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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1979176 times)
cypherdoc
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May 19, 2015, 07:02:26 PM
 #24381

i see this as all positive:

"We are now going to use our name, reputation and global index provider stature to provide bitcoin values that the rest of the market can look to," says Tom Farley, who serves as president of NYSE, the venerable financial institution that has come to symbolize Wall Street and capitalism more broadly."

"New technology does not intimidate us, it excites us," Farley says, effectively summing up the new mindset of NYSE. Bitcoin in particular excited him, both because of the interest in the currency and the blockchain technology behind it, which serves as a transaction database. "It was that curiosity and also... let's not wait for this to fully evolve; let's get a seat early on and see how this matures."

http://mashable.com/2015/05/19/new-york-stock-exchange-bitcoin/

Except the NYSE BTC "index", at least as initially set up, is a joke:

https://www.nyse.com/publicdocs/nyse/indices/NYSE_Bitcoin_Index_Methodology.pdf

Quote
The Index is calculated on those days specified as Index business days. Index business days will be classified as any weekday throughout the calendar year.
The Index will be published within 2 hours following 4 PM U.K. time. It will be published with (4) decimals, and will be rounded on the last digit.
There is currently (1) Exchange/Venue whose bitcoin transaction data is included in the calculation of the Index: - Coinbase Exchange



that's ok.  it's the concept that counts.  along with the built in marketing to the masses.
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justusranvier
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May 19, 2015, 07:03:26 PM
 #24382

Whether you only refuse to answer or also close yourself to new information from others, is certainly up to you.

I am nevertheless grateful for your contributions so far.
There are some questions I want to answer in longer form than what what a forum post allows.

Right now time is the resource in most short supply for me.

How much of it should I allocate to debating economics, how much of it should I allocate to preparing for the next round of OBPP ratings, how much of it should I allocate to describing what a transition plan from the current P2P network to a market-based P2P network would look like, etc. etc. etc.
Erdogan
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May 19, 2015, 07:08:24 PM
 #24383

i see this as all positive:

"We are now going to use our name, reputation and global index provider stature to provide bitcoin values that the rest of the market can look to," says Tom Farley, who serves as president of NYSE, the venerable financial institution that has come to symbolize Wall Street and capitalism more broadly."

"New technology does not intimidate us, it excites us," Farley says, effectively summing up the new mindset of NYSE. Bitcoin in particular excited him, both because of the interest in the currency and the blockchain technology behind it, which serves as a transaction database. "It was that curiosity and also... let's not wait for this to fully evolve; let's get a seat early on and see how this matures."

http://mashable.com/2015/05/19/new-york-stock-exchange-bitcoin/

Except the NYSE BTC "index", at least as initially set up, is a joke:

https://www.nyse.com/publicdocs/nyse/indices/NYSE_Bitcoin_Index_Methodology.pdf

Quote
The Index is calculated on those days specified as Index business days. Index business days will be classified as any weekday throughout the calendar year.
The Index will be published within 2 hours following 4 PM U.K. time. It will be published with (4) decimals, and will be rounded on the last digit.
There is currently (1) Exchange/Venue whose bitcoin transaction data is included in the calculation of the Index: - Coinbase Exchange



Hardly a leader in tech, we already have 24/7/52 indexes.

Carlton Banks
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May 19, 2015, 07:09:48 PM
 #24384

I agree with intangibility [of money] being a benefit, we might have different definitions here though, how are you defining this?

Private keys are the authority to spend your money. And because they're just random numbers, the ability to store your money safely is intangible to both the owner and everyone else. The actual storage itself depends on something tangible (mining & computer hardware), but we're working under an assumption that all the self interest mechanisms built into the satoshi design will protect and preserve the current blockchain from being destroyed or overpowered (and that's worked well so far).

Doesn't this just go back to portability though? One way to phase that is bitcoin is more portable than physical based money (gold) because it is just a bunch of random numbers. You can easily transport random numbers anywhere you can send information. This includes the ability to send money across the world in seconds, or even transport money into your head (brain wallet). Being intangible means something is more portable, including the ability to transport money into your mind, which is impossible with anything tangible.

Hmmm, I would argue that anything that is portable is tangible, and that intangible objects cannot be ported anywhere, because they are both everywhere and nowhere simulatneously  Grin But then again, maybe I'm only saying that because it would mean I'm right  Tongue

It's possible that we're arguing about semantics, but from what I remember about good system design, proper analysis (including labelling objects and actors with the best possible description you can think of) is the unimpeachable foundation for getting good results.

Vires in numeris
TPTB_need_war
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May 19, 2015, 07:11:41 PM
 #24385

The network effects for bitcoin vs. alts are very real and already present a significant hurdle for any of them to overcome. For example, in 2014 VCs invested >$300M in Bitcoin firms vs. near zero for any alt. Currently numerous websites, VPNs, etc, that I use accept Bitcoin, none to few accept any alt. The fact is there are already network effects in place for Bitcoin vs. alts. This makes the hurdle higher for things such as Monero.

http://www.qhoster.com/clients/announcements/43/QHoster-accepts-all-cryptocurrencies-Buy-hosting-domain-names-Linux-VPS-Windows-RDP-VPS-and-dedicated-servers.html

smooth
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May 19, 2015, 07:13:43 PM
 #24386

I think the best argument for one ledger is network effects. Network effects for money are very very strong. In order to enable a switch to a new money, there has to be a significant improvement over the existing money. Network effects are so strong that people continue to use fiat even though it has been inferior for decades. To me this is the main reason why Monero and other alts will not win, even if they offer some advantages (which I think is debatable), the advantages are not enough to overcome the network effects that are already behind bitcoin (which itself may not be able to beat the network effects of the dollar).

This is a better argument than what we usually see here since it focuses on might happen as a result of network effects, rather than you picking a winner and declaring that everyone else should support the winner you picked "because network effect". So, well presented, rocks.

Not sure about fiat being inferior for decades though.

Not sure if this was agreeing or being sarcastic. Wink

It was agreeing. In fact I've made the same argument to Monero people. I'm the Bitcorn in the Monero world. Smiley

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In case it was that later then I'd respond that I'm not saying Bitcoin will win "because network effect", I'm saying "because network effect" any follower has to be significantly better, not just moderately better.

Exactly

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The network effects for bitcoin vs. alts are very real and already present a significant hurdle for any of them to overcome. For example, in 2014 VCs invested >$300M in Bitcoin firms vs. near zero for any alt.

Supposedly some of the Ethereum presale money did come from VC-type investors, but who really knows. Bitshares was also supposedly VC-backed, but I don't know the details of that either. Ripple (not exactly a cryptocurrency, I know) just got $30 million in VC money, and Stellar got VC money last year indirectly (via Stripe, which is VC-backed). So it isn't zero. There are at least two investor-backed Monero businesses (MyMonero and Crypto Kingdom). It's all certainly less than Bitcoin of course.
79b79aa8d5047da6d3XX
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May 19, 2015, 07:15:42 PM
 #24387

Hardly a leader in tech, we already have 24/7/52 indexes.
. . . that are not calculated from taking the data from a single exchange.

This has to be temporary, they cannot be so spectacularly dim.
cypherdoc
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May 19, 2015, 07:18:02 PM
 #24388

$DJI gone negative.  would be really interesting if it turns out to be a headfake over the top (to a new high).

the Dow Theory non conf is strong.
smooth
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May 19, 2015, 07:18:54 PM
 #24389

The network effects for bitcoin vs. alts are very real and already present a significant hurdle for any of them to overcome. For example, in 2014 VCs invested >$300M in Bitcoin firms vs. near zero for any alt. Currently numerous websites, VPNs, etc, that I use accept Bitcoin, none to few accept any alt. The fact is there are already network effects in place for Bitcoin vs. alts. This makes the hurdle higher for things such as Monero.

http://www.qhoster.com/clients/announcements/43/QHoster-accepts-all-cryptocurrencies-Buy-hosting-domain-names-Linux-VPS-Windows-RDP-VPS-and-dedicated-servers.html

The problem I see with most of those services is the same one you see with xmr.to. They're mostly using Bitcoin as a payment rail (and a marketing vehicle to target Bitcoin supporters as customers) and then they're going to dump it to pay their costs of doing business (most of it in the case of domain registration). There is no real circulatory economy there.

There's really not a whole lot of difference between using BTC to pay for a domain name and using xmr.to to pay for a domain name (via an even shorter holding period of BTC), or for that matter setting up a domain registrar that accepts XMR as payment and dumps it to pay upstream registration costs (not hard to do at all, but also not particularly profitable).
TPTB_need_war
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May 19, 2015, 07:20:43 PM
 #24390

but we're working under an assumption that all the self interest mechanisms built into the satoshi design will protect and preserve the current blockchain from being destroyed or overpowered (and that's worked well so far).

By what metric do you assert it has worked well so far?

I see failure on that point in every measurable facet that can portend a trend:

1. Hashrate and topology of the network is becoming more centralized.
2. Behemoths are driving most of the new wallets (or will soon).
3. Scaling now requires moving to IBLT centralization of mining.
4. Pools have demonstrated the Tradegy of the Commons leads to 50% concentration. You Whack-A-Mole it with concerted political effort while Bitcoin is small, but as the behemoths take over the economics will rule (even if hidden behind a Sybil attack).

The so called decentralization of the pools can't portend anything due to the inability to measure a Sybil attack.

Erdogan
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May 19, 2015, 07:21:22 PM
 #24391

I agree with intangibility [of money] being a benefit, we might have different definitions here though, how are you defining this?

Private keys are the authority to spend your money. And because they're just random numbers, the ability to store your money safely is intangible to both the owner and everyone else. The actual storage itself depends on something tangible (mining & computer hardware), but we're working under an assumption that all the self interest mechanisms built into the satoshi design will protect and preserve the current blockchain from being destroyed or overpowered (and that's worked well so far).

Doesn't this just go back to portability though? One way to phase that is bitcoin is more portable than physical based money (gold) because it is just a bunch of random numbers. You can easily transport random numbers anywhere you can send information. This includes the ability to send money across the world in seconds, or even transport money into your head (brain wallet). Being intangible means something is more portable, including the ability to transport money into your mind, which is impossible with anything tangible.

Hmmm, I would argue that anything that is portable is tangible, and that intangible objects cannot be ported anywhere, because they are both everywhere and nowhere simulatneously  Grin But then again, maybe I'm only saying that because it would mean I'm right  Tongue

It's possible that we're arguing about semantics, but from what I remember about good system design, proper analysis (including labelling objects and actors with the best possible description you can think of) is the unimpeachable foundation for getting good results.

There is some support for calling them intangible, but i prefer to view them as tangible because you have to store the key somewhere on a non-intermittent storage medium, and that is where the coins are.


rocks
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May 19, 2015, 07:25:54 PM
 #24392

how much of it should I allocate to describing what a transition plan from the current P2P network to a market-based P2P network would look like, etc. etc. etc.

When you have time, that would be interesting to understand.
rocks
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May 19, 2015, 07:26:48 PM
 #24393

I agree with intangibility [of money] being a benefit, we might have different definitions here though, how are you defining this?

Private keys are the authority to spend your money. And because they're just random numbers, the ability to store your money safely is intangible to both the owner and everyone else. The actual storage itself depends on something tangible (mining & computer hardware), but we're working under an assumption that all the self interest mechanisms built into the satoshi design will protect and preserve the current blockchain from being destroyed or overpowered (and that's worked well so far).

Doesn't this just go back to portability though? One way to phase that is bitcoin is more portable than physical based money (gold) because it is just a bunch of random numbers. You can easily transport random numbers anywhere you can send information. This includes the ability to send money across the world in seconds, or even transport money into your head (brain wallet). Being intangible means something is more portable, including the ability to transport money into your mind, which is impossible with anything tangible.

Hmmm, I would argue that anything that is portable is tangible, and that intangible objects cannot be ported anywhere, because they are both everywhere and nowhere simulatneously  Grin But then again, maybe I'm only saying that because it would mean I'm right  Tongue

It's possible that we're arguing about semantics, but from what I remember about good system design, proper analysis (including labelling objects and actors with the best possible description you can think of) is the unimpeachable foundation for getting good results.

Yup we're at semantics at this point, and I'm holding on to the classical properties of money with dear life...
Zangelbert Bingledack
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May 19, 2015, 07:28:21 PM
 #24394

Anything else subverts the entire basis of money.
I think you just identified the motive.

Hey guys - you are in my TOP-20 bitcoin theorists. Both. Considering this, the latest replies have been lame.

I have presented a mechanism that may dethrone Bitcoin without asking the majority, the exact same way as it has always happened during monetary transformations in the history (leaving the majority holding the bag), and the same way as Bitcoin gained its valuation, which you and I are not ashamed to enjoy.

I am interested in hearing analytical criticism that could invalidate the theory. What I hear instead is moral criticism that the entire basis of money is subverted if such happens.

This isn't a moral criticism, but a practical one, as argued in the post. Stores of value can change, but this cannot be a fast process as that contravenes the very definition of "store of value." Not unless it absolutely has to happen (facing catastrophe), as I also mentioned. Or let me make it more clear: I do not think the market will accept changing the store of value except as an absolute last resort.

FWIW, I don't agree with Justus's suggestion that altcoin investors are attempting to subvert the basis of money.
justusranvier
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May 19, 2015, 07:29:42 PM
 #24395

I don't agree with Justus's suggestion that altcoin investors are attempting to subvert the basis of money.
Not all of them.

Some of them, and they do as much as they can to encourage others.

Many of the others could be considered unwitting participants.
smooth
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May 19, 2015, 07:34:07 PM
 #24396

Anything else subverts the entire basis of money.
I think you just identified the motive.

Hey guys - you are in my TOP-20 bitcoin theorists. Both. Considering this, the latest replies have been lame.

I have presented a mechanism that may dethrone Bitcoin without asking the majority, the exact same way as it has always happened during monetary transformations in the history (leaving the majority holding the bag), and the same way as Bitcoin gained its valuation, which you and I are not ashamed to enjoy.

I am interested in hearing analytical criticism that could invalidate the theory. What I hear instead is moral criticism that the entire basis of money is subverted if such happens.

This isn't a moral criticism, but a practical one, as argued in the post. Stores of value can change, but this cannot be a fast process as that contravenes the very definition of "store of value." Not unless it absolutely has to happen (facing catastrophe), as I also mentioned.

Well, again, there is no fast process at work here. <0.1% of the store-of-value from gold, fiat, etc. has shifted to Bitcoin. In fact the real number considering all store-of-value asset classes is probably far less than 0.1% but that's an easy number to use. If 0.2% moves to some other cryptocoin next year that will still be an extremely slow process, but Bitcoin will likely be left behind at that point.
TPTB_need_war
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May 19, 2015, 07:44:51 PM
 #24397

This isn't a moral criticism, but a practical one, as argued in the post. Stores of value can change, but this cannot be a fast process as that contravenes the very definition of "store of value." Not unless it absolutely has to happen (facing catastrophe), as I also mentioned. Or let me make it more clear: I do not think the market will accept changing the store of value except as an absolute last resort.

Do you approach all your investments as lifetime or multi-decade HODL?

I thought investing into stores-of-value was a process of buying low and selling high?

If you bought gold in 1980 and I bought bonds or stocks, you'd be a relative pauper by now.

Changing stores-of-value is the normal mode. The abnormal mode is HODLing too long. September is the time to prepare to sell bonds (and in 2017 sell stocks).

I assume your point is bounded on stores-of-value that compete directly with Bitcoin for the same exact market as Bitcoin. In that case I agree with you that the chances of an upstart overtaking a market leader with Bitcoin's momentum are nil. And the chances of a negative wealth efffect on Bitcoin at this juncture are nil.

That is why put my sentence in red, bold that the only real chance for an altcoin to obtain escape velocity is to uptake markets that Bitcoin can't touch.

Monero's problem is there  is no real ecosystem (circulatory, network effects) use for its anonymity that doesn't also involve Bitcoin. So any network effects tend to accrue more to Bitcoin as the dominant market leader.

Edit: one very important point I have learned from this discussion is that the worst thing an altcoin can do is allow too many coins to fall into the hands of indifferent speculators, because they will surely sell to arbitrage back into Bitcoin. Your whales will need to understand how you intend to generate a long-term superior return over Bitcoin and that trading in and out is more risky.

Well, again, there is no fast process at work here. <0.1% of the store-of-value from gold, fiat, etc. has shifted to Bitcoin. In fact the real number considering all store-of-value asset classes is probably far less than 0.1% but that's an easy number to use. If 0.2% moves to some other cryptocoin next year that will still be an extremely slow process, but Bitcoin will likely be left behind at that point.

That window is quickly closing. The Circles, Paypals, are preparing to close it, at least in Bitcoin's current market as a speculation on the potential for a global ledger and money transfers without being tied to one behemoth (e.g. Paypal). Bitcoin is really a way of scaling Paypal to everyone while pretending it isn't (obfuscating that is) owned by Peter Thiel et al. Bitcoin is a reverse takeover of global banking by pretending it is open and fair. Bitcoin is the way you force national governments to accede to an international banking regulation.


Carlton Banks
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May 19, 2015, 07:54:57 PM
 #24398

Yup we're at semantics at this point, and I'm holding on to the classical properties of money with dear life...

I do enjoy this kind of argument, I feel like either of us might give in, and either of us would accept we're better off sharpening each others wits than battling to bitter mutual near-death. Saying that makes me feel like this issue doesn't matter though  Grin I will revert; I was right all along muahhahahahaha. There, it's fun again!  Tongue

Vires in numeris
Carlton Banks
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May 19, 2015, 07:58:21 PM
 #24399

Hmmm, I would argue that anything that is portable is tangible, and that intangible objects cannot be ported anywhere, because they are both everywhere and nowhere simulatneously  Grin But then again, maybe I'm only saying that because it would mean I'm right  Tongue

It's possible that we're arguing about semantics, but from what I remember about good system design, proper analysis (including labelling objects and actors with the best possible description you can think of) is the unimpeachable foundation for getting good results.

There is some support for calling them intangible, but i prefer to view them as tangible because you have to store the key somewhere on a non-intermittent storage medium, and that is where the coins are.

Good call, it's true even of brain wallets (although arguably the loss of that particular storage medium makes money the least of your problems...)

Vires in numeris
Zangelbert Bingledack
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May 19, 2015, 08:06:45 PM
 #24400

Positive wealth effect = increase in marketcap : net virgin demand

In CKG case, there was $50k new money wanting in, which ended up raising the marketcap to $500k, making the wealth effect coefficient of 10x.

I see what you mean. It's a function of the strength of the holders' hands. The stronger the hands, the greater the wealth effect. As your excellent analysis of dishoarding shows, there's an incentive to hold for the first few doublings (whatever starts to be life-changing), then sell at a certain rate, so it doesn't seem that useful to generalize from an example where the maximum any holder could have made by selling is way less than $50,000.

However, your point holds to a degree because the 10% are very motivated to hold at first. But I think "at first" are the operative words. There's a whole lot of upside to traverse between, for example, XMR and BTC. All the more so in the case of an empty ledger or new coin.

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I'm actually not talking about spinoffs here. I just used the word "ledger" because that's one of my preferred terms for "coin" or "altcoin." I meant that the 90% will sell their allocations in the altcoin and buy more BTC, for the reasons mentioned above, and that I think this negates the small float effect.

Yes, you are talking about spinoffs, because in an exit situation to a new ledger, the 90% does not have any allocations in the new ledger that they could sell unless they buy them first, negating your point instead.

I think I addressed this by saying that people wouldn't switch to a new coin all at once in any case, unless Bitcoin was already doomed. They need years of testing, high valuations, etc.

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we can say the effect should be mitigated/eliminated by arbitrageurs - as long as fairly basic market infrastructure is there.

I agree that if the old chain survives the initial crash without it causing a descent to abyss (BTC has many examples of survival!), then in the long term the valuations of the chains adjust to represent market perceptions. Yet as the science of determining a correct valuation for a cryptocoin is completely unestablished even in the best minds, not only in the markets, it may well be that in a "successful" 10% exit, the end state is much different than 90/10. I don't claim any reasonable powers to forecast, even after more research on the subject than most.

There is however the case that the old chain is destroyed by the initial exodus of capital and market crash, and the general loss of confidence that results. Just see what has happened to shitcoins.

I still think this whole scenario ultimately relies on long-term holders getting spooked by short-term gyrations absent fundamentals, and that those gyrations probably wouldn't be allowed to happen by the arbitrageurs. However, I should note that I personally don't necessarily even think that if, for example, Dogecoin temporarily exceeded Bitcoin's market cap in a crazy rally that it would spell doom for Bitcoin. I take seriously the ledger-refinement point that has endowed Bitcoin with uniquely strong hands over the years, and of course Bitcoin's position isn't maintained merely by its price, but by infrastructure, track record, dev team, length of time at very high valuations (gigantic bullseye for attackers), etc.
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