a reciprocity of wants as your post demontrates. If any of the agents don't want what is offered for barter then the the trade must revert to credit. Money is just a representation of debt/crebit. Anthropologists believe that early forms of economies were gift based and money evolved from these gift economies. Barter existed as a rarity between external communities. Barter between strangers because lack of trust and therefore the debts could be settled immediately. But internally early communities used credit. Coins (physical money) weren't invented til later. But credit money always existed |
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We used barter system before we had money, why use money? You answer this one!! This is not correct. Money always existed according to historical record and logic. It existed as credit before coins were invented. Mitchell Innes challenged the idea of a barter economies in 1913. The fallacy comes from Adam Smith and became erroreuosly accepted in Economics although there has never been any anthropological evidence of a barter economy. Modern eceonomists don't believe this anymore than scientists believe in Creationism |
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besides Silk Road  uh oh i said the ultimate question. Now you answer  There is a need for anonymity with everyday transactions. For example, the Target data breach shows that people not doing anything illegal were victimized by being transparent in their financial matters. If all those Target credit card transactions had been in bitcoin rather than credit card, there would be no need for victims to change their credit card numbers and pay for identity theft protection. I may go to a shady pawn shop and buy a used computer. Normally I'd pay cash, but I'd never dream of using a credit card, so that the meth heads in the back can later charge some porn on that card. I'd have no problem in paying in bitcoin. People use credit cause they want to buy now pay later. Thats what credit is. They could have just used cash at Target and no identity theft either. |
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I just read the article. Its good but not complete.
Its true that "value" comes from market demand. But we are all market participants. We can't detach ourselves any longer unless we can exist as individuals without need for markets.
The easiest to think about intrinsic value is think separately about coins and metal.
A pre 1982 penny is 95% copper. The notational value of that coin is 1cent. However, the melt value of copper fluctuates w market price. Therefore instrinsic value of copper pennies are based on market demand of copper. A post 1982 penny only contain 5% copper so its intrinsic value is less although notational value is same. This is reason why some people arbitrage pennies
People get confused w gold because we used to have gold coins then gold notes. But now gold is no longer money but a traded commodity
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Uh.. Paypal is a clearing house. Credit cards are "credit"
Nothing at all like bitcoin
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I hope you make a lot of money. Im not here to criticize your system. Im just skeptical as an options trader. Im a firm believer in random walk in short term (minutes) , technicals in semi short (hours, days) term and fundamentals long term (days, months) . Most of my trades are delta neutral. I sell premium 45 days out on IV spikes. I do have spec long positions that are 6 mos to year out
2 problems I foresee trading BTC
1. The slippage on BTC is huge. Probably cause theres no liquidity. I looked on bitstamp and coinbase and the bid/ask can be $5 wide. Lack of liquidity also makes difficult for intraday trading if you cant get in and out of position
2. Theres no easy way to short BTC so you can only trade bullish direction. In options you can trade up, down, or sideways
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Just curious how do you trade these predictions? You just buy and sell if your target is hit?
If your target doesn't hit what do you do? Double down? Swallow loss?
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My question remains how do you hedge a BTC position? Like if I bought BTC today for $450. How do I hedge against a drop to $400?
Sell a risk-reversal OTC. Thanks for the reply. Seems too much trouble |
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OP does not comprehend the concept of "hedging" and basically invented his own fairy tale caricature of what he believes an institutional investor to be in order to improvise some FUD, end of story.
How do you hedge BTC? There's no options market on it The existence of an options market within a particular asset is not what hedging as a investment principle means. I know what hedging means. But options are the easiest tool for hedging. My question remains how do you hedge a BTC position? Like if I bought BTC today for $450. How do I hedge against a drop to $400? |
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OP does not comprehend the concept of "hedging" and basically invented his own fairy tale caricature of what he believes an institutional investor to be in order to improvise some FUD, end of story.
How do you hedge BTC? There's no options market on it |
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bitcoin is a FIAT?? OMG!!!!!!! you are really.. i wont even say the word because you being one, insults others of that same descriptive group.. more so then the word itself.. fiat money
noun
1.
inconvertible paper money made legal tender by a government decree. By that definition you posted BTC is fiat. BTC is not convertible to anything. Fiat means "let it be done". Means its created from nothing. USD is created out from debt. BTC is created when some solves a math problem. 1BTC = 1BTC. Its not convertible to gold or silver or grains or anything. The only difference about BTC & USD is that USD is created out thin air by the govt. BTC is created out of thin air by miners. The other difference is USD is legal tender and BTC is not. A point which I've made repeatedly. The reason why this important is the demand for USD is a legal requirement to pay taxes. |
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