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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1807053 times)
justusranvier
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May 19, 2015, 07:29:42 PM
 #24421

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.
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smooth
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May 19, 2015, 07:34:07 PM
 #24422

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
 #24423

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
 #24424

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
 #24425

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...)

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Zangelbert Bingledack
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May 19, 2015, 08:06:45 PM
 #24426

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.
smooth
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May 19, 2015, 08:10:16 PM
 #24427

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.

I don't know, to me it looks like the more the Coinbase, Circle, Paypal, etc. turn Bitcoin into a form of ersatz crypto that is really at its core more like fiat, the more the door opens, not closes. If that wasn't happening already, Monero would have half or less of the support it has now.

This may be a slow, even multi-generational process. I expect that as a possible, though not certain outcome. I don't buy that this will all play out over the next 2-3 years, necessarily. Nor do I consider 0.1% to be much of a lead at all. Every credible crypto is milimeters from the starting line, and there may not even be a race to be won by one at all, as you said.



TPTB_need_war
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May 19, 2015, 08:10:45 PM
 #24428

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

I have to disagree with rpietila. The whales can't sell until the masses come in. There isn't typically enough liquidity until then. The market can sniff their moves out because they are simply too large. Only the masses are too stupid not to sniff it. The wealth effect is illusionary until the float is filled with those buy high and sell low. Or until you've converted the SoV into a UoA by bringing the masses sufficiently into it in small enough morsels (checking account not brokerage account balances) that they don't need to stampede sell.

smooth
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May 19, 2015, 08:16:08 PM
 #24429

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.

I agree with this. Look, LTC got to within 20% of BTC on a price basis briefly (market cap was smaller since LTC is newer but that's a relatively small effect), and there was no real threat to Bitcoin there.

This is a young market and a young technology space. There will be a lot of churn, most of which is best described as sound and fury signifying nothing.
TPTB_need_war
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May 19, 2015, 08:21:03 PM
 #24430

LTC got to within 20% of BTC on a price basis briefly (market cap was smaller since LTC is newer but that's a relatively small effect), and there was no real threat to Bitcoin there.

Because it was the best coin for GPUs to mine for a while after ASICs banished them from Bitcoin (so all that BTC discarded hardware value was infused into Litecoin), then afaik the speculators piled on to the ramp up (remember people looking for leverag over BTC in the 2013 run), and when that ended (and with ASICs for Litecoin) afaik it cratered (haven't been watching lately).

And this is a critical point. If you can move the worlds CPUs into your coin decentralized, you can beat Bitcoin because you can move more hardware value into your coin. Especially if you can give the mined morsels to be so small that no one sells and they instead circulate those morsels on a use-case that Bitcoin can't do.

Why do you think I expended so much effort perfecting a CPU (ASIC/GPU resistant[1]) hash that I believe is far superior to Monero's (you can verify or refute if ever it is released).

[1] I mean not more than 10X efficiency advantage for an ASIC.

Zangelbert Bingledack
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May 19, 2015, 08:23:20 PM
 #24431

constantly switching to newer altcoins, even if they represent true improvements, is destructive to SOV.  thus, the whole concept of cryptocurrency as a SOV fails miserably.  they fail to see this thus their activities are destructive to the SOV concept.

This is one reason I've been wary of the "Bitcoin is shopper's paradise" idea of the past few years where merchant adoption was overemphasized or emphasized before its time, and the premature reference to Bitcoin as "the currency of the Internet" (/r/Bitcoin's sidebar) when it only "has currency," as it were, in a few niche markets so far. This marketing brought in so many people who didn't understand that everything is founded on SoV, and who didn't understand the ledger but rather thought of BTC as "digital tokens you can send through the Internet" (the famous WeUseCoins video with 6M views), with all the second-thoughts and objections that distorted understanding results in.

Well, I agree with your observation about it all being terribly premature but I disagree with your conclusion. In fact my conclusion is exactly the opposite. It is precisely because that focus is premature that Bitcoin has zero legitimacy to claim to be the global ledger of anything other than Bitcoin. You can't be the global ledger of money until and unless you are established -- in reality not just in some supporters' imaginations -- as money.

I agree in one important sense: my comments today on store of value become irrelevant if a new coin (new ledger) emerges and gets massively more investment from outside the current crypto community such that Bitcoin users only constitute a tiny percentage of crypto users anymore. It's clear enough why, because in that situation, we potentially have most of the population using a cryptoledger for the first time without ever having considered Bitcoin a store of value. Instead they consider the new ledger as a store of value, because it's all they've ever known post-fiat. In their minds, the SoV-destroying precedent of "must switch ledger when upgrading protocol" has never been set.

However, I think the analysis I gave earlier today would apply to that ledger, and we'd never see any ledger switches after that except in catastrophic circumstances.
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May 19, 2015, 08:25:15 PM
 #24432

constantly switching to newer altcoins, even if they represent true improvements, is destructive to SOV.  thus, the whole concept of cryptocurrency as a SOV fails miserably.  they fail to see this thus their activities are destructive to the SOV concept.

This is one reason I've been wary of the "Bitcoin is shopper's paradise" idea of the past few years where merchant adoption was overemphasized or emphasized before its time, and the premature reference to Bitcoin as "the currency of the Internet" (/r/Bitcoin's sidebar) when it only "has currency," as it were, in a few niche markets so far. This marketing brought in so many people who didn't understand that everything is founded on SoV, and who didn't understand the ledger but rather thought of BTC as "digital tokens you can send through the Internet" (the famous WeUseCoins video with 6M views), with all the second-thoughts and objections that distorted understanding results in.

Well, I agree with your observation about it all being terribly premature but I disagree with your conclusion. In fact my conclusion is exactly the opposite. It is precisely because that focus is premature that Bitcoin has zero legitimacy to claim to be the global ledger of anything other than Bitcoin. You can't be the global ledger of money until and unless you are established -- in reality not just in some supporters' imaginations -- as money.

I agree in one important sense: my comments today on store of value become irrelevant if a new coin (new ledger) emerges and gets massively more investment from outside the current crypto community such that Bitcoin users only constitute a tiny percentage of crypto users anymore. It's clear enough why, because in that situation, we potentially have most of the population using a cryptoledger for the first time without ever having considered Bitcoin a store of value. Instead they consider the new ledger as a store of value, because it's all they've ever known post-fiat.

However, I think the analysis I gave earlier today would apply to that ledger, and we'd never see any ledger switches after that except in catastrophic circumstances.

As I said, I agree when you get to the point where it actually resembles a global ledger. Something that grabbed 0.2% could still be overtaken by something that grabbed for example 1%. But if and when you get to 20% or 80% or whatever, then no.

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May 19, 2015, 08:26:51 PM
 #24433

As I said, I agree when you get to the point where it actually resembles a global ledger. Something that grabbed 0.2% could still be overtaken by something that grabbed for example 1%. But if and when you get to 20% or 80% or whatever, then no.

Right, all in context.

A good example is that in Japan today I learned Bitcoin is getting so little adoption (due to MtGox being all they know of it) that Ripple is actually ahead in terms of total amount invested (they used MLM/Amway to sell it Cheesy). When you have an entirely different population to choose from, nothing I said about precedents regarding SoV applies, since the new population is unaware of the precedent.

For practical purposes, though, I don't see something that is very much like Bitcoin being able to pull that kind of "new population group" trick, unless circumstances change in some unforeseen way, possibly regulatory.
TPTB_need_war
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May 19, 2015, 08:34:58 PM
 #24434

As I said, I agree when you get to the point where it actually resembles a global ledger. Something that grabbed 0.2% could still be overtaken by something that grabbed for example 1%. But if and when you get to 20% or 80% or whatever, then no.

Right, all in context.

Has Bitcoin already captured a few % of its final market? I say yes, because it appears to be limited to helping Paypal & friends (Goldman, etc) do a global obfuscated reserve takeover of traditional consumer (or B2C) transactional banking only. And realize that most of the world's population is unbanked or already has a Paypal account (and I consider Bitcoin = Paypal = Coinbase = Circle already it is just a matter of releasing what is already in the cards).

Will Bitcoin ever be mined regularly by all humans? Is there any market for that?

Will Bitcoin ever be used in decentralized micropayments? Is there any market for that? (Coinbase et all won't be able to accomodate the same level of network effects that a decentralized solution would)

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May 19, 2015, 08:35:48 PM
 #24435

And this is a critical point. If you can move the worlds CPUs into your coin decentralized, you can beat Bitcoin because you can move more hardware value into your coin. Especially if you can give the mined morsels to be so small that no one sells and they instead circulate those morsels on a use-case that Bitcoin can't do.

+1

The monetization of the great masses is both intriguing and important for me. CKG PoP emission is one try. That fulfills the condition that the value received is too small to be sold, yet big enough to have ingame transactional value, and games (as all MMO social networks) can quickly achieve network effects which are very valuable.

The value of CK is $5,000 per player, which is more than the value of BTC per owner. Some MMO have more players than Bitcoin has owners. Combining these 2 would result in a virtual economy larger than Bitcoin, and having Monero as the ingame currency, with CKG, CKS, land and a host of other things as assets.

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May 19, 2015, 08:45:21 PM
 #24436

Sometimes I believe the central banks shooting themselves in the foot could do more for bitcoin than all the VC investment in the world. If they ever implemented a cash ban for real, there would be a significant effort to find a new cash-like mechanism, enter bitcoin.

http://www.zerohedge.com/news/2015-05-19/cashless-society
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May 19, 2015, 08:49:58 PM
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enter bitcoin = Paypal = Coinbase = Circle = Facebook = ...

Zangelbert Bingledack
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May 19, 2015, 08:52:24 PM
 #24438

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.

I don't disagree, but I have assumed the usual context here is basically Bitcoin investors "branching out" into some altcoins. One could make a somewhat valid criticism that this context is changing to small degree, the best examples being Ripple and Ethereum and maybe Dogecoin, where they are actively trying to source users and investors from outside the Bitcoin community (BitShares to an extent as well). As long as Bitcoin is "the main attraction" into the space, which as far as I can tell it overwhelmingly is, the points I made seem to hold.
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May 19, 2015, 08:53:10 PM
 #24439

Sometimes I believe the central banks shooting themselves in the foot could do more for bitcoin than all the VC investment in the world. If they ever implemented a cash ban for real, there would be a significant effort to find a new cash-like mechanism, enter bitcoin.

http://www.zerohedge.com/news/2015-05-19/cashless-society

the disingenuous thing about that policy is that it is an attempt not to force consumers to buy things in the real economy, but to force them to speculate in assets like stocks and bonds so that the current holders (the financial elite) can dump to the masses at a higher top.
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May 19, 2015, 08:55:37 PM
 #24440

I don't disagree, but I have assumed the context here is basically Bitcoin investors "branching out" into some altcoins. One could make a somewhat valid criticism that this context is changing to small degree, the best examples being Ripple and Ethereum and maybe Dogecoin, where they are actively trying to source users and investors from outside the Bitcoin community (BitShares to an extent as well).

There'll be a new monero investments website soon as well, which presents the investment case in XMR without basing it on BTC, and also lists the options to buy it directly with fiat.

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