Somebody just paid $450 million for a painting. A currency or anything else is worth what people are willing to pay for it regardless of whether it is backed by government or other assets.
Does anyone here use Bitcoin?
- Thread starter Gonolz
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Govt can create more currency (of their issue) at will.
They can’t create more da Vinci paintings, gold, or bitcoin.
I would expect, under the continuous process Bernanke outlined, the pile of dollars will grow and so will the dollar price of the aforementioned items.
I find the whole Bitcoin thing interesting but would personally not bother investing at these levels, under the assumption that if they're talking about it on Yahoo the easy money has been made.
No doubt a huge multiplier has been missed by anyone on the sidelines, but not expecting it to gain on USD going forward, so you expect US deficits and monetary creation to really stop? I’m expecting more of the opposite, that is to say, more of the same.
As the pile of USD grows the pile of bitcoin is fixed. It can only grow from the present 16 million coins to 21 million. It’s inflationary pace is down, and will eventually end, and then ultimately the real pool will shrink as people lose coins, like this guy.
Pool of USD ain’t ever going down, as it would make the debt even more expensive. I suggest folks take stock of economic law and political realities.
I am curious what will happen closer and closer to the 21 million mark. If people will just sit, or if people will feel like its maxing so no gain, so sell to cash out and the price plummets with the last people holding are holding empty "bags".
That poor guy. Thats the kind of regret people kill themselves over.
I think bitcoin is growing in value relative to dollars because even though the pool of bitcoin is increasing, the pools of fiat currencies are growing too. When bitcoin stops growing I don’t expect the government’s are going to suddenly end their deficits and stop inflating, so even if the demand for bitcoin remained the same (and I happen to think it’s still tiny - who do you know that actually claims some?) the fiat currency price of bitcoin should keep rising.
In other words, a bet on bitcoin appreciating in dollar terms is a bet on continued deficits financed in printed fiat.
Seems like a safe bet.
They don’t mention the current status of the girlfriend...
Hmm. I am still learning (feel like the dude riding a horse introduced to a car, who would want that loud thing, I don't have to feed Silver, he eats grass), but I guess a lot of it also has to do with the why. I'd guess many people are buying it just to make a profit, the speculation aspect. If it tops out, then they don't need it, so they get out. I admit to not really having a clue about the appreciation, but US dollar is relatively stable vs other countries. RE population who own some, I know a handful but agree it is a small % of the world pop. I just don't have any idea what % of the world population cares about it.....
May all be completely accurate. But the whole Bitcoin process still seems really sketchy to me and while I may have been willing to lose a few thousand I'm not going to dump anything significant into it.
Say Bitcoin goes up to $100,000 in a few years. By my math you'd make about $30k. I guess the question is whether you're ok with the risk of having that $5k in a new and untested investment.
The thing is that when it maxes out, if people still believe in it, the value will go up even faster. It's like if the government stopped printing money, the dollar would become more valuable over time in terms of the resources it could buy. The real key here is that people keep believing and supporting the system. As long as enough people will give me stuff I want for my bitcoin, because they believe enough other people will give them stuff they want for that bitcoin, the system keeps working. No different than dollars, gold or anything else.
Well, I do the normal 15% in traditional investing,so this would be more like gambling to see if I could turn that $5k into $35k you know?
Haven't got into bitcoin, but did get some litecoin bought when it was around 50.00 it's hovering around 157.00 now so not too bad.
Seems like a bubble to me.
It can’t be useful as a currency (energy cost) in any large scale. It’s speculation driven by greed. It will die spectachlarly.
It can’t be useful as a currency (energy cost) in any large scale. It’s speculation driven by greed. It will die spectachlarly.
The energy consumption issue is one I'm just learning about. Bitcoin "miners" in Mongolia? Bitcoin miners using more electricity than 159 countries?
"In the bitcoin economy, time really is money. Every 10 minutes or so, mining machines compete with each other to solve a math problem to win 12.5 bitcoins, a reward set by the bitcoin software. The work is akin to trying out billions of combinations of numbers on a safe. The miner who gets the right combination the fastest unlocks the safe. The more machines you have, the greater your chances of earning coins."
The whole thing is just bizarre to me. I can't shake the idea that it's like earning rupees in The Legend of Zelda but here people are investing real money.
As to the latter, the original bitcoin exchange was mt gox. Mt gox was a Magic the gathering card exchange before that.
Was programmed by the guy that made edonkey (media stealing exchange). It’s shady people doing shady things.
No one knows who made bitcoin. That should be troubling.
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Maybe bitcoins are just a global hoax by big electricity.
Interesting reading about the electrical use. https://futurism.com/mining-bitcoin-costs-more-energy-159-countries-consume-year/
Btw, the way edonkey/emule worked doesn’t seem that dissimilar conceptually to blockchain.
Another thread touched on the subject, so I will repost in this one. Today, my plumber told me he was making "an investment" in digital currency because it has such good profits. He is hoping to quadruple his money in less than a year. The time to sell is soon.
Yep. The reddit threads on this topic are ridiculous. This is the future. Bitcoin is going to supplant fiat currencies around the world. One million dollars a bitcoin. Bitcoin will put banks out of business. I.m very curious how many paper million and multi millionaires crypto added to the market.
I’ve heard about bitcoin and lite coin from people I know in Poland and I’ve seen articles about Venezuelans grabbing on to this. The world wide nature of it makes me wonder how high the bubble can go. Definitely regret not investing in this years ago to benefit from the hysteria.
There is hundreds of trillions in currency and money in equity markets in the world. The market cap for crypto is around 500 bill.
If the technology plays out on some of them I don’t think the crypto bubble has even barely begun.
If the technology plays out on some of them I don’t think the crypto bubble has even barely begun.
So, question. Where does all that bitcoin value reside? It's not like there is a dollar printed and put aside. People buy bitcoin with dollars right?
It’s important to realize there is a distinction between an exchange and the bitcoin protocol itself.
Why? The protocol is open source. Any coder can read what it does.
What would the identity of the original coder reveal that is useful?
I get that. Just seems like there’s similarity in concept to the non centralized hash approach of edonkey.
In my view, this is a marketing scam of sorts. The guy who made “lite coin” was 19. By including “coin” in the names, Joe Sixpack associates this with money. Now, it’s a market scam that you might make a lot of money with but it’s basically value from nothing.
There’s nothing particularly innovative about blockchain. This is gold pieces in Everquest.
Economic value isn’t intrinsic, it’s in the subjective mind of the market participant.
Correct. There is a permanent ledger entry made that shows who owns the bitcoin. When transferred the ledger is updated. This is the ‘blockchain’ - the entire history of bitcoin transactions.
Problem with the dollar that is printed is that they won’t quit printing them, so when you set it aside it loses value. The bitcoin protocol has a hard limit encoded on the inflation of the bitcoin pool.
They buy it with whatever people want to trade it for. It is a medium of exchange.
Given that the edonkey guy using a similar concept built mt gox and the latter was a heist, I wonder if he created bitcoin specifically to do that.
Actually, it’s very innovative as it solves a couple of monetary problems. It prevents counterfeiting, and that is probably the most important. Here’s a good article on the Byzantine Generals Problem.
Your example is also a good one to explore.
Gold pieces in Everquest were not limited. This became a problem as higher level characters earning huge rewards swamped the economy with cash. The creators were constantly trying to create money sinks to drain the cash that was created just by people playing the game.
Imagine how unfair a monetary system would be if the authorities could create money at whim and provide it to their favorites, thereby diluting the value of the money you earn and have saved. Because that’s what we have now with the Federal Reserve System.
Now imagine a system where they cannot create money from whole cloth, but must trade for it. That’s what bitcoin ultimately promises. Expect lots of FUD from the powers that be who are threatened by a change like this.
Here's the part I don't get - we spend countless billions of dollars each year trying to guard against security breaches and identity theft, most of which is aimed at stealing money from us.
Yet, with Bitcoin, we're lining up and fighting to throw tons of hard-earned money to faceless entities in cyberspace to own something that most can't even begin to explain.
I get that one could make the exact argument about stocks, but it's the cyberspace angle that makes it different to me.
Yet, with Bitcoin, we're lining up and fighting to throw tons of hard-earned money to faceless entities in cyberspace to own something that most can't even begin to explain.
I get that one could make the exact argument about stocks, but it's the cyberspace angle that makes it different to me.
Again, it’s important to understand the distinction between an exchange like MtGox and bitcoin itself.
If I have money in a bitcoin wallet, it’s not subject to ‘heist’. If I transfer money from my wallet to a wallet that Mt Gox holds the keys to, I have introduced a counterparty risk that bitcoin itself doesn’t have. I’ve decided to trust the owner of MtGox to treat me right. If he goes rogue like Jon Corzine at MFGlobal and starts dipping into ‘my’ wallet to fund his own trades, do I blame the monetary unit itself, or the thief?
I have not followed the MtGox story very closely (with regard to whether it was hacked, or an inside job), but the proprietary code of exchange sites is not to be confused with the open source bitcoin protocol.
Exchanges are necessary for crypto to be accessible. You also need secure storage that can be recovered in the event someone dies or loses keys.
Being able to put a face on Ben Bernanke doesn’t stop him from robbing you with his printing press.
But you’re right most people would struggle to explain the monetary system.
Being able to put a face on Jon Corzine didn’t stop him from robbing customers of 1.6 billion dollars, but his friends are richer and more powerful than yours, so his penalty is not getting to run for President like he hoped.
Also edonkey was not an exchange. It was a peer to peer non centralized sharing service in which a full composition of data could be broken up into components with an identifier to construct as a whole through a hash system. Ie. A chain that identified how the components fit together and could identify individual components and grab them from anywhere connected to the net.
Exchanges have a purpose, my point is that they are exchanges and certain aspects of them shouldn’t be conflated with bitcoin. You and I could trade bitcoin without using an exchange.
I wouldn’t consider putting my coin in someone else’s wallet ‘securing’ it. It places it at counterparty risk. You can get the security of redundancy without counterparty risk.
You can print your keys and put them in a jar and bury it in the backyard if you wanted.
Venezuelans are definitely jumping on board because their monetary authorities are debasing the Bolivar to keep buying political support. It’s easier to jump the border with bitcoin than any other store of value as well...
Depends on your financial position, how much is due, and your appetite for risk. It would also be prudent to get a better understanding of the "crypto currency" before investing or exchanging in place of USDs imo.
This is a lucid, intelligent, well-thought-out post. Yet the value of Bitcoin has septupled in the time since the original post. Sometimes you gotta say WTF, make your move.
Yes, this would fall under appetite for risk. Sounds like you have a healthy one. Personally, I wouldn't risk anymore than 1-3% of my funds used for trading. I believe it's great opportunity for people who aren't in the know to get taken advantage of by those that are. Which is generally the case with trading financial markets.
Bitcoin is pointless. It is an intangible "asset" and has no tangible value. It isn't needed by anyone. It's an illusion, it has no intrinsic value. I don't even need it to buy anything and there are many different ways to make a profit. What's the point?
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So, in other words, Bitcoin is like U.S. dollars or any other currency? The only key is that people believe the illusion. How much is the cotton, linen and ink worth on a $100 bill? It would take a lot of those to buy a $450 million painting.
