Off topic bitcoin rats deserting ship

[Edwin Dirnbeck]

Just for fun ,I follow the bitcoin mania. The two top pumpers seem to be coindesk and ccn,at least they allways come up on top in a google search. In this quarter bitcoin has fallen from around $20,000 to $6500. When the price was rising they never had trouble withtheir servers keeping up with the trafic and you could instantly see the new hihger price. Now that the bottom has fallen out and seems to be going even lower,you click on their site and just see little circles going round and round. Maybe they believed their own hype and are frozen in shock,or they are trying to sell their bitcoins to pay the electric bill. Edwin Dirnbeck

[3 Phase Lightbulb]

Yes, it's amazing. It's currently $6600 which is up ~450% from this time last year (~$1200). And it's up ~4600% from 5 years ago (~$140).

[lakeside53]

Doesn't mean much to the guy that bought it a 20k thinking it would go up. Just gambling.

[Edwin Dirnbeck]

Doesn't mean much to the guy that bought it a 20k thinking it would go up. Just gambling.

Or 19 -18-17-16- ect.

[lakeside53]

I wonder what the average holder cost price is now. How many are still owning from $140?

[michigan doug]

Just stick with your bank. They'll pay you almost 2% per annum if you lock it up in a cd.

More seriously, yes, cryptocurrency is volatile. In december, Bitcoin gained a functional futures market. In the long run, this is good and healthy and necessary. But in the short term, it makes it much easier to manipulate the market with leverage. I have first class reasons to believe that the big investment houses have decided they want significant skin in the crypto game. For players of that size, the entire 250 billion dollar crypto market is a drop in their ocean, ie. easily manipulated.

So this is a 6-12 month dip to allow Wall Street to shove some money into the crypto market at a very attractive price. Guess what happens afterward they get their positions set like they want? Yeah, it goes up again. Likely by 100's of percent again.

I am not encouraging anybody to invest in crypto due to the volatility. But this is what, "buy low, sell high" looks like in real life. When everybody else is running around with their hair on fire and things look terrible, that's when the big money is loading up. It is not unlike the "dogs of the Dow" strategy.

[Machine]

I wouldn't be so sure it's headed north again, at least in the longer run. Cryptos are fine in theory and I love how they are an alternative to government fiat money. But right now they are a very tiny part of the world's money supply. The world's central banks (including the US Federal Reserve Bank), who control everything - including our politicians - will never allow a truly independent currency to widely circulate unrestrained. They will never allow any currency to seriously compete with their monopolistic inflationary money system. That's why after we were taken off the gold standard years ago a hefty ~30% "collectible" tax was imposed on gold & silver coins, precious metals etc. That's to keep anyone who thinks of opting out of their money system and resorting to gold,silver etc as an alternative - reined in.

Right now they're letting cryptos develop and exist. But only because it's a tiny amount of the total money supply, basically a rounding error in the trillions of central bank money circulated every year. Also, as someone stated earlier, you can bet they're already exploiting it as an internally manipulated trading vehicle. As long as they control it in this manner and profit from it as a manipulated trading vehicle, it will continue to exist. But if at any time the cryptos get too big for their britches and actually start to usurp the utter dominance of central bank money in any meaningful way? They'll pull out all stops and either outlaw them outright, or absorb them into their full control so as to act as a supplement to their existing money system.

They've already floated the justification for a future ban or annexation of cryptos, which you can be sure will come in the event they start to get out of their control: Cryptos are used for anonymous criminal transactions.

[Magicniner]

In december, Bitcoin gained a functional futures market. In the long run, this is good and healthy and necessary.

Yes, it's not like markets that allow speculation can adversely affect entire populations whilst most of the speculators walk away keeping their personal assets.

Oh, hang on,

;-)

[J Tiers]

........

So this is a 6-12 month dip to allow Wall Street to shove some money into the crypto market at a very attractive price. Guess what happens afterward they get their positions set like they want? Yeah, it goes up again. Likely by 100's of percent again.
.....

Dunno, Doug.....

That hundreds or more percent has already happened. There does not seem to be any reason for bitcoin to take off again, and It would seem that the big players might actually not WANT it to. It represents a factor outside their control.

It's somewhat of a commodity, but where is the underlying value that would make it go up again? To be a sensible investment, anything needs to have a value, an intrinsic value. Gold has no real intrinsic value other than it's usefulness. Ditto for silver. The remainder of its value is a "notional" value, represented by it's supposed intrinsic value, but that version of the intrinsic value is really a "market value", which exists only because there are people who want it just because of what it is, not for a use other than as a medium of exchange.

Gold is not the only medium of exchange. It is a "social fiat currency" with value really only because it does not corrode, it can be made into things, and it is not commonly found, like sand (which also does not corrode and can be made into things). That is why it became so popular to begin with.

But really, gold has value simply because everyone knows that gold is the "gold standard" for currency... the very term in quotes testifies to its pervasive socially approved value. The number of folks who "have to have" gold for a definite use is much smaller than the number who believe it is a universal exchange medium. The inflated value gold has is due to the difference between the useful value and the perceived value.

Bitcoin has no such.... there is no use for it, other than as currency. It does not even really exist. So, while it could be valuable as a medium of exchange, it is not the only one, and nobody has to have bitcoin. It is not as good as gold, and even gold is not taking off in value, it tends to remain stable. With the attention focused on it, bitcoin is now such a target that it has probably lost virtually all of it's usefulness as an untraceable currency.

So where is the underlying force that would drive bitcoin up hundreds of percent AGAIN? When it has already produced profits in the 1000s of percent for no good reason, and people know that.....?

[Norman Bain]

I disagree those who assert that Bitcoin is an effective currency for exchange.

The mechanism (the underlying algorithms and platform generally) fails any reasonable test of scalability. Cost (the fees) for transfers are out of control.

The totality of the platform will (and can be) readily replaced by an alternate improved platform. When this happens there will NOT be a transfer of Bitcoin (value if you like) to the new medium; they will be separate beasts.

A "real" next generation platform will have a near zero cost of conversion. Speculation in the medium (change in the electronic record/value of the funds you currently have held) will not appreciate or depreciate at a rate that varies by other than the currencies that are converted to/from.

[J Tiers]

I disagree those who assert that Bitcoin is an effective currency for exchange.

......

It failed as a medium of exchange the moment it became a speculative investment.

Any medium of exchange has to have a standard and reasonably stable "accepted value"... otherwise there is no possible way to set a price, the price might become stupidly low, or insanely high, overnight.

As for the others' "fiat currency" concept, that is basically bogus. A "currency" simply functions to represent a certain amount of "work". It is not ITSELF the work, it just REPRESENTS the work. Anything could do that, paper dollars, cowrie shells, just so long as it is not easy to find or make more of it.

As such, there is no requirement that the currency itself have a value in and of itself. In fact it may be better if it does not, because that can make it unstable in value, changing the amount of work that it represents.

So paper dollars are as good as anything else. Even gold is not a stable value.... If I found gold on my property, a big mine, and started mining and selling it, I could, if I had enough of a supply, cause the value of gold to drop, because it would become too plentiful. That is the same issue as with printing money.

[Machine]

It failed as a medium of exchange the moment it became a speculative investment.

Currencies from around the world are bought and traded by speculators every day on the global Forex market. Yet they mostly remain functional mediums of exchange.

As for the others' "fiat currency" concept, that is basically bogus. A "currency" simply functions to represent a certain amount of "work". It is not ITSELF the work, it just REPRESENTS the work. Anything could do that, paper dollars, cowrie shells, just so long as it is not easy to find or make more of it. As such, there is no requirement that the currency itself have a value in and of itself. In fact it may be better if it does not, because that can make it unstable in value, changing the amount of work that it represents.

The primary thing that gives Federally issued fiat currency value is the government's decree that it can be used to pay taxes and debts (public and private). And governments can and usually do refuse payment of debts and taxes in any other currency than their own. If the government and economy are stable and exist within the framework of a functional republic, and the quantity of money is properly managed so as to retain its value, this fiat or governmental decree imparts defacto value to the money.

So paper dollars are as good as anything else. Even gold is not a stable value... If I found gold on my property, a big mine, and started mining and selling it, I could, if I had enough of a supply, cause the value of gold to drop, because it would become too plentiful. That is the same issue as with printing money.

Gold or other precious metals are much more stable in value than fiat currencies issued by debtor nations (like the US and nearly all of the Western world). The volume or quantity of dollars, yen, pounds sterling etc are all constantly rising at a rate much higher than the volume of gold and silver are entering the market. The reason is obvious: precious metals are just that - they're precious. They're rare and difficult to dig up out of the earth, smelt, refine and mint into coins. That takes time, human labor, energy, mining rights, heavy equipment, permits, smelting refineries, minting presses and so on. Whereas fiat currencies are created out of thin air by the stroke of a computer keyboard (the vast, vast majority of modern fiat money is created from digital credits, not paper or coin).

So when you say the value of gold is not stable in value, what you really mean is that fiat currencies are not stable in value. When you see fluctuations in the price of gold vs the US $ or any other fiat currency, it is usually because the currency itself is fluctuating, not gold. And the reason the currency is fluctuating in modern times is almost always because they're increasing the supply of money which reduces its value (that's called inflation), which makes gold and other precious metals more expensive when priced in US $. In contrast, the volume of gold on the market is relatively stable, again because it is difficult for gold to be dug up out of the Earth, much, much harder than keyboard strokes.

Another way of thinking about it is to consider a pre-1965 silver quarter. Quarters and other silver coins used to be 90% real silver. Back in 1960 that same quarter would have bought you a gallon of gasoline. If you took that same 1960 silver quarter today and sold it at the current price of silver, it is worth $2.97. Where I live gas is currently about $2.70 gallon. So, as you can see, when you compare the value of a precious metal coin, its value is amazingly stable over very long periods of time when priced against things that have real value (i.e. a commodity) instead of a steadily diminishing monetary unit. In contrast, the US dollar has lost almost 90% of its value since 1960, which is all due to its steadily increasing quantity since then (mostly occurring as our debts increased to the point where we were taken off the gold standard by Richard Nixon in '71). That's how unstable it is compared to silver, but also gold as well.

[J Tiers]

Currencies from around the world are bought and traded by speculators every day on the global Forex market. Yet they mostly remain functional mediums of exchange.

They are not subject to the speculative rocketing up in value that bitcoin has seen, mostly because there is a huge economy that has priced things in national currency. That cannot be bucked, you get laughed out of the place if you try anything..... just go and try to pass a dollar as if it were really 3 bucks. Of course if you treat a buck as if it were worth only a quarter, you will get lots of takers. Currencies do not change value like bitcoin because their value in goods has been firmly established.

So that argument is dead on arrival.

So when you say the value of gold is not stable in value, what you really mean is that fiat currencies are not stable in value. ......

Bullcrap, frankly.

Measure the value against things that HAVE VALUE, not against gold.

IF the price of a bushel of wheat, or other essential food commodity ALSO went up at the same rate as gold, THEN, AND ONLY THEN, your specious argument would have validity.

But, in fact, the vast majority of commodities stay at the same general price, while gold, or bitcoin, etc, rockets up in price.

THAT IS YOUR CLUE that the price increase is purely a matter of speculators and the tinfoil hat crowd bidding it up. There is thus evidence that the price increase of gold, for instance, is driven by speculation, and NOT by devaluation of what you folks call "fiat currency".

There is a total disconnect between the bid-up price of gold or bitcoin, and the value of essential commodities, food, clothing, and shelter. Therefore it is NOT as you suggest, despite what you may believe, or want to believe. Take off the tinfoil hat and think about it for a while.

Another argument that is dead on arrival.

[JRouche]

I saw bitcoin back in the day. It is older than most folks know. I had 10k extra around 1992. I went with the penny stocks of Mexican telecommunication. I bought stock for a fraction of what it became. And FYI. I am still middle class.

[Mcgyver]

Another argument that is dead on arrival.

Is there a subject that has more strong opinions and less education and knowledge than economics? Its as crazy as if a bunch of accountants showed and starting telling journeymen machinist they're tapping holes all wrong and whats really needed is strong pair of tongs and a rain dance. You'll be a busy man if setting out to correct critics of monetary policy and structures, assuming you know.