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Author Topic: Bitcoin was not a bubble  (Read 3941 times)
ineededausername
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October 19, 2011, 04:13:23 PM
 #21

it could take less than another 6 mo for you to be eating your words. 

Bitcoin is not going anywhere because it's economically and technically flawed.

Where is it economically or technically flawed?  Nobody has double-spent a single bitcoin.  Prove me wrong. 

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netrin
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October 19, 2011, 04:27:04 PM
 #22

economically flawed because it has no inherent scarce value. A bitcoin unit is scarce but has no value as a commodity. A bitcoin transaction is valuable but is not scarce as a service.


Just like fiat paper.

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October 19, 2011, 05:08:57 PM
 #23

Nice observation and analysis to the OP.
If it is not a bubble then what is it?

I say it was a "pump and dump". We've been played by those that have a lot of money.
Maybe it wasn't intentional maybe it was.

I'm still convinced the number 1 weakness of any decentralized digital currency
that is adopted at the grass roots level is its reaction to huge investments relative to the current size of the economy.
The best we can all do moving forward is learn from the experience and profit in the future if it happens again.
Sell high and then short it to drive it back down to sane levels avoiding a long agonizing experience.

Here comes early adopter generation II.
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October 19, 2011, 05:29:17 PM
 #24

As a commodity (which some have painted it as, including mtgox in court hearings) it has certainly bursted as a bubble.



Waiting for the production rate to be reduced is the carrot on the stick part to this elaborate scam. Suckers.

This is actually correct in that it slighted dampened the collapse of the bubble.
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October 19, 2011, 05:50:41 PM
 #25

The market said bitcoin was in a bubble, the market said the price would drop. You didn't listen, you dismissed us as trolls, the market was right.

The market now says bitcoin is dead, again you argue with us, but we are right again.
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October 19, 2011, 06:25:49 PM
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The market said bitcoin was in a bubble, the market said the price would drop. You didn't listen, you dismissed us as trolls, the market was right.

True.

The The market now says bitcoin is dead, again you argue with us, but we are right again.

False.

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October 19, 2011, 06:27:10 PM
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BubbleBoy
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October 19, 2011, 06:33:20 PM
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The market now says bitcoin is dead, again you argue with us, but we are right again.

Bitcoin is not by any stretch of the imagination dead. It's an effective way to launder money and this alone is good enough to ensure it's survival, despite it's flaws. Bitcoin is not going anywhere because it will be replaced by better crypto-currencies, not because the concept is dead.
hugolp
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October 19, 2011, 06:38:14 PM
 #29



Hugolp, I agree with your basic premise, that $20-$32 was the bubble, but that only lends some confidence to the 'commodity' nature of bitcoin (wave v greater than wave iii). I believe bitcoin is seeing a recession in the business cycle (wave II). I also believe Japan is experiencing the fall from a business cycle, in fact the entire fiat monetary system is experiencing the unavoidable decline of a century scale cycle. In the July thread "The Dichotomy Of a Bubble - Why Bitcoin Will Endure", I/we made the same argument that bubbles have symmetry and it stands.


Mt. Gox Bitcoin May to today (late July 2011) vs.
Nasdaq Composite 1994 to 2008

However, regarding the nit-picking, obviously nominal supply is greater than demand. That's 101. My assertion is that the supply GROWTH (0.1% daily) is insignificant compared to the swings in demand and speculative exuberance and despair, which have averaged 1.5% depreciation since June, but with daily swings of 25-50% not uncommon.

Markets do not behave linearly. You are supposing that an increase of the money supply of 1% should make the price go down by 1%. This is not true. In the very long run tends to be a direct correlation between the money supply and prices, but the relation does not hold in the middle and short term. You can see this for example when central banks intervene in the currency market, the decrease in price when they sell their currency does not correspond to the increase in the money supply they produce.

The reason is again basic economics. The more you have of something the less you value having one more. An stupid example, if you go traveling 15 days and loose all your shoes, you will be willing to pay a very high price to get 1 (or even 2) pairs of shoes, so you can go around. But to get your third, fourth,... pair you wont buy unless the price is lower and you consider its a good deal. This economic law has a name that I dont remember now.

Some people want to have a bunch of bitcoins but the more they have the less willing to pay a higher price they are. Its different for each person and more importantly it does not have to be linear, very probably its not linear. So once you start increasing the money supply, the price does not react linearly.

Quote
One MIGHT argue, though he'd be hard pressed to prove it, that miner supply triggers an avalanche of selling in a declining market, but that would only lend weight to a bubble/ponzi argument.

I actually think its the other way around. Its a good thing the price is so low. There was people complaining about the deflationary nature of Bitcoin saying that it was a way for early adopters to profit since only a few people knew about Bitcoin back then. Well, now Bitcoin is famous and its cheap, so anyone willing can jump in. Its the distribution phase of Bitcoin.

Btw, I agree with the part of the fiat currency imploding right now.
danman87
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October 19, 2011, 06:47:32 PM
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October 19, 2011, 09:00:06 PM
 #31

it could take less than another 6 mo for you to be eating your words. 

Bitcoin is not going anywhere because it's economically and technically flawed. That being said, a new bubble can very well re-emerge after the current one cools-off, successive bubbles are historically documented. The bubbly appeal is certainly still there: revolutionary, this time is different, game changer, paradigm shift etc.  Maybe we can see re-ignition in the pennies range, 0-20c, but that price will not be hit very soon, judging by the subjective interest I see a bull trap is long overdue.

However a second bubble with gentler slopes will not in any case comfort the owners of the 1 million or so coins sold in the 15 - 30$ range. Those are millions of dollars of wealth destroyed through mining overvalued bits, and millions of dollars into the pockets of a hand full of "early adopters" pushing the scheme.

please elaborate as to how its economically and technically flawed.  and tell us why its lasted almost 3 yr w/o experts like Dan Kaminsky being able to find flaws.  also why Bitcoin cannot function in the same way that gold has for centuries being a fixed commodity backing for fiat currency.
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