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Author Topic: Watching amateur finance types flail  (Read 33765 times)
BCEmporium
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June 24, 2011, 07:28:09 PM
 #41

I'm not an economist bs-filled or an economist at all, sorry for that, however I'm connected to web developing and even not being a designer. Man! You're even using Comic Sans for your headers... I really don't know what can be more amateurish than that, except maybe one or two marquees rolling without any relevant information.
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Anduril
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June 24, 2011, 07:28:29 PM
 #42

People are so stupid. No one cares about your pathetic analysis. You know nothing about this technology, and the reason for the speculation and market bumps is because people like YOU.AKA People who don't understand what this is, and will probably never will. Just keep "speculating", god knows that's what you do best.    Roll Eyes

You do know that in order to be taken seriously outside of the geek circles, Bitcoin needs people like the OP, right?

Understanding the technology does not a viable currency make.
Serge
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June 24, 2011, 07:30:56 PM
 #43

I think people who predict failure can never see past that.
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June 24, 2011, 07:34:20 PM
 #44

John, if these problems are as classic as you claim, then surely their solutions are also classic, and will be straightforward to implement.

What then is the issue here?

The most classic part is Human Nature: After an extreme boom (greed) there is always extreme bust (fear)
Bitcoin will be fine, but short to medium-term you can expect to eventually see BTC for ~$2.50 (give or take 100% in either direction)

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finack
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June 24, 2011, 07:34:26 PM
 #45

That just screams "bubble" to anyone who's seen one. Bear in mind that the Bitcoin system generates no revenue. All funds must come from new investors.

I felt like responding to thank you for making a thoughtful post, if for no other reason than you're predictably getting the broad dismissal from the bulls. I definitely agree with analysis of the fundamentals of the market, though one thing struck me as I visited your site:

Quote from: downside
We predicted the mortgage crisis in October 2004, again in 2006, again in 2007, and said it was here in March 2008.

This rather plays in to the criticism of many long term bears, in that it's said if you predict a big crash, correction or recession sooner or later you're bound to be right at some point and you can accept your 15 minutes of fame. Trying to act on those regular predictions can be much riskier though, as the classic quote goes "Markets can remain irrational a lot longer than you and I can remain solvent". Which isn't to say that I suggest speculating in bitcoins or participate in it myself, merely to suggest that bubbles are much easier to identify than to time. If you accept a rather straightforward analysis that there is no fundamental value represented by bitcoins and that it's entirely priced by speculation, then that suggests the bubble has been ongoing for quite some time and could easily hold out longer than the recent top might make it seem.

It's amusing watching the Bitcoin community flail around. Most of the classic financial disasters are being re-enacted in miniature. We have pyramid schemes, tulipomania, bucket shops, pump and dump... This would be fun if it were an MMORPG.

I agree that this makes the entire phenomenon fascinating. The communities openness to such transparent hucksterisms like the pyramid schemes seems to speak volumes about the main interests in bitcoins. And while I'm not schooled in such things, this also seems to be a rather unique twist on the pump in dump where there appears to be no central actor with the pumping actually done by all the market participants themselves through some kind of ad hoc understanding. It really feels to me like it's been taken hold at least in part by penny or otc manipulators. Very interesting to watch, seldom do you get such a raw view of it because of the legal implications. I just hope nobody is risking their retirement of college fund.

Cheers,
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June 24, 2011, 07:34:33 PM
 #46


You do know that in order to be taken seriously outside of the geek circles, Bitcoin needs people like the OP, right?

Understanding the technology does not a viable currency make.

Yes, but we don't need people like the original poster who provide a chart with nothing to back it up. Oh, and an 'investment pro' that thinks currency has 'revenue'. You've got to be kidding me. Sounds more like someone got out of business school and is a junior analyst somewhere...

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June 24, 2011, 07:35:28 PM
 #47

I think people who predict failure can never see past that.
True because then it would mean that they have to admit that they're wrong. When I'm wrong I admit it, but man people outside of the IT world NEVER admit their wrong. And sometimes they don't even shut up knowing that their wrong lol. Look at the tea-baggers


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June 24, 2011, 07:38:15 PM
 #48

I'm not an economist bs-filled or an economist at all, sorry for that, however I'm connected to web developing and even not being a designer. Man! You're even using Comic Sans for your headers... I really don't know what can be more amateurish than that, except maybe one or two marquees rolling without any relevant information.
Maybe the thread title should read: "Watching finance types with amateur websites fail"   Cheesy
BCEmporium
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June 24, 2011, 07:40:44 PM
 #49

Quote from: downside
We predicted the mortgage crisis in October 2004, again in 2006, again in 2007, and said it was here in March 2008.
Grin Grin Grin Grin Grin

Ok, you kept trying and got it. By the same logic I can predict oil to fall to 5 USD or less, as eventually people will find technological alternatives and will give it no more use. Just that I would be saying this every year for 20 years(?) until eventually get it right.
Anduril
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June 24, 2011, 07:41:25 PM
 #50

John, if these problems are as classic as you claim, then surely their solutions are also classic, and will be straightforward to implement.

What then is the issue here?

That you may not like the solutions.
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June 24, 2011, 07:42:06 PM
 #51

I'm John Nagle, the person behind Downside. Over the last decade, we predicted, well in advance, the dot-com crash (company by company), the oil spike, and the mortgage crisis. We've also explored some financial scams - Enron, Madoff, and their ilk. Downside was written up in Business Week, CNN, Fortune, etc. Our track record speaks for itself.

I've been looking at the Bitcoin world. It's amusing watching the classic forms of financial trouble happen in miniature. I have no financial position in Bitcoins, so I'm looking at this neutrally.

So what's wrong in the Bitcoin world?

First, it looks like a bubble. Here's Bitcoin before the Mt. Gox debacle:



That just screams "bubble" to anyone who's seen one. Bear in mind that the Bitcoin system generates no revenue. All funds must come from new investors. This is not like a startup company. This is a zero-sum game. If you've been in the game for half an hour and you don't know who the patsy is, you're the patsy.

Second, Bitcoin is supposed to be a currency, but it's actually a speculative vehicle. If Bitcoin were a successful currency, there would be many merchants using it for small transactions, with perhaps some speculation on the side. In practice, the speculation dominates.  This is the real problem with Bitcoin. If it had been launched as the payment system for something like music tracks or smartphone apps, it might have worked out better.  Or not; "Digicash" and "Beenz", the two previous rounds of this idea, also tanked.

Third, the organizations in Bitcoin's ecology are very flaky. Mt. Gox is two guys in Tokyo who are in way over their heads. We don't know much about Tradehill, which is somewhere in Chile. Neither of these "exchanges" has a published business address, a Dun and Bradstreet rating, published audits, or regulation as a bank or money transfer firm. Yet they're acting as depository institutions for sizable funds belonging to others.

It's amusing watching the Bitcoin community flail around. Most of the classic financial disasters are being re-enacted in miniature. We have pyramid schemes, tulipomania, bucket shops, pump and dump... This would be fun if it were an MMORPG.
I will redo your entire website for you, custom design and everything. Check my work at http://tweetforum.com . I will ONLY take BTC's and I will only charge you 10BTC for this (which is less than 200 bucks for someone redoing your whole site.)Honestly it looks like a joke, and undermines the entire validity of your post. Let me show you why BTC's are valuable.. I put my time AND money where my mouth is.

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finnthecelt
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June 24, 2011, 07:44:01 PM
 #52



If you look at Bitcoins as analogous to the Gold Rush of 1849, it might provide a better parallel.  Early miners made a lot of money, while later miners "made a living".  If you had never heard of a gold rush, and 1849 hit, and you heard of a lot of people getting rich on gold, you (as an uneducated person) might be tempted to buy gold.  This, of course, would be silly, except that a lot of people buying gold drives the price of gold up, and so as gold gets attention, people see that others have made money buying gold, and so you get the bubble.  People buying Bitcoin is a lot like people buying gold in 1849 - it doesn't make a lot of sense, unless you believe that it either is a) a good store of wealth, or b) going to rise in utility /value in the future.

Bitcoin is going to get more attention primarily because it has solved a problem that has never been solved before - Beenz and Digicash didn't solve it.  Paypal and Mastercard didn't solve it.  Cash doesn't solve it.  Bitcoin has a very clever solution to a very difficult problem.  And it's the first to solve it.  So Bitcoin is going to get attention.  And with attention comes investment.  And with investment comes a rise in value.  As long as Bitcoin continues to GROW in the attention it gets, chances are good that people will try to figure out how to invest in it.  And to see that there were only 61,000 accounts in the Mt. Gox leaked database, that shows how truly tiny the Bitcoin community is.  In fact, there were less than 10,000 prior to May 15th or so.


This is an excellent post. Very well said. I'll be saving this one as well...
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June 24, 2011, 07:46:52 PM
 #53

We are creating an entirely new web of powerful encrypted transactions that not even the best hackers in the world can crack. Tell me how that's not value people?

I posted this elsewhere, but it bears repeating:



The technical hubris in this thread is quite amusing.
Nagle
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June 24, 2011, 07:47:58 PM
 #54

 But to compare it to Digicash and Beenz really shows that you haven't done your homework.  Probably a lot like predicting "the dot-com crash over the last Decade".  (That would have been a little more impressive if done in 1998, and not over the last decade.)
Look at the dates on Downside.com's "deathwatch".  Deathwatch ran from 2000-2001, starting at the peak of the dot-com boom. We predicted the crash when others were hyping the boom.
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Bitcoin is going to get more attention primarily because it has solved a problem that has never been solved before - Beenz and Digicash didn't solve it.  Paypal and Mastercard didn't solve it.  Cash doesn't solve it.  Bitcoin has a very clever solution to a very difficult problem.  And it's the first to solve it.  So Bitcoin is going to get attention.  And with attention comes investment.  And with investment comes a rise in value.  As long as Bitcoin continues to GROW in the attention it gets, chances are good that people will try to figure out how to invest in it.  And to see that there were only 61,000 accounts in the Mt. Gox leaked database, that shows how truly tiny the Bitcoin community is.  In fact, there were less than 10,000 prior to May 15th or so.
Digicash came close. They had an anonymous digital currency. The technology was good enough. but David Chaum, who owned the technology, botched several potential big deals, including ones with Microsoft and Visa.

How issuance of a digital currency should work isn't clear. Digicash and Beenz were centralized.  Bitcoin is based on compute work, with a heavy bias towards early adopters. That doesn't seem to be leading to wide adoption as a transactional medium.  Beenz got much further in adoption, and it tanked. If coins were somehow generated by doing useful work, that would be better.
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Currency speculation isn't the best way to make money in Bitcoin.  Building the infrastructure is.  (There's a reason why the remnants of the Gold Rush of 1849 are Wells Fargo and Levis Jeans.  
Ah, the Big Four. Huntington (hardware), Stanford (railroads), Hopkins (hardware), and Crocker (iron). The real remnant of the Gold Rush is the Southern Pacific Railroad.

There's something to be said for that.  

The experience of PayPal is significant.  PayPal is all infrastructure.  PayPal is really a security company. They started by building authentication tokens. Money transfer came later. Most of what PayPal does is deal with security problems. Processing a successful transaction is very cheap. Dealing with trouble requires call centers, investigators, and substantial automated systems looking for fraud. PayPal originally offered peer to peer transfers, but the security problems associated with that were too great.

The Mt. Gox debacle indicates the same may be true for Bitcoin.

Quote
If Bitcoin reaches Paypal's level of success in a decade, then you can do the math - there's a limited number of Bitcoins, and that number needs to support the sort of environment that Paypal supports.  So that means they will be worth over $100 in about 7.5 years.   Not thousands.  Not mllions.  But between $100 and $200.

August 16, 2001: "If you've earned any Beenz on your travels around the Web, you'd better hurry up and spend them." "Internet surfers have only 10 days to use up their Beenz after the company announced Thursday that its online operations will cease Aug. 26. Any outstanding Beenz will be worthless after that date. A short message on the Beenz Web site announced the close and said any Beenz in a member's account after Aug. 26 "will be invalidated by Beenz.com, and the member will not be entitled to any compensation of any kind for such invalidated Beenz."

Although Bitcoin is distributed as to generation and transfer, it's centralized as to exchanges.  A sizable level of activity is required for an exchange to have market depth. So there's a network effect which tends to keep the number of exchanges down. (Yes, potentially there could be a combined ticker and a consolidated limit order book. Those only work when there's a separation between brokers and exchanges.) So, if Bitcoin winds down, it will be because it becomes illiquid.
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June 24, 2011, 07:51:58 PM
 #55

We are creating an entirely new web of powerful encrypted transactions that not even the best hackers in the world can crack. Tell me how that's not value people?

I posted this elsewhere, but it bears repeating:



The technical hubris in this thread is quite amusing.
Heh, good point.  But instead of a $5 wrench, you just use OS or website exploits.
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June 24, 2011, 07:55:42 PM
 #56

Heh, good point.  But instead of a $5 wrench, you just use OS or website exploits.

Indeed. BTC currently is only as strong as the exchanges (because there is hoarding and no liquidity), and let's face it, they are amateurish at best (and no, I'm not equating BTC with Mtgox, but the others do not fill me with confidence either).
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June 24, 2011, 07:56:04 PM
 #57

Maybe the thread title should read: "Watching finance types with amateur websites fail"   Cheesy
Was my first thought as well 'is he talking about himself?'.

The points in this topic have been discussed to death many times, I don't understand why people keep putting up with it.

Both people plugging bitcoin and people like you that try to talk it down have their own agendas. Don't tell me that you posted this out of altruism to warn us :')

Bitcoin Core developer [PGP] Warning: For most, coin loss is a larger risk than coin theft. A disk can die any time. Regularly back up your wallet through FileBackup Wallet to an external storage or the (encrypted!) cloud. Use a separate offline wallet for storing larger amounts.
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June 24, 2011, 07:59:43 PM
 #58

August 16, 2001: "If you've earned any Beenz on your travels around the Web, you'd better hurry up and spend them." "Internet surfers have only 10 days to use up their Beenz after the company announced Thursday that its online operations will cease Aug. 26. Any outstanding Beenz will be worthless after that date. A short message on the Beenz Web site announced the close and said any Beenz in a member's account after Aug. 26 "will be invalidated by Beenz.com, and the member will not be entitled to any compensation of any kind for such invalidated Beenz."

That's a problem with CENTRALIZED ISSUED CURRENCIES, actually you can see that to happen with US Dollar, Euros or any fiat/country currency around the World. Bitcoin is immune to that, nobody can say from date X on you can't use bitcoins.
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June 24, 2011, 08:01:05 PM
 #59

August 16, 2001: "If you've earned any Beenz on your travels around the Web, you'd better hurry up and spend them." "Internet surfers have only 10 days to use up their Beenz after the company announced Thursday that its online operations will cease Aug. 26. Any outstanding Beenz will be worthless after that date. A short message on the Beenz Web site announced the close and said any Beenz in a member's account after Aug. 26 "will be invalidated by Beenz.com, and the member will not be entitled to any compensation of any kind for such invalidated Beenz."

That's a problem with CENTRALIZED ISSUED CURRENCIES, actually you can see that to happen with US Dollar, Euros or any fiat/country currency around the World. Bitcoin is immune to that, nobody can say from date X on you can't use bitcoins.

Or that you CAN use it Smiley

Be fearful when others are greedy, and greedy when others are fearful.

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June 24, 2011, 08:01:31 PM
 #60

I like how many these posts are just flaming the guy who started the thread. Great community!
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