Sign in to follow this  
Followers 0
Ghjhero

Cryptocurrencies

86 posts in this topic

16 minutes ago, OldGimletEye said:

Snip

I can’t speak to all the economic specifics, but I will agree that the value in a form of currency is based on the trust and even the gold standard was arbitrary should gold have lost its lure. 

However ive also seen the way in which Bitcoin has inserted itself into the political economy. I was recently reading an article which described how it is gaining popularity in countries such as Zimbabwe or Venezuela where their economies have gone to shit. Regardless of the political ideology that it is at times associated with I think it’s worth looking into it’s potential. 

Share this post


Link to post
Share on other sites
23 hours ago, Ghjhero said:

However ive also seen the way in which Bitcoin has inserted itself into the political economy. I was recently reading an article which described how it is gaining popularity in countries such as Zimbabwe or Venezuela where their economies have gone to shit. Regardless of the political ideology that it is at times associated with I think it’s worth looking into it’s potential. 

In broken political systems or in systems where there isn't good system of producing safe stores of value I can certainly understand why people would turn to something like bitcoin.

But, if bitcoin were to be some kind of international monetary replacement, I do believe that would require a high degree of political cooperation among nations. Take for instance the Euro. Overall, I believe it has a been a disaster, largely because neither the economic nor political integration is there to make it work.

The irony in this situation of course, at least here in the US, is that lot of the people that are into bitcoin also fear one world government. But, in order to make something like bitcoin work as international monetary standard, you'd need a lot of international cooperation. In the 1920s, the Gold Standard broke down, leading to the Great Depression because the international cooperation wasn't there. When the Bank of France started to accumulate gold reserves, I do believe it's reasons were rational from it's perspective. It had just been through a major war. One that cost money ie gold to pay for to buy things it needed. It likely worried about another war and that it would need enough gold too see it through. The point here is that such international cooperation is hard because such cooperation has to take into account legitimate national needs.

Share this post


Link to post
Share on other sites

I think there’s a difference between how the Euro and Bitcoin have been implemented and how the latter could be more accepted internationally as time goes on. The Euro was a top down approach whereas Bitcoin has come from the ground up with individuals driving it’s increased acceptance. As a currency it should be quite easily acceptable internationally since it is cutting out the middle man that is the government. 

Share this post


Link to post
Share on other sites
16 hours ago, Kalbear said:

The tech behind it - blockchain - has incredible versatility in usage, and I expect a lot of it to be done.

Yes, and to add to that, a huge caution: What's cutting edge in software now is available for free in 10 years.

You'd have to be extremely confident that Bitcoin is not - and will not ever - be possible to forge artificially. There are some emerging security flaws in it which are still fairly minor at this stage. I saw that they're trying to make a newer one, more secure, but it's not catching on. Because ensuring that it can't be easily forged necessarily means some central oversight, so it's being angrily refuted as an alternative.

Share this post


Link to post
Share on other sites

I think it goes overlooked that a lot of bitcoin mining was conducted by IT professionals on their employers' hardware without permission, effectively a theft and misappropriation of resources. 

I don't think I've heard a single redeeming feature for it yet but I'll acknowledge that I'm always a skeptic and just because fads and scams far, far outnumber transformational revolutions in finance and economics doesn't mean I'll be right again this time.  Perhaps you can use your bitcoins to buy the Brooklyn Bridge.

On the bright side, I always enjoy @OldGimletEye's posts on economies and monetary systems

Share this post


Link to post
Share on other sites
12 minutes ago, Iskaral Pust said:

I think it goes overlooked that a lot of bitcoin mining was conducted by IT professionals on their employers' hardware without permission, effectively a theft and misappropriation of resources. 

When did this happen? If you're talking 4-5 years ago when BTC was first making waves, fair enough. Not sure why that matters today.

Edited by Mexal

Share this post


Link to post
Share on other sites
23 minutes ago, Iskaral Pust said:

Perhaps you can use your bitcoins to buy the Brooklyn Bridge.

I actually laughed out loud at this! :P:D

Share this post


Link to post
Share on other sites
7 minutes ago, Mexal said:

When did this happen? If you're talking 4-5 years ago when BTC was first making waves, fair enough. Not sure why that matters today.

Yes, a few years ago now.  I think mining moved on to specialized hardware and distributed computing since then because the computation burden outgrew the capabilities of the generalist corporate servers, but most of the bitcoins were mined in the early days by design.

It matters because the provenance (mining stolen by IT professionals), use (criminals transferring money) and promotion (ICO manias) have all been nefarious.  The libertarian currency utopia has been crooked at every stage.

Share this post


Link to post
Share on other sites
17 minutes ago, Iskaral Pust said:

Yes, a few years ago now.  I think mining moved on to specialized hardware and distributed computing since then because the computation burden outgrew the capabilities of the generalist corporate servers, but most of the bitcoins were mined in the early days by design.

It matters because the provenance (mining stolen by IT professionals), use (criminals transferring money) and promotion (ICO manias) have all been nefarious.  The libertarian currency utopia has been crooked at every stage.

This is true but it's not really a surprise. It's an unregulated currency system that was created from the ground up. Will it ever materialize into something more? Who knows. Maybe with some regulation and good use cases/adoption. I don't know.

Will just say that the use for criminals is overdone. Dollars are used for nefarious use every day and on a scale far beyond Bitcoin.

Edited by Mexal

Share this post


Link to post
Share on other sites
19 minutes ago, Mexal said:

Will just say that the use for criminals is overdone. Dollars are used for nefarious use every day and on a scale far beyond Bitcoin.

In absolute terms, yes.  Not in proportional terms.

If democracy is govt for the people by the people then so far bitcoin has been currency for crime by crime.  It may someday transcend the criminal motivation to have untraceable, unregulated currency but there's no compelling case why that should be.  The world wasn't crying out for a new currency system and we're trying to improve transparency of asset holdings, not make it impossible.  All the hype is used to hide the fact that there is zero social good in crypto currencies. 

Share this post


Link to post
Share on other sites
34 minutes ago, Iskaral Pust said:

All the hype is used to hide the fact that there is zero social good in crypto currencies. 

Except for the innovation of block chains. I agree that currency isn't the best application of them (or a good one at all) but the software's potential has been shown to be widespread and its principles robust. Bitcoin was an effective, albeit expensive, experiment with how useful block chain is as a tool.

Share this post


Link to post
Share on other sites
43 minutes ago, Yukle said:

Except for the innovation of block chains. I agree that currency isn't the best application of them (or a good one at all) but the software's potential has been shown to be widespread and its principles robust. Bitcoin was an effective, albeit expensive, experiment with how useful block chain is as a tool.

I agree.  My very first sentence in this thread was in support of block chain.  But that's not a social good of crypto currencies.

For anyone who is interested in how to look at bitcoin in terms of a bubble forming/peaking, this is a pretty good summary:
Bloomberg article today
I won't short bitcoin, just like I wasn't willing to short mortgages in 2007.  Someone will (luckily) get the timing just right and make a lot of money.  And then Michael Lewis will write a book that claims they're the only ones who saw the crash coming.  It may even get optioned for a movie.

Share this post


Link to post
Share on other sites
On 28/11/2017 at 0:39 AM, Yukle said:

Except for the innovation of block chains. I agree that currency isn't the best application of them (or a good one at all) but the software's potential has been shown to be widespread and its principles robust. Bitcoin was an effective, albeit expensive, experiment with how useful block chain is as a tool.

Is it that robust though?

Bitcoin has shown that, as a any digital format, it is sensitive to proper data management and archiving. No-one knows what percentage of mined coins have been lost because of hardware failures or people forgetting passwords.

And of course Ethereum has showcased the normal sensitivity to bugs and exploits of any software program.

Probably that does not compare horribly to current best practice, but I'd expect a new solution to be better.

Share this post


Link to post
Share on other sites

Even better, Ethereum has been slowed down immensely because people are using it to play a game. http://www.bbc.com/news/technology-42237162

Yes it is only one implementation, but it shows the fragility of (some of the) currently major blockchain implementations.

Share this post


Link to post
Share on other sites
On 12/5/2017 at 6:04 PM, Seli said:

Even better, Ethereum has been slowed down immensely because people are using it to play a game. http://www.bbc.com/news/technology-42237162

Yes it is only one implementation, but it shows the fragility of (some of the) currently major blockchain implementations.

There's some kind of sweet justice in a cryptocurrency network being bogged down by adorable virtual-cats.  Prepare to welcome our new feline overlords.

Share this post


Link to post
Share on other sites

I have some kind of a ball park of a clue how to price an equity or a bond.

I have no effing clue how to value Bitcoin. None. Just completely lost in the sauce. Now it’s completely possible I’m just being a moronasaurus here.

But, perhaps, I’m not being a complete moron.

 

Quote

Nevertheless, as Jamie Dimon suggests, it makes sense to ask what fundamental services Bitcoin provides. More specifically, have the prospects for those services improved sufficiently over the past year to warrant the 10-fold increase in price that has vaulted Bitcoin’s market capitalization into the range of the top 50 U.S. firms?

We strongly doubt it. The remainder of this post explains why.

Start with the fact that, unlike a stock, there is no prospect of Bitcoin ever paying a dividend since there are no earnings. Instead, Bitcoin’s chief benefits appear to arise from the transactions privacy that cryptocurrency advocates tout.

 

Edited by OldGimletEye

Share this post


Link to post
Share on other sites
3 hours ago, OldGimletEye said:

I have some kind of a ball park of a clue how to price an equity or a bond.

I have no effing clue how to value Bitcoin. None. Just completely lost in the sauce. Now it’s completely possible I’m just being a moronasaurus here.

But, perhaps, I’m not being a complete moron.

 

 

Think of bitcoin as digital gold. It doesn't do anything but sit there, as does gold but it can be used as a medium of exchange for actual goods. There is one vital difference. No matter how many times an ounce of gold trades hands, the weight remains the same. The bitcoin gets more and more cumbersome due to the energy required to maintain the block chain that preserves its value. Imagine a ounce of gold that increases in mass with every transaction and you have a bitcoin. Take your cue from that as to the valuation of bitcoin. 

Share this post


Link to post
Share on other sites

I agree, Bitcoin should be a depreciating asset because the average cost of carry increases over time (typical of a contango commodity market), but an inflating asset because the marginal cost of production is increasing steeply provided there is demand/value sufficient to cover that cost.  These are an in tension, with the latter dominating so far.

There’s limited value yet, except to criminals, but lots of demand based on speculative expectations.  If anything negatively impacts those expectations, e.g. sovereigns reasserting their monopoly on currency, then there will be a sharp reversion to the former. 

If demand does increase, and it probably will since we’re still in the early stage of euphoria and awareness (think 1997 for internet stocks), then prices can move higher.  But once we have short trading available, e.g. from the proposed futures contracts, then that peak & collapse could happen at any time.  Bubbles have predictable patterns but not predictable timeframes. 

Share this post


Link to post
Share on other sites

There's an interesting article here about how Bitcoin is none of the things it was supposed to be. Briefly, most uses of it now require middlemen which defeats the anonymous currency aspect of it and also increases fees. Furthermore, even anonymous operators (mainly ones outside the law) can no longer use it as a currency because the volatility is too high.

On the bright side, I didn't think we'd ever see anything like the tulip mania in my lifetime, but here we are.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now
Sign in to follow this  
Followers 0