Global Financial Crisis scenarios

[CoinsCoinsEverywhere]

Fiat is a store of value, but not a good store, as the value evaporates with time. Other money, with a near stable value, is better. Bitcoin is more risky as it can go down further, but since it can also appreciate, it can be described as stable with volatility, or stable with a risk. But I expect the value to go up as far more likely than to go down, so as a store of value it is far better than stable money.

What you're describing is a good investment, not a good currency.  Bitcoin is anything but stable.  Stable plus a little volatility is what the price of a bitcoin on Bitstamp has been for the last few days: it's oscillated only a few dollars around $621 or so.  For normal currencies, a 1% change is big deal.  Look at that article about Venezuela.  60% inflation is insane.  Compare that to the 7000% that bitcoin has gone up in the last 2 years.  You can't tell me that bitcoin is stable.

I didn't.

Um, yes you did.  See the bold text from your previous comment.

[tee-rex]

Look the price is not supposed to be stable right now. This quest that some people seem to be on is idiotic. They don't understand how the price mechanism works at all.

It's a speculators game all the way to the top. When we have reached full adoption, and spent a number of years riding out the last volatility, then we can begin to talk about stability. Before that it's a waste of time.

I agree, except will bitcoin ever be stable, even after full adoption, etc.?  The issue with limited supply is that everyone expects the value to increase over time as the global economy expands.  This would invite perpetual speculation, which would result in bubbles and crashes.

And there is nothing wrong with that. Not even a little bit. People trade in fiat volatility right now. Most people just don't know it.

I agree, there's nothing wrong with a little volatility.  But even the more extreme daily moves in the Forex markets are a percentage point or two, not 10%+.  Although I guess it will depend on how much bitcoins are worth when we reach full adoption.  If they're worth a lot more than they are now (like 10x, 100x, or more), that would limit the volatility.

At full adoption, as in everyone in the world use it, a "whale" will be anyone with a tenth of a coin. Math provides the answers we seek.

I think this will never happen. Think in terms of real wealth. Why would anyone want to sell you a plant, a bank, an oil derrick just because there is a limited supply of new coins?

[CoinsCoinsEverywhere]

Look the price is not supposed to be stable right now. This quest that some people seem to be on is idiotic. They don't understand how the price mechanism works at all.

It's a speculators game all the way to the top. When we have reached full adoption, and spent a number of years riding out the last volatility, then we can begin to talk about stability. Before that it's a waste of time.

I agree, except will bitcoin ever be stable, even after full adoption, etc.?  The issue with limited supply is that everyone expects the value to increase over time as the global economy expands.  This would invite perpetual speculation, which would result in bubbles and crashes.

And there is nothing wrong with that. Not even a little bit. People trade in fiat volatility right now. Most people just don't know it.

I agree, there's nothing wrong with a little volatility.  But even the more extreme daily moves in the Forex markets are a percentage point or two, not 10%+.  Although I guess it will depend on how much bitcoins are worth when we reach full adoption.  If they're worth a lot more than they are now (like 10x, 100x, or more), that would limit the volatility.

At full adoption, as in everyone in the world use it, a "whale" will be anyone with a tenth of a coin. Math provides the answers we seek.

I doubt that bitcoin will reach that level of adoption any time in the next few decades, if ever (I have a hard time seeing it as more than another major world currency like USD or CNY unless the organization of the world changes drastically).  But if it does, or if it comes somewhat close to that, then I can see volatility being reduced to the level we see with fiat currencies today.

[Ibian]

Look the price is not supposed to be stable right now. This quest that some people seem to be on is idiotic. They don't understand how the price mechanism works at all.

It's a speculators game all the way to the top. When we have reached full adoption, and spent a number of years riding out the last volatility, then we can begin to talk about stability. Before that it's a waste of time.

I agree, except will bitcoin ever be stable, even after full adoption, etc.?  The issue with limited supply is that everyone expects the value to increase over time as the global economy expands.  This would invite perpetual speculation, which would result in bubbles and crashes.

And there is nothing wrong with that. Not even a little bit. People trade in fiat volatility right now. Most people just don't know it.

I agree, there's nothing wrong with a little volatility.  But even the more extreme daily moves in the Forex markets are a percentage point or two, not 10%+.  Although I guess it will depend on how much bitcoins are worth when we reach full adoption.  If they're worth a lot more than they are now (like 10x, 100x, or more), that would limit the volatility.

At full adoption, as in everyone in the world use it, a "whale" will be anyone with a tenth of a coin. Math provides the answers we seek.

I think this will never happen. Think in terms of real wealth. Why would anyone want to sell you a plant, a bank, an oil derrick just because there is a limited supply of new coins?

Why would they sell you a pizza now?

[CoinsCoinsEverywhere]

At full adoption, as in everyone in the world use it, a "whale" will be anyone with a tenth of a coin. Math provides the answers we seek.

I think this will never happen. Think in terms of real wealth. Why would anyone want to sell you a plant, a bank, an oil derrick just because there is a limited supply of new coins?

I think the idea is that someday a majority of the world may choose to use bitcoin over fiat currencies because they've had it with their governments messing with their money.  If BTC becomes the world reserve currency, then most people would use it.  But as I said, I think the world would need to change drastically for this to be feasible.  At some point, if governments feel threatened by it, they may try to damage or kill it.  And it probably wouldn't be too hard to do that, either.

[tee-rex]

At full adoption, as in everyone in the world use it, a "whale" will be anyone with a tenth of a coin. Math provides the answers we seek.

I think this will never happen. Think in terms of real wealth. Why would anyone want to sell you a plant, a bank, an oil derrick just because there is a limited supply of new coins?

I think the idea is that someday a majority of the world may choose to use bitcoin over fiat currencies because they've had it with their governments messing with their money.  If BTC becomes the world reserve currency, then most people would use it.  But as I said, I think the world would need to change drastically for this to be feasible.  At some point, if governments feel threatened by it, they may try to damage or kill it.  And it probably wouldn't be too hard to do that, either.

If governments would mess with their money to a degree when you think the majority of the world would choose to use Bitcoin, people will actually switch to anything which has "real" value (say, gold).

[CoinsCoinsEverywhere]

At full adoption, as in everyone in the world use it, a "whale" will be anyone with a tenth of a coin. Math provides the answers we seek.

I think this will never happen. Think in terms of real wealth. Why would anyone want to sell you a plant, a bank, an oil derrick just because there is a limited supply of new coins?

I think the idea is that someday a majority of the world may choose to use bitcoin over fiat currencies because they've had it with their governments messing with their money.  If BTC becomes the world reserve currency, then most people would use it.  But as I said, I think the world would need to change drastically for this to be feasible.  At some point, if governments feel threatened by it, they may try to damage or kill it.  And it probably wouldn't be too hard to do that, either.

If governments would mess with their money to a degree when you think the majority of the world would choose to use Bitcoin, people will actually switch to anything which has "real" value (say, gold).

That's possible.  But I think such a movement would have to occur among us common folk, if you will (a lot of the rich and those in power probably prefer things they way they are), and bitcoin is more accessible to the average citizen than something like gold.

[tee-rex]

At full adoption, as in everyone in the world use it, a "whale" will be anyone with a tenth of a coin. Math provides the answers we seek.

I think this will never happen. Think in terms of real wealth. Why would anyone want to sell you a plant, a bank, an oil derrick just because there is a limited supply of new coins?

I think the idea is that someday a majority of the world may choose to use bitcoin over fiat currencies because they've had it with their governments messing with their money.  If BTC becomes the world reserve currency, then most people would use it.  But as I said, I think the world would need to change drastically for this to be feasible.  At some point, if governments feel threatened by it, they may try to damage or kill it.  And it probably wouldn't be too hard to do that, either.

If governments would mess with their money to a degree when you think the majority of the world would choose to use Bitcoin, people will actually switch to anything which has "real" value (say, gold).

That's possible.  But I think such a movement would have to occur among us common folk, if you will (a lot of the rich and those in power probably prefer things they way they are), and bitcoin is more accessible to the average citizen than something like gold.

Average (and below) citizens would obviously switch to either direct barter or will use something like seashells as a means of exchange, using gold or silver for big purchases and settling accounts.

[Erdogan]

Fiat is a store of value, but not a good store, as the value evaporates with time. Other money, with a near stable value, is better. Bitcoin is more risky as it can go down further, but since it can also appreciate, it can be described as stable with volatility, or stable with a risk. But I expect the value to go up as far more likely than to go down, so as a store of value it is far better than stable money.

What you're describing is a good investment, not a good currency.  Bitcoin is anything but stable.  Stable plus a little volatility is what the price of a bitcoin on Bitstamp has been for the last few days: it's oscillated only a few dollars around $621 or so.  For normal currencies, a 1% change is big deal.  Look at that article about Venezuela.  60% inflation is insane.  Compare that to the 7000% that bitcoin has gone up in the last 2 years.  You can't tell me that bitcoin is stable.

I didn't.

Um, yes you did.  See the bold text from your previous comment.

Once more. Dollar is perceived as stable, but slowly depreciates at 1.5% to5% per year. That is maybe stable day to day, but it is not at all stable over a decennium.

Bitcoin is designed to be stable over decennia, but is currently not stable day to day. There is a risk of 10 % down at any day, but after 10 years it is either stable or going up. So it is stable over some longer period, but it is volatile day to day. So, it you can stomach the day to day risk, it is stable over 10 years or even 3 years. Better than that for savers, it is expected to go up, even if there is a day to day risk.

I don't care to feed you with a teaspoon on this any more. Take it or leave it.

[cryptofan5]

Hi,

I have a question, but please direct me to a post if already asked:

In case of another GFC, would BTC bitcoin price:

a) stays on the same level 
b) skyrockets 
c) tumble down 

?

My guess its B. Bitcoin will be seen as a safe haven by many if the dollar collapses.

[leezay]

My guess its B. Bitcoin will be seen as a safe haven by many if the dollar collapses.

Safe heaven requires not only stability of the value but law and regulation on its side to enforce contract and agreement.

[gmx95]

If you had $1000 in the bank, and they may print a bunch of new money in a few years that $1000 will be worth about $600 today. Bitcointalk would skyrockets soon.

I hope so too, but I am skeptical. I remember a few years ago people were predicting gold price to be $2000-$5000 by now. Well, it did not happen.

[the joint]

Fiat is a store of value, but not a good store, as the value evaporates with time. Other money, with a near stable value, is better. Bitcoin is more risky as it can go down further, but since it can also appreciate, it can be described as stable with volatility, or stable with a risk. But I expect the value to go up as far more likely than to go down, so as a store of value it is far better than stable money.

What you're describing is a good investment, not a good currency.  Bitcoin is anything but stable.  Stable plus a little volatility is what the price of a bitcoin on Bitstamp has been for the last few days: it's oscillated only a few dollars around $621 or so.  For normal currencies, a 1% change is big deal.  Look at that article about Venezuela.  60% inflation is insane.  Compare that to the 7000% that bitcoin has gone up in the last 2 years.  You can't tell me that bitcoin is stable.

I didn't.

Um, yes you did.  See the bold text from your previous comment.

Once more. Dollar is perceived as stable, but slowly depreciates at 1.5% to5% per year. That is maybe stable day to day, but it is not at all stable over a decennium.

Bitcoin is designed to be stable over decennia, but is currently not stable day to day. There is a risk of 10 % down at any day, but after 10 years it is either stable or going up. So it is stable over some longer period, but it is volatile day to day. So, it you can stomach the day to day risk, it is stable over 10 years or even 3 years. Better than that for savers, it is expected to go up, even if there is a day to day risk.

I don't care to feed you with a teaspoon on this any more. Take it or leave it.

This doesn't seem like a convincing argument.  Here's why:

1) If after 10 years the value of bitcoins is stable or going up, then  it's *not* stable and going up.

2) There's no reason why after 10 years the value of BTC can't go down.

3) There's no reason that guarantees the value of bitcoins will be stable in 10 years.  It *could* be, but there's no mechanism that ensures this.  

4) If the value of bitcoin goes up (i.e. like a good investment might), you run into the problem of currency hoarding, and this conflicts with the importance of liquidity.  

5) Expecting BTC to go up doesn't mean it will happen.  Ask all the people that bought BTC just before or shortly after the ATH what their expectations were upon buying in.

6) No matter how you spin it, fiat is historically a better store of value as it is less volatile and more predictable.  Imagine having $1000 in USD and $1000 in BTC and asking yourself to predict how much purchasing power you will have in one year.  I can estimate with great confidence how well my $1000 in USD will hold up over that year, but I can't estimate the same for BTC.  Just look at all the predictions on BTC price made on this forum.  A year ago, we had some expecting BTC to be $10,000 by now while others expected it to be closer to $10.  

7) Stemming from this last thought, it's simply a non-sequitur to conclude bitcoin is a better store of value because of a personal expectation you have that leads you to believe it's more probable that BTC value will increase rather than decrease.

There are a handful of scenarios which could wreak utter havoc on BTC as a store of value.  For example, consider that while the total supply of BTC is known, the market supply is not, and this could be very, very problematic.  Many people have stated something to the effect of, "If BTCs/private keys are lost or irretrievable, this decreases the market supply and it just makes the rest of us richer!"  Okay, that's great, but let's say that some large number of BTCs that are assumed to be lost or irretrievable actually aren't.  It's already been estimated that the total number of lost or irretrievable BTCs already tallies into the hundreds of thousands, if not millions.  The problem is there's really no way to make a good estimate.

To illustrate with an extreme example, let's say that all but 1 BTC are considered lost or irretrievable.  Since BTC can be divided infinitesimally, this shouldn't be an issue since the global economy could still function with only 1 BTC in existence, right?  Can't you just shift a few decimal places?  Theoretically this could work, but then imagine what would happen if those BTCs assumed to be lost/irretrievable are discovered to be found and active?  What if the ~1 million BTC that Satoshi mined started moving when all that was assumed to remain was 1 measly BTC?  What do you think about BTC as a store of value then?  Don't you think that it's realistic to expect that, if BTC value continues to rise for many years as you expect it to, there *will* be many BTC hoarders who will also wait years before making their own personal supply known to the markets (i.e. by moving them)?  

TL;DR:  You might want to reconsider your position...

[tee-rex]

Once more. Dollar is perceived as stable, but slowly depreciates at 1.5% to5% per year. That is maybe stable day to day, but it is not at all stable over a decennium.

Bitcoin is designed to be stable over decennia, but is currently not stable day to day. There is a risk of 10 % down at any day, but after 10 years it is either stable or going up. So it is stable over some longer period, but it is volatile day to day. So, it you can stomach the day to day risk, it is stable over 10 years or even 3 years. Better than that for savers, it is expected to go up, even if there is a day to day risk.

Your logic is rather perverted and lacks grounding at all. Bitcoin doesn't have 10 years behind it to give you any viable reasons for saying that "after 10 years it is either stable or going up". There is just nothing to base your argument upon so far.

[boumalo]

If you had $1000 in the bank, and they may print a bunch of new money in a few years that $1000 will be worth about $600 today. Bitcointalk would skyrockets soon.

I hope so too, but I am skeptical. I remember a few years ago people were predicting gold price to be $2000-$5000 by now. Well, it did not happen.

Yet because the Gold market is highly manipulated by the US government and big banks, the market will see clearly that the USD will be printed exponentially and the price of Gold will go up tremendously

Patience! Some US officials seem to want to create a war to hide the upcoming problems, Gold will go up in price to new highs

[CoinsCoinsEverywhere]

If you had $1000 in the bank, and they may print a bunch of new money in a few years that $1000 will be worth about $600 today. Bitcointalk would skyrockets soon.

I hope so too, but I am skeptical. I remember a few years ago people were predicting gold price to be $2000-$5000 by now. Well, it did not happen.

Yet because the Gold market is highly manipulated by the US government and big banks, the market will see clearly that the USD will be printed exponentially and the price of Gold will go up tremendously

Patience! Some US officials seem to want to create a war to hide the upcoming problems, Gold will go up in price to new highs

Even if the US continues to print money, that doesn't guarantee that the price of gold will increase.  It's likely, but not guaranteed.  And even if it does go to ATHs, there's no guarantee when that will happen or if the increase in gold's price will beat inflation.  Gold is a commodity on an auction market.  If someone big wants to sell, the price will go down.  And if it's being manipulated, which is likely, then it's hard to predict where the price will go.  It just depends on what the manipulators want.

[CoinsCoinsEverywhere]

Fiat is a store of value, but not a good store, as the value evaporates with time. Other money, with a near stable value, is better. Bitcoin is more risky as it can go down further, but since it can also appreciate, it can be described as stable with volatility, or stable with a risk. But I expect the value to go up as far more likely than to go down, so as a store of value it is far better than stable money.

What you're describing is a good investment, not a good currency.  Bitcoin is anything but stable.  Stable plus a little volatility is what the price of a bitcoin on Bitstamp has been for the last few days: it's oscillated only a few dollars around $621 or so.  For normal currencies, a 1% change is big deal.  Look at that article about Venezuela.  60% inflation is insane.  Compare that to the 7000% that bitcoin has gone up in the last 2 years.  You can't tell me that bitcoin is stable.

I didn't.

Um, yes you did.  See the bold text from your previous comment.

Once more. Dollar is perceived as stable, but slowly depreciates at 1.5% to5% per year. That is maybe stable day to day, but it is not at all stable over a decennium.

Bitcoin is designed to be stable over decennia, but is currently not stable day to day. There is a risk of 10 % down at any day, but after 10 years it is either stable or going up. So it is stable over some longer period, but it is volatile day to day. So, it you can stomach the day to day risk, it is stable over 10 years or even 3 years. Better than that for savers, it is expected to go up, even if there is a day to day risk.

I don't care to feed you with a teaspoon on this any more. Take it or leave it.

This doesn't seem like a convincing argument.  Here's why:

1) If after 10 years the value of bitcoins is stable or going up, then  it's *not* stable and going up.

2) There's no reason why after 10 years the value of BTC can't go down.

3) There's no reason that guarantees the value of bitcoins will be stable in 10 years.  It *could* be, but there's no mechanism that ensures this.  

4) If the value of bitcoin goes up (i.e. like a good investment might), you run into the problem of currency hoarding, and this conflicts with the importance of liquidity.  

5) Expecting BTC to go up doesn't mean it will happen.  Ask all the people that bought BTC just before or shortly after the ATH what their expectations were upon buying in.

6) No matter how you spin it, fiat is historically a better store of value as it is less volatile and more predictable.  Imagine having $1000 in USD and $1000 in BTC and asking yourself to predict how much purchasing power you will have in one year.  I can estimate with great confidence how well my $1000 in USD will hold up over that year, but I can't estimate the same for BTC.  Just look at all the predictions on BTC price made on this forum.  A year ago, we had some expecting BTC to be $10,000 by now while others expected it to be closer to $10.  

7) Stemming from this last thought, it's simply a non-sequitur to conclude bitcoin is a better store of value because of a personal expectation you have that leads you to believe it's more probable that BTC value will increase rather than decrease.

There are a handful of scenarios which could wreak utter havoc on BTC as a store of value.  For example, consider that while the total supply of BTC is known, the market supply is not, and this could be very, very problematic.  Many people have stated something to the effect of, "If BTCs/private keys are lost or irretrievable, this decreases the market supply and it just makes the rest of us richer!"  Okay, that's great, but let's say that some large number of BTCs that are assumed to be lost or irretrievable actually aren't.  It's already been estimated that the total number of lost or irretrievable BTCs already tallies into the hundreds of thousands, if not millions.  The problem is there's really no way to make a good estimate.

To illustrate with an extreme example, let's say that all but 1 BTC are considered lost or irretrievable.  Since BTC can be divided infinitesimally, this shouldn't be an issue since the global economy could still function with only 1 BTC in existence, right?  Can't you just shift a few decimal places?  Theoretically this could work, but then imagine what would happen if those BTCs assumed to be lost/irretrievable are discovered to be found and active?  What if the ~1 million BTC that Satoshi mined started moving when all that was assumed to remain was 1 measly BTC?  What do you think about BTC as a store of value then?  Don't you think that it's realistic to expect that, if BTC value continues to rise for many years as you expect it to, there *will* be many BTC hoarders who will also wait years before making their own personal supply known to the markets (i.e. by moving them)?  

TL;DR:  You might want to reconsider your position...

Good points.  I don't think I can improve on this response to what Erdogan said.

Something else to consider about those "irretrievable" coins: they may not be permanently irretrievable.  As technology progresses, it may eventually become feasible to brute force the keys in a reasonable amount of time (although I'm not exactly sure how this would work, so I could be wrong).

[Ibian]

Something else to consider about those "irretrievable" coins: they may not be permanently irretrievable.  As technology progresses, it may eventually become feasible to brute force the keys in a reasonable amount of time (although I'm not exactly sure how this would work, so I could be wrong).

It's not and never will be. It's not a matter of technology. There is simply not enough energy in this solar system to brute force private keys, even in theory.

[the joint]

Something else to consider about those "irretrievable" coins: they may not be permanently irretrievable.  As technology progresses, it may eventually become feasible to brute force the keys in a reasonable amount of time (although I'm not exactly sure how this would work, so I could be wrong).

It's not and never will be. It's not a matter of technology. There is simply not enough energy in this solar system to brute force private keys, even in theory.

I wonder how many times humanity has claimed the impossible only to be surprised by a very rude awakening.

Let's modify that to, "Based upon our current understanding, we believe this will never happen."

Brute forcing *does* seem overwhelmingly infeasible (but NOT impossible as there is a known chance of a collision, and though this likelihood is unfathomably small, it's still there).  But, there may be alternative methods to brute forcing we haven't considered.  In *theory* an advanced quantum computer would contain all possible private key solutions -- an analogy of how such an advanced computer can be imagined is to think of a library that contains all books that ever have *and* that ever will be written, and that there simply needs to be a method to find the book you're looking for.  Accordingly, it's not so much about solving for the correct answer, but rather removing everything that's unnecessary to leave only the correct answer.  Take this with a grain a salt; I'm by no means an expert on the subject.

[Ibian]

Something else to consider about those "irretrievable" coins: they may not be permanently irretrievable.  As technology progresses, it may eventually become feasible to brute force the keys in a reasonable amount of time (although I'm not exactly sure how this would work, so I could be wrong).

It's not and never will be. It's not a matter of technology. There is simply not enough energy in this solar system to brute force private keys, even in theory.

I wonder how many times humanity has claimed the impossible only to be surprised by a very rude awakening.

Let's modify that to, "Based upon our current understanding, we believe this will never happen."

Brute forcing *does* seem overwhelmingly infeasible (but NOT impossible as there is a known chance of a collision, and though this likelihood is unfathomably small, it's still there).  But, there may be alternative methods to brute forcing we haven't considered.  In *theory* an advanced quantum computer would contain all possible private key solutions -- an analogy of how such an advanced computer can be imagined is to think of a library that contains all books that ever have *and* that ever will be written, and that there simply needs to be a method to find the book you're looking for.  Accordingly, it's not so much about solving for the correct answer, but rather removing everything that's unnecessary to leave only the correct answer.  Take this with a grain a salt; I'm by no means an expert on the subject.

The Infinite Library does not exist, and quantum computers only exist in sci-fi novels. Let's discuss this when we have a working model.