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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1804986 times)
_mr_e
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August 21, 2014, 01:12:20 PM
 #10941

Excerpt from: http://www.reddit.com/r/BitcoinThoughts/comments/2e4ant/a_few_thoughts_wednesday_august_20_2014/?sort=confidence

The VC bubble and a domino effect of failures

The latest fad in /r/bitcoin is that the price of bitcoin doesn't matter. One thread was titled "Sean's Outpost can give meals whether bitcoin is worth $35 or $1200!" That's true, but bitcoin is more complicated than that one use case.

I talked about the insane amounts of venture capital being poured into the industry right now a few weeks ago. The price of bitcoin is important for these people because it affects all sorts of businesses. For example, mining businesses can't profit if there is a crash after they design their chips. Exchanges make less money if the price is lower because a lower price can't support high volume. People who build projects on top of the network and who are sitting on donations can fold. Altcoins that are promising can be forked because it is no longer profitable to mine them.

Even at higher prices, there was not enough money to go around to prevent most of the VCs from losing on their investments. The piece of the pie that the VCs can earn shrinks as the price of a bitcoin falls. These people have deep pockets, so most of them can survive a brief downturn, but as the network expands, the lower bound price that would precipitate a complete collapse is rising.

When bitcoins averaged around $50, there weren't lots of employees getting paid in bitcoins and bankers wanting returns on investment. Now that bitcoins tend to average around $600, the size of the economy has increased significantly. Previously, the price of bitcoins could have dropped to $10 and everyone could still have looked forward to a recovery. Now, the minimum price is much higher (I've said $200) where a cascading chain reaction of business failures would take out the whole industry. In the future, that minimum price will likely rise to $1000, and then to $10,000, and so on.

The price falling below $200 or whatever the minimum is doesn't itself signal anything wrong with the promise of bitcoins. Instead, the low price will cause the failure of some critical part of the infrastructure like a major exchange, which could then cause businesses that depend on the exchange to be taken out, and so on. Even if everyone who owns bitcoins believed that the technology would succeed and there were many people spending bitcoins, the businesses would all be forced into bankruptcy simply because other businesses they need to offer their services failed in a chain reaction.

This VC bubble is dangerous and the best thing that could happen right now is for the VCs to stop temporarily with their investments so that this does not happen. Otherwise, the industry will end up in a fragile state where there are startups depending on other startups that have business models depending on a base price.
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cypherdoc
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August 21, 2014, 01:18:03 PM
 #10942

Gold has an up and coming date with Bitcoin. Satoshi won't be kind this time by putting his fist through the face of gold.

Although we can't be sure Satoshi isn't a woman who doesn't believe in violence. Even so, when it happens, you gotta believe there will be some sort of fireworks. 

considering we are talking about two arbitrary units (1 bitcoin, and 1 oz) compared to a third party (usd), you must see how ridiculous this is. but i agree, it is exciting for some reason... go humans Smiley


The fact of the matter is gold's value is always expressed in terms of the USD unit of account despite hypocrite Jim Rickards always leveling that criticism against Bitcoin. Therefore it's quite reasonable to reference gold versus Bitcoin in this manner.

The only time gold is expressed in its own terms is when we talk about buying a men's suit.
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August 21, 2014, 01:55:13 PM
 #10943

...
The latest fad in /r/bitcoin is that the price of bitcoin doesn't matter.
...


I'll generalize that a little more; it's a fad amongst the tech crowd to say price doesn't matter. Getting further into the realm of spec, I think it's because talking about price is probably considered a bit crude, non-intellectual, even greedy/materialistic. The tech crowd wants to remain more "pure" than that, and therefore talks about bitcoin more intellectually as a breakthrough technology, without regard to the asset side of the dynamic.

Yet many know that the price of bitcoin has to increase by a couple orders of magnitude in order to unlock the potential that they see for the technology. Jeremy Allaire is one example (downplays talk of price, but makes statements that require *much* higher price to be true).

Anyways...it's an annoying fad; ideally we should all just be able to be honest about all of it, but the upside to the above approach is probably that maintaining such outward "purity" makes the bitcoin ecosystem less of a turn-off to the set of newbies who are prone to consider the whole thing a scam or some such.

Bitcoin is the first monetary system to credibly offer perfect information to all economic participants.
But Bitcointalk & /r/bitcoin are heavily censored. bitco.in/forum, forum.bitcoin.com, and /r/btc are open.
Best info on Casascius coins: http://spotcoins.com/casascius
justusranvier
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August 21, 2014, 02:15:54 PM
 #10944

upside to the above approach is probably that maintaining such outward "purity" makes the bitcoin ecosystem less of a turn-off to the set of newbies who are prone to consider the whole thing a scam or some such.
Who cares of those newbies are turned off?

You really don't want flaky newbies buying Bitcoins right now because they'll panic and bail at the first sign of trouble.

It's better if the people buying are the ones who want Bitcoin to use it as a unit of account.
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August 21, 2014, 03:14:35 PM
 #10945

Gold has an up and coming date with Bitcoin. Satoshi won't be kind this time by putting his fist through the face of gold.

Although we can't be sure Satoshi isn't a woman who doesn't believe in violence. Even so, when it happens, you gotta believe there will be some sort of fireworks. 

He/She may not be violent but certainly confrontational. Personally I don't see the battle as being between BTC and gold/silver. I don't want to see bitcoin take market share away from PMs; I'd much rather see it taken from the other putrid bullshit presented as markets.

Off topic but I need to rant. The great firewall of China has become stronger. Having an android phone here is like having an expensive camera. Almost nothing works. Having a chromebook here is exactly like having a paperweight. I'm guessing when you use an alternate search engine like Bing in Chrome, it sends it through google anyway because it hangs just the same way that google does. My vpn, when it does connect, stays up for 15 minutes max.  I'm guessing google wouldn't play ball with the chinese government because of their record of human rights abuses. And yet they play ball with the US government. Right.
MoonTime
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August 21, 2014, 03:16:55 PM
 #10946

Gold speculation is done by less people now,unless you are ornament seller Smiley
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August 21, 2014, 03:26:02 PM
 #10947

Gold has an up and coming date with Bitcoin. Satoshi won't be kind this time by putting his fist through the face of gold.

Although we can't be sure Satoshi isn't a woman who doesn't believe in violence. Even so, when it happens, you gotta believe there will be some sort of fireworks. 

considering we are talking about two arbitrary units (1 bitcoin, and 1 oz) compared to a third party (usd), you must see how ridiculous this is. but i agree, it is exciting for some reason... go humans Smiley


The fact of the matter is gold's value is always expressed in terms of the USD unit of account despite hypocrite Jim Rickards always leveling that criticism against Bitcoin. Therefore it's quite reasonable to reference gold versus Bitcoin in this manner.

The only time gold is expressed in its own terms is when we talk about buying a men's suit.

no no no, my point was that putting special meaning/value for comparing 1 bitcoin ~ 1 oz is ridiculous.  i mean... 1 oz? why not 1 gram?

10 million satoshis just passed > 1 gram of gold..... now THAT exciting :0


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August 21, 2014, 03:58:13 PM
 #10948

drumroll...the little green line is starting to rise:

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August 21, 2014, 04:00:15 PM
 #10949

oh noe!  shit!

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August 21, 2014, 04:04:09 PM
 #10950

Bank of America reaches $16.65 billion settlement with U.S.
http://fortune.com/2014/08/20/bank-of-america-reaches-17-billion-settlement-with-u-s/

still ridiculous..

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August 21, 2014, 04:05:28 PM
 #10951

ya gotta believe the ENTIRE gold community is reading this thread:

cypherdoc
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August 21, 2014, 04:19:22 PM
 #10952

Bank of America reaches $16.65 billion settlement with U.S.
http://fortune.com/2014/08/20/bank-of-america-reaches-17-billion-settlement-with-u-s/

still ridiculous..



i heard a stat the other day in a podcast that the Fed owns 1/3 of the UST market and Fannie Mae 1/2 of the mortgage market.  what's left unsaid there is all the banks that are enabling their owns profits thru these 2 supposedly pro-citizen gvt institutions.  unfortunately, we are stuck paying interest rates on loans created out of thin air.
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August 21, 2014, 04:36:48 PM
 #10953

looks like Lawsky will extend:

https://twitter.com/BenLawsky/status/502493642846912512
cypherdoc
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August 21, 2014, 06:01:31 PM
 #10954

in case you didn't catch my drift from yesterday's FOMC, the reason gold is tanking today and yesterday is rate hikes possibly on the horizon:

http://www.reuters.com/article/2014/08/21/us-usa-fed-george-idUSKBN0GL13I20140821

edit:  along with a # of other factors
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August 21, 2014, 06:06:38 PM
 #10955

in case you didn't catch my drift from yesterday's FOMC, the reason gold is tanking today and yesterday is rate hikes possibly on the horizon:

http://www.reuters.com/article/2014/08/21/us-usa-fed-george-idUSKBN0GL13I20140821

and then, you gotta wonder, why has the USD been rallying since 7/1?  it can't be that someone knew this was gonna happen, could it?

this is why one has to be a technical analyst.  shit starts happening on charts before the news ever comes out. 
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August 21, 2014, 06:26:37 PM
 #10956

this sounds good:

https://bitcoinfoundation.org/2014/08/a-bitcoin-backbone/
smoothie
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August 21, 2014, 07:05:02 PM
 #10957

Satoshi won't be kind this time by putting his fist through the face of gold.

maybe. Still, BTC is going down from 8 months+ almost no-stop and is less than 50% its ATH.
gold collapsed less atm.

...it all depends on the timeframes ... Roll Eyes

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cypherdoc
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August 21, 2014, 07:07:00 PM
 #10958

this puts it into perspective:

https://equities.wedbush.com/clientsite/Research/ActionAlertFilePreview.asp?UUID=6B2CD54D-EFE9-44CC-B741-0E7B9AFCC260&ViewerID=1CE41D7D-B184-45DA-AF98-1334A2E3030F

Y axis is price.  Visa currently @ $216.34

rocks
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August 21, 2014, 07:41:48 PM
 #10959


They just might have realized it is not only possible, but quite likely, that the majority of the bitcoin ecosystem will simply exit NY and ignore the regulations. As the Circle CEO said, they are simply unworkable.

Such a result would be devastating to the regulators going forward because it would set a strong precedent and expose the emperor as having no clothes.

If the regulators are to have any hope in the bitcoin space, it is best for them to start very small and reasonable so the majority of firms decide to go ahead and get a BitLicense. Once they are captured it is much easier to slowly increase the rules to be more draconian, while at the same time you've just made it nearly impossible for firms to drop BitLicenses and exit NY without getting sued/imprisoned out of existence.

I was actually very relieved when the BitLicense rules first came out. My thinking was by making the rules so horrible & unconstitutional, that the bitcoin ecosystem would evolve to be more resilient against regulation. Now my worry is the regulators might wake up and take the start slow then increase path, which is a better option for a Machiavellian regulator.
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August 21, 2014, 07:46:13 PM
 #10960


How is that graph even remotely correct?  Visa can't go down?  Bitcoin can't go below 250 for 5 years?

Just throw the graph away and write "Bitcoin's potential is at least 100x its current value, Visa's potential is mostly used up".
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