ETH = Game Over

[JayJuanGee]

Get the fuck out of here with your ongoing lame attempt to continue to attempt to pigeon hole bitcoin as a currency.  Sure bitcoin has currency attributes and even a large number of folks aspire that bitcoin becomes a currency, but the fact of the matter remains that bitcoin's market cap puts bitcoin currently at the m1 rank of 77, and surely m1 money is only the most basic of the kinds of currencies compared with other means of storage, investment, value transfer vehicles.

I always say "currency or longer-term store of value".  M0, M1, M2, MB and all other M-type asset classes are of this type.  They are *collectibles* functioning as *store of value*.  "currency" is just a word for "store of value in the short term".

 In other words, bitcoin is way down the road from being considered as any kind of stable, non volatile and widely accepted form of currency... even though it has some of such attributes, already.

And it doesn't have anything else, that's the whole point.  Its only value proposition is "store of value" (by definition, because it is a collectible without any cash flow or other contractual obligations linked to it).  It is like gold, silver, and dollars.  All of them stores of value, so "currencies" in the wide sense (that is, if you extend the hold times to longer than just between earning and spending on a regular basis, but for instance, to put value aside for a big expense later, or for retirement, or for one's children, like you would put gold aside).

yes.. currency seems currently as bitcoin's main value proposition within the secure decentralized immutable value storage and transfer.  There is no other system that is close to bitcoin, so it remains quite amazing at the moment.  6 months down road, we could have another assessment, but at the moment, bitcoin seems pretty decent and it seems that there can be reasonable ways to invest 1% to 10% of your quasi-liquid investment assets into bitcoin and that would be a reasonable approach at the moment, even though not too many folks are currently making such investment into bitcoin, and sometimes it can take quite a bit of work to figure out a reasonable way to tailor any kind of new investment class, such as bitcoin, into your life in a way that is comfortable for personal particulars.

Well, we are both dumb asses if we make such an agreement without protecting ourselves in some kind of way or making some kind of hedge.

So it is easier to make such a deal in fiat than in bitcoin, hence bitcoin has no competitive edge here.  Unless for one or another reason, we cannot do it in fiat (for instance, with a smart contract, or because it is illegal).  The value bitcoin has in this case over other systems is hence, most of the time, zero.

There should be no problem pegging value of bitcoin to fiat for a kind of contract that would be paid in bitcoin at the fiat value at the time of the execution.  Whether bitcoin is involved at all will depend upon whether folks considered it useful to involve bitcoin, for example, if I am going to send money to you, it may be better for me to send in bitcoin, because I have no idea who you are, and I don't really have any inclination to want to meet you or to get to know you any better.  Not at the moment.  ahahahahaa

I gotta be careful if I am entering into an agreement with someone who may not have the ability to pay, but with any venture, there can be a certain amount of risk, and questions concerning which of the parties should bear the risk (sometimes agreed upon beforehand, and other times, left quite ambiguous and maybe foreseeably yet ill-prepared-for becomes an issue after the fact).

Sure, but these things are equal whether we take bitcoin or dollars as our means of payment.  It is only different if we use a smart contract.  If not, the risks are the same, but on top of that, with bitcoin, I have a volatility risk that is much lower with fiat.  So bitcoin has no edge, and is hence, as a value booster for the deal, totally useless.

In the near future, I'm not using any fucking supposed "smart contract" to automate any portion of my contract with you, unless you can propose some kind of reason that it would bring value to our arrangement.  I also shun away from a large number of monthly automated payments because I want to verify every month before I pay.  That may be my own personal inclinations, at least for now.

It's neither more or less attractive as a means of payment if the parties take adequate precautions and have a decent understanding for what they are in for.  

It is less attractive, because a hedge against volatility is needed, which is much less the case, all else equal, for another payment system.  So if that volatility is too important, bitcoin loses entirely its value proposition as competitive edge over other payment methods.  Unless, as I said, I cannot use another method for one or another reason.  Then bitcoin has value, because without it the deal can't work.

I don't know why you are going on and on about this because I already asserted that it seems dumb to create a contract that is linked to the value of a volatile asset, such as bitcoin.  So you are making shit up in order to argue about stuff that is largely not in contention, but then at the same time, you want to tie these negative attributes to bitcoin?  hello?  Snap out of it.

Whether I will get paid or not is independent of the payment method, so it is not bringing in any competitive edge (unless I use a smart contract, to eliminate counterparty risk - THEN there is extra value to it).

Sure, we could bring in automatic payment in circumstances that we know the payment is made once the conditions are filled, and yeah, that would be a good use for a smart contract, if we know the system can detect and/or escrow sufficiently.

[JayJuanGee]

Now, that's pure retarded.  Did you even read what I wrote?  For example, if you are using bad facts, then it does not matter how pure is your logic.. and I am not even gonna concede that you have good logic, when you are asserting such nonsense.

What bad facts ?

O.k... now you want to play dumb in order that we have to regurgitate all of the various bullshit that we have already covered.

Largely the bad facts is your failure and refusal to give value to speculative value in bitcoin, subjective value and the extent to which even small amount of utility (such as 5%) can cause speculative value and subjective value to have greater importance than what you are attributing to such factors.

More nonsense.. you definitely are not engaging with facts when it comes to understanding what proof of work is providing.

Proof of work serves to make mutability difficult, and essentially serves to burn seigniorage, so that the currency creation doesn't bring much to the creator.   As seigniorage is in general seen as unfair, the burning of seigniorage makes bitcoin to be seen as a fair system, and hence can help create the belief system of its value (an openly scammy system has difficulties establishing a belief system of value).

Bitcoin is sufficiently open, and miners can choose the extent to which they want to invest in mining to the extent that they think that it may be profitable for them in the short term or the long term.  Some may win and some may lose, and there are definitely costs of the system, but in the end, the system still has value in spite of the various costs of mining and securing the network through mining.. aka proof of work.

Bitcoin economics is such that, apart for a small margin, competition between miners will destroy most of the created bitcoin value by PoW, and that's good, but at the same time, a huge waste, and a cost to the entire system, but which also provides for security of its ledger.

yeah, you are rehashing, and concluding that there is no value to this, when it should be fairly obvious that you are wrong about your conclusion about whether there is any value left after the costs of mining.

Your logic points are nonsense, largely based on your inputting of faulty facts, and we have gone over this at nauseum.

Just claiming that something is nonsense doesn't make it nonsense.

Sure that is true, but we have rehashed over and over and over, so it seems a bit laborious to continue to repeat matters, and easier just to say "nonsense" ... Actually some of your nonsense kind of seems to speak for itself, anyhow.

I divided the demand for bitcoin in two classes:
- the demand as a store of value (which would remain if bitcoin's price were known not to rise significantly in the future) which is the only sustainable demand a collectible can have - that store of value can be gold-like in the long term (call it M2, whatever), and store of value in the short term (currency).  The value of bitcoin as a store of value with a competitive edge over other stores of value is its economic contribution, and so its fundamental value.  This demand is independent of any consideration of future rise.
- the demand for it motivated mainly by the hopes for a price rise, which I call speculative, and which is the source of "greater fool theory".

I considered, that there is 20 times more demand motivated by the second reason than the first.  That is, if some god would come from the sky and let all potential bitcoin holders and buyers know that the price would remain essentially stable in the far future, I presume that demand and holding of bitcoin would drop a 20-fold today.  We more or less agreed on that (5% real usage, 95% in for "moon").

If you take these starting points, my conclusions cannot be avoided.

Your conclusions can be avoided and denied for many of the reasons that I have rehashed several times already.

I have no problem with you choosing to invest or not into bitcoin based on your conclusions regarding its future, and other folks have differing evaluations, and they will choose their extent of investment and their extent of allocating assets towards bitcoin.


By the way, do you invest in bitcoin?  how much of your assets?  do you short it?  or do you just make nonsensical assertions on forum without investing in order to attempt to save others from investing?

[LiberOptions]

Ethereum Price Technical Analysis – Trend Line Resistance Holding

Key Highlights
ETH price continued to challenge an important resistance area against the US Dollar, but failed to break it.
There is a bearish trend line as highlighted yesterday on the hourly chart (data feed via SimpleFX) of ETH/USD, which is acting as a resistance.
The pair is slowly stabilizing, and may attempt another break of the trend line resistance.
Ethereum price is currently trading below a resistance trend line and struggling to break it. If the ETH bulls succeed, it may call for an upside move.

Link

[JayJuanGee]

Now, that's pure retarded.  Did you even read what I wrote?  For example, if you are using bad facts, then it does not matter how pure is your logic.. and I am not even gonna concede that you have good logic, when you are asserting such nonsense.

What bad facts ?

O.k... now you want to play dumb in order that we have to regurgitate all of the various bullshit that we have already covered.

Largely the bad facts is your failure and refusal to give value to speculative value in bitcoin, subjective value and the extent to which even small amount of utility (such as 5%) can cause speculative value and subjective value to have greater importance than what you are attributing to such factors.

Upon reflection, one more clarification that I want to make in terms of this aspect of this topic.

The main essence of your argument seems to be:

1) bitcoin does not provide sufficient levels of utility and value beyond speculation to be significantly as an investment or otherwise blah blah blah in other words, bitcoin is almost exclusively speculative to the extent that speculation versus utility matters.
2) speculation is insufficient as a motivating factor for any investment (currency or otherwise) to be sustainable beyond "greater fools" investment.
3) based on 1 and 2, bitcoin is not sustainable beyond "greater fools" investment.


I don't give a shit if your logic is 100% sound, and surely your logic could be 100% sound, and your argument can still be nonsense. 

As you should already realize, we largely do not agree about point 1, and there is a lot there in point 1, but you want to go on and on and talk about point 2 and point 3 and how you arrive at point 3 and how your logic is so wonderful and all of that, and in the end, who gives a shit? 

If we cannot agree about point 1, then we are discussing this matter from differing foundations, and in essence the only point that matters in order to make further progress is point 1.

We have sufficiently discussed point 1, and there is a lot of speculation and facts in point 1, then it is not going to matter if your logic is great and if your point 2 is wonderful.  In the end, it remains substantively important that we do not need agree on point 1. 

We can have varying degrees of opinions regarding point 1, and there is nothing wrong with that, but I do not see any real purpose of continuing to argue all over the place regarding irrelevant topics, such as your point 2 and your logic, etc etc.. .. in that regard, we can agree to disagree.. and that seems to be mostly regarding point 1, which have their own variety of facts and logic contained therein.

[RealBitcoin]

A currency is like a truck: it transports value.  But the produced value of a currency is not the value it transports, but only the small edge it can bring over other ways to transport value.

That is true, but there are services that are exclusively run through bitcoin.

Sure any gambling site can accept any currency, like, doge, ether, etc... but still the most used currency is bitcoin. So bitcoin has a competitive edge and not just that it has special characteristics that make it the most preferable currency.

So the crypto economy will grow on Bitcoin no doubt, other altcoins will be part of it, but BTC is the big show.


Just as say Myspace ran the social media for a time ,but now it's exclusively Facebook, both are similar projects.  Facebook is just as a social construct as Bitcoin, so bitcoin has it's independent value just as any other project.

Sure, but that is only "greater fool" stuff.  That isn't the value that bitcoin produces.  The value bitcoin produces is the little edge it brings in those transports of value that you can better do with bitcoin, at lower cost, faster,.... than with other means of transporting value, such as the fiat system.

It is, people keep putting a % of their salary in bitcoin, so the size does matter. Besides they are enjoying it's services, be that gambling or shopping vintage cloths:

https://duosear.ch/

Most of them are not users but gamblers.

Or electronics shoppers like phone gadgets, raspberry pi computers and other stuff
https://duosear.ch/

But a stash of bitcoin held by someone doesn't buy capital goods.  Savings create capital if they are used to buy capital goods.  There's a difference between holding and investing: economy 101 too.

In a deflationary currency there is no difference. In bitcoin saving/hoarding/investing is pretty much the same. You hold the coins so that other people can spend it's value or re-invest it for other projects:

-They take risk and might not receive them back due to losses
-You hold the value of the coins and become a bigger % shareholder / capita if other people sell

Of course not.  How does someone doing research on bitcoin obtain capital goods when bitcoin goes up, because the coins are held more tightly by speculators ?  Nobody's buying capital goods anywhere.

Read my post again. And you make no sense BTC, first you say that speculators buy/sell is bad, now you say that speculators holding is bad? Make up your mind.

These two concepts have nothing to do with each other.   The P/E ratio of stock is the price of the asset "for eternity" as compared to the yearly PRODUCTION of value.  If you hold the share for 20 years, you will have, with no growth, paid back the price of the asset.  So a P/E ratio of 20 just means that you expect the company to exist for 20 years (I'm oversimplifying: one should use discounted cash flow of course).

https://en.wikipedia.org/wiki/Discounted_cash_flow

On the other hand, the ratio of speculation over fundamental value (Fisher) is just the inflation of the speculative bubble over the true value of the asset.

If you want to compare it to stock, it would be rather like the following: the sum of all the assets of a company is X, and the sum of all its shares is 20 X.

A company that is "worth" (if you would sell all of its assets), say, $10 million would have a market capitalisation of $200 million.  Everybody would claim that its stock is way, way overpriced and is in a full speculative bubble - or that they are on something and that their actual assets will soon rise to $200 million by the exceptional inventions that they are doing.

And what is exactly the difference between a stock and bitcoin, technically?

It's an enterprise, it's global, and it stores value like an asset (stock). Now it may pay out dividend if you are a miner, but otherwise at least it goes up (for almost 7 years straight)

And as a bonus it's a currency. So it holds all the values of a stock, but in a form of a currency that is tradeable. So bitcoin is both a stock, commodity and currency combined. It's a totally new genre of financial asset.

So you cant talk about it in the old sense.

Read this:

http://moneyfortherestofus.net/mny060-hoarding-investing/

I dont like reading keynesian nonsense. I already told you that in a deflationary enviroment  saving/hoarding = investing.

Hahaha, that's of course funny.  You are simply suggesting that cancer reseachers join you in the greater fool theory game, and hope for more greater fools that will buy enough bitcoin at higher prices still so that they can make a benefit.  You are suggesting that they become greater fools that will find still greater fools. 

Well given that billion of $ already went down the toilet, they are not very good money managers.

But if some real scientists would have bought bitcoin in 2009 with a few thousand dollars, they might have made a breakthrough by now with all that money they'd made so far.

What gives value to the US dollar is Fisher's formula, and its use as a currency.  The same thing that gives about $30 of value to bitcoin.

If people were now hoping on "increased adoption" of the dollar, and its value increase, so that they would pile up hoards and hoards of dollar bills, such that the dollar rose a twenty-fold in value, with people hoarding more and more of it, because its value increased (because of that demand), that would be an extremely unhealthy situation for the dollar.  Its value would be much more volatile, it would suffer a very speculative bubble, and it would of course, at a certain point, come crashing down when it wouldn't increase any more, and all people that were only holding piles of dollars hoping for it to increase, would start spending them because they lost hope in still a lot of increase, which was their main motive to hold it it the first place. 

You'd have the dollar come crashing down.

But the dollar is controlled by a central bank and it has tons of overleveraged instruments built on it, of course its not good for them.

But bitcoin is pretty much independent of all that market manipulation. Look at BFX hack , nobody cares, nobody will bail them out. This is a true capitalist system, there are no too-big-to-fail banks.

Bitcoin so far had a higher YOY return than it's inflation, maybe perhaps in its first years. I mean last year 149.12% return  with only 9% inflation. You have to be kidding me.


Look at the EUR, no yearly returns and probably a 5% yearly inflation .

[Jacknife]

https://www.reddit.com/r/ethereum/comments/57p0bv/a_quick_note_on_how_the_call_gas_cost_increase/?st=iucbqo9l&sh=4e279f3f

A quick note on how the CALL gas cost increase will affect contracts. self.ethereum
Submitted 7 hours ago by vbuterinJust some guy
One of the features of EIP150 increases the gas cost of every type of call from 40 to 700. This gas cost is in addition to memory gas costs and the gas provided to the child; for example, if you currently call a contract with 300 gas, then the child gets 300 gas and the parent pays 340 gas (assuming no memory expansion), post fork the child would still get 300 gas but the parent would pay 1000 gas. So calls to contracts that provide less than 700 gas are not affected (unless the child itself consumes an opcode whose price has been greatly increased, but there are very few situations where this is the case).

Existing contracts often use msg.gas - 40 to determine how much gas to send to call a child; because currently a call costs 40 gas, msg.gas - 40 basically means "send the child as much as we can". However, with the patch, msg.gas - 40 + 700 = msg.gas + 680 so these contracts would all be trying to send too much gas to the child. This is remedied by adding a rule that if a call tries to send the child too much gas, instead of failing the child is simply sent the maximum amount of gas that it can get. Hence, if your application relies on calling a contract with 50000 gas and you're used to sending transactions which (post base costs) have 50001 gas, and the cost now increases to 50680, then you can simply bump up the gas in your transactions slightly and it will again work.

Aside: nonlinearity sucks
Some have asked why we need to up the gas costs linearly and why we can't either have a quadratic cost (pay N2 for N calls) or just a hard limit on the number of calls and suicides per transaction. The answer is that this is a very bad idea that opens up new classes of attacks that contract developers now have to worry about. For example, there may be a parallel to the call stack depth limit attack (which BTW thanks to the 63/64 rule in EIP150 will no longer be a concern) where an attacker makes 99 calls, then makes the last call to the victim contract, and the victim contract fails in some unexpected way.

Memory already has a quadratic gas cost, and this has already annoyed us because it means that there is no way to budget a fixed amount of gas in order to expand memory by a fixed amount. So we're actually trying to move away from having a host of weird hard or nonlinear limits that make reasoning about contract development hard.

[LiberOptions]

Ethereum Price Weekly Analysis – ETH/USD Approaching Break

Ethereum price ETH fell sharply this past week against the US Dollar and surprised many traders. It traded as low as $11.48 where the bulls appeared and prevented further losses. The price is currently forming a critical contracting triangle pattern on the 4-hours chart of ETH/USD (data feed via SimpleFX). It may play a major role for the next move in the near term. The upper trend line of the triangle pattern is also coinciding with the 23.6% Fib retracement level of the last drop from the $13.34 high to $11.48 low...

Link

[LiberOptions]

Under Sustained Attack, Ethereum to Introduce Hard Forks

Ethereum is still in trouble, the much-celebrated blockchain platform has been suffering from a sustained attack for weeks now. Under attack, the cryptocurrency based smart contracts platform is now looking at not one but two consecutive hard forks.

According to a recent announcement on Ethereum’s official blog, these “very crafty” attackers have been uncovering one vulnerability after another in Ethereum client implementations and protocol specifications to hinder the performance of the network...

Link

[dinofelis]

A currency is like a truck: it transports value.  But the produced value of a currency is not the value it transports, but only the small edge it can bring over other ways to transport value.

That is true, but there are services that are exclusively run through bitcoin.

Sure any gambling site can accept any currency, like, doge, ether, etc... but still the most used currency is bitcoin. So bitcoin has a competitive edge and not just that it has special characteristics that make it the most preferable currency.

Using bitcoin to pay on a gambling site, is indeed true usage of bitcoin with a competitive edge. 

Listen, I'm NOT saying that bitcoin is worthless.  I'm simply saying that bitcoin's market cap, at the moment, is dominated by other things than its usage (namely what I call "greater fool theory") and I don't think that's a good thing.  That's all.

It would be way better that bitcoin's market cap was more in agreement with its usage as a store of value/currency, and much less as a "greater fool theory" asset.

I think that some people here are confusing the critique I'm having on the current way bitcoin is TRADED and the actual value of the bitcoin system.  It is a bit like when I'm saying that feeding caviare to the pigs is a bad idea, that I'm criticising caviare.

Sure, but that is only "greater fool" stuff.  That isn't the value that bitcoin produces.  The value bitcoin produces is the little edge it brings in those transports of value that you can better do with bitcoin, at lower cost, faster,.... than with other means of transporting value, such as the fiat system.

It is, people keep putting a % of their salary in bitcoin, so the size does matter. Besides they are enjoying it's services, be that gambling or shopping vintage cloths:

https://duosear.ch/

Most of them are not users but gamblers.

Or electronics shoppers like phone gadgets, raspberry pi computers and other stuff
https://duosear.ch/

Again, that's real bitcoin usage.  That's not what I'm complaining about.

In a deflationary currency there is no difference. In bitcoin saving/hoarding/investing is pretty much the same. You hold the coins so that other people can spend it's value or re-invest it for other projects:

-They take risk and might not receive them back due to losses
-You hold the value of the coins and become a bigger % shareholder / capita if other people sell

That reasoning of the deflationary spiral only holds if the asset you're talking about is the main/sole currency.  It doesn't make sense if there are myriads of "value storage" competitors.

I know how this goes:
- I produce value and I get money for it.  If I use that money as a store of value, during that time, I've put net value into the economy, and I don't pump it out again by consumption.  So I let everyone else "profit" from that value during a certain time.  This happens through the deflationary effect that my holdings generate: me holding money increases the demand for money, and hence (through Fisher !) other people's money's value, with ideally the same amount as I refused to consume directly but put in.

However, in the case of just holding bitcoin over holding fiat or gold, this implies just a SHIFT from fiat or gold to bitcoin, not an overall increase in "monetary asset value".  If I were *in any case* holding value, I do not change anything to the economy by preferring bitcoin over gold.  I just decrease gold's value and increase bitcoin's.

Moreover, this deflationary effect doesn't increase the buying of capital goods over consumption goods (which is what investing is about).  It will increase the buying of goods in the same ratio.  If other people are mainly consuming, then my value will be used for consumption, not for acquiring capital goods.

If I explicitly invest in production, then my investment will explicitly improve the amount of capital goods, and increase economic production in the future.

This is why "holding value" is not investing.  It is letting value to the others, in the same ratio consumption/capital as they used to, the time I put this value aside.  And moreover, if it is just a choice of WHAT store of value, then this only plays on the relative prices of both storages.

And what is exactly the difference between a stock and bitcoin, technically?

Its value is not used to buy production capital, and it doesn't produce (much) value - the only value it produces, is the competitive edge it brings over other means of storage of value.  This is why its price shouldn't be much higher than strictly necessary for the value it produces.

If a company worth $1000 000,- in production capital, can produce, say, for $100 000,- yearly, with a yield of 10% yearly, that's way, way better than a company that needs $ 100 000 000,- in production capital to produce the same value yearly, namely $100 000,-., with a pitiful yield of 0.1%.

The "company worth" of a monetary asset which is unavoidable, is given by Fisher's formula.  If it needs to transport $1000 000 000,- a year and it needs to be kept on average, say, 2 weeks, then a market cap of $ 40 000 000,- is unavoidable.  That's comparable to the "capital goods" in a company, and the market cap of its stock.  If by transporting $ 1000 000 000,- a year, it brings a competitive edge of $1000 000,- a year (that's the value that is PRODUCED by bitcoin, over other systems), then with its given market cap, it has a yield of 2.5%.

However, if by speculation, the market cap is blown up 10 times more, to $ 400 000 000,-, it still doesn't produce more "competitive edge" than before, namely $ 1000 000,- a year, but now its yield is only 0.25% which is worse.

That's my whole point.

What gives value to the US dollar is Fisher's formula, and its use as a currency.  The same thing that gives about $30 of value to bitcoin.

If people were now hoping on "increased adoption" of the dollar, and its value increase, so that they would pile up hoards and hoards of dollar bills, such that the dollar rose a twenty-fold in value, with people hoarding more and more of it, because its value increased (because of that demand), that would be an extremely unhealthy situation for the dollar.  Its value would be much more volatile, it would suffer a very speculative bubble, and it would of course, at a certain point, come crashing down when it wouldn't increase any more, and all people that were only holding piles of dollars hoping for it to increase, would start spending them because they lost hope in still a lot of increase, which was their main motive to hold it it the first place. 

You'd have the dollar come crashing down.

But the dollar is controlled by a central bank and it has tons of overleveraged instruments built on it, of course its not good for them.

But bitcoin is pretty much independent of all that market manipulation. Look at BFX hack , nobody cares, nobody will bail them out. This is a true capitalist system, there are no too-big-to-fail banks.

But I agree with that.  That doesn't change the fact that a monetary asset's "capitalisation" is given by Fisher's formula.

[RealBitcoin]

Using bitcoin to pay on a gambling site, is indeed true usage of bitcoin with a competitive edge. 

Listen, I'm NOT saying that bitcoin is worthless.  I'm simply saying that bitcoin's market cap, at the moment, is dominated by other things than its usage (namely what I call "greater fool theory") and I don't think that's a good thing.  That's all.

It would be way better that bitcoin's market cap was more in agreement with its usage as a store of value/currency, and much less as a "greater fool theory" asset.

I think that some people here are confusing the critique I'm having on the current way bitcoin is TRADED and the actual value of the bitcoin system.  It is a bit like when I'm saying that feeding caviare to the pigs is a bad idea, that I'm criticising caviare.

Well then just wait, the market has a good way of correcting itself. But in my theory price spearheads value, and then value catches up slowly.

Bitcoin was under 200 euro for a year, and in that year the value had really catched up since the 2013 bust, so probably the price increases since then were legitimate.

That reasoning of the deflationary spiral only holds if the asset you're talking about is the main/sole currency.  It doesn't make sense if there are myriads of "value storage" competitors.

Yea but bitcoin is by far the most secure, with the simplest code, highest economy, highest userbase, and above all highest life expectancy.

Why would anyone store their savings in Novacoin? https://coinmarketcap.com/currencies/novacoin/

However, in the case of just holding bitcoin over holding fiat or gold, this implies just a SHIFT from fiat or gold to bitcoin, not an overall increase in "monetary asset value".  If I were *in any case* holding value, I do not change anything to the economy by preferring bitcoin over gold.  I just decrease gold's value and increase bitcoin's.

Yes it takes away value from gold, which is already overrated. With things like this:
http://www.cbsnews.com/news/american-with-121-pounds-of-gold-arrested-in-bolivia/

I am not sure gold is so much a superstar anymore. It is losing it's shine.

Moreover, this deflationary effect doesn't increase the buying of capital goods over consumption goods (which is what investing is about).  It will increase the buying of goods in the same ratio.  If other people are mainly consuming, then my value will be used for consumption, not for acquiring capital goods.

If I explicitly invest in production, then my investment will explicitly improve the amount of capital goods, and increase economic production in the future.

This is why "holding value" is not investing.  It is letting value to the others, in the same ratio consumption/capital as they used to, the time I put this value aside.  And moreover, if it is just a choice of WHAT store of value, then this only plays on the relative prices of both storages.

If Jonny buys 1 BTC, while Kevin has 638$ in USD.  Jonny in 1 year will probably have higher wealth than Kevin, due to inflation.

Jonny now will have more wealth to consume OR invest than Kevin.

It doesn't increase the ratio of investment/consumption, but it does increase both by a net effect. It's just inflation stealing away your purchasing power, so by opting out from inflation, you will have more money to consume or invest.

Besides it's a chicken-egg problem, for consumption you need entrepreneurs & investors, and vice-versa. So you need both at a healthy ratio of whatever, and this generates positive economic increase for Bitcoin.

Its value is not used to buy production capital, and it doesn't produce (much) value - the only value it produces, is the competitive edge it brings over other means of storage of value.  This is why its price shouldn't be much higher than strictly necessary for the value it produces.

If a company worth $1000 000,- in production capital, can produce, say, for $100 000,- yearly, with a yield of 10% yearly, that's way, way better than a company that needs $ 100 000 000,- in production capital to produce the same value yearly, namely $100 000,-., with a pitiful yield of 0.1%.

The "company worth" of a monetary asset which is unavoidable, is given by Fisher's formula.  If it needs to transport $1000 000 000,- a year and it needs to be kept on average, say, 2 weeks, then a market cap of $ 40 000 000,- is unavoidable.  That's comparable to the "capital goods" in a company, and the market cap of its stock.  If by transporting $ 1000 000 000,- a year, it brings a competitive edge of $1000 000,- a year (that's the value that is PRODUCED by bitcoin, over other systems), then with its given market cap, it has a yield of 2.5%.

However, if by speculation, the market cap is blown up 10 times more, to $ 400 000 000,-, it still doesn't produce more "competitive edge" than before, namely $ 1000 000,- a year, but now its yield is only 0.25% which is worse.

That's my whole point.

Yes, that is why Bitcoin is more than just a financial asset. It's value is subjective, based on their investor's beliefs.

Right now Bitcoin's main value comes from either wealth storage, or as a hedge against bank bail-ins. So most investors not necessarly invest at the optimal price, but at whatever price they can get in to store their money.

Ask the Venezuelans, they dont care about bitcoin's price, they just don't want to suffer a 1500% inflation with the bolivar.

So bitcoin has more value packaged inside it, than it seems at first look, it's not just a silly internet token, it's meant to store money safely, and that is really priceless.

So if bitcoin were to raise to A 100 billion market cap, it would not make it more overvalued than it is now, it would just mean that more millionaires/billionaires are interested in securing their wealth.

But I agree with that.  That doesn't change the fact that a monetary asset's "capitalisation" is given by Fisher's formula.

Well bitcoin is not a traditional monetary asset, so this formula might not be entirely accurate. It fails to consider other valuation factors.

[ArdiPrabowo]

ETH ethereum still good coin
you can see all new altcoin majority is dev coin use token etherum
majority use platform etherum

if eterum die and game over much altcoin can die too

[EastBirth]

ETH ethereum still good coin
you can see all new altcoin majority is dev coin use token etherum
majority use platform etherum

if eterum die and game over much altcoin can die too

The Ethereum is a good coin, but if it is not developed actively, it will be replaced another good coins.

[LiberOptions]

Ethereum Price Technical Analysis – ETH Relatively Muted

Ethereum price recently traded near $11.91 where sellers appeared and pushed the price down versus the US Dollar. The ETH/USD pair is currently trading lower and moved below the 100 hourly simple moving average. However, there may be no break, as there is a bullish trend line formed on the hourly chart (data feed via SimpleFX) of ETH/USD. It may...

Link

[JayJuanGee]

But I agree with that.  That doesn't change the fact that a monetary asset's "capitalisation" is given by Fisher's formula.

Well bitcoin is not a traditional monetary asset, so this formula might not be entirely accurate. It fails to consider other valuation factors.

hahahahaha

If you had not been following some of dinofelis's recent posts in this thread, he is not the kind of guy that would let actual real world facts get in the way of his various monetary theories.   

[dinofelis]

Well then just wait, the market has a good way of correcting itself. But in my theory price spearheads value, and then value catches up slowly.

This is one theoretical path (which I outlined several times): the speculators of today are the visionaries, which see the true value of bitcoin in the future, and are just quicker than others to go for the "real price".

However, and that's my whole point, that would mean that these people are EXPECTING bitcoin to have a *usage* value (as store of value/currency) that is on or above the current market value.  In order for that to be true (which is not impossible) it would mean that the demand for bitcoin as store of value/currency (and hence going into Fisher's formula) would have to essentially overtake the demand for bitcoin inspired mainly/only by "expectation of rise in price" (what I call "greater fool theory").  Now, if we assume that already TODAY the demand inspired mainly/only by "expectation of rise in price" is about the TWENTYFOLD of the demand for currency/store of value (without necessary expectation of rise in price) by the numbers that we pulled out of our nose but that people seem not to contest (95% "demand because it will rise" vs 5% demand for "use as currency/store of value at same price"), then hoping for a more than 20-fold increase in "true adoption" seems to me very optimistic, although not impossible.

My whole point is namely that this "true adoption" is rather hindered by a too high market price today (which, as I explained several times, increases the costs of the use of bitcoin, and hence diminishes its competitive edge which is exactly supposed to be the motor behind that "true adoption").

Bitcoin was under 200 euro for a year, and in that year the value had really catched up since the 2013 bust, so probably the price increases since then were legitimate.

I still think that the MAIN demand for bitcoin is "greater fool".  My test for that is: suppose that all people demanding/holding bitcoin would KNOW somehow (because the angel Gabriel whispered in their ears, because some super smart extraterrestrial from Sirius told them, or for whatever reason) that bitcoin's price is NOT going to rise above inflation in the coming decades, would they still hold/demand bitcoin ?

If the answer to that question is "yes", then that's true adoption, they are using bitcoin as a store of value/currency because it gives them an edge.  If the answer to that question is "no", then they are ONLY holding/buying bitcoin because they expect a price rise, and we are in "greater fool theory".  My assumption is that 95% of the holdings/demand for bitcoin fall in that category today.

If Jonny buys 1 BTC, while Kevin has 638$ in USD.  Jonny in 1 year will probably have higher wealth than Kevin, due to inflation.

Jonny now will have more wealth to consume OR invest than Kevin.

Huh, no.  I assume that Jonny will have a few percent more value than Kevin, the inflation of fiat (which isn't very high these days).  These few percent went in fact in the economy as seigniorage by whoever created new dollars (people who got cheap loans).  There is no fundamental difference between the value transfer with a deflationary currency, and an inflationary: the only difference resides in WHO gets it.  In a deflationary currency, all currency spenders get the value you hold (for a while).  In an inflationary currency, those with the privilege of seigniorage get that.  In a modern fiat system, that is NOT the central bank, but that are the people subscribing cheap loans.  Loans are the thing that creates money in the modern fiat system, and the receivers of seigniorage are the people/institutions getting loans for cheaper than they should (mainly the state with state loans and financial institutions).

As bitcoin is for the moment still inflationary, I wouldn't even think that there's much difference between the inflation of dollar and the inflation of bitcoin.

It doesn't increase the ratio of investment/consumption, but it does increase both by a net effect. It's just inflation stealing away your purchasing power, so by opting out from inflation, you will have more money to consume or invest.

Yes, that is a competitive edge of something like bitcoin or gold over fiat.  I don't deny that.  But I would think that for the moment, the volatility risk on bitcoin is much higher than the gain you can hope to make by escaping inflation.

Its value is not used to buy production capital, and it doesn't produce (much) value - the only value it produces, is the competitive edge it brings over other means of storage of value.  This is why its price shouldn't be much higher than strictly necessary for the value it produces.

If a company worth $1000 000,- in production capital, can produce, say, for $100 000,- yearly, with a yield of 10% yearly, that's way, way better than a company that needs $ 100 000 000,- in production capital to produce the same value yearly, namely $100 000,-., with a pitiful yield of 0.1%.

The "company worth" of a monetary asset which is unavoidable, is given by Fisher's formula.  If it needs to transport $1000 000 000,- a year and it needs to be kept on average, say, 2 weeks, then a market cap of $ 40 000 000,- is unavoidable.  That's comparable to the "capital goods" in a company, and the market cap of its stock.  If by transporting $ 1000 000 000,- a year, it brings a competitive edge of $1000 000,- a year (that's the value that is PRODUCED by bitcoin, over other systems), then with its given market cap, it has a yield of 2.5%.

However, if by speculation, the market cap is blown up 10 times more, to $ 400 000 000,-, it still doesn't produce more "competitive edge" than before, namely $ 1000 000,- a year, but now its yield is only 0.25% which is worse.

That's my whole point.

Yes, that is why Bitcoin is more than just a financial asset. It's value is subjective, based on their investor's beliefs.

Right now Bitcoin's main value comes from either wealth storage, or as a hedge against bank bail-ins. So most investors not necessarly invest at the optimal price, but at whatever price they can get in to store their money.

Every financial asset is based upon "subjective beliefs" but these have to turn out to be true or they break down.  A monetary asset is a infinitely recursive belief system: you are willing to obtain it against value, because you believe that you will obtain value against it, and you believe that because you think that the next person accepting it, will also believe it.

But you better be right in your beliefs (even though they are "subjective") or you are a bag holder.  So I wouldn't call that "subjective beliefs" but rather "uncertain hypotheses".  There's a difference.  I like chocolate 3 times more than apples.  That's subjective.  You may prefer apples over chocolate.  However, me estimating your preference of apples over chocolate is "subjective", but is in fact more "uncertain".  I have to guess, and bet.  If I make a mistake, I will lose.

Ask the Venezuelans, they dont care about bitcoin's price, they just don't want to suffer a 1500% inflation with the bolivar.

I think they prefer dollars.

So if bitcoin were to raise to A 100 billion market cap, it would not make it more overvalued than it is now, it would just mean that more millionaires/billionaires are interested in securing their wealth.

That's what I don't believe.  Maybe, one day.  I don't think that billionaires are in bitcoin because they want to secure their wealth ; I think that millionaires are in bitcoin because they hope to become billionaires.  And that's what has to stop at a certain point, and when that stops, the main reason for the demand for bitcoin is to crumble (like with every asset for which most of the demand is based on the expectation of a future price rise).  That doesn't say anything about the true value of the asset. 

[dinofelis]

But I agree with that.  That doesn't change the fact that a monetary asset's "capitalisation" is given by Fisher's formula.

Well bitcoin is not a traditional monetary asset, so this formula might not be entirely accurate. It fails to consider other valuation factors.

hahahahaha

If you had not been following some of dinofelis's recent posts in this thread, he is not the kind of guy that would let actual real world facts get in the way of his various monetary theories.    

One has to be very cautious when people start claiming that for THIS particular case/situation/paradigm shift, the "old laws of economics" don't hold any more.  It is one of those group think indicators of "bubble".  It was true for the South Sea bubble, it was true for the dot com bubble.  I don't know if you are old enough to have heard all those fancy theories at the end of the 90-ies over the "new economy", where value production wasn't necessary any more and one could build business models integrating permanent loss as long as there was growth.

When you look at things like facebook and google, who, at first sight, seem to have followed the "new economy" paradigm of giving away products for free against "growth", they ended up producing value as publicity vendors to their addicts of "free products" which are nothing else but tasty bait for publicity and data mining.

When I hear some here about bitcoin, this has a particular resonance effect in my ears.

[RealBitcoin]

This is one theoretical path (which I outlined several times): the speculators of today are the visionaries, which see the true value of bitcoin in the future, and are just quicker than others to go for the "real price".

However, and that's my whole point, that would mean that these people are EXPECTING bitcoin to have a *usage* value (as store of value/currency) that is on or above the current market value.  In order for that to be true (which is not impossible) it would mean that the demand for bitcoin as store of value/currency (and hence going into Fisher's formula) would have to essentially overtake the demand for bitcoin inspired mainly/only by "expectation of rise in price" (what I call "greater fool theory").  Now, if we assume that already TODAY the demand inspired mainly/only by "expectation of rise in price" is about the TWENTYFOLD of the demand for currency/store of value (without necessary expectation of rise in price) by the numbers that we pulled out of our nose but that people seem not to contest (95% "demand because it will rise" vs 5% demand for "use as currency/store of value at same price"), then hoping for a more than 20-fold increase in "true adoption" seems to me very optimistic, although not impossible.

My whole point is namely that this "true adoption" is rather hindered by a too high market price today (which, as I explained several times, increases the costs of the use of bitcoin, and hence diminishes its competitive edge which is exactly supposed to be the motor behind that "true adoption").

Well Facebook also beat most expectations, despite having a highly criticized business model. Internet projects are certainly undervalued. You criticize a 20 fold increase, while we might get a 1000 fold increases.

I still think that the MAIN demand for bitcoin is "greater fool".  My test for that is: suppose that all people demanding/holding bitcoin would KNOW somehow (because the angel Gabriel whispered in their ears, because some super smart extraterrestrial from Sirius told them, or for whatever reason) that bitcoin's price is NOT going to rise above inflation in the coming decades, would they still hold/demand bitcoin ?

Well that has to be the Satan to whisper such things in your ears, because that is very very unlikely to happen.

But let's suppose it could, it would also be true for Gold as well, because they are cousins, so you cant apply 1 thing to BTC and exclude Gold & Silver from it.

Well, then it would probably still be held, because BTC still has the lowest inflation amongst all fiat currencies, and in 8 years it will be even lower than Gold's. So either way, if the price stagnates at 650$ (which is hardly imaginable since the USD has a high inflation rate) it would still be the best currency, above gold.

Huh, no.  I assume that Jonny will have a few percent more value than Kevin, the inflation of fiat (which isn't very high these days).

Stop right there, fiat inflation is very high these days according to some sources it's well above 7% / year.

Of course your cooked CPI data wont show this, you have to look at M2/M3 data & a currency basket index like Dollar Index for USD.

It is well above 7% yearly if you calculate it correctly, and probably even higher for small currencies.

And don't forget most of the inflation is not reflected in price increase, but in the diminishing size & quality of products





source: http://www.manchestereveningnews.co.uk/news/greater-manchester-news/think-your-chocolate-bars-smaller-8550709

Yes, that is a competitive edge of something like bitcoin or gold over fiat.  I don't deny that.  But I would think that for the moment, the volatility risk on bitcoin is much higher than the gain you can hope to make by escaping inflation.

Nope, the volatility risk of bitcoin in my opinion is better than risking inflation, because the trend is going up.

Besides, I am more worried of bail-ins, than inflation, which is a serious risk.

Every financial asset is based upon "subjective beliefs" but these have to turn out to be true or they break down.  A monetary asset is a infinitely recursive belief system: you are willing to obtain it against value, because you believe that you will obtain value against it, and you believe that because you think that the next person accepting it, will also believe it.

But you better be right in your beliefs (even though they are "subjective") or you are a bag holder.  So I wouldn't call that "subjective beliefs" but rather "uncertain hypotheses".  There's a difference.  I like chocolate 3 times more than apples.  That's subjective.  You may prefer apples over chocolate.  However, me estimating your preference of apples over chocolate is "subjective", but is in fact more "uncertain".  I have to guess, and bet.  If I make a mistake, I will lose.

Yes but bitcoin is not like placing a bet on a roulette table on the black chip. It has less uncertainty and definitely more stability than just a random bet.

Hence it is not random. Random = impossible to predict, while bitcoin is somewhat possible to predict.

I think they prefer dollars.

For now.

That's what I don't believe.  Maybe, one day.  I don't think that billionaires are in bitcoin because they want to secure their wealth ; I think that millionaires are in bitcoin because they hope to become billionaires.  And that's what has to stop at a certain point, and when that stops, the main reason for the demand for bitcoin is to crumble (like with every asset for which most of the demand is based on the expectation of a future price rise).  That doesn't say anything about the true value of the asset. 

Sure, it is mostly millionaires, yet, the financial system around us is getting worse and worse. So i think there will be hardly any better place to secure your wealth.

If we were in 1816, I'd say fuck bitcoin, nobody will use it. But we are in 2016, with a 1.2 quadrillion derivative bubble about to pop, so it's not like we have a choice.

[JayJuanGee]

But I agree with that.  That doesn't change the fact that a monetary asset's "capitalisation" is given by Fisher's formula.

Well bitcoin is not a traditional monetary asset, so this formula might not be entirely accurate. It fails to consider other valuation factors.

hahahahaha

If you had not been following some of dinofelis's recent posts in this thread, he is not the kind of guy that would let actual real world facts get in the way of his various monetary theories.    

One has to be very cautious when people start claiming that for THIS particular case/situation/paradigm shift, the "old laws of economics" don't hold any more.  It is one of those group think indicators of "bubble".  It was true for the South Sea bubble, it was true for the dot com bubble.  

In fact, it does not really matter what the actual facts are, you are not dealing with facts, but instead dealing with a stupid ass theory (that you call the greater fool theory bubble), and trying to act as if your stupid ass theory fits the facts.  If you were not arguing backwards, and if you were actually dealing with actual facts, some of your nonsense would likely become a bit easier to deal with.

I don't know if you are old enough to have heard all those fancy theories at the end of the 90-ies over the "new economy", where value production wasn't necessary any more and one could build business models integrating permanent loss as long as there was growth.

 When I see your comment, "I don't know if you are old enough,"  I get the sense that you are being a patronizing jerk, but then again, it could be that you are not using such impression in an attempt at patronizing?  Whether you are being patronizing or not, the impression that you are some how dealing with personal experiences and observations is bullshit.  Face it, you are not.  You got your dumbass theory, and you just keep beating it over and over and over, damned the actual facts.

Yeah, sure you are talking about actual facts that took place in the world, but they are not material and relevant to the current situation within the bitcoin space, so your attempts at drawing various analogies don't really fit, when you say bitcoin is like this or like that or like another thing, and you are not dealing with material and relevant bitcoin differences.  But, you do like to go on and on and on with immaterial irrelevance in an attempt to make it seem as if you could have possibly thought the matter through, and in the end you may have thought a lot about your theory, but you are missing something in terms of identifying differentiating aspects that exist in the bitcoin space.

When you look at things like facebook and google, who, at first sight, seem to have followed the "new economy" paradigm of giving away products for free against "growth", they ended up producing value as publicity vendors to their addicts of "free products" which are nothing else but tasty bait for publicity and data mining.

When I hear some here about bitcoin, this has a particular resonance effect in my ears.

Yeah, everything is a scam.. right???

You know what?  There is short term and long term value with a lot of products, and some product may have a short life, and have a kind of flash in the pan utility, but that does not mean that it was a pump and dump or fits in a "greater fools theory" merely because it ended up providing utility for only a short period of time.  Yeah, there is going to be "greater fools theory" in existence for a lot of products, but that does not mean that "greater fools theory" remains the dominant theory that fits a large number of failed products.

It kind of sounds as if you want one theory to fit everything.  You recently learned about this new theory called "greater fools theory," and you think it is a really great theory because it makes you feel smart because you are not one of those greater fools, and therefore, you have a desire to judge everyone as being a bunch of dummies, except yourself and maybe a few other skeptics.. and then you point at them and say, "greater fools." but in the end, you are not really grappling with reality and a variety of other dynamics that are going on and a lot of variety of ways that utility is created whether long term or short term or through speculation and other quasi-abstract ways of creating utility.

[LiberOptions]

Ethereum Price Technical Analysis – ETH/USD Back In Action

Yesterday, I stated that the ETH buyers need an encouragement for an upside move. Ethereum price did move higher, as the buyers managed to gain strength. There was a good upside reaction, and the price cleared a couple of important resistance levels. The first one was yesterday’s highlighted bearish trend line on the hourly chart (data feed via SimpleFX) of ETH/USD...

Link

[Spoetnik]

I seen a documentary on inflation from the Housing crisis recession..
Greenspan decided to CHANGE how it was calculated by the federal reserve.
He cooked the books hard !
He removed things like Gas or oil or housing costs or food etc etc..
Then went on to point to his pie charts saying there was NO inflation problem.

I can also attest to seeing companies pull that shrinking food weight bullshit.
I noticed Wallmart has seen doing that a LOT for years.. for example.
Cut the size of the product and still charge yet even more money.

We are in fact being raped hard by inflation.
In Canada we are pounded with never ending price increases on anything you can possibly think of.

How this is reflected in Altcoins or even Bitcoin i am not too sure though.
Guessing they are not immune though.

Anyway.. ETH = DEAD

It is on life support being propped up by a mysterious group.. most likely the dev's & friends.
So from a community stand point we have seen the limit.. it's dead as it's going to get.
..until that is, the manipulators putting up buy walls pull the life support and let her rip !

It is no coincidence the price has been frozen at $12.50 for a year with all the drama that has gone down.
The price was "decided" and not by the community ether.

Sure.. play the game but be aware if the plug is pulled ?
It's likely you would not find out quick enough to run to Poloniex to login and dump your coins fast enough.
i know because i have seen it happen before..