ETH = Game Over

[dinofelis]

Did you two guys say anything about Ethereum being "game over" ?
Sorry i skipped past your comments.

Even though not explicitly, it is related.  ETH *should have been game over* if it were something that were actually used.  But ETH is not used, it is a betting token.  Like most crypto.  Betting tokens don't need to have much solid properties.  Only the belief that you will find someone wanting to pay more for it, in the illusion that he will find an even greater fool paying still more.  Whether the transactions are reversible or not, whether the block chain functions or not, or whether it even exists, doesn't really matter.  Only the belief that you will find someone more gullible and more greedy than you.  And the world is big.  The belief can be justified.  In that case, you win the bet. 

[JayJuanGee]

Did you two guys say anything about Ethereum being "game over" ?
Sorry i skipped past your comments.

Even though not explicitly, it is related.  ETH *should have been game over* if it were something that were actually used.  But ETH is not used, it is a betting token.  Like most crypto.  Betting tokens don't need to have much solid properties.  Only the belief that you will find someone wanting to pay more for it, in the illusion that he will find an even greater fool paying still more.  Whether the transactions are reversible or not, whether the block chain functions or not, or whether it even exists, doesn't really matter.  Only the belief that you will find someone more gullible and more greedy than you.  And the world is big.  The belief can be justified.  In that case, you win the bet. 

If you look back at the transition of this topic, you will see that Dinofelis made a comment that largely put ETH and bitcoin in a very similar category, and suggesting that they are both merely speculative investments and seeking the greater fool.  I reacted to that comment by asserting that bitcoin is quite different from ETH and brings quite a bit of value and paradigm shifting newness that is either not brought by ETH or at least ETH is not quite in the same place as Bitcoin in terms of what value is bringing to the table.

[dinofelis]

If you look back at the transition of this topic, you will see that Dinofelis made a comment that largely put ETH and bitcoin in a very similar category, and suggesting that they are both merely speculative investments and seeking the greater fool.  I reacted to that comment by asserting that bitcoin is quite different from ETH and brings quite a bit of value and paradigm shifting newness that is either not brought by ETH or at least ETH is not quite in the same place as Bitcoin in terms of what value is bringing to the table.

The point I wanted to make is that what keeps ETH alive (while it shouldn't), is something bitcoin is also undergoing: it is MAINLY a betting token in a greater fool system.  The things that *should* have made ETH crumble don't count for betting tokens, and that's why it is still there, and what I wanted to outline, is that bitcoin is *also* mainly used as a betting token.
But there are differences between ETH and bitcoin too, and maybe I wasn't clear about that.  I guess that the main difference is that bitcoin is still an immutable block chain in its spirit, while ETH isn't - that should have killed it, except as a betting token.  The "social structure" of bitcoin and of ethereum are different.  They both suffer from imperfections: bitcoin's simple ASIC based mining algorithm makes for mining centralization ; ethereum's initial emission scheme makes for stake holders' centralization with very strong influence by the initial dev team.  It has now turned out that this last aspect is fatal for immutability, while the first aspect hasn't yet shown this problem.  But bitcoin has probably a much larger, and diversified "community" than ethereum, which may be the ultimate protection against mutability.

And although ethereum can do everything bitcoin can, but not the other way around, bitcoin is actually also really used, while I haven't yet seen the slightest real world application of ethereum.   My point was, though, that even this usage of bitcoin is small as compared to the "betting token" aspect of bitcoin.

However, even in the "betting token" sphere, there is probably a difference between ethereum and bitcoin, and that is the time constant of expectation of finding someone who will pay more: that time constant with bitcoin is very long (there are many hodlers) ; I don't know if there are many ethereum hodlers, willing to hold ethereum for years even if the price plummets "temporarily".

And then, bitcoin has something that no altcoin has and never will have: bitcoin was the first.

[RoommateAgreement]

ETH is all game and all games will be over sometime but i don't think it is near the end yet.
it is still getting pump and dumped and now we are seeing the bubble phase of eth and soon this will be over and a new game will start and go up again!

[JayJuanGee]

If you look back at the transition of this topic, you will see that Dinofelis made a comment that largely put ETH and bitcoin in a very similar category, and suggesting that they are both merely speculative investments and seeking the greater fool.  I reacted to that comment by asserting that bitcoin is quite different from ETH and brings quite a bit of value and paradigm shifting newness that is either not brought by ETH or at least ETH is not quite in the same place as Bitcoin in terms of what value is bringing to the table.

The point I wanted to make is that what keeps ETH alive (while it shouldn't), is something bitcoin is also undergoing: it is MAINLY a betting token in a greater fool system.  The things that *should* have made ETH crumble don't count for betting tokens, and that's why it is still there, and what I wanted to outline, is that bitcoin is *also* mainly used as a betting token.
But there are differences between ETH and bitcoin too, and maybe I wasn't clear about that. 

Yeah, it is almost as if we are beating this comparison contrast to death, and from my point of view, too much comparison contrast may cause some losing of perspective, and surely, I am critical of you to some extent, dinofelis, because I believe that your various comparison points are losing some nuances, and creating more details and specifics does not really help to make the matter more clear or even more correct.

I guess that the main difference is that bitcoin is still an immutable block chain in its spirit, while ETH isn't - that should have killed it, except as a betting token. 

Even with these simple descriptions regarding immutability, you are all over the place in qualifications and characterizations of recent history.

The "social structure" of bitcoin and of ethereum are different. 

Sure, but some folks invest in both and some folks  are maximalists in one coin or the other. Yet, at the same time, the social structure is constantly evolving, even though there were some historical foundations that influence each, whether we are talking about hard core folks within each respective community or the multitude of varying perspectives that are the likely majority and more mixed.

They both suffer from imperfections: bitcoin's simple ASIC based mining algorithm makes for mining centralization ; ethereum's initial emission scheme makes for stake holders' centralization with very strong influence by the initial dev team.  It has now turned out that this last aspect is fatal for immutability, while the first aspect hasn't yet shown this problem.  But bitcoin has probably a much larger, and diversified "community" than ethereum, which may be the ultimate protection against mutability.

Well, part of the recent battle in bitcoin does have to do with some folks wanting to make bitcoin more mutable in terms of the scaling debate, and even though some folks lobbied fairly strong criticisms towards bitcoin difficulties in achieving consensus seem to have resulted in some folks changing their perspective to appreciate difficulty in change (especially when you are already starting with a very solid system that is not broken and securely preserves immutable decentralized value) is a kind of bitcoin feature rather than a bug.  So some folks have come to recognize and appreciate bitcoin more because it is seeming fairly resilient and difficult to change, even though there still remain some loud mouths out there that continue to shout about how broken bitcoin is, and if you are allowing that nonsense to sway your opinion about bitcoin, then you are caught up in the same kind of denigrating misconceptions and false equivalencies.

And although ethereum can do everything bitcoin can, but not the other way around, bitcoin is actually also really used, while I haven't yet seen the slightest real world application of ethereum.   My point was, though, that even this usage of bitcoin is small as compared to the "betting token" aspect of bitcoin.

This is a kind of nonsense to suggest that ethereum can do more than bitcoin, but it's actual use in the real world has not been demonstrated yet, therefore ethereum has potential improvements upon bitcoin.  I will concede that there are some things that ethereum can do that bitcoin cannot, but who gives a ratt's ass about that when bitcoin still continues to be able to do what it was designed to do like no other competitor, and the fact that bitcoin is still evolving and developments are being made, it is quite likely that in the relatively near future, bitcoin is going to be able to materially and at a sufficient enough level do everything that the various competing cryptos can do (even if these things cannot be done directly on the bitcoin's blockchain, they could be done on side chains that allow for some absorption and at least cooperative symbiosis regarding the incorporation of the various "competing" crypto technologies while still using some of the security aspects of bitcoin).

However, even in the "betting token" sphere, there is probably a difference between ethereum and bitcoin, and that is the time constant of expectation of finding someone who will pay more: that time constant with bitcoin is very long (there are many hodlers) ; I don't know if there are many ethereum hodlers, willing to hold ethereum for years even if the price plummets "temporarily".

Yeah, you continue and continue and continue with your faulty framework.  Yes, there is some speculation and betting going on with each of the coins, and frequently we see various kind of unfounded hype mechanisms in ethereum that clearly reach a much higher level then what is taking place in bitcoin, but yeah, there are some folks in bitcoin who like to hype a lot too, because they truly and correctly believe that exponential BTC price growth has a much more likely chance of taking place with greater adoption and greater development.  You seem to get caught up in considerably misplaced denigration of bitcoin by attributing this greater adoption and development to labelling these later entrants as "greater fools"

Even though there remains some likelihood that your framework captures some apparent dynamics in the crypto space, describing the situation as either short term or long term greater fools, should cause you to recognize that there is something wrong with your framework, because a large number of folks don't give a shit about the long term if such long term is 100 years later, so we need framing and considerations that are more immediate for folks, regarding hourly volatility, 30 days, 1 year, 5 years... These shorter terms are much more concrete, even though in order to have a decent short-term plan, there still needs to be some outline regarding how the longer term is intended to play out in order for folks to have perspective regarding the shorter term periods.

And then, bitcoin has something that no altcoin has and never will have: bitcoin was the first.

Being the first really only matters if there is some kind of meaningful innovation that is not really within the realm of being copied by others.  

Bitcoin had more than 4 years of nearly exclusive resolution of the double spend problem, and yeah, it did not come out of the blue, but it built upon other information and ideas to truly fix such problem.  One of the telltale signs of bitcoin's security advantage remains that even a few years ago, there was so much computing power invested into bitcoin that it made it very difficult to attack, and we know that even since that time, hashing power has gone up exponentially to generate security hundreds of times more valuable than the current price.  Anyhow, yeah, if there were some better coin, the bitcoin miners could direct their mining in another direction, and sure bitcoin's security advantage is not flawless, but currently, there remains almost no competition with that security aspect of bitcoin, and if something better seems to be evolving, I have no personal problem to diversify some of my investment into that something other.  Even though maybe Monero could be in the ballpark of something that seems to have decent potential at the moment, Ethereum is no where near to being in the ballpark with all of its pie in the sky, lack of a real world application pumping hype marketing and difficulties even camouflaging any kind of decentralized immutability (Maybe ETC could have something in this regard?)

[dinofelis]

Well, part of the recent battle in bitcoin does have to do with some folks wanting to make bitcoin more mutable in terms of the scaling debate,

Honestly, to me, forking over the scaling now wouldn't really be a breaking of immutability, because "limited blocks" is maybe not a clearly defined intend which was obvious to people starting to use bitcoin.  The block size was until recently nothing else but a technicality.  However, from the moment that the finite block size starts to have economic impact, and people start adapting to it (the scarceness of room on the block can be an economic incentive), then of course, this finite block size has become part of the "bitcoin paradigm", and changing it then would mean a break of immutability. 

To me, immutability is not some technicality, but a matter of "respect of the original intend of the contract that underlies the cryptocurrency at hand".  And note that this contract is NOT a smart contract, but one of intend.  This is why "hard forking", which is "breaking the smart contract" of the crypto currency, is NOT a break of immutability if that hard fork only touches upon technical aspects, and doesn't touch the economic paradigm of the crypto.  The block size was long time a technical matter.   When it starts to play an economic role (such as fee market etc...) then the block size becomes part of the paradigm, and modifying it becomes "breaking immutability" (like changing the emission rate of bitcoin would be).

This is a kind of nonsense to suggest that ethereum can do more than bitcoin

Well, ethereum can be used as a coin exactly as bitcoin is, it is faster, it has not the same block size limitations, AND one can write buggy smart contracts on it  

Yeah, you continue and continue and continue with your faulty framework.  Yes, there is some speculation and betting going on with each of the coins, and frequently we see various kind of unfounded hype mechanisms in ethereum that clearly reach a much higher level then what is taking place in bitcoin, but yeah, there are some folks in bitcoin who like to hype a lot too, because they truly and correctly believe that exponential BTC price growth has a much more likely chance of taking place with greater adoption and greater development.  You seem to get caught up in considerably misplaced denigration of bitcoin by attributing this greater adoption and development to labelling these later entrants as "greater fools"

That framework is not faulty at all.   If *the main* reason to buy bitcoin is because one "expects an exponential rise with greater adoption", meaning, one expects more and more people to buy bitcoin FOR EXACTLY THE SAME REASON, namely, an exponential rise and one calls the influx of all these people expecting that, "greater adoption", then we have the schoolbook illustration of "greater fool theory".

If on the other hand, you expect greater adoption because people are going to USE IT A LOT as a currency, NOT buying it mainly because they expect a price rise, but because of this greater adoption, there is a price rise, then you are right.

However, face it.  Answer honestly for yourself the following question:

What is the main reason for most people buying/holding bitcoin ?

A) they buy/hold it because the want to use it as a currency/store of value, and *they are not motivated by an expectation of rise of price*.

B) most people buying/holding bitcoin buy it/hold it because *they expect a rise of price*.

If the answer is A, you are right, we are NOT in the "greater fool" paradigm ; the price rise is just a reflection of larger adoption.  However, if the answer is B, then we are in exactly the defining property of a "greater fool theory" situation.

If "most people buying/holding bitcoin" are essentially motivated to do so because they expect a rise of the price, and if most "adoption" comes from people motivated by the expectation of a greater price, we are having the schoolbook example of "greater fool theory".  It is only when the MAIN DEMAND, and when the MAIN GROWTH has nothing to do with an expected price rise, that one is NOT in "greater fool theory".

Now, ask yourself honestly, whether that is true.  Ask yourself whether, with bitcoin, MOST new people getting into bitcoin do this for OTHER reasons than an expectation of price rise.  If your answer is that most people get into bitcoin NOT because they expect the price to rise, THEN you are right and this is not "greater fool theory".   Really ?

But, mind you, greater fool theory works extremely well to get rich, as long as there are enough greater fools !  I'm not saying that it is not working !

Even though there remains some likelihood that your framework captures some apparent dynamics in the crypto space, describing the situation as either short term or long term greater fools, should cause you to recognize that there is something wrong with your framework, because a large number of folks don't give a shit about the long term if such long term is 100 years later, so we need framing and considerations that are more immediate for folks, regarding hourly volatility, 30 days, 1 year, 5 years... These shorter terms are much more concrete, even though in order to have a decent short-term plan, there still needs to be some outline regarding how the longer term is intended to play out in order for folks to have perspective regarding the shorter term periods.

 This "greater fool theory" thing can work positively for decades.  By the time 3/4 of the world population is gambling on bitcoin, expecting to find another 3/4 of the world population to sell their coins at higher price, several generations of bitcoin holders will have become rich.  It is that last 3/4 - a fraction that will be the last of great fools, and end up being bag holders of something they bought (like everyone else before them) to make a benefit, and see that they are just bag holders.   But this may take decades.  Greater fool theory works, as long as you are not the last (and largest) generation.

[JayJuanGee]

Well, part of the recent battle in bitcoin does have to do with some folks wanting to make bitcoin more mutable in terms of the scaling debate,

Honestly, to me, forking over the scaling now wouldn't really be a breaking of immutability, because "limited blocks" is maybe not a clearly defined intend which was obvious to people starting to use bitcoin. 

There's nothing wrong with forking at all, except to the extent that it may be controversial, and ETH's recent hardfork should have taught folks that none of us should take the extent of controversial for granted.  Accordingly, there should be even more reluctance towards hardforking and/or attempting to impose consensus unless we really can recognize overwhelming consensus on whatever the topic of the hardfork.  For example, if the hardfork is fixing a noncontroverted bug (for example accidentally mined 21 million coins in one block, or something like that).

The block size was until recently nothing else but a technicality. 

Actually, it is possible that if the scaling up of bitcoin was presented in its pure technical sense and both evidence and logic had been presented to justify such scaling up, then it is possible that some kind of scaling solution could have been achieved in a fairly short period of time.  

A couple problems with both XT and Classic was that there were hidden agendas regarding attempting to change governance also, and really in the end, the case for actual technical problems were not as strong as XT and Classic folks were making them out to be, so a lot of the passion regarding the scaling debate is not really technical, but instead political and also concerns about personality.. rather than technically justified.  Further, there have been some pretty contradictory positions taken in respect to seg wit.  When seg wit was first announced, it was pretty much non-controversial because even a large number of the XT and Classic proponents (such as Gavin and Jeff Garzik) were in favor of seg wit, at least as an interim solution.  However, with the passage of time, it became more and more clear that seg wit should be implemented as a softfork rather than a hardfork because a certain amount of sabatoge and ill will had been generating around it, largely from the governance aspects of the XT and Classic supporters, rather than any kind of meaningful and constructive technical criticisms.

However, from the moment that the finite block size starts to have economic impact, and people start adapting to it (the scarceness of room on the block can be an economic incentive), then of course, this finite block size has become part of the "bitcoin paradigm", and changing it then would mean a break of immutability. 

Sure, finite block sizes could become or remain a design aspect of bitcoin, because there seems to have generated some rationale why limits should be imposed, largely considering defending some kinds of attacks and also possibly generating some mining incentives through fee generation and justification for reasonable fees.

To me, immutability is not some technicality, but a matter of "respect of the original intend of the contract that underlies the cryptocurrency at hand". 

Seems like I may agree with you, if you are talking about immutability within the context of bitcoin, but I do think that immutability has to be considered within the context of secure and decentralized value storage, too.

And note that this contract is NOT a smart contract, but one of intend.  This is why "hard forking", which is "breaking the smart contract" of the crypto currency, is NOT a break of immutability if that hard fork only touches upon technical aspects, and doesn't touch the economic paradigm of the crypto.  The block size was long time a technical matter.   When it starts to play an economic role (such as fee market etc...) then the block size becomes part of the paradigm, and modifying it becomes "breaking immutability" (like changing the emission rate of bitcoin would be).

could be.

This is a kind of nonsense to suggest that ethereum can do more than bitcoin

Well, ethereum can be used as a coin exactly as bitcoin is, it is faster, it has not the same block size limitations, AND one can write buggy smart contracts on it  

So what if ethereum can be a coin if it is not clear about whether it is secure, and even we have never been clear about the total number of coins and whether or how such movement to proof of stake.. and in the end, so what  about alot of this lovey dovey smart contract bullshit when it is ahead of its time.  Sure, there are a lot of good ideas with smart contracts that have to be worked out.  

Bitcoin, on the other hand, has a fairly narrow assurance in respect to providing secure decentralized immutable value transfer/storage through proof of work, and that is a humungous achievement on its own so long as it can continue to last, which is proving to be lasting and lasting and being developed upon in order to continue to foresee future growth (through ongoing future adoption and ongoing development that is not all clearly known at the moment because the market is going to reward or punish which parts have more utility and which parts do not and what system built upon such are going to prosper financially).

Yeah, you continue and continue and continue with your faulty framework.  Yes, there is some speculation and betting going on with each of the coins, and frequently we see various kind of unfounded hype mechanisms in ethereum that clearly reach a much higher level then what is taking place in bitcoin, but yeah, there are some folks in bitcoin who like to hype a lot too, because they truly and correctly believe that exponential BTC price growth has a much more likely chance of taking place with greater adoption and greater development.  You seem to get caught up in considerably misplaced denigration of bitcoin by attributing this greater adoption and development to labelling these later entrants as "greater fools"

That framework is not faulty at all.   If *the main* reason to buy bitcoin is because one "expects an exponential rise with greater adoption", meaning, one expects more and more people to buy bitcoin FOR EXACTLY THE SAME REASON, namely, an exponential rise and one calls the influx of all these people expecting that, "greater adoption", then we have the schoolbook illustration of "greater fool theory".

You keep reading what you want to into the supposed "main reasons" for people to buy bitcoin.

Sure some folks may hope for an exponential growth in value of their investment, but such exponential growth expectation is not a necessary condition or motivation for investing.  I think I already outlined this, but investors could also consider that the coin will hold value better than other investments and not lose value.  Accordingly, a person may consider that there is a 1% chance that the BTC price will grow to the $3 to $5k price territory in the coming years, but a 80% chance that it is going to stay above $500, and lots of variations in between, and that may be good enough... Sure, possibilities of exponential growth, but when you calculate all of the possibilities, it just may show that bitcoin has a decent likelihood (in spite of likely volatility) to hold it's value with decent likelihood of modest appreciation (and seemingly better than alternative places to put 1% to 5% of the assets of the investor).  

That scenario is no where near having an unreasonable expectation to become rich  if you attribute a mere probability to such upward price scenarios and also including considerations of downside risk, too.  Greater adoption does not equal greater fool as you like to denigratingly suggest with your faulty and incomplete framing of the situation and the calculations that folks may undertake.

If on the other hand, you expect greater adoption because people are going to USE IT A LOT as a currency, NOT buying it mainly because they expect a price rise, but because of this greater adoption, there is a price rise, then you are right.

I already explained that there are a lot of reasons why greater adoption is going to take place, and we don't even know all of them at the moment.. it is just a decent place to put anywhere between 1% and 10% of your total quasi liquid investment funds (and people are going to vary regarding how much they believe is good for their circumstances.

However, face it.  Answer honestly for yourself the following question:

What is the main reason for most people buying/holding bitcoin ?

A) they buy/hold it because the want to use it as a currency/store of value, and *they are not motivated by an expectation of rise of price*.

B) most people buying/holding bitcoin buy it/hold it because *they expect a rise of price*.

If the answer is A, you are right, we are NOT in the "greater fool" paradigm ; the price rise is just a reflection of larger adoption.  However, if the answer is B, then we are in exactly the defining property of a "greater fool theory" situation.

There is no main reason because there are a variety of reasons that are going to keep developing with the passage of time that are going to be a combination of A and B, when the price is going up, there are going to be a lot more from the B camp, and when people assess fundamentals, there will be more of those in the A camp.  This diversity is going to exist throughout the globe while folks have differing regulatory environments, differing financial incentive, differing access to information, differing development in their immediate surroundings that could cause greater or lesser bitcoin utility opportunities.

If "most people buying/holding bitcoin" are essentially motivated to do so because they expect a rise of the price, and if most "adoption" comes from people motivated by the expectation of a greater price, we are having the schoolbook example of "greater fool theory".  It is only when the MAIN DEMAND, and when the MAIN GROWTH has nothing to do with an expected price rise, that one is NOT in "greater fool theory".

We don't have to have any "main growth" anything.  As long as the better mousetrap is built, people will continue to come, and it does not really matter about whether it is main or not as long as development continues, which it has continued.  

There are a multitude of charts on blockchain.info

https://blockchain.info/charts

and in other locations that show ongoing and continued growth, and the main reasons do not really matter so long as such growth continues, which there is no indication that it going to stop.  Sure, it could go flat for periods of time and maybe it will even decrease a bit or fail to grow as exponentially as folks had hoped, but who cares, in the end bitcoin remains a good investment, and if some other better place comes to put 1% to 10% of your quasi-liquid investment assets, then the money can be moved.

Now, ask yourself honestly, whether that is true. 

 
you are coming off as a bit patronizing here.

I have already done these kinds of calculations for myself in terms of the utility of bitcoin and it's various value propositions in terms of short term, medium term and longer term, and I continue to engage such calculations from time to time over the past nearly 3 years that I have been in bitcoin.  Some of my strategies of my investment in bitcoin are quite more involved than a large number of other people, but I do what is good for me and the time that I have available for such.

People are going to engage in various levels of these kinds of value calculations for themselves, and some calculations are going to be more gut level and others will be more informed.  Some will be more right for the person and some will be ill thought out, and in the end, it doesn't really matter that much because with the passage of time, bitcoin is going to continue to prevail - and if something better comes along, then each person can chose the extent to which, s/he diversifies assets into that other asset.

Ask yourself whether, with bitcoin, MOST new people getting into bitcoin do this for OTHER reasons than an expectation of price rise.  If your answer is that most people get into bitcoin NOT because they expect the price to rise, THEN you are right and this is not "greater fool theory".   Really ?

 you are repetitive.

But, mind you, greater fool theory works extremely well to get rich, as long as there are enough greater fools !  I'm not saying that it is not working !

 Yeah some people gamble more than others, too, in the way that they allocate their investments and their lives in general.  Some people regret and others don't look back.  Lot's of variety, and some of it works better than others - whether you go long or you go short - whether you leverage your approach or you take some intermediate or modest approach.  Some folks may chose to invest 80% of their quasi liquid assets into bitcoin, and others may be more conservative at .05% and there are a lot of variations that may or may not be very well thought out, but just deciding to invest $100 or to invest the equivalent of 1BTC, but then over time, there may be reconsideration, to buy high and sell low or to sell low and buy high.  Folks can be quite irrational, sometimes, and we should all realize these kinds of dynamics are ongoing, but does not necessarily turn them into a "greater fool."

Even though there remains some likelihood that your framework captures some apparent dynamics in the crypto space, describing the situation as either short term or long term greater fools, should cause you to recognize that there is something wrong with your framework, because a large number of folks don't give a shit about the long term if such long term is 100 years later, so we need framing and considerations that are more immediate for folks, regarding hourly volatility, 30 days, 1 year, 5 years... These shorter terms are much more concrete, even though in order to have a decent short-term plan, there still needs to be some outline regarding how the longer term is intended to play out in order for folks to have perspective regarding the shorter term periods.

 This "greater fool theory" thing can work positively for decades.  By the time 3/4 of the world population is gambling on bitcoin, expecting to find another 3/4 of the world population to sell their coins at higher price, several generations of bitcoin holders will have become rich.  It is that last 3/4 - a fraction that will be the last of great fools, and end up being bag holders of something they bought (like everyone else before them) to make a benefit, and see that they are just bag holders.   But this may take decades.  Greater fool theory works, as long as you are not the last (and largest) generation.

Whatever.  You have now created a decades long framework in which we are likely never really going to be able to verify how it plays out or if you were correct.

I have already concluded - in my infinite wisdom - hahahahahaha- that you are likely not correct.

"When 3/4 of the world".. that is just ridiculous.  We are likely at .01% of the world's population that has some kind of investment in bitcoin, and you are talking about 75%?  Why don't you deal with real numbers?

If bitcoin gets to 1% of adoption, then that could likely be 100x increase in price and 100x increase in the complexity of the infrastructure.  Even going to 1% is not very likely to take place any time in the very near future.  Bitcoin remains in very infancy levels of adoption and development with a lot of potential for growth, but such growth is not inevitable.  At the same time, bitcoin has computing power dedicated to its security that is 1,000s of times, greater than any existing super computer and even several super computers combined.  So, bitcoin remains in a very unique place with a lot of upside potential, and merely because Ethereum is trying to ride on bitcoin's coat tails does not mean that ethereum is some kind of equal concept with it's pumped centralized marketing.

[dinofelis]

You keep reading what you want to into the supposed "main reasons" for people to buy bitcoin.

Sure some folks may hope for an exponential growth in value of their investment, but such exponential growth expectation is not a necessary condition or motivation for investing.

This is indeed the main point of contend.  I thought it was more or less acknowledged that people "investing" in bitcoin do it mainly because MOON.  The other reasons to buy bitcoin would be "store of value" and "currency" (both are the same concept, only the time scale of holding is different), and hence actual USAGE, which, I thought we agreed upon, is only a tiny fraction of bitcoin's actual demand.  The "buying because of selling higher", I thought (which I call "speculation") was the main drive of the volume, of the demand, and hence of the market cap and *hence of the price* of bitcoin.

You have to do the gedanken experiment: suppose that all people holding bitcoin now would, by some element of magic, KNOW that they are going to sell their coins at $600 in the future (because a genie has come and told them for instance).

Suppose that a genie tells all potential bitcoin buyers that they will sell their coins, if they buy them, at about the same value.  Do you think still many people would be holding/buying bitcoin ?

Those like me that buy bitcoin to buy some services on the net would be happy, and not change their habits.  But do you really think that *most* of the market cap, most of the holders, most of the buyers, would continue their activity of holding, buying if somehow they KNEW that they would sell their coins (or use their coins) at exactly the same market value as they bought them ?   Or would the whole thing crumble down ?  Be honest.

 I think I already outlined this, but investors could also consider that the coin will hold value better than other investments and not lose value.  Accordingly, a person may consider that there is a 1% chance that the BTC price will grow to the $3 to $5k price territory in the coming years, but a 80% chance that it is going to stay above $500, and lots of variations in between, and that may be good enough...

That would be true usage as "store of value" (like gold is: nobody is expecting "exponential growth" of the price of gold - you can think that there are good and bad moments to enter gold, but in general, people buy gold as a STORE of value for the long term, exactly as you describe).  Do you really think so that most bitcoin holders are in for that ? 

Sure, possibilities of exponential growth, but when you calculate all of the possibilities, it just may show that bitcoin has a decent likelihood (in spite of likely volatility) to hold it's value with decent likelihood of modest appreciation (and seemingly better than alternative places to put 1% to 5% of the assets of the investor).  

Imagine that bitcoin remains in the $100 - $1200 range for decades.  Would most current bitcoin holders be happy you think ?

That scenario is no where near having an unreasonable expectation to become rich  if you attribute a mere probability to such upward price scenarios and also including considerations of downside risk, too.  Greater adoption does not equal greater fool as you like to denigratingly suggest with your faulty and incomplete framing of the situation and the calculations that folks may undertake.

Well, if most bitcoin holders do what you suggest, then you are right, that is not greater fool theory, but that is just USAGE as a (long term) store of value.  But my impression about everything I read about people's motivations for going into bitcoin is MOON!  And without that hope for MOON! they wouldn't simply be there. 

If what you write is correct, then the actual market cap of bitcoin is mainly given by bitcoin USAGE, and not by speculation.  That would be great. Honestly, I don't believe that.

There is no main reason because there are a variety of reasons that are going to keep developing with the passage of time that are going to be a combination of A and B, when the price is going up, there are going to be a lot more from the B camp, and when people assess fundamentals, there will be more of those in the A camp.  This diversity is going to exist throughout the globe while folks have differing regulatory environments, differing financial incentive, differing access to information, differing development in their immediate surroundings that could cause greater or lesser bitcoin utility opportunities.

My idea of the demand of bitcoin is that it is 95% driven by "hope for MOON!", and that if in one way or another, there wouldn't be that hope, they wouldn't bother holding any coin.

and in other locations that show ongoing and continued growth, and the main reasons do not really matter so long as such growth continues

No.  The motivations are essential.  They distinguish between greater fool theory, and "fundamental growth".  In the first case, the growth charts are the main or sole motivation ; in the second case, they are the consequence.  In the first case, there cannot be anything else but a crash when "full adoption" is reached, in the second case, when full adoption is reached, charts stabilize.

But the charts themselves can not distinguish whether they are "cause and effect" or "only effect".

you are coming off as a bit patronizing here.

I'm sorry.  I thought it was clear for you as well as for me that the main bitcoin activity is speculative, and I wanted to bring you to the inevitable conclusion that follows logically from it.
Now I see that you are in fact not convinced that most bitcoin activity (amongst which "holding" is also a kind of activity) is driven by speculation.  In that case, I can understand that you come to a different conclusion.

I simply have not the impression that this is what motivates people mainly to buy or hold bitcoin.   I can be wrong, but I thought we agreed on that, and now it seems that we aren't in agreement there.

Yeah some people gamble more than others, too, in the way that they allocate their investments and their lives in general.  Some people regret and others don't look back.  Lot's of variety, and some of it works better than others - whether you go long or you go short - whether you leverage your approach or you take some intermediate or modest approach.  Some folks may chose to invest 80% of their quasi liquid assets into bitcoin, and others may be more conservative at .05% and there are a lot of variations that may or may not be very well thought out, but just deciding to invest $100 or to invest the equivalent of 1BTC, but then over time, there may be reconsideration, to buy high and sell low or to sell low and buy high.  Folks can be quite irrational, sometimes, and we should all realize these kinds of dynamics are ongoing, but does not necessarily turn them into a "greater fool."

That's the case of every tradeable asset.  The only question is if that behaviour is only "sugar on top of the usage demand", or is motivating the bulk of the demand.

Whatever.  You have now created a decades long framework in which we are likely never really going to be able to verify how it plays out or if you were correct.

Indeed.  The only thing that can really give one an idea are the individual motivations of people of why they have a demand for bitcoin.  If their main motivation is to "buy low and sell high", then we know we are in "greater fool".  If their main motivation is to use it as a currency to buy stuff on the internet (it isn't, this we know), or if their main motivation is to "hold value for later" (like gold), then we are in a "fundamentals" paradigm.

I thought it was clear that the first motivation outnumbers significantly the second, but you seem to doubt that.  Fair enough.

"When 3/4 of the world".. that is just ridiculous.  We are likely at .01% of the world's population that has some kind of investment in bitcoin, and you are talking about 75%?  Why don't you deal with real numbers?

Ok, the argument doesn't change, read then: "when 3/4 of the ultimate number of people use bitcoin".  Point was simply that "increasing adoption" will stop SOMEWHERE and I gave you the ultimate upper bound.  So at a certain point, more than half of the people that ever will use bitcoin, will have bought bitcoin and hold it.  These people will not be able to hope that they will find other people buying their stash for much more.  These people cannot reasonably hope for "more adoption".  At a certain point, growth stops.  If GROWTH was the motivation to be in the game, the game will crash.  That was my point, because I thought that you and I agreed that most people were in bitcoin to "invest" (that is to say, to sell higher, a LOT higher).  Given that you now take the position that this is not the case, my logical deduction doesn't hold any more.

If bitcoin gets to 1% of adoption, then that could likely be 100x increase in price and 100x increase in the complexity of the infrastructure.  Even going to 1% is not very likely to take place any time in the very near future.  Bitcoin remains in very infancy levels of adoption and development with a lot of potential for growth, but such growth is not inevitable.  At the same time, bitcoin has computing power dedicated to its security that is 1,000s of times, greater than any existing super computer and even several super computers combined.  So, bitcoin remains in a very unique place with a lot of upside potential, and merely because Ethereum is trying to ride on bitcoin's coat tails does not mean that ethereum is some kind of equal concept with it's pumped centralized marketing.

This is again some kind of "hope for MOON!", no ?

"one day we will reach saturation, but that's still far in the future and the price will still grow, grow grow !!"

But that was exactly my argument.  One day it stops if that's the motivation.  As long as it doesn't stop, one can get in and out and get rich.

[JayJuanGee]

You keep reading what you want to into the supposed "main reasons" for people to buy bitcoin.

Sure some folks may hope for an exponential growth in value of their investment, but such exponential growth expectation is not a necessary condition or motivation for investing.

This is indeed the main point of contend.  I thought it was more or less acknowledged that people "investing" in bitcoin do it mainly because MOON. 

In other words, you are just making shit up based on an assumption that is not based in reality and the real complexity of people and their various motivations.

The other reasons to buy bitcoin would be "store of value" and "currency" (both are the same concept, only the time scale of holding is different), and hence actual USAGE, which, I thought we agreed upon, is only a tiny fraction of bitcoin's actual demand.  The "buying because of selling higher", I thought (which I call "speculation") was the main drive of the volume, of the demand, and hence of the market cap and *hence of the price* of bitcoin.

And, hence you are assuming a lot.

You have to do the gedanken experiment: suppose that all people holding bitcoin now would, by some element of magic, KNOW that they are going to sell their coins at $600 in the future (because a genie has come and told them for instance).

Suppose that a genie tells all potential bitcoin buyers that they will sell their coins, if they buy them, at about the same value.  Do you think still many people would be holding/buying bitcoin ?

I doubt that your hypothetical matters, because there is a scheme of probabilities, and people are weighing probabilities.


If any outcome was completely certain, then that would be a kind of perfect information, which is pie in the sky theoretical, not practical regarding discussions of the future.  Sure some outcomes are more probable to occur than others, yet people are still going to have varying estimations of various possible outcomes, and also frequently get some variation of it wrong and have to act at various points down the road to correct their earlier actions.  Another mistake is to assume that everyone is playing balls to the walls, when in reality a large number of people play incrementally. and that is just the way the world works.. even though you got both kinds of behavior and various kinds of behavior in between.

Those like me that buy bitcoin to buy some services on the net would be happy, and not change their habits.  But do you really think that *most* of the market cap, most of the holders, most of the buyers, would continue their activity of holding, buying if somehow they KNEW that they would sell their coins (or use their coins) at exactly the same market value as they bought them ?   Or would the whole thing crumble down ?  Be honest.

some would if they do not know of any other better place to park their value.  But again, recall that people may have a tentative plan for when they are going to need their money, so they are going to park their value in various locations based on various needs for liquidity, especially when a lot of folks live pay check to pay check and may be very limited in the amount that they are investing longer term.

 I think I already outlined this, but investors could also consider that the coin will hold value better than other investments and not lose value.  Accordingly, a person may consider that there is a 1% chance that the BTC price will grow to the $3 to $5k price territory in the coming years, but a 80% chance that it is going to stay above $500, and lots of variations in between, and that may be good enough...

That would be true usage as "store of value" (like gold is: nobody is expecting "exponential growth" of the price of gold - you can think that there are good and bad moments to enter gold, but in general, people buy gold as a STORE of value for the long term, exactly as you describe).  Do you really think so that most bitcoin holders are in for that ? 

I am not sure why you keep harping on some kind of idea of most.  If someone creates a one or two year investment plan, then they are going to attempt to figure some kind of store of value, but if they are worried about volatility, they may store less.

By the way, based on fundamental differences, bitcoin has a much higher upside potential than gold, and you should realize that as well... and that possible upside creates a certain amount of value that is part of the mixed value calculations.

Sure, possibilities of exponential growth, but when you calculate all of the possibilities, it just may show that bitcoin has a decent likelihood (in spite of likely volatility) to hold it's value with decent likelihood of modest appreciation (and seemingly better than alternative places to put 1% to 5% of the assets of the investor).  

Imagine that bitcoin remains in the $100 - $1200 range for decades.  Would most current bitcoin holders be happy you think ?

some are prepared for those kinds of scenarios.  whether it is happy or not, no one really knows where the price is going, and they just calculate probabilities, as I already stated several times.

Some folks are going to cash out well before $1,000, too.. there are lots of variations, and some folks will be jumping in at $1,200

That scenario is no where near having an unreasonable expectation to become rich  if you attribute a mere probability to such upward price scenarios and also including considerations of downside risk, too.  Greater adoption does not equal greater fool as you like to denigratingly suggest with your faulty and incomplete framing of the situation and the calculations that folks may undertake.

Well, if most bitcoin holders do what you suggest, then you are right, that is not greater fool theory, but that is just USAGE as a (long term) store of value.  But my impression about everything I read about people's motivations for going into bitcoin is MOON!  And without that hope for MOON! they wouldn't simply be there. 

You are starting to sound like a troll, and you are reading too much of the negative press that is customarily spread regarding bitcoin users being irrational blah blah blah.

If what you write is correct, then the actual market cap of bitcoin is mainly given by bitcoin USAGE, and not by speculation.  That would be great. Honestly, I don't believe that.

I did not say that bitcoin market cap is mainly driven by usage.  I said that it is a combination of factors and motives, and I likely agree with the scenario that a large majority is speculation, but that is not going to undermine bitcoin because of its current utility and its likely increased longer term utility.  On the other hand, I do not consider speculation to be a bad thing, and I do not consider bitcoin to be anywhere near the level of ETH speculation. 

There is no main reason because there are a variety of reasons that are going to keep developing with the passage of time that are going to be a combination of A and B, when the price is going up, there are going to be a lot more from the B camp, and when people assess fundamentals, there will be more of those in the A camp.  This diversity is going to exist throughout the globe while folks have differing regulatory environments, differing financial incentive, differing access to information, differing development in their immediate surroundings that could cause greater or lesser bitcoin utility opportunities.

My idea of the demand of bitcoin is that it is 95% driven by "hope for MOON!", and that if in one way or another, there wouldn't be that hope, they wouldn't bother holding any coin.

I don't claim to really have any grasp of the actual percentage driven by speculation, such as "to the moon", but even if it were true that 95% were such "to the moon" speculation, that does not undermine my prior claims, and also that seems to be a move a little bit off of your earlier position that you were asserting that almost all of bitcoin was speculation (similar to ETH). 

and in other locations that show ongoing and continued growth, and the main reasons do not really matter so long as such growth continues

No.  The motivations are essential.  They distinguish between greater fool theory, and "fundamental growth".  In the first case, the growth charts are the main or sole motivation ; in the second case, they are the consequence.  In the first case, there cannot be anything else but a crash when "full adoption" is reached, in the second case, when full adoption is reached, charts stabilize.

Maybe i should have said that better?  The exact percentage of the motivations are not that important, because even if we currently have 95 % speculation, that 5% utility is going to evolve and become a likely greater percentage as the adoption continues.

But the charts themselves can not distinguish whether they are "cause and effect" or "only effect".

Probably you are correct there, that we do not have a lot of information regarding specific motivations, although there may be various attempts at analyzing such.. whether based in fact or not, may be a different story.

you are coming off as a bit patronizing here.

I'm sorry.  I thought it was clear for you as well as for me that the main bitcoin activity is speculative, and I wanted to bring you to the inevitable conclusion that follows logically from it.
Now I see that you are in fact not convinced that most bitcoin activity (amongst which "holding" is also a kind of activity) is driven by speculation.  In that case, I can understand that you come to a different conclusion.

I simply have not the impression that this is what motivates people mainly to buy or hold bitcoin.   I can be wrong, but I thought we agreed on that, and now it seems that we aren't in agreement there.

Probably we are disagreeing mostly on the importance of speculation versus utility rather than the actual proportions of either, though we may disagree a little bit about the proportions as well.

Yeah some people gamble more than others, too, in the way that they allocate their investments and their lives in general.  Some people regret and others don't look back.  Lot's of variety, and some of it works better than others - whether you go long or you go short - whether you leverage your approach or you take some intermediate or modest approach.  Some folks may chose to invest 80% of their quasi liquid assets into bitcoin, and others may be more conservative at .05% and there are a lot of variations that may or may not be very well thought out, but just deciding to invest $100 or to invest the equivalent of 1BTC, but then over time, there may be reconsideration, to buy high and sell low or to sell low and buy high.  Folks can be quite irrational, sometimes, and we should all realize these kinds of dynamics are ongoing, but does not necessarily turn them into a "greater fool."

That's the case of every tradeable asset.  The only question is if that behaviour is only "sugar on top of the usage demand", or is motivating the bulk of the demand.

Whatever.  You have now created a decades long framework in which we are likely never really going to be able to verify how it plays out or if you were correct.

Indeed.  The only thing that can really give one an idea are the individual motivations of people of why they have a demand for bitcoin.  If their main motivation is to "buy low and sell high", then we know we are in "greater fool". 

of course everyone wants to buy low and sell high, but in actual practice they don't always achieve such and they gotta lot of other things going on in their lives and including changes in their perspectives that cause them to buy high and sell low.

If their main motivation is to use it as a currency to buy stuff on the internet (it isn't, this we know), or if their main motivation is to "hold value for later" (like gold), then we are in a "fundamentals" paradigm.

I thought it was clear that the first motivation outnumbers significantly the second, but you seem to doubt that.  Fair enough.

again I don't necessarily doubt the proportions only the significance of such.

"When 3/4 of the world".. that is just ridiculous.  We are likely at .01% of the world's population that has some kind of investment in bitcoin, and you are talking about 75%?  Why don't you deal with real numbers?

Ok, the argument doesn't change, read then: "when 3/4 of the ultimate number of people use bitcoin".  Point was simply that "increasing adoption" will stop SOMEWHERE and I gave you the ultimate upper bound.  So at a certain point, more than half of the people that ever will use bitcoin, will have bought bitcoin and hold it.  These people will not be able to hope that they will find other people buying their stash for much more.  These people cannot reasonably hope for "more adoption".  At a certain point, growth stops.  If GROWTH was the motivation to be in the game, the game will crash.  That was my point, because I thought that you and I agreed that most people were in bitcoin to "invest" (that is to say, to sell higher, a LOT higher).  Given that you now take the position that this is not the case, my logical deduction doesn't hold any more.

I think that both of us are starting to go all over the place and really probably talking past one another.

I still am of the position that bitcoin is in its very early stages and even if you attempt to describe the population of potential bitcoin users as a smaller group, there remains a whole hell of a lot of development still going on a very low level of adoption, whether that adoption begins to explode in the coming years or if it takes a decade or more to develop to a greater degree that significantly creates upwards price pressures on bitcoin.

If bitcoin gets to 1% of adoption, then that could likely be 100x increase in price and 100x increase in the complexity of the infrastructure.  Even going to 1% is not very likely to take place any time in the very near future.  Bitcoin remains in very infancy levels of adoption and development with a lot of potential for growth, but such growth is not inevitable.  At the same time, bitcoin has computing power dedicated to its security that is 1,000s of times, greater than any existing super computer and even several super computers combined.  So, bitcoin remains in a very unique place with a lot of upside potential, and merely because Ethereum is trying to ride on bitcoin's coat tails does not mean that ethereum is some kind of equal concept with it's pumped centralized marketing.

This is again some kind of "hope for MOON!", no ?

This is not a hope for the moon.  This is a description of the actual facts.

"one day we will reach saturation, but that's still far in the future and the price will still grow, grow grow !!"

But that was exactly my argument.  One day it stops if that's the motivation.  As long as it doesn't stop, one can get in and out and get rich.

You are talking nonsense.  bitcoin is being developed on an ongoing basis and its network is increasing on an ongoing basis and the hash power is going up.. .. so it is not pie in the sky to recognize very likely upward price pressures based on all these developments.   Any prudent investor should prepare for price movements in either direction, but I think that it remains prudent to put a decent stake in bitcoin anywhere between 1% and 10% of liquid investment assets.. some may chose more and others may chose less. 

Assessments are made based on the now and the various possibilities, not based on hypothetically that someday all of the adoption is going to stop... bitcoin has barely even reached any kind of significant audience, and there remains considerable space for growth.  it is not greater fools or pyramid scheme or ponzi scheme or any of those variations, even though you continue to assert that you are arguing the more mild version of "greater fools"  which remains ridiculous if you account for the actual facts and logic.

[dinofelis]

The funny thing is that you are giving the arguments that indicate exactly what you are trying to deny.

My thesis now is: "most people are into bitcoin, mainly because they expect a price rise"

From that proposition, I think we can agree that "greater fool theory" follows. 

We can formulate my thesis differently, but logically equivalent: "if many people that have a demand/are holding bitcoin, were to expect a price stagnation, they wouldn't hold onto their coins, or they wouldn't express a demand for it."

You deny this.  Hence, your statement is: "most people in bitcoin use it as a currency/store of value and are NOT into it mainly because they expect a price rise".  Or equivalently: "if most people who are now, or in the future, in bitcoin would know for sure that the price wouldn't rise, they would still express their demand for bitcoin / hold on their coins".

BTW, when you write this:

I doubt that your hypothetical matters, because there is a scheme of probabilities, and people are weighing probabilities.

that is not in contradiction: the point is that people EXPECT a price rise, even if they give it a probability of a price decrease.  It is all about expectation values, and risk aversion, we agree.  But this doesn't change the main statement, that people are mainly IN bitcoin because of their expectation to make a benefit.

Let us now look at how you are REALLY appreciating the importance of bitcoin's price in the demand for it:

By the way, based on fundamental differences, bitcoin has a much higher upside potential than gold, and you should realize that as well... and that possible upside creates a certain amount of value that is part of the mixed value calculations.

--> probabilistic expectation of value increase

Imagine that bitcoin remains in the $100 - $1200 range for decades.  Would most current bitcoin holders be happy you think ?

some are prepared for those kinds of scenarios.  whether it is happy or not, no one really knows where the price is going, and they just calculate probabilities, as I already stated several times.

Some folks are going to cash out well before $1,000, too.. there are lots of variations, and some folks will be jumping in at $1,200

--> "cashing out to make a benefit on price rise"

I did not say that bitcoin market cap is mainly driven by usage.  I said that it is a combination of factors and motives, and I likely agree with the scenario that a large majority is speculation, but that is not going to undermine bitcoin because of its current utility and its likely increased longer term utility.  On the other hand, I do not consider speculation to be a bad thing, and I do not consider bitcoin to be anywhere near the level of ETH speculation. 

--> "large majority is speculation" (on price rise, what else...)

I don't claim to really have any grasp of the actual percentage driven by speculation, such as "to the moon", but even if it were true that 95% were such "to the moon" speculation, that does not undermine my prior claims, and also that seems to be a move a little bit off of your earlier position that you were asserting that almost all of bitcoin was speculation (similar to ETH). 

--> It does.  It is exactly that.  If 95% is "to the moon speculation" then my "assertion that almost all of bitcoin is speculation" is for sure correct ! 

Maybe i should have said that better?  The exact percentage of the motivations are not that important, because even if we currently have 95 % speculation, that 5% utility is going to evolve and become a likely greater percentage as the adoption continues.

--> Why would that be the case ?  Is the percentage (5%) rising or decreasing over time ?  If most people in bitcoin now are speculating on greater price, why on earth would newcomers be different, and "true users" ?  My impression is rather that the bitcoin market cap rose much more than the actual currency usage (for instance, on dark markets), which would rather indicate that the "bitcoin user population" is evolving more towards speculation than to usage.   

I don't see any reason to expect the future adoption of bitcoin by new users to be radically different than the current one, and if anything, it goes more and more in the direction of speculation, while "currency adoption", say, on stores and so on, is not following.

When the price rose during spring this year, this was clearly NOT related to a higher amount of demand for usage as a currency.  It was not because all of a sudden, Amazon allowed people to pay in bitcoin or something and people rushed out to obtain bitcoins to do their shopping on Amazon. 

Probably we are disagreeing mostly on the importance of speculation versus utility rather than the actual proportions of either, though we may disagree a little bit about the proportions as well.

Well, if it is 95% - 5%, clearly we have an almost totally (95% !) speculation dominated asset, and that is *by definition* an asset one demands to be able to get rid of it at a higher price: greater fool.  I don't see how one can escape this iron logic.

An asset is not "greater fool" if its demand for speculative purposes is very small (say, <10% <20%) as compared to its demand for usage (here, store of value in the long run, or currency usage to buy stuff with).  If an asset's demand is totally dominated (95%!) by speculation, then we have the schoolbook example of a greater fool driven system.  It would indeed mean that the day that all speculators realize that they are "the last in the row" and that there are no greater fools, the demand would plummet by a factor 20 (from 95% to 0%, which leaves 5% of real usage: 1/20) and hence the market cap too.
If an asset suffers from 10% speculation, the day the speculators realize they are the "last fools", then that asset's demand (and hence its market cap) would only drop 10%, as 90% of its demand is unrelated to expectations of price rise.

That's all.

[JayJuanGee]

The funny thing is that you are giving the arguments that indicate exactly what you are trying to deny.

I don't think so.  I have identified some pretty severe flaws in your thinking and your reliance upon superficial made up shit in order to support your various theories.

Including but not limited to, you fail and refuse to give any value to speculation, and you attempt to view utility in narrow manners, and also sometimes get caught up in nearly irrelevant timelines of decades, hundreds or thousands of years into the future.  

O.k.  Sure you can argue until your blue in the face and make sense, but you are failing and refusing to deal with real facts and suitable logic.

My thesis now is: "most people are into bitcoin, mainly because they expect a price rise"

From that proposition, I think we can agree that "greater fool theory" follows. 

This is almost all repetition, and you should already realize the reasons why i do not agree, but you keep on and on about the matter.

We can formulate my thesis differently, but logically equivalent: "if many people that have a demand/are holding bitcoin, were to expect a price stagnation, they wouldn't hold onto their coins, or they wouldn't express a demand for it."

You deny this.  Hence, your statement is: "most people in bitcoin use it as a currency/store of value and are NOT into it mainly because they expect a price rise".  Or equivalently: "if most people who are now, or in the future, in bitcoin would know for sure that the price wouldn't rise, they would still express their demand for bitcoin / hold on their coins".

In your seeming desire to want to come to the conclusions that you prefer, you seem to falsely attribute arguments to me, and refuse to absorb what I actually said... including inabilities to decipher exact motives of folks, and giving some value to speculation. Let's say for example that there is only 5% utility in the present, but even with that there is speculation about present and future utility.. So even if utility is at a smaller than expected number, speculation about utility is meaningful speculation that has utility in itself in spite of your failure/refusal to attribute any value to such speculation and to define it with your unreal conditions.

BTW, when you write this:

I doubt that your hypothetical matters, because there is a scheme of probabilities, and people are weighing probabilities.

that is not in contradiction: the point is that people EXPECT a price rise, even if they give it a probability of a price decrease.  It is all about expectation values, and risk aversion, we agree.  But this doesn't change the main statement, that people are mainly IN bitcoin because of their expectation to make a benefit.

You could be correct here, but you still seem to be missing the point with your giddy and goofy focus on trying to be correct with your lame theory and removal from facts.

Let us now look at how you are REALLY appreciating the importance of bitcoin's price in the demand for it:

By the way, based on fundamental differences, bitcoin has a much higher upside potential than gold, and you should realize that as well... and that possible upside creates a certain amount of value that is part of the mixed value calculations.

--> probabilistic expectation of value increase

Yep.  Weigh possible outcomes in order to make a fairly decent estimate regarding whether and how much to invest.  This not only changes over time, but also individuals come to different conclusions based on perspective and imperfect information and all of that continues to evolve.. even though some people may have more set plans and more evolving plans.

Imagine that bitcoin remains in the $100 - $1200 range for decades.  Would most current bitcoin holders be happy you think ?

some are prepared for those kinds of scenarios.  whether it is happy or not, no one really knows where the price is going, and they just calculate probabilities, as I already stated several times.

Some folks are going to cash out well before $1,000, too.. there are lots of variations, and some folks will be jumping in at $1,200

--> "cashing out to make a benefit on price rise"

Yeah, this happens all over the place, and sometimes folks actually get a profit and sometimes they do not.  so what?  Sometimes people are risk averse, and they want to cash out before they lose whatever gains they had.  This conduct does not support your stupid-ass theory.

I did not say that bitcoin market cap is mainly driven by usage.  I said that it is a combination of factors and motives, and I likely agree with the scenario that a large majority is speculation, but that is not going to undermine bitcoin because of its current utility and its likely increased longer term utility.  On the other hand, I do not consider speculation to be a bad thing, and I do not consider bitcoin to be anywhere near the level of ETH speculation. 

--> "large majority is speculation" (on price rise, what else...)

So what?  There is a lot of speculation, I will concede to that.  

By the way, there is speculation in both directions, and there is also price manipulation in both directions.

I don't claim to really have any grasp of the actual percentage driven by speculation, such as "to the moon", but even if it were true that 95% were such "to the moon" speculation, that does not undermine my prior claims, and also that seems to be a move a little bit off of your earlier position that you were asserting that almost all of bitcoin was speculation (similar to ETH). 

--> It does.  It is exactly that.  If 95% is "to the moon speculation" then my "assertion that almost all of bitcoin is speculation" is for sure correct ! 

For one thing, we do not know the numbers exactly, but I suggested even giving you the benefit of the doubt about the 95% speculation, that does not prove your point unless you want to assume that I am also agreeing with you regarding your dumb ass theory that speculation has little to no value.

I already stated speculation can also involve utility in itself and it can be speculating about present or future utility.  And, sure, the more likely that the speculation is correct about either present or future utility, the more solid is the price formulations that come out of such speculations.

Maybe i should have said that better?  The exact percentage of the motivations are not that important, because even if we currently have 95 % speculation, that 5% utility is going to evolve and become a likely greater percentage as the adoption continues.

--> Why would that be the case ?  Is the percentage (5%) rising or decreasing over time ? 

Bitcoin's ecosystem is evolving, so utility is not a locked in number, and they number of users or their viewpoint is not locked in either.

You try to lock in things that are already difficult to pinpoint which leads to additional errors and further faulty conclusions.

If most people in bitcoin now are speculating on greater price, why on earth would newcomers be different, and "true users" ?  My impression is rather that the bitcoin market cap rose much more than the actual currency usage (for instance, on dark markets), which would rather indicate that the "bitcoin user population" is evolving more towards speculation than to usage.   

O.k.  you recognize that there is evolution of perspective, and that perspective can evolve both ways.  You are suggesting more speculation, and sure it could evolve in that direction - even though that seems to be the less likely scenario that you are painting for your own seemingly trolling purposes.

I don't see any reason to expect the future adoption of bitcoin by new users to be radically different than the current one, and if anything, it goes more and more in the direction of speculation, while "currency adoption", say, on stores and so on, is not following.

Yeah right.  Not very likely of a scenario.

When the price rose during spring this year, this was clearly NOT related to a higher amount of demand for usage as a currency.  It was not because all of a sudden, Amazon allowed people to pay in bitcoin or something and people rushed out to obtain bitcoins to do their shopping on Amazon. 

You are correct that utility rises slowly, but perspectives can change quickly based on expected future value.

I agree that short term bursts in price are very likely large percentages of speculation (likely in the 95% territory), but even these speculations can be anchored in utility, and in this regard, bitcoin has a lot more utility than ethereum.

Probably we are disagreeing mostly on the importance of speculation versus utility rather than the actual proportions of either, though we may disagree a little bit about the proportions as well.

Well, if it is 95% - 5%, clearly we have an almost totally (95% !) speculation dominated asset, and that is *by definition* an asset one demands to be able to get rid of it at a higher price: greater fool.  I don't see how one can escape this iron logic.

Yeah right, "by definition"  - your "definition"  

We may be throwing around these numbers, but let me just point out an example of how utility could evolve from .05% to 1% to 3% to 5% to 10% etc.  If there is some utility there, that utility can evolve in either direction, and it can also partially drive the level of speculation, perspectives about the asset and how solid is the speculation.

An asset is not "greater fool" if its demand for speculative purposes is very small (say, <10% <20%) as compared to its demand for usage (here, store of value in the long run, or currency usage to buy stuff with).  If an asset's demand is totally dominated (95%!) by speculation, then we have the schoolbook example of a greater fool driven system.  It would indeed mean that the day that all speculators realize that they are "the last in the row" and that there are no greater fools, the demand would plummet by a factor 20 (from 95% to 0%, which leaves 5% of real usage: 1/20) and hence the market cap too.
If an asset suffers from 10% speculation, the day the speculators realize they are the "last fools", then that asset's demand (and hence its market cap) would only drop 10%, as 90% of its demand is unrelated to expectations of price rise.

That's all.

You seem to even recognize that utility/speculation portions can evolve, and you could be correct that certain levels of one or another need to be sustained, yet in respect to bitcoin, you seem to either be arguing in the abstract or arguing back from the conclusion that you want to reach.

Also, your expectations of whether an asset has to be majority utility seems to be pulled out of thin air, too.  

I think that we may agree about some of the fundamentals, including the fact that there needs to be some utility in order for there to be some meaningful and longer term value.  We disagree on the amounts that are present in bitcoin and the implication of what utility is there and even seem to disagree about some of the value that actual speculation brings (especially when such speculation has foundations in perceptions of actual utility rather than pie in the sky utility which is a larger portion of what ETH represents(actually ETH seems to have some utility too that has grown over time, but the utility of ETH is much more amorphous and seemingly smaller than that of BTC and that is what seems to largely differentiate the two))

[JayJuanGee]

By the way, here are a couple more thoughts about the utility of bitcoin - reflected through a couple of interesting current event links:

First:  a bit of a historical perspective from reddit peeps, and a few war stories from them.

https://www.reddit.com/r/Bitcoin/comments/55mm36/we_need_to_take_a_moment_and_look_back_at_how_far/


Second, you may have recalled that in about mid-2014, naughty america had gotten quite a bit of coverage in the bitcoin space when they began to accept bitcoin for purchases ( described in this article)

Now naughty america is exploring ways to protect their property rights by uses of blockchain.  interesting, real and useful.

http://www.newsbtc.com/2016/10/03/naughty-america-eyes-blockchain-fight-adult-content-piracy/

[dinofelis]

By the way, here are a couple more thoughts about the utility of bitcoin - reflected through a couple of interesting current event links:

First:  a bit of a historical perspective from reddit peeps, and a few war stories from them.

https://www.reddit.com/r/Bitcoin/comments/55mm36/we_need_to_take_a_moment_and_look_back_at_how_far/


Second, you may have recalled that in about mid-2014, naughty america had gotten quite a bit of coverage in the bitcoin space when they began to accept bitcoin for purchases ( described in this article)

Now naughty america is exploring ways to protect their property rights by uses of blockchain.  interesting, real and useful.

http://www.newsbtc.com/2016/10/03/naughty-america-eyes-blockchain-fight-adult-content-piracy/

I just want to stress again that I DON'T say that "bitcoin is a ponzi game", and I DON'T say that bitcoin doesn't have any real usage.  Bitcoin is a real monetary asset, that can have (and has, up to a certain point) real, genuine usage as such, and can bring real value as a new form of monetary asset, improving competitive advantage for those that use it.

I'm only saying that, unfortunately, today, most (95% say) of bitcoin activity, and hence most (95%) of its market cap is DOMINATED by "greater fool theory" usage at the *expense* of this real, genuine usage, and at the expense of its genuine value proposition, and that if this stays that way, it will end up killing bitcoin all together in the long run.

There.  I managed to give a short reply.  

[JayJuanGee]

By the way, here are a couple more thoughts about the utility of bitcoin - reflected through a couple of interesting current event links:

First:  a bit of a historical perspective from reddit peeps, and a few war stories from them.

https://www.reddit.com/r/Bitcoin/comments/55mm36/we_need_to_take_a_moment_and_look_back_at_how_far/


Second, you may have recalled that in about mid-2014, naughty america had gotten quite a bit of coverage in the bitcoin space when they began to accept bitcoin for purchases ( described in this article)

Now naughty america is exploring ways to protect their property rights by uses of blockchain.  interesting, real and useful.

http://www.newsbtc.com/2016/10/03/naughty-america-eyes-blockchain-fight-adult-content-piracy/

I just want to stress again that I DON'T say that "bitcoin is a ponzi game", and I DON'T say that bitcoin doesn't have any real usage.  Bitcoin is a real monetary asset, that can have (and has, up to a certain point) real, genuine usage as such, and can bring real value as a new form of monetary asset, improving competitive advantage for those that use it.

I'm only saying that, unfortunately, today, most (95% say) of bitcoin activity, and hence most (95%) of its market cap is DOMINATED by "greater fool theory" usage at the *expense* of this real, genuine usage, and at the expense of its genuine value proposition, and that if this stays that way, it will end up killing bitcoin all together in the long run.

There.  I managed to give a short reply.  

Great!!!!!!!!!

I will give a short reply too.

Even though you seem to concede that we don't really know for sure the amount of speculation versus utility in bitcoin, and even if we accept 95% as a rough estimate of the current state of affairs, your characterization of that portion as equivalent of "greater fool theory" undermines and distracts from any meaningful analysis regarding what is really going on in bitcoin and the value, impact and importance of the quality of that current 5% utility (or whatever that evolving number may be).

[LiberOptions]

Ethereum Price Technical Analysis – Perfect Upside Break

Ethereum price managed to overcome odds against the US Dollar, and traded higher. There was a nice upside move, which pushed the price above $13.20. There was a break above the 61.8% Fib retracement level of the last drop from the $13.31 high to $12.91 low. So, it basically opened the doors for a new high. The most important point was a break above yesterday’s highlighted contracting triangle pattern on the hourly chart (data feed via SimpleFX) of ETH/USD.

Link

[Auponef]

Ethereum Price Technical Analysis – Perfect Upside Break

Ethereum price managed to overcome odds against the US Dollar, and traded higher. There was a nice upside move, which pushed the price above $13.20. There was a break above the 61.8% Fib retracement level of the last drop from the $13.31 high to $12.91 low. So, it basically opened the doors for a new high. The most important point was a break above yesterday’s highlighted contracting triangle pattern on the hourly chart (data feed via SimpleFX) of ETH/USD.

Link

That is what happened a few days ago. But the price has dropped a bit since then. That is similar to other coins.

[JayJuanGee]

Ethereum Price Technical Analysis – Perfect Upside Break

Ethereum price managed to overcome odds against the US Dollar, and traded higher. There was a nice upside move, which pushed the price above $13.20. There was a break above the 61.8% Fib retracement level of the last drop from the $13.31 high to $12.91 low. So, it basically opened the doors for a new high. The most important point was a break above yesterday’s highlighted contracting triangle pattern on the hourly chart (data feed via SimpleFX) of ETH/USD.

Link

That is what happened a few days ago. But the price has dropped a bit since then. That is similar to other coins.

Surely, it is interesting to see the Ethereum price sustaining a certain level of being propped up... even while there has been a couple of weeks worth of ongoing DDOS attacks towards the Ethereum network, as described in the below article from yesterday.

http://www.coindesk.com/so-ethereums-blockchain-is-still-under-attack/

[dinofelis]

Even though you seem to concede that we don't really know for sure the amount of speculation versus utility in bitcoin, and even if we accept 95% as a rough estimate of the current state of affairs, your characterization of that portion as equivalent of "greater fool theory" undermines and distracts from any meaningful analysis regarding what is really going on in bitcoin and the value, impact and importance of the quality of that current 5% utility (or whatever that evolving number may be).

My point is only that I'm all for that 5% current utility, and I'm saying that the 95% of speculative bubble is only harming that 5% of real value, maybe to the point of rendering it totally dead.

Because that 95% of speculation is making the costs of the system 20 times higher (difficulty adapts to price, and hence the wasting of mining resources) than necessary to sustain its 5% of utility ; it makes the volatility much higher than would be if only sustained by demand for the 5% of utility (one would think that the demand for actual usage is more stable than the speculation demand and offer), and given the higher volumes, it attracts institutional players, lawmakers and regulators much more than necessary.  All this goes against the competitive advantage that the real usage of bitcoin could potentially bring, if it were essentially limited to its 5% of real usage.
With a market cap 20 times smaller, mining PoW 20 times less, and bitcoin essentially sustained by real usage, fees would be smaller, blocks wouldn't be full (yet), gamblers like the Winkelvoss boys wouldn't be around, and regulators wouldn't mix in, banks wouldn't be interested and volatility wouldn't be that high.  Adoption would be genuine adoption, and the whole ecosystem would be sustainable, which is not the case if 95% of its price and market is made up of "greater fool theory".

That said, it may very well be that bitcoin will have an evolving ecosystem, with constant price, and more and more genuine adoption, and less and less speculation, so that, say, the current price of $600 is sustained for years (say, 15 years), with less and less speculation, and more and more genuine usage.  That is not excluded.  That would be good.  It would have been still better, though, if instead of having gone directly to $600, it would have slowly risen, following genuine adoption, and only have reached $600 15 years from now, when those $600 represent more than 90% of genuine usage (so an 18 fold increase of current adoption for real usage).

[JayJuanGee]

Even though you seem to concede that we don't really know for sure the amount of speculation versus utility in bitcoin, and even if we accept 95% as a rough estimate of the current state of affairs, your characterization of that portion as equivalent of "greater fool theory" undermines and distracts from any meaningful analysis regarding what is really going on in bitcoin and the value, impact and importance of the quality of that current 5% utility (or whatever that evolving number may be).

My point is only that I'm all for that 5% current utility, and I'm saying that the 95% of speculative bubble is only harming that 5% of real value, maybe to the point of rendering it totally dead.

I wonder if someone gave you this crazy idea, or did you come up with it on your own?  Sure industries are going to be different, yet any kind of industry that is innovative and potentially popular is going to start out with a certain amount of speculative investments, and possibly bitcoin is a bit more subject to this kind of phenomenon because one of it's main utilities is currency/storage of value.  Even Satoshi recognized that speculation was going to be part of early stages of bitcoin.

Sure there is some outside chance that speculation could become so intense and severe that it causes certain failures and stress points, but you still are painting a very speculative scenario to assert and argue that speculation is "so bad in bitcoin" that it such practice is going to cause it to fail... what lack of concreteness!!!

Because that 95% of speculation is making the costs of the system 20 times higher (difficulty adapts to price, and hence the wasting of mining resources) than necessary to sustain its 5% of utility...

Now, you are coming off as some kind of Ethereum pumper nut job, who some how believe that proof of stake is better than proof of work because it is more energy efficient.

Who gives a ratt's ass about efficiency, the market is going to find equilibrium and balancing points, so if the price is too high, folks will not buy, and if the price is low, they will buy.  if the price is too volatile, folks will either be disinclined to use it to transfer value, or have to take extra protective measures to protect themselves from volatility in the direction that potentially goes against their interests.

; it makes the volatility much higher than would be if only sustained by demand for the 5% of utility (one would think that the demand for actual usage is more stable than the speculation demand and offer),

Yeah, sure there is going to be volatility, and volatility is exciting.  As the market cap goes up, volatility is going to continue to be likely to decrease because it becomes more and more expensive to attempt to create volatility.  There are a large number of ways to protect oneself from volatility, and one of them may be to choose to not use such asset (bitcoin) as a storage of value, but surely in the end, if upwards volatility is anticipated to be more likely than downward volatility, then any calculating person would error on the side of keeping a little more of their disposable assets in bitcoin.

Personally, I always have enough fiat cash flow projected and on hand for at least 1-2 months in order to not be forced to cash out of bitcoin (except to the extent that I willfully want to cash out of bitcoin).   I may not be the greatest example in the world, because I am a bit nerdy, but  in about the next 18 months, I anticipate about three points in which I may possibly need to cash out some bitcoin.  I have back up plans in place as well, but there is a possibility that I may have to cash out during any or all of those three points.  Most people are not going to project their cashflow beyond one or two months, but I would suggest that folks do not hold too much in bitcoin or leverage in such a way that causes situations in which they would have emergency needs to cash out of their bitcoin because they had either invested too much or they had attempted to leverage their investment.  On the other hand,they could become rich from such use of leverage, but I personally find such behaviors as too risky, and really I doubt that a large portion of bitcoin users are in fact engaging in leveraging behaviors in respect to their bitcoin investment (even though there are certainly some folks doing just that).

and given the higher volumes, it attracts institutional players, lawmakers and regulators much more than necessary.  All this goes against the competitive advantage that the real usage of bitcoin could potentially bring, if it were essentially limited to its 5% of real usage.

Whatever...

You know bitcoin has already been in existence for more than 7 years, and there has been time for growth, and I would argue that bitcoin is still in a very early adopter stage, but yeah, it has also gotten a certain amount of attention from each of the kinds of players that you list.  Such attention remains part of the dynamics, so why fight the "is" with projections of the "ought to be."  The situation "is what it is", so I see no real purpose in whining about it should be this, that and the other thing, when it is not... Bitcoin is already at a certain level of decentralized status that no one can really make it into something else, except for proposing code and developing and hoping that others adopt your suggestions, and one of the ways that others adopt your suggestions and proposals is if they believe that they can be advantaged in one way or another by such adoption... otherwise if they refrain from adopting, then others are going to decide whether or not they adopt or if they develop other competitive propositions.

With a market cap 20 times smaller, mining PoW 20 times less, and bitcoin essentially sustained by real usage, fees would be smaller, blocks wouldn't be full (yet), gamblers like the Winkelvoss boys wouldn't be around, and regulators wouldn't mix in, banks wouldn't be interested and volatility wouldn't be that high.  Adoption would be genuine adoption, and the whole ecosystem would be sustainable, which is not the case if 95% of its price and market is made up of "greater fool theory".

Yes, you are showing yourself as a real pie in the sky wisher to have an "ought to be" world that is other than what "is happening"

That said, it may very well be that bitcoin will have an evolving ecosystem, with constant price, and more and more genuine adoption, and less and less speculation, so that, say, the current price of $600 is sustained for years (say, 15 years), with less and less speculation, and more and more genuine usage.  That is not excluded. 

Come on.  Even you know that it is not very likely that bitcoin is going to sustain a price of $600 or $200 or $1,000 for the next 15 years.  

We are lucky, if you call it luck, to have BTC prices that are more or less floating in a 5-10% range for 3-6 months.

If anything, we need to expect ongoing volatility with bitcoin prices, and since you seem to be acting as if you believe that bitcoin is over priced, then you are going to expect bitcoin prices to be volatile towards the downside.  I personally believe that it is more likely that bitcoin prices will be volatile towards the upside.

Even though I may not be correct in my anticipated upwards price direction.I think that the odds for little to no volatility is pure pie in the sky fantasy.

That would be good.  It would have been still better, though, if instead of having gone directly to $600, it would have slowly risen, following genuine adoption, and only have reached $600 15 years from now, when those $600 represent more than 90% of genuine usage (so an 18 fold increase of current adoption for real usage).

Again, you seem to be somewhat "out of touch" with real and actual dynamics that relate to overall market capitalization.

As you may know, bitcoin prices went up thousands of times in its first few years of existence, and a lot of that has to do with starting from zero.

So, currently since about 2013, the price rise from $100 to $1000 and back to $200 and back up again to $600, seems to be a bit of a slower period in bitcoin price fluctuation, and really there is not a lot of price movement in the last several years, overall, and in that regard, there continues to be attempts to find the price.

In other words, it seems to be quite arbitrary and detached from reality that you are proposing a certain kind of "preferred price" and a certain kind of "preferred price movement" in order to suggest what "ought to be."  Your "ought to be" comes off as just baloney because of its apparent arbitrariness.

Instead of living in a world of "ought to be", wouldn't it be better to attempt to figure out where it is going from here, rather than where it "ought to have gone"?    So, yes, accordingly, it seems that since you are caught up in the "ought to have been slower and less" that you are going to predict that the future "ought to correct" for such past overhype.

[mining1]

Wow, if you think pow is better than pos then you're stupid. A network can achieve a better decentralization much easier in POS because you don't need specialized hardware. So it's not only about saving energy.