Why Bitcoin will collapse in price.

[toknormal]

I get the impression that it comes down to politics.  Does a government control its central bank or vice versa?  If you believe the first part, you can hope that your elected officials will support bitcoin because all of the good things *they* say about it.  If you believe vice versa, the current president whose real boss is the Federal Reserve will see bitcoin as a problem to mitigate.

The technology behind cryptocurrencies and it's value as a financial tool to society has nothing to do with politics, tulips, its market price or any other of these arbitrary and ill-defined criteria constantly being trawled up in these debates.

In particular the comparison with tulips and constant obsession with it's market price is a total distraction from the technical innovation which cryptocurrencies bring to modern finance which is clear and unambigious.

That is that they facilitate direct asset transfers between peers *without the need for a counterparty*.

The only "tool" that society has had up till now which can do this is Gold. It's not a question of value and whether or not Bitcoin / Gold etc have *value*. Its a question of *function*. Monetary function.

For example, I cannot just "email" you electronically  $1000. I need to go to a bank and ask them to do it. Even when the bank does it, they are not actually "transferring" anything of value - they are just changing a number in one account and incrementing it in another. The number that ends up in the receivers account only has "value" because of the counterparty endorsement it has. It has no intrinsic value of its own - if it was just a number I typed into a spreadsheet it would have no market value.

Gold on the other hand, has a market value whether it's sitting in a bank vault or buried in a mountain. It does not require counterparty endorsment - only market endorsement because it is a non-counterfeitible generic form of money.

Bitcoin is likeways independent of counterparty endorsement. I *can* email you (or transfer to your "wallet") $1000 in Bitcoin without requiring a counterparty. It therefore performs a monetary function - the same one that gold does - and that is why it has market value, the same as gold did. Porc's nonsense about shiny metals and attractiveness are not the reason Gold can function as a store of value. The reason for that is that is has the right properties that enable it to perform a certain required function in a non-barter economy.

An electronic trading platform on the scale of the internet has a need for a form of money that can perform the same function that gold did in the pre-electronic era. Public-Private key cryptology is the obvious basis for such a technology and hence cryptocurrencies were born.

Again, cryptocurrency's viability has nothing to do with their market "value" - it has to do with their technical function. Markets later decide what that function is worth to the economy. Please drop all this nonsense about price, tulips, crashes and shininess of metals - the macro economic impact of cryptocurrencies on the future of finance goes way beyond any of that and will likely be felt for centuries.

I can assure you, the clocks will not be turning back now that this stuff has been invented.

[DoomDumas]

"monopoly money" (fiat), I mean worthless piece of paper and number in computer, printed at will around the world..
This shit has to go, and will colapse by itself by hyperinflation and a lot of suffering for humans of the planet.
The mathematic behind Fiat is doomed to fail, inflation and bankrupcy are build into this unsustainable system.

After the historic world-fiat colapse to come, peoples will be more interrested in a much much better mean of exchange, wich have better matematic principle.

Bitcoin will not worth fiat anymore, they will worth buying power.

I bet fiat colapse will happen before bitcoin collapse, so there shoul not be any major Bitcoin collapse !

[porc]

I get the impression that it comes down to politics.  Does a government control its central bank or vice versa?  If you believe the first part, you can hope that your elected officials will support bitcoin because all of the good things *they* say about it.  If you believe vice versa, the current president whose real boss is the Federal Reserve will see bitcoin as a problem to mitigate.

The technology behind cryptocurrencies and it's value as a financial tool to society has nothing to do with politics, tulips, its market price or any other of these arbitrary and ill-defined criteria constantly being trawled up in these debates.

In particular the comparison with tulips and constant obsession with it's market price is a total distraction from the technical innovation which cryptocurrencies bring to modern finance which is clear and unambigious.

That is that they facilitate direct asset transfers between peers *without the need for a counterparty*.

The only "tool" that society has had up till now which can do this is Gold. It's not a question of value and whether or not Bitcoin / Gold etc have *value*. Its a question of *function*. Monetary function.

For example, I cannot just "email" you electronically  $1000. I need to go to a bank and ask them to do it. Even when the bank does it, they are not actually "transferring" anything of value - they are just changing a number in one account and incrementing it in another. The number that ends up in the receivers account only has "value" because of the counterparty endorsement it has. It has no intrinsic value of its own - if it was just a number I typed into a spreadsheet it would have no market value.

Gold on the other hand, has a market value whether it's sitting in a bank vault or buried in a mountain. It does not require counterparty endorsment - only market endorsement because it is a non-counterfeitible generic form of money.

Bitcoin is likeways independent of counterparty endorsement. I *can* email you (or transfer to your "wallet") $1000 in Bitcoin without requiring a counterparty. It therefore performs a monetary function - the same one that gold does - and that is why it has market value, the same as gold did. Porc's nonsense about shiny metals and attractiveness are not the reason Gold can function as a store of value. The reason for that is that is has the right properties that enable it to perform a certain required function in a non-barter economy.

An electronic trading platform on the scale of the internet has a need for a form of money that can perform the same function that gold did in the pre-electronic era. Public-Private key cryptology is the obvious basis for such a technology and hence cryptocurrencies were born.

Again, cryptocurrency's viability has nothing to do with their market "value" - it has to do with their technical function. Markets later decide what that function is worth to the economy. Please drop all this nonsense about price, tulips, crashes and shininess of metals - the macro economic impact of cryptocurrencies on the future of finance goes way beyond any of that and will likely be felt for centuries.

I can assure you, the clocks will not be turning back now that this stuff has been invented.

1) "facilitate asset transfers between peers without the need of counterparty"

BTC is not an asset as it has no utility. That I can transfer it does not make it money. Because money has to actually be valuable itself, otherwise no value can change hands.

2) "The only "tool" that society has had up till now which can do this is Gold. It's not a question of value and whether or not Bitcoin / Gold etc have *value*. Its a question of *function*. Monetary function."

The function he described in 1) is not fulfilled by the Bitcoin network, as transfers and even between individuals without use of a bank (which is risky), but it transfers NOTHING. And that is the problem. BTC has no intrinsic value. Its transfer is not useful as nobody will accept it.

He basically is saying that money is anything that is scarce and can be transferred. That is totally incorrect. Money commodities themselves need to have value.

Also to function as a store of value, it needs to be predictable. BTC has no value and nobody knows if litecoin might be used tomorrow and something else the next day. All of the wealth people stored in bitcoin (for example your dad who worked hard his entire life) would vanish, once a new coin comes along.

3)  "Even when the bank does it, they are not actually "transferring" anything of value - they are just changing a number in one account and incrementing it in another. The number that ends up in the receivers account only has "value" because of the counterparty endorsement it has."

No the bank transferred dollars. They have no intrinsic value but I can exchange them for something because government forces the shop owner into accepting nothing (dollar).
Counterparty endorsement of the bank does not give dollars "value".

4) "Bitcoin is likeways independent of counterparty endorsement. I *can* email you (or transfer to your "wallet") $1000 in Bitcoin without requiring a counterparty."

Yes we can exchange nothing directly I get it. But what we exchanged only has a price, because we agree to exchange nothing for something. However this agreement is artificial as NOBODY WANTS BITCOIN FOR ITSELF. GET IT IN YOUR HEAD. NOBODY WANTS A BITCOIN. THAT WE CAN TRANSFER NOTHINGS NOBODY WANTS between each other in a clever way does not CHANGE that fact.

And we HUMANS always WANTED GOLD FOR ITSELF. THIS IS THE GUARANTEE GOLD HAS: IT SAYS I WILL ALWAYS BE BEAUTIFUL AND PEOPLE WILL ALWAYS WANT ME.

BITCOIN HAD NOT SUCH GUARANTEE. Get it in your head. BITCOIN ONLY HAS A PRICE BECAUSE WE AGREE THAT NOTHING IS SOMETHING. Without this agreement BTC is useless and thus the network is useless. Because the entire value of the bitcoin network is dependent on an artificial agreement we cant compare it to gold, as our brains always loved gold for ITSELF. There is not artificial agreement.

You totally failed to see the real ENDORSEMENT that stands behind gold: REALITY! Reality that humans like shinny things thus will give you something they value for shinny things. Thus gold can be used as a store of value and medium of exchange. NO HUMAN wants A BITCOIN BTCBTCBTCBTCBTCBTCBTC

[flynn]

Right.




Massive FAIL

[toknormal]

You totally failed to see the real ENDORSEMENT that stands behind gold: REALITY! Reality that humans like shinny things thus will give you something they value for shinny things

Sorry porc, that's not the "real" endorsment that stands behind gold at all.

At any rate, it doesn't work in modern trading environments because it's a hunk of useless metal that can't travel through wires.

It looks to me like you're trying to convince yourself that BTC has no "value" and not doing a very good job of it. It constantly amazes me how people can keep banging their head off the ***it has no value, it's all an illusion*** wall while year after year markets continue to confound this appraisal.

Be advised that BTC is now trading for around $1000 PER Bitcoin. If you think that's "nothing", be my guest but the market is not conforming to the porc dictionary of value-based commodities. Maybe it'll drop to zero one day and then you'll be vindicated but don't hold your breath or you'll be doing a lot of typing on forums like this one.

Maybe "getting a life" might be a better option in the meantime.

[toknormal]

Everybody watch this.

All is explained.

http://www.youtube.com/watch?v=qHUPPYzzZrI

[diedicar]

 bitcoin is a shining thing.
Let's try to understand  why people like shining objects. I think is radically a form of comunication: jewels like wampum shells, are worn so you can see it from far. If you have a commodity which is visible from far an so is possible to desire it for somebody who looks, you'are just advertising for it. Maybe your advertising works becaus you are a powerful, violent king, but maybe advertising needs no testimonial. If you adveritse for a commlodity, this commodity gets  medium of exchange value. Bitcoin is an internet based viral advertising campaign for a commodity, so it's a very shining, visible from far object. That's why (given the two other proprieties of rareness and indestructibility ) it's a good store of value.

[deisik]

bitcoin is a shining thing.
Let's try to understand  why people like shining objects. I think is radically a form of comunication: jewels like wampum shells, are worn so you can see it from far. If you have a commodity which is visible from far an so is possible to desire it for somebody who looks, you'are just advertising for it. Maybe your advertising works becaus you are a powerful, violent king, but maybe advertising needs no testimonial. If you adveritse for a commlodity, this commodity gets  medium of exchange value. Bitcoin is an internet based viral advertising campaign for a commodity, so it's a very shining, visible from far object. That's why (given the two other proprieties of rareness and indestructibility ) it's a good store of value.

I wouldn't actually call bitcoin is a shining thing. On the contrary, it allows you to hide your money and your identity (though your mileage may vary) from some prying eyes and ears...

"Money loves silence, and big money loves deathly silence"

[porc]

I want to end my contribution to this thread with this post (that I have posted in my other threads already, but also sums up the last pages of this thread, ,the first pages being intervention and regulation by government):


Remember: Intrinsic value is one of the essential properties of money, that allows it to fulfill its functions. Without intrinsic value, gold could not fulfill its monetary role. You want to seperate golds intrinsic value from its monetary value, however that is impossible, as without intrinsic value gold has NO monetary value. The reason you insist on seperating these two aspects of gold, is because you want to believe that bitcoin can function as money despite its lack of intrinsic value.

Now lets look at the functions of money, in order to appreciate, why it HAS to have intrinsic value.

1) Store of value.

 To act as a store of value, these forms must be able to be saved and retrieved at a later time, and be predictably useful when retrieved. WIKI

Now what would happen, if in future nobody would accept my gold as payment for goods and services. Well, I could make jewelry out of it and wear that jewelry or I could decorate my house with it.

What happens when nobody accepts my BTCs? Well, I could do ABSOLUTELY NOTHING with my BTCs in this case. So already we see, that bitcoin actually has enormous counterparty risk, as it is only worth what somebody is willing to pay for it. If nobody wants my BTCs I am left with ABSOLUTELY NOTHING (i.e. bitcoin).

Now obviously I want to have a high degree of certainty, that somebody will want to exchange my store of value with other valuable things, as otherwise I would have an excess of one resource, that I would be stuck with.

What is golds guarantee in this regard? Well, it says: I am beautiful, people have loved my look since dawn of man, and have thus always been willing to accept me as payment for other valuable goods and services. Thats REAL backing.

What is BTC guarantee in this regard? Well it says: I am worth nothing, but people have agreed to exchange me for something, because they want to save transaction costs, and because they like exchanging me peer to peer (no third party or bank). Now without reading futher how convincing does that sound to you (pretend like you have never heard of BTC, or that BTC has collapsed in price)? Lets continue: In future people might not accept nothing for something. In future they might switch to a different coin, that is technologically superior (thus my wealth is stored in myspace and suddenly facebook comes along) or more popular for other reasons (altcoin inflation). In future the transaction costs might explode due to prohibitive regulation, so that the artificial agreement to exchange something for nothing collapses. In future, maybe people will prefer real backing over backed by nothing, especially if real backing can be transferred electronically (digital gold). In future people might think that it was crazy to accept nothing as payment, just to safe on transaction costs. In future there might be reputable trustees, and people might regain trust with third parties. In future maybe people decide that instant payment is not that important to them, as money is fungible. In future people might realize that bitcoin is not anonymous and that it is not internet or gold 2.0. Bitcoin might stay highly volatile as the believe in an artificial agreement (with huge counterpary risk) is extremly volatile.

Now from my perspective the situation is even worse: Right now people are ONLY accepting nothing for something, because they strongly believe that nothing will go up in price (after all it has been going up in price in the past, so it must be true for the future Wink). Eventually some early adopter will want to cash out, and if there is nobody there to take his position, the price will fall through the floor.

So I believe, that bitcoin because it does not have value, cant be relied upon as a store of value. It is entirely dependent on the counterparty honoring an pseudo agreement. So bitcoin actually has enormous counterparty risk. Gold is a great store of value, as people will always accept it because it is beautiful. It is burnt into our brain. It has no counterparty risk, because the counterparty cant help but love and accept it (like with food and water).

Thus intrinsic value is ESSENTIAL for one of moneys core functions: store of value. Money value cant be seperated from intrinsic value, as it is DEPENDENT on it.

2) Medium of exchange

Same arguments apply. Right now people exchange something for nothing, due to an artificial pseudo agreement (transaction costs, peer to peer if you ask bitcoiners). I believe its even worse: Right now people ONLY accept it because it is going up in price. As soon as it crashes, people will stop accepting it, as it is irrational to agree to exchange something of utility for something of no utility in order to save transaction costs.

[flynn]

I want to end my contribution to this thread with this post

That's the point where I stopped reading.

[diedicar]

bitcoin is a shining thing.
Let's try to understand  why people like shining objects. I think is radically a form of comunication: jewels like wampum shells, are worn so you can see it from far. If you have a commodity which is visible from far an so is possible to desire it for somebody who looks, you'are just advertising for it. Maybe your advertising works becaus you are a powerful, violent king, but maybe advertising needs no testimonial. If you adveritse for a commlodity, this commodity gets  medium of exchange value. Bitcoin is an internet based viral advertising campaign for a commodity, so it's a very shining, visible from far object. That's why (given the two other proprieties of rareness and indestructibility ) it's a good store of value.

I wouldn't actually call bitcoin is a shining thing. On the contrary, it allows you to hide your money and your identity (though your mileage may vary) from some prying eyes and ears...

"Money loves silence, and big money loves deathly silence"

yes it does, but we have to think about the origins of money, gold was choosen because of it advertising effect at those times the only way to advertise was via clothes and fetishes. Now we have the net, and cryptocurrencies make the net itself their form of advertising.

I thank pork for this useful conversation, but i think he is plain wrong given he thinks money has to have some use value different from acceptance. Gold is absolutely useless, he might have said in other times, and with good reason. But if we focus on the reason why gold was choosen (or wampum shells) it's because "useless" means undestructible, one of the 3 proprieties of a good store of value. (and bitcoin DOES HAVE this important prorpiety).

It seems that behind satoshi there is Nick Szabo.     http://www.ibtimes.co.uk/articles/527078/20131203/satoshi-nakamoto-nick-szabo-bitcoin-creator-revealed.htm
 i tfind usefeul his paper on th origins fo money (especially when it talks about the adoption of wampum shells).http://szabo.best.vwh.net/shell.html

[Findus]

I want to end my contribution to this thread with this post.

I just want to remind to anybody who is taking the time to carefully present arguments in this thread, that even if porc is not listening to you, you are not wasting your time, since other people like me are interested in these arguments. This thread provided me with good insights about the viability of bitcoin, and as a result I'm more convinced than ever of its great future.

[deisik]

I just want to remind to anybody who is taking the time to carefully present arguments in this thread, that even if porc is not listening to you, you are not wasting your time, since other people like me are interested in these arguments. This thread provided me with good insights about the viability of bitcoin, and as a result I'm more convinced than ever of its great future.

Actually, I was not writing in all these threads for that guy exclusively since it has become pretty evident pretty soon that his agenda was not to get the hang of the things...

[AnonyMint]

Is it you Anonymint?

No. porc and I argued recently on the anonymity point.

I agree with his very strong point about capital gains (or VAT in UK and arguably else where) taxes due on Bitcoin but not on legal tender. I disagree with his other points and specifically I think anonymity can defeat the government (but Bitcoin doesn't have it).

He doesn't yet see there is fight coming on anonymity. You either bend over and take in the ass from a bankrupt world (current debt is $150 trillion) or you go anonymous.

[AnonyMint]

Everybody watch this.

All is explained.

http://www.youtube.com/watch?v=qHUPPYzzZrI

The S-curve, logistic model can not apply to Bitcoin. Alternative link.

[Peter Lambert]

Is it you Anonymint?

No. porc and I argued recently on the anonymity point.

That does not prove you are different people. I have had arguments with my sock puppet before. Usually he agrees with me, but there was one time he was just being difficult and argumentative while playing the devil's advocate.

bitcoin is a shining thing.
Let's try to understand  why people like shining objects. I think is radically a form of comunication: jewels like wampum shells, are worn so you can see it from far. If you have a commodity which is visible from far an so is possible to desire it for somebody who looks, you'are just advertising for it. Maybe your advertising works becaus you are a powerful, violent king, but maybe advertising needs no testimonial. If you adveritse for a commlodity, this commodity gets  medium of exchange value. Bitcoin is an internet based viral advertising campaign for a commodity, so it's a very shining, visible from far object. That's why (given the two other proprieties of rareness and indestructibility ) it's a good store of value.

I wouldn't actually call bitcoin is a shining thing. On the contrary, it allows you to hide your money and your identity (though your mileage may vary) from some prying eyes and ears...

"Money loves silence, and big money loves deathly silence"

You can use bitcoin to hide all or some of your money, but it is also quite easy to show off how much you have using bitcoins, just point to an address with a large balance and sign something using the private key for that address.

[AnonyMint]

The technology behind cryptocurrencies and it's value as a financial tool to society has nothing to do with politics, tulips, its market price or any other of these arbitrary and ill-defined criteria constantly being trawled up in these debates.

In particular the comparison with tulips and constant obsession with it's market price is a total distraction from the technical innovation which cryptocurrencies bring to modern finance which is clear and unambigious.

That is that they facilitate direct asset transfers between peers *without the need for a counterparty*.

The only "tool" that society has had up till now which can do this is Gold. It's not a question of value and whether or not Bitcoin / Gold etc have *value*. Its a question of *function*. Monetary function.

You need some education.

[AnonyMint]

Is it you Anonymint?

No. porc and I argued recently on the anonymity point.

That does not prove you are different people. I have had arguments with my sock puppet before. Usually he agrees with me, but there was one time he was just being difficult and argumentative while playing the devil's advocate.

Lol. Surely you can analyze our writing styles. Please don't hold me responsible for what porc says. I will clearly state where I agree and disagree with him.

His intellect is reasonable but not at my level. So it should be clear we are not the same person.

You can use bitcoin to hide all or some of your money

You really can't for the most part. Because your anonymity depends on what the other users do since it is only valid if a process of elimination isn't going to work.

[knarzo]

Is it you Anonymint?

No. porc and I argued recently on the anonymity point.

That does not prove you are different people. I have had arguments with my sock puppet before. Usually he agrees with me, but there was one time he was just being difficult and argumentative while playing the devil's advocate.

Lol. Surely you can analyze our writing styles. Please don't hold me responsible for what porc says. I will clearly state where I agree and disagree with him.

His intellect is reasonable but not at my level. So it should be clear we are not the same person.

You can use bitcoin to hide all or some of your money

You really can't for the most part. Because your anonymity depends on what the other users do since it is only valid if a process of elimination isn't going to work.

Yeah. You're the smartest person here round. At least i figured that out with my lowlevel iq

[AnonyMint]

@knarzo:

Some monkeys would rather the group dies than for one monkey to be admitted to be a natural leader.

Those groups perish.

(implication is I won't be joining your group)