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Author Topic: Scaling bitcoin to world economy is unrealistic.  (Read 9809 times)
cbeast
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September 19, 2012, 02:17:50 PM
 #121

I'm not sure you can really project Bitcoin price based purely on historical price. You have to look at projected adoption vectors. I don't think the chart is really wrong, just a little conservative. There will probably some punctuated equilibrium along the way. I think it may look more like this curve, but somewhat time compressed because of the accelerated rate of technological development.


Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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September 19, 2012, 03:09:04 PM
 #122

I'm not sure you can really project Bitcoin price based purely on historical price. You have to look at projected adoption vectors. I don't think the chart is really wrong, just a little conservative. There will probably some punctuated equilibrium along the way. I think it may look more like this curve, but somewhat time compressed because of the accelerated rate of technological development.


Well, according to my graph it is not conservative enough.
Go to bicoincharts, view mtgox all data (at max time resolution) in log scale and take a screenshot.
Then use some tool to put makers at the lowest points of the 'triangle' structures (starting around october 2010).
Then just connect the dots and notice the simple curve.

This curve is more conservative than the runtogold one, but it may be that it's the start of a curve like you described.

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September 19, 2012, 04:51:13 PM
 #123


This was my big problem with Bitcoin, think about this. The success of Bitcoin is not guaranteed, it has to succeed in a free market system. If it is horded and not distributed it will die. If anything goes out of balance it will die.


Bitcoin will die because everyone wants to have it? I don't understand, please explain.

What makes Bitcoin valuable is the idea of a frictionless, free market economy, with a fixed currency supply. This value is ultimately expressed through a prosperous economy.

In contrast, Bitcoin's current value is derived from the market demand for Bitcoin. This value is derived from the idea of having Bitcoin in a prosperous economy.   

I will distil the paradox further but the explanation to my original statement above is distilled in this post

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September 19, 2012, 05:02:24 PM
 #124


Bitcoin will die because everyone wants to have it? I don't understand, please explain.

Would it be reasonable to answer: Just having Bitcoin's without an economy to back up the value is akin to a ponzi and will ultimately crash

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September 19, 2012, 11:11:51 PM
 #125

We'll hit a bottom of $10 in january and a bottom of $20 around september next year.
That's what my charts are saying.
This is interesting. How did you figure that out?
(I'm not saying you're wrong. I'm just curious.)

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September 20, 2012, 01:03:26 AM
 #126

At the current rate we are arround 250.000.000 USD.
What where the amonts hedgefunds usually invest? And what are the amounts nowadays bailouts come up with? How much USD hold the top 100 of forbes each? Top
We are still very, very small!
If just 1 crazy entity decides to strike and scoop up some of the coins we go parabolic straight up with alice in my opinion.

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September 20, 2012, 09:24:49 AM
 #127


Bitcoin will die because everyone wants to have it? I don't understand, please explain.

Would it be reasonable to answer: Just having Bitcoin's without an economy to back up the value is akin to a ponzi and will ultimately crash

This is a completely theoretical scenario. There is no way from here to there. Most people in the Bitcoin community want to live life and are not hell-bent to take all their Bitcoins into the void with them, eventually. People do buy and sell stuff. Of course they want to keep some, just in case the price shoots past the moon, overnight.


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September 20, 2012, 12:59:51 PM
 #128

We are still very, very small!
Keep in mind that a lot of the monetary system doesn't exist. A lot of the money "printed" by the FED is just in a computer as loans to some bank that then put it in a government bond paying ~3%.
Since THAT government also pays with loaned/"printed" money it's a completely empty/fictional system without substance. They couldn't even store a trillion dollars in bills IF they had them.

If these banks ever tried to move from their trillion dollar derivatives/junk bonds into the real world it would either cause an immediate crash or hyperinflation.

It would be like all early BTC adopters cashing out tomorrow; they know it would destroy their value so they DON'T do it.

The entire world budget for renewable energy is ~200 billion euro I think, that is 1/5 of the debt added by the USA in the past 6-12 months -the real market could never absorb all the monopoly money going around, so they just skim a little off the top and otherwise act as if its real.

If the Bitcoin economy grows "just" 1000 times we could buy that renewable energy for a year - not that small huh!

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September 20, 2012, 04:27:16 PM
 #129

For the next several hundred years, the new generations will complain about how cheaply their parents got *their* bitcoins.

Time to write in the will "I bequeath my wallet.dat to .."

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September 20, 2012, 09:35:36 PM
 #130

If bitcoin can't deflate in a stable manner, then fiat will be seen as more stable, and people will not store wealth in bitcoin as anything other than a risky investment. If bitcoin can't deflate in a stable manner, what incentive is there for people to "invest" in it?

Maybe the difference between carrying your wealth home on a thumbdrive or in a wheelbarrow. Bitcoin has its issues but the other options aren't looking so hot themselves. That's largely why it's interesting to me.

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September 24, 2012, 05:28:40 PM
 #131

Well WW3 is around the corner (already started depending on where you are) and its only a matter of time for the market to hit $30 a share or higher again. Millions per? Yes, thats impossible.
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September 27, 2012, 10:13:21 PM
 #132

Money gets chosen by markets primarily on the basis of its utility and only secondarily on the basis of its distribution; its utility stems foremost from the physical characteristics of the substance. (Is it money-apt like gold and bitcoin, short-term-metastable-quasi-money-apt like fiat currencies, or ineffective as money like ice cubes?) The secondary aspects, while relevant, are far more forgiving.

An example:

Warren Buffett once invoked the image of all the gold in the world merged into a giant cube to illustrate the unproductivity/uselessness of gold as such, and his example is contrived to create just that impression. Such a scenario could indeed, at least temporarily, demonentize gold, just as one person holding all BTC would demonetize Bitcoin; a commodity can't act as a medium of exchange without enough eligible exchangers to render it a common value proxy across an economy.

That said, if you owned that giant cube of gold, you'd want to get a chunk of it out into people's hands and in the marketplace as money so that people will accept gold from you in exchange for goods and services. One can see the incentive for large holders of 'money-apt' commodities to circulate them, particularly in those markets that provide the wealth holder useful goods/services. In fact, if someone were to have possession of ALL the world's gold/bitcoins, the smartest thing for him or her to do would be to distribute enough of it, even for free, to remonetize it. All the money-apt characteristics--the primary condition for something to be money--are there lying dormant, as compelling as ever, waiting for the weak secondary condition to be fulfilled. Note that nothing more need be done than to distribute the money-apt commodity past some minimum threshold. Markets will do the rest automatically--Game recognize game; money demand recognizes money.

This is why I don't fear for the scalability of Bitcoin or its appeal to latecomers. Even if it's storing value mostly for a small group, it's just as good a store of value to any new entrant, and of course a great medium of exchange.

Also note what I said about the dominant strategy for the unilateral holder of a money apt-substance implies about the marginal utility of money ownership. If I have 50 bitcoins, I'm more likely to be frivolous with a few Satoshis than someone who owns 1/1000th of a bitcoin. In combination with the limitations on fraud with Bitcoin relative to fiat, I expect some trickle-down on that basis, and from those with large holdings promoting the new currency and assisting their communities.

Gold has similar distributional inequality to Bitcoin. A new, independent form of sound money concentrated within a different group helps to decentralize power in the world. Bitcoin is mostly owned by forward-thinkers, nerds, etc. (I'm venturing a guess there.) Gold ownership rests on a history of violence and theft stretching endlessly back through a savage past. Those massive hoards need a counterweight.

Assuming all goes well with Bitcoin's rise and it reaches its anticipated potential, the challenge for the early adopters will be to use their purchasing power wisely and philanthropically.
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September 28, 2012, 02:32:01 AM
 #133

Money gets chosen by markets primarily on the basis of its utility and only secondarily on the basis of its distribution; its utility stems foremost from the physical characteristics of the substance. (Is it money-apt like gold and bitcoin, short-term-metastable-quasi-money-apt like fiat currencies, or ineffective as money like ice cubes?) The secondary aspects, while relevant, are far more forgiving.

An example:

Warren Buffett once invoked the image of all the gold in the world merged into a giant cube to illustrate the unproductivity/uselessness of gold as such, and his example is contrived to create just that impression. Such a scenario could indeed, at least temporarily, demonentize gold, just as one person holding all BTC would demonetize Bitcoin; a commodity can't act as a medium of exchange without enough eligible exchangers to render it a common value proxy across an economy.

I think that if distribution is distorted enough it can have a bigger influence on money choice than utility when the value gets higher. And ultimately it will act as a break on value when this group aggregates too much coins (for instance through loans) and becomes too big a power.
So there is a limit to the growth potetial of bitcoin because of the 'early' adopters.

Quote
That said, if you owned that giant cube of gold, you'd want to get a chunk of it out into people's hands and in the marketplace as money so that people will accept gold from you in exchange for goods and services. One can see the incentive for large holders of 'money-apt' commodities to circulate them, particularly in those markets that provide the wealth holder useful goods/services. In fact, if someone were to have possession of ALL the world's gold/bitcoins, the smartest thing for him or her to do would be to distribute enough of it, even for free, to remonetize it. All the money-apt characteristics--the primary condition for something to be money--are there lying dormant, as compelling as ever, waiting for the weak secondary condition to be fulfilled. Note that nothing more need be done than to distribute the money-apt commodity past some minimum threshold. Markets will do the rest automatically--Game recognize game; money demand recognizes money.

Well, yes.
And that would then make such a person the controller of the market. Think of it, individuals owning much more than the complete market and spreading coins as they see fit. They could manipulate prices on a massive scale. That can only be healthy within a bigger framework of something more balanced where the market has value stored in other ways as well. Bitcoin can only function in a symbiotic relation.

Quote
This is why I don't fear for the scalability of Bitcoin or its appeal to latecomers. Even if it's storing value mostly for a small group, it's just as good a store of value to any new entrant, and of course a great medium of exchange.

I also think bitcoin can be a great medium, i just think it cannot be the only medium and it cannot be the biggest medium.

Quote
Also note what I said about the dominant strategy for the unilateral holder of a money apt-substance implies about the marginal utility of money ownership. If I have 50 bitcoins, I'm more likely to be frivolous with a few Satoshis than someone who owns 1/1000th of a bitcoin. In combination with the limitations on fraud with Bitcoin relative to fiat, I expect some trickle-down on that basis, and from those with large holdings promoting the new currency and assisting their communities.
I'm sure that there will be some trickle-down, but it will propably not flow easily. And on its way down more trenches will be formed.
Although relatively speaking big coin holders will be more frivolous compared to small holders, in general the incentive is to hold on to your coin. Not only will people be frivolous with their money less often, the coin they spend will not distribute easily.
So i'm not sure this process will unfold as nicely as you described.

Quote
Gold has similar distributional inequality to Bitcoin. A new, independent form of sound money concentrated within a different group helps to decentralize power in the world. Bitcoin is mostly owned by forward-thinkers, nerds, etc. (I'm venturing a guess there.) Gold ownership rests on a history of violence and theft stretching endlessly back through a savage past. Those massive hoards need a counterweight.
Those forward-thinking nerds are pretty sketchy overall. Lots of scams, lots of tor connections, lots of puppets, lots of obscure information passing through hidden irc chanels etc.
And they would be a big part of the 'nouveau riche' superclass (so even above upper-class as this class effectively owns the market).

Quote
Assuming all goes well with Bitcoin's rise and it reaches its anticipated potential, the challenge for the early adopters will be to use their purchasing power wisely and philanthropically.
And you trust the bunch of us are generally capable of that?
I don't see that happen.
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September 28, 2012, 03:21:09 AM
 #134


Bitcoin will die because everyone wants to have it? I don't understand, please explain.

Would it be reasonable to answer: Just having Bitcoin's without an economy to back up the value is akin to a ponzi and will ultimately crash

This is a completely theoretical scenario. There is no way from here to there. Most people in the Bitcoin community want to live life and are not hell-bent to take all their Bitcoins into the void with them, eventually. People do buy and sell stuff. Of course they want to keep some, just in case the price shoots past the moon, overnight.


Sure I can agree there is no way from here to there, but here sure feels bad and there looks pity good, I want to go there.

It may just be theoretical but with savings being a benefit in a growing economy it doesn't look like we are going "there" it feels more like staying "here".

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October 01, 2012, 10:22:49 PM
 #135

the world is a scary place
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