Bitcoin bubble

[Usine]

I agree that some stocks have value related to the valuation of the companies, but some are hugely inflated, and are based on future gains (eg Tesla). Similar to Bitcoin - people are speculating on the future value of the asset.

Also there are other markets which have very low, if not non-existent "backing" that sustains their value, such as fiat currencies and gold. Yes, gold has some industrial uses but its high value is based mostly on belief. And yes, you can pay taxes in fiat but its value too, is based on collective belief.

Bitcoin is the same - it has no intrinsic value per se (really the only things that have true intrinsic value IMO are things like food and water), but people's collective belief gives it value, because so many people understand the implications of such a technology.

If the bubble pops (if it is a bubble), then there will be plenty of people buying back in at lower prices and sustaining the value - it's not going away without something drastic happening, such as a flaw in the protocol - and this becomes less and less likely as time goes on.

Stock markets also rely on sentiment and they are priced in fiat currency. What happens when "sentiment" changes about the value of that?

The longer they take to catch up the better for those of us buying it now.

Oh god, you just said "fiat currency" in the same breath as positive comments about crypo-currencies.

HAHAHAHAHAHAHAHAHA!

Bitcoin IS an asset and has no debts.
Its trading performance is public.
Nor does it give a damn about your "trajectory forecasts".

As for it having no value, talk to the citizens of countries with no banking services, collapsing economies and hyperinflation in Africa, Asia and South America.
Ask the miilions receiving remittances.

"About a third of the customers queuing at La Maison du Bitcoin's teller windows in Paris aren't speculating on the value of the cryptocurrency. They're sending digital money home to Africa.
"In many countries in Africa, there are far more cellphones than bank accounts," said Manuel Valente, co-founder of La Maison. "For bitcoin, all you need is a phone."

https://www.brisbanetimes.com.au/business/investments/bitcoin-has-become-a-safe-haven-currency-in-some-of-the-worlds-volatile-places-20171128-gztz2q.html

[Kesecer]

I agree that some stocks have value related to the valuation of the companies, but some are hugely inflated, and are based on future gains (eg Tesla). Similar to Bitcoin - people are speculating on the future value of the asset.

Also there are other markets which have very low, if not non-existent "backing" that sustains their value, such as fiat currencies and gold. Yes, gold has some industrial uses but its high value is based mostly on belief. And yes, you can pay taxes in fiat but its value too, is based on collective belief.

Bitcoin is the same - it has no intrinsic value per se (really the only things that have true intrinsic value IMO are things like food and water), but people's collective belief gives it value, because so many people understand the implications of such a technology.

If the bubble pops (if it is a bubble), then there will be plenty of people buying back in at lower prices and sustaining the value - it's not going away without something drastic happening, such as a flaw in the protocol - and this becomes less and less likely as time goes on.

Stock markets also rely on sentiment and they are priced in fiat currency. What happens when "sentiment" changes about the value of that?

I most certainly did, keep laughing till you are broke.

[Amial]

I agree that some stocks have value related to the valuation of the companies, but some are hugely inflated, and are based on future gains (eg Tesla). Similar to Bitcoin - people are speculating on the future value of the asset.

Also there are other markets which have very low, if not non-existent "backing" that sustains their value, such as fiat currencies and gold. Yes, gold has some industrial uses but its high value is based mostly on belief. And yes, you can pay taxes in fiat but its value too, is based on collective belief.

Bitcoin is the same - it has no intrinsic value per se (really the only things that have true intrinsic value IMO are things like food and water), but people's collective belief gives it value, because so many people understand the implications of such a technology.

If the bubble pops (if it is a bubble), then there will be plenty of people buying back in at lower prices and sustaining the value - it's not going away without something drastic happening, such as a flaw in the protocol - and this becomes less and less likely as time goes on.

Stock markets also rely on sentiment and they are priced in fiat currency. What happens when "sentiment" changes about the value of that?

I most certainly did, keep laughing till you are broke.

Care to comment on derivatives?

[Bamel]

I agree that some stocks have value related to the valuation of the companies, but some are hugely inflated, and are based on future gains (eg Tesla). Similar to Bitcoin - people are speculating on the future value of the asset.

Also there are other markets which have very low, if not non-existent "backing" that sustains their value, such as fiat currencies and gold. Yes, gold has some industrial uses but its high value is based mostly on belief. And yes, you can pay taxes in fiat but its value too, is based on collective belief.

Bitcoin is the same - it has no intrinsic value per se (really the only things that have true intrinsic value IMO are things like food and water), but people's collective belief gives it value, because so many people understand the implications of such a technology.

If the bubble pops (if it is a bubble), then there will be plenty of people buying back in at lower prices and sustaining the value - it's not going away without something drastic happening, such as a flaw in the protocol - and this becomes less and less likely as time goes on.

Stock markets also rely on sentiment and they are priced in fiat currency. What happens when "sentiment" changes about the value of that?

I most certainly did, keep laughing till you are broke.

Care to comment on derivatives?

I can see the sterling being 1.2 per dollar but i can also see it being 300 for a dollar. It is faith that makes the UK a developed economy. In a coordinated financial attack we can become as poor as an African nation

[Rludd]

Ooh yes!

The fundamental principles of derivatives are fine, such as using forwards, options and swaps to hedge against risk. They become an insurance policy flattening out any abrupt change in the markets. Arguably anyone with a fixed rate mortgage has a simple derivatives play.

The problem is that it becomes speculative and a bubble builds. When Mr Hamanaka at Sumitomo Bank effectively owned over 60% of the world’s copper through derivative contracts the $1.8bn loss was no surprise; the same for the “London Whale” at JP Morgan; Long Term Capital Management; and credit derivatives at the heart of the global banking crisis.

As a result, derivatives become utterly poisonous. With £1.2 quadrillion (£1,200 trillion) of outstanding contracts it is also utterly terrifying. I would stop speculative trading on derivatives.

The same applies to crypto currencies. Fundamentally they should and will become a force for good and for change but they are being abused for speculation and greed.

[Renr]

Ooh yes!

The fundamental principles of derivatives are fine, such as using forwards, options and swaps to hedge against risk. They become an insurance policy flattening out any abrupt change in the markets. Arguably anyone with a fixed rate mortgage has a simple derivatives play.

The problem is that it becomes speculative and a bubble builds. When Mr Hamanaka at Sumitomo Bank effectively owned over 60% of the world’s copper through derivative contracts the $1.8bn loss was no surprise; the same for the “London Whale” at JP Morgan; Long Term Capital Management; and credit derivatives at the heart of the global banking crisis.

As a result, derivatives become utterly poisonous. With £1.2 quadrillion (£1,200 trillion) of outstanding contracts it is also utterly terrifying. I would stop speculative trading on derivatives.

The same applies to crypto currencies. Fundamentally they should and will become a force for good and for change but they are being abused for speculation and greed.

You’re completely missing the point. I agree that a global crypto currency with no or minimal charges would be a real asset to the world. However Bitcoin isn’t it. In countries where there is hyperinflation they begin trading in USD or Euros, a speculative currency like Bitcoin, which fluctuates so wildly is no better than a local currency.

Services like M-Pesa in Kenya have proven a lot more promising for non-cash transactions. https://en.m.wikipedia.org/wiki/M-Pesa

[Usine]

Ooh yes!

The fundamental principles of derivatives are fine, such as using forwards, options and swaps to hedge against risk. They become an insurance policy flattening out any abrupt change in the markets. Arguably anyone with a fixed rate mortgage has a simple derivatives play.

The problem is that it becomes speculative and a bubble builds. When Mr Hamanaka at Sumitomo Bank effectively owned over 60% of the world’s copper through derivative contracts the $1.8bn loss was no surprise; the same for the “London Whale” at JP Morgan; Long Term Capital Management; and credit derivatives at the heart of the global banking crisis.

As a result, derivatives become utterly poisonous. With £1.2 quadrillion (£1,200 trillion) of outstanding contracts it is also utterly terrifying. I would stop speculative trading on derivatives.

The same applies to crypto currencies. Fundamentally they should and will become a force for good and for change but they are being abused for speculation and greed.

You’re completely missing the point. I agree that a global crypto currency with no or minimal charges would be a real asset to the world. However Bitcoin isn’t it. In countries where there is hyperinflation they begin trading in USD or Euros, a speculative currency like Bitcoin, which fluctuates so wildly is no better than a local currency.

Services like M-Pesa in Kenya have proven a lot more promising for non-cash transactions. https://en.m.wikipedia.org/wiki/M-Pesa

These are really good points, especially about gold. It was one of the reasons Gordon Brown sold it as it provided no return, such as an interest payment.

I agree about companies like Tesla too where valuations are completely unrelated to financial performance. In Tesla’s case the potential is clear yet with Snap Inc it’s clearly not. Yet there is at least some justification for share ownership and price. I just believe that crypto currency pricing is irrational.

I should point out that I’m involved in a consortium building a crypto-currency based trading platform for a market that has problems accessing finance and banking services. When we’ve compiled the risk profile the biggest issue that would lead to failure is speculation. People making a living and buying services want price stability.

[Kesecer]

Bitcoin is used for extortion by corrupt individuals, and should not be recognised as legal tender. The sooner the bubble is burst, the better.

[Amial]

Bitcoin is used for extortion by corrupt individuals, and should not be recognised as legal tender. The sooner the bubble is burst, the better.

Unlike USD and GBP, which has never been used for illegal activity?

[Bamel]

Bitcoin is used for extortion by corrupt individuals, and should not be recognised as legal tender. The sooner the bubble is burst, the better.

Unlike USD and GBP, which has never been used for illegal activity?

So is gold, so are diamonds and so is cash - US$, Euros, etc. Must we stop using that too and make it illegal?
Everytime you use a banknote to buy something at a supermarket, somebody else is using the same kind of banknotes to buy drugs, arms or bribe someone.

[Rludd]

Bitcoin is used for extortion by corrupt individuals, and should not be recognised as legal tender. The sooner the bubble is burst, the better.

Unlike USD and GBP, which has never been used for illegal activity?

So is gold, so are diamonds and so is cash - US$, Euros, etc. Must we stop using that too and make it illegal?
Everytime you use a banknote to buy something at a supermarket, somebody else is using the same kind of banknotes to buy drugs, arms or bribe someone.

Used for extortion?! That's news to me.

You're thinking of banks and fiat currencies.

[Stianyd]

The laws of technology suggest there to be a cut-off date to this scam, the laws of history suggest this to be a scam, the laws of concept suggest this to be worse than fiat... does reality even sink in or the transaction fees not expensive enough or the process time not slow enough? To further that the big boys has intervened... so that romanticised story of Satoshi can burn since sheep don't care to understand whilst speculators don't care, this is going to kill Bitcoin and take a load of that market cap with it.

The technology is going to be a part of the future but that doesn't mean a brand will be... and at those prices you have better chance to speculate at the roulette table.

“Stocks take an escalator up, and an elevator down”

[Giric]

The big question is whether it will become mainstream. Like any currency, it's "worth" something only when sufficient numbers of people think it is. It will be interesting to see establishment reaction if it becomes a genuine alternative to sterling.

[Aneelal]

No part of the financial system is exposed by Bitcoin, and it’s behaviour means it never will be. It’s impossible to price in it for more than a few minutes, so it just can’t be used contractually in normal business. To hedge it, you would have to revert to normal currency, which sort of defeats the purpose, no?
Look at countries whose currencies got out of control like Argentina for a while or Venezuela. Everything ended up priced in dollars, because otherwise external business is impossible.
And no country is going to accept it has pay some random people a fortune for use of a currency it didn’t create. I see the Bank of England is looking into creating its own blockchain currency. And it won’t require huge amounts of computer power, it will just be created and registered.

[pri3oner]

Look at American economic system.  USA prints dollars while having huge bebt. I can call it the biggest bubble ever but it's still alive.
Crypto is under this risk too cause it's novice instead of "default" economics but it grows faster. So risks are huge too.

[kalodu]

Bitcoin probably is in a bubble and will see a big crash eventually, could keep growing until $20k-$30k before it happens though. It doesn't matter however if it's in a bubble or if its about to crash as history has shown it will go up in the long run either way, the safe bet is to buy and hold. If you wish to cash out some gains now that is also good for financial security but if you don't need that money its usually a safe bet to just hold on to your coins and come back to them in several years time.

[bitcoin.podcast]

If bitcoin was a bubble, it would have burst long ago. A bubble can not live that long. Bitcoin is a serious system that can improve the lives of many people

[Karakyli]

Recently, bitkoyn really behaves like a classic financial bubble. His rapid growth in the price is caused by the rush demand of people who invest in him to get a good profit by raising his rate. Increase in demand, in turn, attracts again, increasing its rate. If bitkoyin had improved over this period, became safer to use, acquired new useful functions, became more convenient, it would be quite normal and logical. However, it rises in price not due to the growth of its intrinsic value, but simply due to the demand for it, which does not correspond to the actual increase in its value. Thus, it behaves like a normal bubble.

[KLACC]

Yes, bitcoin is a bubble and now it is heavily inflated. Most likely soon we will hear how it bursts. But some time will pass and the BTC will be puffed up again. This is for the crypto currency norm. It is necessary to use this

[icanscript]

Bitcoin is not a bubble.
Bitcoin-currency 21 centuries. It is the same as our life.
The bitcoin rate rose to $ 13,500.