… i understand… decentralized currency blah blah blah… BUT BUT, am i missing, or actual monetary system is a completely different beast. Money Supply, Bonds, Interest rate all interconnected and work together to provide robust economic environment. Bitcoin has no such utility.
So what is Bitcoin? Is it a store of value? But even Gold, or paintings have other tangential utility, but bitcoin does not. What really drives the demand behind the bitcoin?
What will happen if tech giants will create consortium and issue it is own currency that can be used to purchase goods/utilities on their services?
Gold or diamonds have much lower physical utility than is implied by their prices. This is one argument of Bitcoin proponents in comparing it to gold or similar assets. I’m not sure if people will come to associate a digital asset as a real asset or safe haven (if you have 500 GB of purchased Amazon movies, would you ever include that in your net worth?), but who knows what today’s youth will come to believe in the future…
But anyway, I have a hard time imagining widespread adoption of this sort of decentralized currency by commercial entities. If companies start creating assets and liabilities, in Bitcoin or some other cryptocurrency, they will have to hedge this exposure somehow. Furthermore, they have reporting, regulatory, and tax regulations designed around normal currencies. So, even if they wanted to move to a cryptocurrency method of business, the process has to move at the “speed of government”. If companies want to adopt blockchain technology to increase security, they can always apply it to normal currencies. Some of the “benefits”, like lack of central bank or governed interest rates, will work against Bitcoin, since this will mean there are fewer volatility reduction mechanisms, making Bitcoin a worse store of value.
If we come to a point where USD or other reserve currencies become compromised or destabilized, I can imagine people demanding an alternative. We’re not anywhere close to that point though.
I think people who are asking these smart questions are not getting answers (because it has no logic, no fundamental value, and no utility other than criminality-related). And if you look at the global bitcoin investor base, these people are notasking these questions, because they are not sophisticated investors.
Anyhow, now I have futures on my IBKR screen, so I can eat popcorn and watch the insanity!
Yes, that is a good point, and it occurred to me right after I posted the first comment. I should have more appropriately come up with an example of a digital asset that is tradable.
One could even make this comparison between gold, a physical asset, and a fiat currency like USD. People sell the non-tangible USD in favor of gold in times of distress. Why would they favor another non-tangible asset like Bitcoin instead?
I hear a lot about how much dollars one can sell his/her bitcoins for in this market. But I have yet to hear how much bitcoins one can sell his dollars for…
I wonder how many bitcoins “Satatushi Kimimucho” owns (or whatever he/she’s made up name is)? I mean the whole point of a ponzi like this would be owning a ton of “coins”, and then having everyone drive the price up from 1 penny to $18,000, then get out sneaky-like with all their money while the last round of nimrods are buying in.
What if “Satatushi” turned out to be Goldman? Or the Chinese Government?
The anonymous billionaire is interesting to me. Is this guy sipping a latte in Palo Alto sitting on billions and no one knows its him? I guess there is an advantage to anonymity. That would be crazy.
One thing you will notice about that chart is, in addition to being more volatile, the Cboe price is just higher than the “spot” price. (The spot price in this case being Bloomberg’s index of bitcoin prices on five exchanges.) Why would you pay $1,000 more for a bitcoin in January than you would for a bitcoin today? One answer is that the Cboe January futures contract doesn’t exactly give you a bitcoin in January: It is cash settled, and gives you an amount of dollars equal to the price of a bitcoin on January 17, 2018. If you are the sort of bitcoin dabbler who wants to participate in bitcoin’s rally without ever actually touching any bitcoins – and I suspect a lot of futures investors are – then this is a very appealing feature. It makes a kind of intuitive sense that more people would want a dollar-settled bitcoin contract than would want actual bitcoins, so the price should be higher. (Though that does rather undermine the notion of bitcoin as a world-dominating currency, doesn’t it?)
Was thinking about what happens when the last speculator is packed in…
Seems like it can’t appreciate forever, and appreciation is the only reason people are in it. Say one year it sits roughly flat, people start getting bored. Eventually they need to realize their gains as real money, and put that into real assets…so some start selling and moving it over to S&P or CSI300 which let’s say is experiencing a bull market, instead of stagnating bitcoin. Then comes the panic, remember China 2015, those unsophisticated A-share investors (which are packed into bitcoin) just chase the next big thing “eek, the chart went flat now going down, SELL EVERYTHING!!!”. But unlike in the CSI300 case where the government put a floor under the collapse, there is no government backing here (see Ohai post, the “bitcoin is totally free!” also means there is nothing to give it stability). So just like it can go up to whatever fantasy number, it can go down just as much.
And yet another weird thing; a store of value is supposed to be able to survive time, yet the nature of tech is that it only has value short-term. I spent years in tech-VC and we all assume 1) almost all tech fails and we lose everything, and 2) winners only have value for N-years, then lose everything. I don’t understand this concept of a tech-based store of value.
The “inventory” being all the current and future bitcoins that can ever be fabricated? If this entity owns 7.5% of current market cap that’s, what $20B already? Still minor league compared to scams Goldman has pulled off, but has potential.
I’ve been reading a lot of bitcoin and altcoin forums over the past 6 months - trying to get a view of the market. What coins look good, what is promising prospect. But basically, everyone who is investing is just hoping that they get in before all the other people invest…
There are so many people that have invested $200 or $300 with the hope of getting rich. And nearly every post on each forum is ‘this is a great coin guys, lots of promise here, likely to go higher than bitcoin’… just some shilling with the hope of it getting pumped and going to the ‘moon’. There is no value, you can’t do anything with it…except make more money.
In my opinion, it’s all a bunch of bollox… i stuck in a couple of grand a few months ago. The markets are opening up to LatAm and Indians, which should see demand rocket for a few more months and more and more bellends stick their life savings in.
I’ll think i’ll come out at 8x… I can’t be bothered with it… i spend far too long looking at coinmarketcap or whatever… i would rather be on AF or gardening. I don’t see this having more legs
