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Learning, Sharing, and Teaching => Investor Alley => Topic started by: MrThatsDifferent on November 16, 2017, 09:47:45 PM

Title: Is it too late [bitcoin]?
Post by: MrThatsDifferent on November 16, 2017, 09:47:45 PM
Ughhh, my friend is obsessed with bitcoin and I was this close to investing $3k as experiment money in August but I didn’t because I set a goal for my Vanguard account ($100k) and haven’t reached that yet. Now I’m kinda kicking myself and wondering if I should invest now or leave the game to the more fearless? (I still wouldn’t invest more than $3k max).  If I don’t do it, will I be regretting it in 5 years?
Title: Re: Is it too late [bitcoin]?
Post by: Indexer on November 16, 2017, 10:11:58 PM
Some people here love it...  I think avoiding it is best.

The last conversation I had with someone on here ended with the mutual conclusion that bitcoin has no intrinsic value, but they still wanted to keep buying it. To me no intrinsic value = $0 value. [shrug]
Title: Re: Is it too late [bitcoin]?
Post by: oldladystache on November 16, 2017, 10:31:47 PM
Maybe.

I kicked myself a long time then jumped in a few months ago. Tripled my money so far. But if it all goes away it won't hurt me.
Title: Re: Is it too late [bitcoin]?
Post by: Llewellyn2006 on November 16, 2017, 10:55:22 PM
I'd be more confident of a crash in Bitcoin than I would be about a crash in the stock market
Title: Re: Is it too late [bitcoin]?
Post by: cantgrowone on November 16, 2017, 11:27:37 PM
I will never put my cash in BTC, but I do mine it and plan to hold onto the little BTC I have.

As always, only invest what you can afford to lose.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on November 16, 2017, 11:38:11 PM
I'm no longer in bitcoin, so I can't speak for it.

I do have some questions though: Why bitcoin and why now? Do you think 8k is the best price to get in at or do you expect a correction? Do you feel confident enough in it to hold through volatility and contradicting sources of information? Do you think it will be able to effectively scale second layer? Compare it with its forked counterpart, bitcoin cash. If you're still keen on bitcoin, I would not recommend more than $1k. Crypto has significant risk (depending on your entry amount; in your case, it's minor) and you should diversify into at least one or two other crypto.

Look through coinmarketcap.com and read up on other coins. If you're not already aware; included in the definition of cryptocurrency is that it is decentralized (protects against double-spend), with inherent costs and incentives to achieve consensus (currently proof-of-work and proof-of-stake systems). Not all the coins listed meet this criteria. Just something to be aware of. Permissionless vs permissioned; censor-resistant versus alteration; true financial sovereignty vs central control. The aspects of one is more valuable than the other.

The two that I would recommend researching are ethereum and omisego. Both have (or will have) extreme utility.

Omisego (omg), once it goes live (expected 2nd qtr 2018), will be a blockchain that aims to implement plasma, with smart contract enforcement through ethereum. The ambition of plasma is to scale transaction levels to millions per second, instantly and with low fees. It will be a decentralized exchange as well as a payment network, among other things. More than 5,000 merchants that conduct operations through omise will shift to the omisego blockchain. There will be fiat gateways. Potentially, it could be listed on gdax (https://www.gdax.com/static/digital-asset-framework-2017-11.pdf). Gdax is an offshoot of coinbase. Omg currently has a small cap, with promising opportunity for significant returns. If you own omg and stake it, you will receive a portion of the transaction fees.     

Ethereum's (eth) underlying premise is that it is decentralized computational power. You can use it as peer-to-peer cash, or to pay network fees to gamble, or to buy into icos, or to set up smart contracts or some other instructions. The future holds immense possibilities, with dapps that will eclipse our imagination. Something that is a type of fuel, energy, power; what can you do with it? Throw in zero-knowledge proofs (you can prove you know a secret without revealing it). Ethereum solves and will solve mathematical problems that have immense real-world applicability. The internet, with cryptography, improved quality of life; blockchain tech will do the same, with a financial basis.








Title: Re: Is it too late [bitcoin]?
Post by: Llewellyn2006 on November 16, 2017, 11:43:21 PM
I'm no longer in bitcoin, so I can't speak for it.

I do have some questions though: Why bitcoin and why now? Do you think 8k is the best price to get in at or do you expect a correction? Do you feel confident enough in it to hold through volatility and contradicting sources of information? Do you think it will be able to effectively scale second layer? Compare it with its forked counterpart, bitcoin cash. If you're still keen on bitcoin, I would not recommend more than $1k. Crypto has significant risk (depending on your entry amount; in your case, it's minor) and you should diversify into at least one or two other crypto.

Look through coinmarketcap.com and read up on other coins. If you're not already aware; included in the definition of cryptocurrency is that it is decentralized (protects against double-spend), with inherent costs and incentives to achieve consensus (currently proof-of-work and proof-of-stake systems). Not all the coins listed meet this criteria. Just something to be aware of. Permissionless vs permissioned; censor-resistant versus alteration; true financial sovereignty vs central control. The aspects of one is more valuable than the other.

The two that I would recommend researching are ethereum and omisego. Both have (or will have) extreme utility.

Omisego (omg), once it goes live (expected 2nd qtr 2018), will be a blockchain that aims to implement plasma, with smart contract enforcement through ethereum. The ambition of plasma is to scale transaction levels to millions per second, instantly and with low fees. It will be a decentralized exchange as well as a payment network, among other things. More than 5,000 merchants that conduct operations through omise will shift to the omisego blockchain. There will be fiat gateways. Potentially, it could be listed on gdax (https://www.gdax.com/static/digital-asset-framework-2017-11.pdf). Gdax is an offshoot of coinbase. Omg currently has a small cap, with promising opportunity for significant returns. If you own omg and stake it, you will receive a portion of the transaction fees.     

Ethereum's (eth) underlying premise is that it is decentralized computational power. You can use it as peer-to-peer cash, or to pay network fees to gamble, or to buy into icos, or to set up smart contracts or some other instructions. The future holds immense possibilities, with dapps that will eclipse our imagination. Something that is a type of fuel, energy, power; what can you do with it? Throw in zero-knowledge proofs (you can prove you know a secret without revealing it). Ethereum solves and will solve mathematical problems that have immense real-world applicability. The internet, with cryptography, improved quality of life; blockchain tech will do the same, with a financial basis.

Apart from your first sentence I didn't understand a word of what you have written. Which is exactly why I would stay away from crypto currencies.
Title: Re: Is it too late [bitcoin]?
Post by: MrThatsDifferent on November 17, 2017, 03:15:50 AM
ETH is the one I was thinking about as I like the idea of blockchains that have real world applications.
Title: Re: Is it too late [bitcoin]?
Post by: KBecks on November 17, 2017, 06:40:03 AM
This crossed my mind and then I thought -- let's say I have $7,000 laying around.  Do I really want a Bitcoin most of all with that money, or are there other ways that money can be used that would be more beneficial? 

I am not a speculator.  If I bought into bitcoin or other crypto it would be for diversification, but I'm happy with my investments now.  I would be buying out of greed or fear and neither is a good reason.

I need to learn a lot more about crypto before thinking about putting any cash into it.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on November 17, 2017, 07:06:50 AM
Ughhh, my friend is obsessed with bitcoin and I was this close to investing $3k as experiment money in August but I didn’t because I set a goal for my Vanguard account ($100k) and haven’t reached that yet. Now I’m kinda kicking myself and wondering if I should invest now or leave the game to the more fearless? (I still wouldn’t invest more than $3k max).  If I don’t do it, will I be regretting it in 5 years?

Most of the answers you've gotten have focused on why bitcoin is or isn't a good investment. Let's put that aside.

My personal rule of thumb is to never buy something when my motive is that it already went up a lot in price and I'm kicking myself for not buying it earlier. If that's why you want to invest, whether it is in bitcoin, or amazon stock, or san francisco real estate -- I've seen lots of similar "is it too late" threads about buying houses out there -- I'd not suggest putting your money in.

I own a bit of bitcoin, but I do because it was fun to figure out how to buy it, and how to use it, and actually using it to make purchases. If it goes to zero, that's okay, I consider what I've put in hobby spending, not part of my investments or net worth.
Title: Re: Is it too late [bitcoin]?
Post by: Enigma on November 17, 2017, 07:18:24 AM
I have a coworker that was talking about buying into bitcoin yesterday.  I am still on the fence about it.  Probably wont buy into the hype myself.  Maybe it will go somewhere but idk.
Title: Re: Is it too late [bitcoin]?
Post by: surfhb on November 17, 2017, 09:15:37 AM
This kind of thing goes directly OPPOSITE to what this blog is about and what brings people here for discussions.   That said,  basically greed is at the root of your upcoming decision. 

This is your life we’re talking about.   I don’t think it’s wise to use even “ play money” (whatever that is) to speculate.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 17, 2017, 09:19:22 AM
I'm not going to debate the merits or downsides of bitcoin since there are plenty of threads on the forum so far that have done just that at great lengths. You can search for them and read through the discussions if you'd like.

What I will say is that, as with anything that you put money toward, it is always wise to learn as much about whatever it is as possible. So if you don't know what bitcoin is or how it works, then my advice is to learn about it as much as you can before you put your money anywhere. Here is an excellent video that I always refer people to that explains how bitcoin works and digs into some of the technical side of things in a way that anyone can understand. I hope it helps your understand of bitcoin.

https://www.youtube.com/watch?v=bBC-nXj3Ng4 (https://www.youtube.com/watch?v=bBC-nXj3Ng4)
Title: Re: Is it too late [bitcoin]?
Post by: Cromacster on November 17, 2017, 09:29:08 AM
I will never put my cash in BTC, but I do mine it and plan to hold onto the little BTC I have.

As always, only invest gamble what you can afford to lose.

FTFY
Title: Re: Is it too late [bitcoin]?
Post by: dougules on November 17, 2017, 11:08:10 AM
Bitcoin is not an investment.  It's a form of cash, and really unstable one at that.  It's only an investment if you're mining or in some kind of interest-bearing account.  Otherwise there's no actual return, and it's just gambling with the exchange rates. 

I wouldn't put any money in bitcoin unless I was either planning to start buying things with it or it was just fun money that I'd be willing to take to a casino. 
Title: Re: Is it too late [bitcoin]?
Post by: GGNoob on November 17, 2017, 12:19:33 PM
I got in late, about 6 weeks ago. Invested in both Bitcoin and Ethereum, the percent of each based on market cap. I'm up around 25-30% so far.

I didn't buy crypto at first because 1) I felt it was too late to become so rich I could FIRE off of the investment and 2) because I figured even if I did buy, I wouldn't know when to sell and I'd probably sell it too soon and miss out on the chance to be too rich from it. But I recently decided I would hold it as a percentage of my portfolio. I first started at about 5% but as the price went up, I changed it to 10%. That's where I really wanted to be at first but didn't have enough cash to put that much in (most money is in tax-advantaged accounts). Now I figure I know when to buy and when to sell based on rebalancing my portfolio, so I was able to justify holding it that way. I don't expect to get rich from it, but I'm hoping it increases my overall return a little. If not, it's a small enough amount that I can lose it and shrug it off.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on November 17, 2017, 12:45:05 PM
I'm still waiting for my tulip bulbs to go back to their old highs.  Then I'll cash out and put it all into bitcoin.
Title: Re: Is it too late [bitcoin]?
Post by: caffeine on November 17, 2017, 01:21:56 PM
bitcoin is just one regulation away from being obsolete.

I'm surprised its taking so long for the US / EU to shutdown its trade.
Title: Re: Is it too late [bitcoin]?
Post by: frugledoc on November 17, 2017, 01:36:09 PM
Maybe, who knows, I'm definitely not interested.

Even if I could triple or quadruple my money I wouldn't be willing to put enough in to make a significant impact on my networth.
Title: Re: Is it too late [bitcoin]?
Post by: DS on November 17, 2017, 01:38:22 PM
Yes, it's too late :)
Title: Re: Is it too late [bitcoin]?
Post by: alexpkeaton on November 17, 2017, 07:37:01 PM
bitcoin is just one regulation away from being obsolete.

I'm surprised its taking so long for the US / EU to shutdown its trade.

There may be stupid regulations around it like New York and Hawaii's, but it won't be banned. The major investment banks have gotten on board so there's lobbying power to shape regulation in their favor.

FWIW, my asset allocation includes 4% to cryptocurrency, but I own 0 BTC. I have mostly ETH and intend to diversify into some other cryptocurrencies soon.
Title: Re: Is it too late [bitcoin]?
Post by: I'm a red panda on November 17, 2017, 07:44:24 PM
I'm still waiting for my tulip bulbs to go back to their old highs.  Then I'll cash out and put it all into bitcoin.

👍
Title: Re: Is it too late [bitcoin]?
Post by: gp_ on November 18, 2017, 12:24:26 PM
Avoid cryptos at all cost.

why? because you don't understand them, and therefore look at them as not being wise investments? if most people attempted to learn about them with the same dedication as a "normal investment", you'd be more educated, and therefore see value where it exists. most ICO's serve no purpose (it's pointless for them to issue a token), but there are many that have a specific use case and are actually forward-thinking.

to the OP, i would suggest buying at least 1 BTC. you don't need to buy an entire BTC at once, but dollar cost average until you possess 1 if that's easier. there are BILLIONS of dollars flowing into cryptocurrencies right now (specifically BTC) and these are traditional hedge funds and other institutions. they aren't idiots...
Title: Re: Is it too late [bitcoin]?
Post by: YttriumNitrate on November 18, 2017, 02:13:14 PM
From my perspective, the current market for cyrptocurrencies sure feels a lot like tech stocks around 1998 or 1999. My guess would be that just like 1999, the real question is not whether or not it is too late to get into cryptocurrencies but which cryptocurrencies will survive the coming cull. Bitcoin is the current leader of the field, but so were America Online and Yahoo. My predictions for 10 years from now are: 80%+ of the current crypto currencies are defunct, bitcoin/ethereum are worth a fraction of their current value, and 1 or 2 cyrptocurrencies you haven't heard of today dominate the field.
Title: Re: Is it too late [bitcoin]?
Post by: surfhb on November 18, 2017, 02:14:40 PM
Avoid cryptos at all cost.

they aren't idiots...

Well, depends how you define the term.  :)     I'm anxious to see how the crypto market will do in the next correction and recession.   These are very good times!   They don't last forever....I hope the Gen Y / millennial crowd doesnt take this 10 year (yes....10 years!!) bull market for granted.....it will end eventually.   Just don't want to see you holding the hot potato ;)

From my 30+ years of investing,  I plan to stay away from such specialization.....Been there done that twice now.    I would be a much richer man if I had just invested in a simple index fund and spent my valuable time doing other things.   Not to mention the stress of huge price swings we see in the crypto markets.   
Title: Re: Is it too late [bitcoin]?
Post by: Indexer on November 18, 2017, 04:11:52 PM
Avoid cryptos at all cost.

why? because you don't understand them, and therefore look at them as not being wise investments?...

...they aren't idiots...

The more I understand bitcoin the less interested in it I am. In addition, you can't 'invest' in bitcoin, because it isn't an investment. Investments pay dividends, income, share business profits, etc. Bitcoin's value is completely based on speculation. The price can go up and down, but at the end of the day no one has any clue what a bitcoin should really be worth. It's intrinsic value is $0.00. To me, that means it is worthless. Even tulips during tulipmania had an intrinsic value. It was very low... how many calories are in a tulip bulb if you ate it? It was still a positive number. If the markets decided bitcoins were worth $0 tomorrow, what could you do with a bitcoin? Nothing. 

Hedgefunds buying something doesn't mean anything. There are plenty of hedgefunds run by idiots. While most active funds underperform their benchmarks... hedge funds normally do even worse than active mutual funds. A hedgefund could buy bitcoin just for the talking point of owning Bitcoin, or they could be buying it for short term gains with the intention of dumping it. Bitcoin can be both a long term failure and a short term trading opportunity.

Billions of dollars flowing into something doesn't mean it's good. Adjusted for the current price of gold, a tulipmania era tulip would be worth over $650,000. Hundreds of billions flowed into tech bubble era tech stocks. Trillions were wrapped up in the housing bubble. If something is hot people will throw far more money at it than it is worth.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 18, 2017, 04:57:32 PM
The more I understand bitcoin the less interested in it I am. In addition, you can't 'invest' in bitcoin, because it isn't an investment. Investments pay dividends, income, share business profits, etc. Bitcoin's value is completely based on speculation. The price can go up and down, but at the end of the day no one has any clue what a bitcoin should really be worth. It's intrinsic value is $0.00. To me, that means it is worthless. Even tulips during tulipmania had an intrinsic value. It was very low... how many calories are in a tulip bulb if you ate it? It was still a positive number. If the markets decided bitcoins were worth $0 tomorrow, what could you do with a bitcoin? Nothing. 

Again, I'm not going to comment on whether bitcoin is a good investment, but I will reply to a comment that attempts to make a claim that bitcoin has no "intrinsic value". There are a lot of things that I could say that would demostrate the opposite, but to me this is one of its most important...

Zimbabwe had a government that hyper-inflated its own currency to unimaginable levels that made their currency useless. This left the country's own citizens desperate for a means to transact. The humanitarian impacts that this had were profound. By the time Zimbabwe's currency was denominated in the trillions, it left its citizens looking to foreign currencies to store their wealth and make purchases. However, this requires physical currency to flow into the country in crisis times like that and thus this option is not an adequate solution to protecting citizens from governments with corrupt monetary policies. Currently, Bitcoin is trading for $13,000 in Zimbabwe (approximately twice that of the rest of the world). Bitcoin's value to people in situations like this is immediately apparent. The reason is because all that is needed to own and transact with Bitcoin is a phone and an internet connection; something that is in much larger supply than trusted banks in countries like that. No identification is required and therefore Bitcoin does not discrimate.

Zimbabwe is a great example of the potential good (and thus intrinsic value) that bitcoin can provide to the citizens of the world. Zimbabwe may be one of the first prime examples of hyper-inflation in Bitcoin's lifetime, but it certainly won't be the last. Facebook has value because it possess a network effect among its millions of users. A network like bitcoin that possesses millons of users and consists of billions of dollars of wealth means that in times of crisis around the world, the network itself can provide relief to anyone without discrimination. This is bitcoin's intrinsic value and the longer it exists, the more apparent it will be. It might be difficult for people in America to realize this value since we have access to a dizzying amount of financial services, but it is value none-the-less to the billions of people around the world that don't.

In otherwords: people aren't transacting with Bitcoin because it has value. Bitcoin has value because people can transact with it.

I hope Bitcoin succeeds for this reason alone.
Title: Re: Is it too late [bitcoin]?
Post by: Raj on November 18, 2017, 06:28:53 PM
I would recommend not investing anything in Bitcoin that you aren't prepared to lose, I agree with YttriumNitrate, the current market is very unstable and while Crypto Technology's will probably still be around in the following decades, it's unlikely that Bitcoin and the other main suppliers will be the ones to reap the benefit. 

Like Yahoo being the first does not necessarily mean they will be the best.

Title: Re: Is it too late [bitcoin]?
Post by: FI4good on November 19, 2017, 08:23:20 AM
you might regret buying it, you might regret not buying it, none of us know the future.

FOMO ( fear of missing out ) is quite powerful in a bull market cycle, I'd always suggest questioning yourself as to your reasoning to deploy your hard worked for capital in this manner at this moment . Why ?   

My philosophy is to invest my excess capital into bright, clever people, working hard, doing good and interesting things . So for me bitcoin doesn't fit with my  philosophy.

I wish you luck if thats your thing though . 
Title: Re: Is it too late [bitcoin]?
Post by: Livewell on November 19, 2017, 08:47:09 AM
Bitcoin is the 2017 version of tulips

If you feel like gambling, go for it! 

Title: Re: Is it too late [bitcoin]?
Post by: gp_ on November 19, 2017, 08:51:08 AM
Well, depends how you define the term.  :)     I'm anxious to see how the crypto market will do in the next correction and recession.   These are very good times!   They don't last forever....I hope the Gen Y / millennial crowd doesnt take this 10 year (yes....10 years!!) bull market for granted.....it will end eventually.   Just don't want to see you holding the hot potato ;)

From my 30+ years of investing,  I plan to stay away from such specialization.....Been there done that twice now.    I would be a much richer man if I had just invested in a simple index fund and spent my valuable time doing other things.   Not to mention the stress of huge price swings we see in the crypto markets.   

yes, many will end up holding the "hot potato". there are huge price swings for sure, which is why i suggested buying at least 1 just for speculation reasons. the downside is that you lost a (somewhat) small amount, the upside potentially being a great payoff.
Title: Re: Is it too late [bitcoin]?
Post by: gp_ on November 19, 2017, 09:01:44 AM
The more I understand bitcoin the less interested in it I am. In addition, you can't 'invest' in bitcoin, because it isn't an investment. Investments pay dividends, income, share business profits, etc. Bitcoin's value is completely based on speculation. The price can go up and down, but at the end of the day no one has any clue what a bitcoin should really be worth. It's intrinsic value is $0.00. To me, that means it is worthless. Even tulips during tulipmania had an intrinsic value. It was very low... how many calories are in a tulip bulb if you ate it? It was still a positive number. If the markets decided bitcoins were worth $0 tomorrow, what could you do with a bitcoin? Nothing. 

Hedgefunds buying something doesn't mean anything. There are plenty of hedgefunds run by idiots. While most active funds underperform their benchmarks... hedge funds normally do even worse than active mutual funds. A hedgefund could buy bitcoin just for the talking point of owning Bitcoin, or they could be buying it for short term gains with the intention of dumping it. Bitcoin can be both a long term failure and a short term trading opportunity.

Billions of dollars flowing into something doesn't mean it's good. Adjusted for the current price of gold, a tulipmania era tulip would be worth over $650,000. Hundreds of billions flowed into tech bubble era tech stocks. Trillions were wrapped up in the housing bubble. If something is hot people will throw far more money at it than it is worth.

i completely understand where you're coming from. yes, plenty of hedgefunds are ran by idiots, but the fact that institutional money is flowing into this space means that there's some weight to to this... yes, they're hedging their bets and speculating like everyone else, but the same can be said for every other asset in existence. the mainstream view of bitcoin is still very young, which is why i suggested the OP buy at least 1 if possible. i've been in this space for awhile, and i'm pretty confident that we're still nowhere near an all time high. leaving ethics out of the equation, many can still profit even at the current price.
Title: Re: Is it too late [bitcoin]?
Post by: PDXTabs on November 19, 2017, 09:48:36 AM
I am currently mining Monero and Ethereum. I would not personally buy any cryptocurrency for the sake of "investing." Specifically, cryptocurrencies are supposed to be a store of value the same way that the USD, Euro, or gold are supposed to be a store of value. I do own some BTC, but I purchased it to buy things online, not to be a currency trader.

All my investments are held in either Vanguard's VTWSX or the SP 500 index fund that is offered through my employer's 401k.
Title: Re: Is it too late [bitcoin]?
Post by: MrThatsDifferent on November 19, 2017, 01:11:39 PM
Avoid cryptos at all cost.

why? because you don't understand them, and therefore look at them as not being wise investments? if most people attempted to learn about them with the same dedication as a "normal investment", you'd be more educated, and therefore see value where it exists. most ICO's serve no purpose (it's pointless for them to issue a token), but there are many that have a specific use case and are actually forward-thinking.

to the OP, i would suggest buying at least 1 BTC. you don't need to buy an entire BTC at once, but dollar cost average until you possess 1 if that's easier. there are BILLIONS of dollars flowing into cryptocurrencies right now (specifically BTC) and these are traditional hedge funds and other institutions. they aren't idiots...

No, from an investment standpoint, I understand them perfectly well.  That is the source of my warning. 

As other commenters have said here (and as I have said in other threads) they have no intrinsic value.  If something has no intrinsic value, then it cannot, ipso facto, be considered an investment.  If you buy something with no (or only nominal) intrinsic value, you are speculating.  Period, end of story.  That is simply the definition of a speculation.  Is it possible to "make money" while speculating? Yes, of course it is.  However, the money made while speculating is akin to the money one "makes" when gambling. Since there is no real intrinsic value of the asset like a bitcoin, the only source of possible gains comes from the hope or belief that another person in the future will pay more for the thing.  This is not the case with a true investment. 

I think deep down bitcoin holders know this to be the case -- or at least they should.  Without fail, everyone I've run into who holds a bitcoin or some other crypto becomes a true-believer, and crypto salesman the minute they buy one... Why? because they have to if they ever hope to see a profit.  Since there is no real underlying asset value to bitcoin, the bitcoin holder needs to constantly be talking it up to others to ensure that there will be a steady stream of buyers who bring actual money to the table -- because let's be honest, this is the only thing that is supporting its value at the moment.  If the buyers dry up even for a few hours the price of a bitcoin could plummet -- theoretically to zero.

It’s funny because I have two friends who are bitcoin zealots and one posts constantly that everyone who hasn’t gotten bitcoin is an idiot and it’s working. It makes you question yourself and think, am I a Luddite who, like those in the past who didn’t believe in the internet or smartphones, just doesn’t understand this concept of crypto currency?  Will we look back in 10 years and say, thank jeebus I didn’t put money on that or damn, blew my chance!?!  No one has a crystal ball.  FOMO is definitely driving things, especially with all the, wish I had...
Title: Re: Is it too late [bitcoin]?
Post by: MaaS on November 19, 2017, 01:22:44 PM
I'm still waiting for my tulip bulbs to go back to their old highs.  Then I'll cash out and put it all into bitcoin.

Lol.  I laughed way too hard at this, well played.

As many have said in differing ways, this is a question that can't be answered by facts.  Bitcoin has no fundamentals behind it or intrinsic value.  With a speculative item like this, who knows how high it can go.  This may just be the beginning, or it could be the end. 

I personally own zero Bitcoin and don't intend to. 

Title: Re: Is it too late [bitcoin]?
Post by: harvestbook on November 19, 2017, 02:42:38 PM
I was interested late last year when it was under $1,000 but was starting to get hyped. Then it became hot and I lost interest before I could figure out the best way to buy and store it. Even if i had bought then, I'd have sold long ago.

My feeling is whatever intrinsic value cryptocurrency has will manifest in the world's markets anyway, and I'd rather hold small pieces of the world's markets. Blockchain technology seems to have real and valuable uses but again, I don't necessarily think that value will be captured in a currency basically created out out of thin air. Additionally a very small number of people hold the bulk of Bitcoin and it's likely being manipulated by a very few large coin holders. Even with the boom, it's still only about .003 percent of the world's market cap and that's insignificant in a truly diversified portfolio.

I can't predict the future but I'm happy to sit it out and stick with owning the world's companies that produce goods and provide services, and the debt markets of those who make and do things.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on November 19, 2017, 04:54:03 PM
No, from an investment standpoint, I understand them perfectly well.  That is the source of my warning. 

As other commenters have said here (and as I have said in other threads) they have no intrinsic value.  If something has no intrinsic value, then it cannot, ipso facto, be considered an investment.  If you buy something with no (or only nominal) intrinsic value, you are speculating.  Period, end of story.  That is simply the definition of a speculation.  Is it possible to "make money" while speculating? Yes, of course it is.  However, the money made while speculating is akin to the money one "makes" when gambling. Since there is no real intrinsic value of the asset like a bitcoin, the only source of possible gains comes from the hope or belief that another person in the future will pay more for the thing.  This is not the case with a true investment. 

We have different understanding of crypto. Your understanding leads you to believe it's gambling. My understanding leads me to believe in it. Does the internet have intrinsic value? Does electricity? Does a network? Crypto principles (open financial systems, decentralized, permissionless, privacy, reduced transactional barriers, value velocity, etc) have intrinsic value; various services have already been built on top of crypto. The future will determine which of us has a greater understanding.

Quote
I think deep down bitcoin holders know this to be the case -- or at least they should.  Without fail, everyone I've run into who holds a bitcoin or some other crypto becomes a true-believer, and crypto salesman the minute they buy one... Why? because they have to if they ever hope to see a profit.  Since there is no real underlying asset value to bitcoin, the bitcoin holder needs to constantly be talking it up to others to ensure that there will be a steady stream of buyers who bring actual money to the table -- because let's be honest, this is the only thing that is supporting its value at the moment.  If the buyers dry up even for a few hours the price of a bitcoin could plummet -- theoretically to zero.

Personally, I have no need to sell anyone on crypto nor am I trying to. My motive and intent are altruistic. Op asked for advice about risking 3k for an asymmetric return.

Title: Re: Is it too late [bitcoin]?
Post by: phil22 on November 19, 2017, 05:31:52 PM
sorry but we can't take comfort in the "intrinsic value" of the stocks we're all accumulating.  look at the price/book ratio listed here for the VTSAX (you'll see its at 3.0):
https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0585#tab=2

why are we all willing to invest in something priced more than 3x its "intrinsic value"?  because 100+ years of stock market history shows us we can probably assume future buyers will be there when we go to sell our shares.

your stocks have their current value because that's what people are willing to pay for them.  not because of intrinsic value.

that being said, putting money into bitcoin to try to make an easy profit is a bad idea... just like stock picking is a bad idea.
Title: Re: Is it too late [bitcoin]?
Post by: Indexer on November 19, 2017, 07:35:49 PM
Intrinsic value = the value based on financials.

This is not whether it gives you a happy feeling or might save the world in some hypothetical future. It is not related to the current market price. It's the value something is worth even if no one wants to buy it.

Stocks: what are the earnings, what is my cash flow if I hold it(dividends), etc.  (Note: I'm talking about stocks with earnings. Dotcom era tech stocks, penny stocks, stocks without revenues, etc. have little value outside of speculation.)

Bonds: how much is the income stream I can get if I hold it, what are prevailing interest rates?

The US dollar: Yes, it's a fiat currency. It is also legal tender for all debts, public and private. The dollar could suffer hyperinflation. However, I have a debt, my mortgage, and the bank is legally obligated to accept my dollars. That means, at least in one aspect of my life, the dollar has a fixed value. I need X dollars to keep a roof over my head for the next 30 days so I have an incentive to keep collecting dollars. Apply that same logic to every person and business with dollar denominated loans and the dollar has an established intrinsic value.


Bitcoin: if I owned 1 bitcoin, and tomorrow no one wanted to trade bitcoins with me, what is my bitcoin worth?  Hmmm... no dividends, banks aren't legally obligated to accept it... it's worth... absolutely nothing. It's intrinsic value is $0.00.

Why would no one want to trade bitcoins with me? Many possibilities, but four big ones stand out to me.
1. Something better could come along, looking at the competition this seems highly probable. Plus if the Fed & ECB decided to create their own blockchain tech then bitcoin's chances of going mainstream are gone. It would still be useful for black market deals, but that doesn't justify an $8,000 market value.
2. The energy consumption makes it unfeasible, which is already the case. It's been calculated that the average bitcoin transaction uses more energy than the average US home uses in a week. How do you scale that?!? https://motherboard.vice.com/en_us/article/ywbbpm/bitcoin-mining-electricity-consumption-ethereum-energy-climate-change
3. Bitcoin gets hacked, or it is proven that it can be hacked. No one has to hack it, just the threat that it can be hacked makes it irresponsible to hold onto. Current computers would have a hard time. However, quantum computers could do it. https://www.cryptocoinsnews.com/quantum-computers-will-destroy-bitcoin-scientists-warn/
4. The speculation dies down. If Bitcoin's price drops too much then there is less financial incentive to be a bitcoin miner. Miners might mine other crypto currencies instead. Less Bitcoin miners = less computing power to process bitcoin transactions. Then what happens?

For fun, what is a tulip bulb worth if no one wants to trade tulip bulbs with me? 1.48 calories per gram. 300 years after tulipmania tulips were valuable again. In WWII, due to a Nazi blockage, there wasn't any food, so people ate tulips. ;-)



@Shadow: I hear you. I however do not believe for a second that bitcoin is the next internet or electricity. I think it is far more likely to be the next dotcom bust. In 1999 an online toy company had a larger market cap than Toys R Us, even though ToyRUs did more sales.... even online sales. It didn't make sense. It was stupid. That online toy store went under when the tech bubble burst. Fast forward to 2017 and Toys R Us is filing bankruptcy. The technological predictions of the tech bubble are coming true, just 18 years too late. Toys R Us also wasn't brought down by an online toy store. They were brought down by Amazon, which in 1999 was an online bookstore. Blockchain tech might improve how we transfer money, it might also improve other technology, but that doesn't mean Bitcoin's price will continue to go up over time. For that to happen Bitcoin has to start replacing currencies, which for the reasons I've listed, I don't see happening... ever.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on November 19, 2017, 10:09:43 PM
@Indexer

I'm not addressing bitcoin specifically. I'm discussing crypto in general. Due to the consensus structure, blockchain transactions have inherent costs. For example, all transactions in ethererum has a cost:

Dapps (decentralized applications) are built on it. Some of the first generation dapps are somewhat clunky and very basic, yet people still use them. Etherdelta is a decentralized exchange running off ethereum network. They make 0.03% for every taker or maker transaction, and every transaction costs eth. Etheroll (small cap and not really that great a site), a provably fair gaming service with 1% house edge, pays eth dividends for every etheroll token you hold; it costs eth for every roll. You basically go to the website (send a small amount to your metamask addon), and click on roll to play. Funfair, a more advanced online casino, will be launched 2018.

Storj, a decentralized cloud storage platform pays individuals for their hard drive space to store zero-knowledge end-to-end encrypted files, shredded into distributed shards. It is cheaper, faster, and more secure than centralized cloud storage platforms; storj transactions costs eth. "There is no need to trust a corporation, vulnerable servers, or employees with your files. Storj completely removes trust from the equation. Storj uses blockchain features like a transaction ledger, public/private key encryption, and cryptographic hash functions for security." There will soon be projects like golem, a decentralized computer that can be used for fast and cheap computing or rendering power for graphical media or scientific and medical research folding processes; it will pay users for their hardware processing; all transactions on ethereum naturally cost eth.

Axa, a french insurance company is using eth for flight delay insurance (https://www.coindesk.com/axa-using-ethereums-blockchain-new-flight-insurance-product/). Icos allow people to seamlessly and automatically crowdfund or speculate. All costs eth transactions. There are increasing demand for eth. New dapps are being built on top of it; many will fail, and some will do well. There are stuff emerging for identity, voting processes, "mortgage applicants being able to prove that their salary sits within a certain range, without revealing the exact figure", other insurance purposes, etc.

People are also using it to buy other products (airvpn, adult entertainment) or tip on social networks (as simple as typing in !tip 0.001 eth). Bat (basic-attention-token browser) aims to disrupt online advertising industry, and also allows users to donate directly to youtubers and other sites; it runs off the ethereum network.

The demand will for something like eth will be driven from compelling use-cases, especially if the pace of progress continues with 2nd and 3rd generation dapps or if there is a killer app. Future apps might be something like netflix.eth or a video stream service that allows microtransactions (charges $0.25 per episode, gives you a passcode that's good for 48 hours on two devices or something). There is even a market for ethereum name services, and some of them are going for millions $.



Title: Re: Is it too late [bitcoin]?
Post by: shadow on November 19, 2017, 10:32:11 PM
@Shadow: I hear you. I however do not believe for a second that bitcoin is the next internet or electricity.

Also, I'm not saying blockchain will be the next internet or electricity. I'm alluding to aspects that blockchain shares: it's an open system with money properties, that allows developers to innovate on top of, where computation costs power. If the internet has intrinsic value as an open information network and electricity has intrinsic value as a source of power, then blockchain also has its own intrinsic value.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on November 19, 2017, 11:09:31 PM
2. The energy consumption makes it unfeasible, which is already the case. It's been calculated that the average bitcoin transaction uses more energy than the average US home uses in a week. How do you scale that?!? https://motherboard.vice.com/en_us/article/ywbbpm/bitcoin-mining-electricity-consumption-ethereum-energy-climate-change

Proof-of-stake systems used in other crypto and planned for use in ethereum use significantly less electricity.

Quote
3. Bitcoin gets hacked, or it is proven that it can be hacked. No one has to hack it, just the threat that it can be hacked makes it irresponsible to hold onto. Current computers would have a hard time. However, quantum computers could do it. https://www.cryptocoinsnews.com/quantum-computers-will-destroy-bitcoin-scientists-warn/

If we ever approach this point, either there will be a solution or the internet will break. It is far more likely for current financial systems to get hacked than bitcoin (cash) protocol (I'm not sure about bitcoin segwit). If quantum computers can crack blockchains, no encryption scheme is safe at any level; all will be affected including banks and governments.

Title: Re: Is it too late [bitcoin]?
Post by: runbikerun on November 20, 2017, 01:40:36 AM
I've heard three principal arguments in favour of cryptocurrency, and I've yet to be convinced by any of them.

1. Is cryptocurrency actually a currency? I've never met anyone in the flesh who's actually paid for goods or services using it. It's almost impossible to use without first converting it to dollars, euro or yuan. This isn't a simple one to solve: the delays in transaction processing and the ridiculous price volatility make it very difficult to imagine a world in which crypto as it's currently comprised can operate successfully as a currency. Right now, Starbucks loyalty points probably have a better claim to be classed as a currency: they're accepted at a reasonable minority of retail establishments around the world, they can be used immediately, and their value is fairly consistent.

2. Is crypto a store of value? This is a controversial one, as there are crypto advocates who believe that currency should never be a store of value at all. So when discussing this one, it's possible to be faced with two utterly contradictory arguments: that no currency should be a store of value, and that cryptocurrency is a solid store of value.

The usual comparator for establishing crypto as a store of value is to bring up Venezuela or Zimbabwe - in other words, to bring up the spectre of two of the most catastrophic economic disasters of the post-war world and then talk about them as though that represents a reasonably likely scenario for people around the world. It's not: those two are wildly divergent outliers, and even in cases where the local currency suffers catastrophic inflation, the historical result has been a black market operating in US dollars specifically because it's stable and extremely easy to use. At any rate, crypto is a terrible choice of alternative currency, as it's more volatile than almost every currency on earth and requires a computing infrastructure that isn't present in a lot of countries which might be at risk of hyperinflation.

That's before we get to the fact that it would be trivially easy for the US, EU and China to reduce crypto values to zero if they decided to do so. Criminalise conversion to real currencies and the price would crater in minutes and keep falling.

3. The last use case I've seen is the ICO argument: that crypto allows an effective public offering for a business model without going through the usual steps prior to that. This one looks legitimate at first glance, but is actually potentially an even worse idea than the other two. IPOs are incredibly tightly regulated and controlled, and for good reason. Going with an ICO bypasses all kinds of relevant regulation and enables business to launch with none of the usual safeguards in place to protect investors. Instead of having to provide a coherent and convincing business case to professional investors, startups can potentially launch an ICO and sell to crypto enthusiasts instead. That's a dangerous lowering of the bar.

The last thing that's worth bearing in mind is simple: even if my analysis is completely wrong, it doesn't change the fact that crypto pricing is in a speculative bubble. Even if it turns out bitcoin is an essential component of a grey economy, there's no intrinsic reason that means it needs to be at seven thousand dollars a coin to fulfil that role. If Ethereum is a genuinely useful platform for certain applications, it may well be enough to support a price a tenth of what it is now. Prices right now bear no relationship to projected future values or real-world data: if they did, they'd be orders of magnitude less volatile and would visibly move in reaction to relevant information.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 20, 2017, 07:50:48 AM
Why would no one want to trade bitcoins with me? Many possibilities, but four big ones stand out to me.
1. Something better could come along
2. The energy consumption makes it unfeasible
3. Bitcoin gets hacked
4. The speculation dies down

Indexer, I appreciate your response. I don't agree with it, but you're one of the first people in this thread that has talked about risk and what those risks are.

The reason why I've stated numerous times why I won't say whether or not Bitcoin is a good investment for someone is because determining whether something is a good investment for someone requires that we know what that person's risk appetite is and what their portofolio should look like to match that risk appetite. Some people like 100% stocks, some like a varying mix of stocks and bonds, some like some stocks, bonds, and a small percentage of high risk, high yield, etc. The point is, unless we know what someone's risk appetite is, then you can't give good advice on whether something might be a good fit for any individual.

I often here people talk about the speculative nature about bitcoin without really mentioning any specifics at all. People don't realize that speculation goes both ways. You can speculate that something will be worth a lot, but you can also speculate that something with be worth a lot less in the future. The only thing that decreases the speculative nature of any given investment is to lay out the risks, both inherent and residual, of the investment.

Rarely do I ever see people do this when they say "well someday bitcoin could go to zero". Sure, absolutely...gold could also go to near zero, Apple as a company could go bankrupt, and the US dollar could see hyper-inflation. All of these things have varying degrees of risk and saying that they could happen without discussing the realities of such an occurrence isn't a proper way to do risk assessment. Some are more likely to occur than others, but unless you actually populate the risks and each of their likelihoods of occurrence, then you won't truly understand what the risk of the investment actually looks like.

So again, I'm not going to state whether or not I feel bitcoin is a good investment for the OP, but I can provide some additional thoughts on the given risks involved with Bitcoin as Indexer had:

Bitcoin's price is strictly supply and demand driven. Since it supply is statically hard-coded and deflationary, then that means the main driver for its price is simply demand. So if the price were to decrease, then that means demand would need to decrease. As Indexer mentioned, what are some things that would cause demand to decrease?

1) A better crypto-currency is developed. This could happen, but I feel the likelihood of this occurring is extremely small at this point. SegWit was enabled recently that will allow Bitcoin to develop advancements in its capabilities much quicker and without necessarily the need to hardfork. This means that any crypto-currency that comes along to try and supplant bitcoin as the market leader, not only needs to compete against the size of bitcoin's market itself, but also has to compete against the fact that any technological improvements that the competitor has can simply be implemented in bitcoin before a competing market ever gets strong enough. Take for example the RSK side chain that will allow for smart contracts to take place on the bitcoin network and be backed by bitcoin. This means that many of the technological features that Ethereum has over Bitcoin would then be able to take place on the bitcoin network. Here is a good article that also talks about why Bitcoin has such a massive market lead on other crypto-currencies and why it will be extremely difficult for others to supplant it as the leader. Keep in mind this article was written back in May before Bitcoin saw massive market growth, investment. development, and withstood several hardfork attempts against it.
https://medium.com/@jimmysong/why-bitcoin-is-different-than-other-cryptocurrencies-e16b17d48b94 (https://medium.com/@jimmysong/why-bitcoin-is-different-than-other-cryptocurrencies-e16b17d48b94)


2) The energy consumption makes it infeasible. I don't see this as a risk at all, and it actually isn't even in my risk profile for Bitcoin, but I'll address it since it was mentioned. The energy consumption of the Bitcoin network today is massive. That much is true. But it isn't unsustainable and it is actually a problem that I feel will solve itself. The amount of energy that it takes to solve a block is directly dependent on the difficulty of solving that block and the efficiency of the mining hardware. I see a lot of articles always compute the energy consumption of the bitcoin network in relation to the number of transactions it performs, but this is a useless calculation since the energy spent per block isn't really tied to how many transactions are in that block. There could be 1,000 transactions in a block or 1,000,000 transactions and the energy consumed to solve the block and add it to the block chain will be about the same give the same difficulty level at the time. Therefore, as the network scales and grows, the ratio between the number of transactions it processes and the energy spent will begin to decrease.

Also, there are layer-2 side chain possibilities such as the Lightning Network that will allow for an immense number of transactions to be processed on the equivalent computing power of a small server. This will allow the bitcoin network to process massive amounts of micro-transactions for a lot less energy than our payment systems are capable of now.

Finally, energy consumption is Bitcoin mining's business model. Unlike many traditional business that don't take power consumption into consideration, for Bitcoin mining, it is its business. Therefore improving inefficiencies and costs in energy is Bitcoin mining's main profit driver. This will likely lead to Bitcoin (as it already has been shown) to be a first adopter and main driver of more sustainable energy practices in the long run.


3) Bitcoin gets hacked. This is certainly a legitimate concern and it makes my list as well for possible risks to Bitcoin. This is a risk that could actually damage Bitcoin's price significantly. Bitcoin is a safe and secure network for value storage due to the fact that it is a decentralized and secure network. If this were to become compromised due to a vulnerability in the code, then that could posed a significant risk to the sentiment of the market to trust its wealth in the network. I don't feel that the likelihood of this risk is very high however. The security in the blockchain itself would still be valid due to the proof-of-work that it took to secure the blocks. The more likely scenario would be a flaw in the security of the wallets themselves or in the transactions that take place, but not necessarily in the Bitcoin network. Consumers are always in control of the wallets they use however and there is a massive number available. So in the event of a vulnerability in one wallet, the users can choose to move their funds to another. In the event of a vulnerability discover in the transactions that could allow for information disclosures or leaks, the Bitcoin network can always patch and hardfork to mitigate the vulnerability while the market holds transactions to prevent risk during the time. I don't think this risk is a massive risk to Bitcoin's long term value. Finally, Bitcoin uses many of the same cryptographic algorithms that the rest of the world users for security and has second layers on top of these to protect against failures in the cryptography. Most other traditional institutions are much more susceptible to cryptography failures than bitcoin is.

As far as quantum computer, this is not a very big threat to Bitcoin despite a lot of media attention around the subject. Most of the articles are simply clickbait due to the amount of attention that both bitcoin and quantum computer receive. The reality is that quantum computing problem solving is very limited in scope and Bitcoin has several features that protect it against the types of problems that quantum computing could be utilized in attacking. Furthermore, any advancements in commercially available quantum computer will not be immediate and Bitcoin will have plenty of time to upgrade in advance of this to sufficiently protect itself. Here is a good article regarding quantum computing and Bitcoin:
https://news.bitcoin.com/antonopoulos-bitcoins-protection-against-quantum-computing/ (https://news.bitcoin.com/antonopoulos-bitcoins-protection-against-quantum-computing/)

4) Finally, government intervention could play a role in diminishing demand for Bitcoin. However, I feel that the time for this has long past. If democratic governments were to take a stance against Bitcoin, it would've had to have been well before it became an established market. Derivative markets are now becoming a reality and that means that there will be substantial institutional investment taking place that will rely on the Bitcoin market. Since this institutional money will likely be intertwined with other derivative bets taking place in other markets, that means that it will not be feasible for any large democratic government to shutdown Bitcoin without also unraveling other large economic markets that are now meshed with Bitcoin. There may be totalitarian or communistic governments that take a stand against Bitcoin exchanges (see China), but for the most part democratic and capitalist governments and economies are now faced with the reality that Bitcoin is a part of our economy. It will need to be regulated, but it will not be squashed.


These are the biggest risks that I feel bitcoin faces. Since bitcoin's price is simply demand driven, then these are the biggest risk factors against a growing demand. Outside of these, I don't see very many risks (especially in the foreseeable future) that would hinder demand for it. So simply just saying "but demand could go to zero" is not enough. Demand doesn't just go to zero for those holding bitcoin unless there is a market force that would drive that downturn. Demand could stabilize, in which case the current market price would also see a stabilization, but for a significant downturn to occur, there would need to be a systemic risk to Bitcoin itself (as mentioned above) to take place to drive a massive fleeing from the market.

There are absolutely other risks involved with bitcoin. This is not an exhaustive list by any means, but I hope it provides people with a better understanding for some on how to look at what the risks to the Bitcoin market are.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 20, 2017, 08:20:01 AM
I've heard three principal arguments in favour of cryptocurrency, and I've yet to be convinced by any of them.

1. Is cryptocurrency actually a currency?
2. Is crypto a store of value?
3. The last use case I've seen is the ICO argument

I don't understand why people feel the need to place Bitcoin into a rigid categorization based on our historical definition of terms. Rarely do revolutionary technologies fit into our historical categorizations. Therefore I don't feel there is a pressing need to categorized bitcoin as a currency or store of value. I see people go at lengths to try and determine whether it is either/or. It is whatever it needs to be. If the market wants it to be a store of value, it can provide that. If the market wants to use it to facilitate transactions, it can provide that as well. It can be both, it can be only one, it can be neither. It's value doesn't depend strictly on what it is categorized as with regards to these ideas.

As far as ICO go, saying that ICOs bypass regulation is not a dig against ICOs, it is a dig against the regulation. Governments are always slow to react against new technologies, so it is not a surprise that a new technology that allows for something such as ICOs to catch governments off guard and force them to be reactionary. That does not mean that ICOs will always be unregulated or risky. The opposite is actually much more likely to be true. It is much more likely that regulation will be put in place that make it so that a future of ICOs are tightly regulation and become a very common way for business to seek startup funds. This will be yet another improvement in our economy that will lead to a much faster pace for innovation to occur.

Also, as it stands, protocol innovation is hindered by the "chicken or the egg" scenario. Developing a new protocol that requires as broad userbase for adoption of the protocol will lack the broad userbase it requires because of the fact that there are no other users to share the protocol with. This has hindered protocol innovation for the last 20 years. With crypto-currencies, there is now a tool that allows for a whole network of users to share in the adoption of the protocol and receive a stake of the monetization of said protocol. This provides an immediate userbase for the protocol and provides incentive for its adoption. Decentralized storage solutions are a prime example of this. No one is going to offer up their storage to a network to get used if there are no users using the network. No users are also going to use a decentralized storage solution that has no storage available for storing things. ...chicken or the egg? I expect crypto-currencies to provide a massive leap in innovation over the next decade because of this.

There are also many other use cases outside of what you listed that will all provide varies degrees of value:

1) Remittances
2) Other cross-border transfers
2) Donations
3) Protest - People in the streets can simply display a QR code and anyone can donate to the cause
4) Irreversible transaction security
5) Smart contracts
6) Anything digital can be made scarce or counterfeit proof
7) Timelocked transactions
8) Multi-signature security

There more, but these are some big ones that I feel are very unique to crypto-currencies that there really aren't good solutions for otherwise today.
Title: Re: Is it too late [bitcoin]?
Post by: talltexan on November 20, 2017, 09:00:42 AM
Avoid cryptos at all cost.

why? because you don't understand them, and therefore look at them as not being wise investments? if most people attempted to learn about them with the same dedication as a "normal investment", you'd be more educated, and therefore see value where it exists. most ICO's serve no purpose (it's pointless for them to issue a token), but there are many that have a specific use case and are actually forward-thinking.

to the OP, i would suggest buying at least 1 BTC. you don't need to buy an entire BTC at once, but dollar cost average until you possess 1 if that's easier. there are BILLIONS of dollars flowing into cryptocurrencies right now (specifically BTC) and these are traditional hedge funds and other institutions. they aren't idiots...

Why is this "you don't understand them" slur always part of the pro-crypto response to skeptics?
Title: Re: Is it too late [bitcoin]?
Post by: runbikerun on November 20, 2017, 09:05:41 AM
How could Apple stock fall to zero? They could burn through their entire cash pile, forget to sign any contracts beyond the end of the week, tell their entire supplier network to go find new jobs, lose the keys to their warehouses, have all their property holdings confiscated around the planet, and deliberately crater the brand. All of that, done tomorrow, might be enough to reduce the stock to near zero.

How could bitcoin fall to zero? A joint announcement by the US, EU and China of a severe crackdown on cryptocurrency would quite possibly be enough.

And as for why people are seeking to categorise cryptocurrency: it's being traded for seven thousand dollars a pop. People are trying to figure out whether it's worth that. So far, I've seen nothing to justify the pricing.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 20, 2017, 09:20:37 AM
A joint announcement by the US, EU and China of a severe crackdown on cryptocurrency would quite possibly be enough.

...Which is about as likely as Apple burning through its entire cash pile...
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 20, 2017, 09:34:08 AM
People are trying to figure out whether it's worth that. So far, I've seen nothing to justify the pricing.

I don't understand this concept. I hear it a lot when it is stated that "people don't know what bitcoin is worth".

The market determines its worth. If 1 million people want to own $1 worth of bitcoin and there are 1 million bitcoins in circulation, then each bitcoin would need to be worth $1 to accommodate that. In other words, the valuation of what 1 bitcoin is worth takes care of itself. The market determines it based on how much stake the market wants to put in bitcoin. If suddenly the market of 1 million people wants to own $2 worth of bitcoin but there are still only 1 million bitcoin in circulation, then each bitcoin needs to be worth $2 to accommodate the market.

This isn't like trying to create a valuation of a company based on revenues, net worth, etc. This is simply supply and demand and if more people want to use the network (ie, own some bitcoin), then the valuation is a simple calculation to determine what each bitcoin needs to be worth in order to accommodate the appropriate level of demand. If someone feels they own too much bitcoin, then they can sell theirs which opens up more supply for those who wish to own more. It is less of trying to determine how much a single bitcoin should be worth and more about how much monies worth of bitcoin any given individual feels they should own. The valuation part is easy and justifying the pricing doesn't really make sense unless you don't believe in free market economics.
Title: Re: Is it too late [bitcoin]?
Post by: runbikerun on November 20, 2017, 09:34:39 AM
A joint announcement by the US, EU and China of a severe crackdown on cryptocurrency would quite possibly be enough.

...Which is about as likely as Apple burning through its entire cash pile...

There's no point in continuing the conversation if you think a crackdown on crypto is as likely as Apple deliberately destroying itself for no good reason. If you think so, fine, but you're operating under assumptions that render any conversation pointless. A crackdown may not be likely, in the immediate future, but it's orders of magnitude more likely than Apple stock tanking - which was my point. It would take a great deal less to crater cryptocurrencies than it would to trigger US hyperinflation or reduce Coca-Cola stock to nothing.
Title: Re: Is it too late [bitcoin]?
Post by: runbikerun on November 20, 2017, 09:36:05 AM
People are trying to figure out whether it's worth that. So far, I've seen nothing to justify the pricing.

I don't understand this concept. I hear it a lot when it is stated that "people don't know what bitcoin is worth".

The market determines its worth. If 1 million people want to own $1 worth of bitcoin and there are 1 million bitcoins in circulation, then each bitcoin would need to be worth $1 to accommodate that. In other words, the valuation of what 1 bitcoin is worth takes care of itself. The market determines it based on how much stake the market wants to put in bitcoin. If suddenly the market of 1 million people wants to own $2 worth of bitcoin but there are still only 1 million bitcoin in circulation, then each bitcoin needs to be worth $2 to accommodate the market.

This isn't like trying to create a valuation of a company based on revenues, net worth, etc. This is simply supply and demand and if more people want to use the network (ie, own some bitcoin), then the valuation is a simple calculation to determine what each bitcoin needs to be worth in order to accommodate the appropriate level of demand. If someone feels they own too much bitcoin, then they can sell theirs which opens up more supply for those who wish to own more. It is less of trying to determine how much a single bitcoin should be worth and more about how much monies worth of bitcoin any given individual feels they should own. The valuation part is easy and justifying the pricing doesn't really make sense unless you don't believe in free market economics.

In other words, there is no such thing as an asset bubble, because "justifying the pricing doesn't really make sense unless you don't believe in free market economics".
Title: Re: Is it too late [bitcoin]?
Post by: Finallyunderstand on November 20, 2017, 09:41:31 AM
I always find the argument "it can't be a store of value when it's supposed to be a currency" funny. 

That doesn't make sense in my mind.  Dollars are a currency but people also use dollars to "store" wealth.  If I currently have $50k in my bank account in US Dollars I don't say, "well it's not storing value because I'm only supposed to use it as currency to facilitate transactions".  It stores value UNTIL I want to use it as currency. 

Cryptos can store value UNTIL you decide to use/sell/trade or whatever and get something out of it.  My couch is currently storing value.  I could sell it if I wanted and fairly easily at that.  I could even trade it for a bike.  Does that make it a currency?  Sort of.

Am I proponent of Crypots?  Nope.  Just stating that something can fit more than one definition at a time and who really gives a shit how other people invest their money.

These threads are like political arguments.  Please state the number of people you've converted one way or the other over threads debating cryptos, religion, or politics?  I would venture to guess it's less than 1.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 20, 2017, 10:00:04 AM
There's no point in continuing the conversation if you think a crackdown on crypto is as likely as Apple deliberately destroying itself for no good reason. If you think so, fine, but you're operating under assumptions that render any conversation pointless. A crackdown may not be likely, in the immediate future, but it's orders of magnitude more likely than Apple stock tanking - which was my point. It would take a great deal less to crater cryptocurrencies than it would to trigger US hyperinflation or reduce Coca-Cola stock to nothing.

I say this because the US government only has a few months before billions of dollars of institutional money comes into the derivative market for bitcoin. Derivatives are a very messy thing. They're essentially a massive global financial casino. Some institutions take bets in one direction and others take bets in another. Some take bets with the assumption that they'll win some bets. When institutions leverage derivatives markets, they become absolutely dependent on them and the market as a whole is a house of cards. It's the reason why Warren Buffet says they're a financial "weapon of mass destruction".

The reason I state this is because the derivatives market for bitcoin is only a month away and that means that many companies beyond even the crypto-industry will become somewhat financially dependent on Bitcoin one way or the other. This means that democratic nations, like the US and EU will find it politically suicidal and economically infeasible to kill the bitcoin market without also collapsing the derivative house of cards that now depends upon its existence. The market cap of the bitcoin market is one thing, but the market cap of the derivatives market that depends on that market will be several fold larger and will make Apple look small in comparison.
Title: Re: Is it too late [bitcoin]?
Post by: dougules on November 20, 2017, 10:46:28 AM
Another thing, the thread topic "Is it too late?" is a classic economic bubble question. 
Title: Re: Is it too late [bitcoin]?
Post by: Cassie on November 20, 2017, 10:50:21 AM
We got into mining 4 years ago and have made $. We have cashed out some along the way so we have all our original $ back plus more.  I would only risk the amount of $ that you can afford to lose.
Title: Re: Is it too late [bitcoin]?
Post by: ChpBstrd on November 20, 2017, 11:11:08 AM
Back to the OP's question. I recommend the bitcoin investment, but only after you answer the following questions to yourself:

1) If you had put your entire portfolio in a cryptocurrency like Etherium this time last year, and you were a millionaire (in terms of the current trading value of your cryptocurrency) now, would you still be holding the cryptocurrency, or would you sell and trade them for an investment portfolio? Would you sell in one personal circumstance but not another?

2) Suppose a cryptocurrency will either double or go to zero in a year. Is this the highest-odds double-or-nothing wager in the marketplace? For example, you could buy a put option on Sears (SHLD) that will yield a 100+% return if their stock goes to zero in a year and lose 100% if SHLD only loses X%. Is the rationale for that bet weaker than the rationale for the continuation of a known bubble?

3) Would you do business or make loans to a drug dealer, a person who pimps young girls for prostitution, or a Russian money launderer, or would you have an ethical problem with that? These are the primary use cases for why the world needs cryptocurrencies instead of dollars, you know.

4) How will you know what is a fair value for your cryptocurrency? When will you sell?

5) Would you be a buyer right now if the cryptocurrencies had lost 90% of their value in dollars this year, instead of gaining triple digit percentages? If you bought, and then lost 90%, how would your attitude about cryptocurrencies be affected?

6) If you are only willing to gamble what you are willing to lose - say $2,000, will that amount be enough to change your FIRE date, even if you score a 4-5X return? Would shifting slightly more of your portfolio out of bonds and into equities achieve the same overall effect on portfolio risk and returns? Is tracking e-currency prices the best use for many hours of your time?

7) If you could buy a put option or futures contract on a cryptocurrency that would gain 100% if the cryptocurrency collapsed, would you consider that bet?

8) How much time would you spend at work to earn a bitcoin, assuming you could never sell it for dollars? A week? A month? A year?

9) What made it irrational for investors in 1998-2000 to buy Pets.com? Suppose you had a time machine and you wanted to go back and talk someone out of this investment. They'll never believe your time machine story, so what reasons would you give? How would you respond to their counterarguments, such as how much it's gone up, how online sales are the future, and how they'll have the discipline to sell at the right time?

10) If the bubble bursts while you're still in it, will you feel dumb or just unlucky?

Title: Re: Is it too late [bitcoin]?
Post by: shadow on November 20, 2017, 11:28:06 AM
3) Would you do business or make loans to a drug dealer, a person who pimps young girls for prostitution, or a Russian money launderer, or would you have an ethical problem with that? These are the primary use cases for why the world needs cryptocurrencies instead of dollars, you know.

Why place moralistic sentiment on a tool when it is the agents themselves who are the problems? A blade, cash, tech, science, medicine can be used for both good or bad. They are tools. Also, we have to consider whether the benefits far outweigh negative uses.

Title: Re: Is it too late [bitcoin]?
Post by: maizeman on November 20, 2017, 11:42:21 AM
3) Would you do business or make loans to a drug dealer, a person who pimps young girls for prostitution, or a Russian money launderer, or would you have an ethical problem with that? These are the primary use cases for why the world needs cryptocurrencies instead of dollars, you know.

Wait, what? Right now the major use case for bitcoin is when you want to pay money to someone you haven't meet in person (ie over the internet), and conventional credit cards/bank wire transfers are too slow, too expensive, or not available to one or both parties. That last case certainly encompasses a lot of illegal activity, like drug dealing, or trafficking in stolen credit card numbers. Generally there are better solutions available for money launderers, but yes, there may certainly a fair bit of traffic from people in that field.

But what exactly is the use case for bitcoin in prostitution, or specifically in child prostitution? By definition doesn't this require that the parties meet in person? If so I don't see any advantage to bitcoin relative to cash, and several significant disadvantages.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 20, 2017, 11:56:50 AM
Along those same lines, the internet has provided immense opportunities for child pornographers, drug dealers, money launderers, weapons dealers, and all sort of bad things to now take place much easier than before. But that doesn't make me any less comfortable using the internet or promoting its existence.
Title: Re: Is it too late [bitcoin]?
Post by: talltexan on November 20, 2017, 12:19:21 PM
Back to the OP's question. I recommend the bitcoin investment, but only after you answer the following questions to yourself:

1) If you had put your entire portfolio in a cryptocurrency like Etherium this time last year, and you were a millionaire (in terms of the current trading value of your cryptocurrency) now, would you still be holding the cryptocurrency, or would you sell and trade them for an investment portfolio? Would you sell in one personal circumstance but not another?

2) Suppose a cryptocurrency will either double or go to zero in a year. Is this the highest-odds double-or-nothing wager in the marketplace? For example, you could buy a put option on Sears (SHLD) that will yield a 100+% return if their stock goes to zero in a year and lose 100% if SHLD only loses X%. Is the rationale for that bet weaker than the rationale for the continuation of a known bubble?

3) Would you do business or make loans to a drug dealer, a person who pimps young girls for prostitution, or a Russian money launderer, or would you have an ethical problem with that? These are the primary use cases for why the world needs cryptocurrencies instead of dollars, you know.

4) How will you know what is a fair value for your cryptocurrency? When will you sell?

5) Would you be a buyer right now if the cryptocurrencies had lost 90% of their value in dollars this year, instead of gaining triple digit percentages? If you bought, and then lost 90%, how would your attitude about cryptocurrencies be affected?

6) If you are only willing to gamble what you are willing to lose - say $2,000, will that amount be enough to change your FIRE date, even if you score a 4-5X return? Would shifting slightly more of your portfolio out of bonds and into equities achieve the same overall effect on portfolio risk and returns? Is tracking e-currency prices the best use for many hours of your time?

7) If you could buy a put option or futures contract on a cryptocurrency that would gain 100% if the cryptocurrency collapsed, would you consider that bet?

8) How much time would you spend at work to earn a bitcoin, assuming you could never sell it for dollars? A week? A month? A year?

9) What made it irrational for investors in 1998-2000 to buy Pets.com? Suppose you had a time machine and you wanted to go back and talk someone out of this investment. They'll never believe your time machine story, so what reasons would you give? How would you respond to their counterarguments, such as how much it's gone up, how online sales are the future, and how they'll have the discipline to sell at the right time?

10) If the bubble bursts while you're still in it, will you feel dumb or just unlucky?

What's missing from this list is consideration of whether you frequently buy goods/services for which merchants are accepting crypto- now.
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on November 20, 2017, 12:37:29 PM
3) Would you do business or make loans to a drug dealer, a person who pimps young girls for prostitution, or a Russian money launderer, or would you have an ethical problem with that? These are the primary use cases for why the world needs cryptocurrencies instead of dollars, you know.

Wait, what? Right now the major use case for bitcoin is when you want to pay money to someone you haven't meet in person (ie over the internet), and conventional credit cards/bank wire transfers are too slow, too expensive, or not available to one or both parties. That last case certainly encompasses a lot of illegal activity, like drug dealing, or trafficking in stolen credit card numbers. Generally there are better solutions available for money launderers, but yes, there may certainly a fair bit of traffic from people in that field.

But what exactly is the use case for bitcoin in prostitution, or specifically in child prostitution? By definition doesn't this require that the parties meet in person? If so I don't see any advantage to bitcoin relative to cash, and several significant disadvantages.

Historically the first people to adopt crypto currencies for actual use have been people doing illegal stuff.  That's why there exists a burning need to keep everything off the books and off the government's radar.  Prostitution and human trafficking has been one of the best use cases of bitcoin and cryptocurrency:

http://www.dailymail.co.uk/indiahome/article-3552796/Bitcoin-India-s-currency-choice-drug-trafficking-illegal-arms-prostitution.html (http://www.dailymail.co.uk/indiahome/article-3552796/Bitcoin-India-s-currency-choice-drug-trafficking-illegal-arms-prostitution.html)
https://news.bitcoin.com/backpage-effect-sex-industry-thrives-bitcoin/ (https://news.bitcoin.com/backpage-effect-sex-industry-thrives-bitcoin/)
https://www.weforum.org/agenda/2016/12/fighting-human-trafficking-tracing-blood-diamonds-and-other-surprising-uses-for-blockchain/ (https://www.weforum.org/agenda/2016/12/fighting-human-trafficking-tracing-blood-diamonds-and-other-surprising-uses-for-blockchain/)
http://engineering.nyu.edu/press-releases/2017/08/16/follow-bitcoin-find-victims-human-trafficking (http://engineering.nyu.edu/press-releases/2017/08/16/follow-bitcoin-find-victims-human-trafficking)
https://cointelegraph.com/news/arkansas-police-generates-its-own-cryptocurrency-to-track-child-porn (https://cointelegraph.com/news/arkansas-police-generates-its-own-cryptocurrency-to-track-child-porn)
 . . . etc.
Title: Re: Is it too late [bitcoin]?
Post by: MrThatsDifferent on November 20, 2017, 12:45:41 PM
Thanks everyone for sharing your thoughts. When I discovered MMM last year I quickly worked out that my strengths are not in finance and numbers and the only way I was going to make this work was by keeping it simple, doing what the most successful were doing, create a plan and stick to it come hell or high water. So far, so good. What’s holding me back from bitcoin is it violates my plan: I barely understand it, none of the finance gurus I’ve been following advocate it, it’s not a part of my strategy and outside of playing with $3k to experience it, I don’t know what else I’d do with it?  I certainly wouldn’t keep investing my paychecks like I’m doing with Vanguard. I’m smart enough to not be too stupid. I think I have missed out and I think it’s cause I don’t have the tolerance for risk. I’m late to the party as it is, I can’t afford to be wrong when I’m finally on a good path financially.  The boat I missed wasn’t 3 months ago, it was 7 years ago. If I want to accelerate my FIRE plans I’ll need to do it the old-fashioned way—through side-hustles and bonuses at work.
Title: Re: Is it too late [bitcoin]?
Post by: Telecaster on November 20, 2017, 01:24:27 PM
I always find the argument "it can't be a store of value when it's supposed to be a currency" funny. 

That doesn't make sense in my mind.  Dollars are a currency but people also use dollars to "store" wealth.  If I currently have $50k in my bank account in US Dollars I don't say, "well it's not storing value because I'm only supposed to use it as currency to facilitate transactions".  It stores value UNTIL I want to use it as currency. 

Cryptos can store value UNTIL you decide to use/sell/trade or whatever and get something out of it.  My couch is currently storing value.  I could sell it if I wanted and fairly easily at that.  I could even trade it for a bike.  Does that make it a currency?  Sort of.

The definition of money is largely philosophical when you get right down to it.  For example rai Stones.   One of which is still traded even though it fell out of a canoe and resides on the bottom of the ocean.  But everyone agree is a rai stone down there somewhere, so it has value.

https://en.wikipedia.org/wiki/Rai_stones

There are any number of even odder things that have functioned as currency over the centuries as well.  But philosophy aside, just being a store of value by itself isn't enough to be considered currency.  It also needs to be a medium of exchange.  The guy with the bike might trade for your couch, but the grocery store won't, and neither will your mortgage company.  There also has to be a unit of account.  I suppose one couch is a unit, but hard to subdivide.  So no, there is no reasonable definition of currency that includes couches. 

Bitcoin clearly is a currency in my view, it ticks all the boxes although the "store of value" thing is admittedly a little hard to pin down.  I also believe the intrinsic value question is moot.  Bitcoin will have value as long as people wish to complete transactions in Bitcoin, and it is a good bet there will always be people who can't or don't want to complete transactions with the traditional banking system.

That said, I think people who are talking about "investing" in bitcoin are barking mad.  Unless you need to complete transactions in Bitcoin it is a fool place to put your money.

Title: Re: Is it too late [bitcoin]?
Post by: ChpBstrd on November 20, 2017, 02:17:37 PM
The reason one would use a cryptocurrency rather than, say, PayPal, Square, a free ACH transfer, a money wire, a credit card, or a checkout service is so that their transactions are untraceable by governments, who can subpoena financial firms. This privacy is an aspect actively promoted by supporters/sellers of cryptocurrencies, and it has real utility - to some users doing illegal things.

See https://news.bitcoin.com/backpage-effect-sex-industry-thrives-bitcoin/ (https://news.bitcoin.com/backpage-effect-sex-industry-thrives-bitcoin/)

And no, cryptocurrency speculators don't commit the crime. But their speculation does justify investments in a financial system whose main purpose or advantage over other means of trade is to hide illicit transactions from governments. (The internet, on the other hand, has many noncriminal purposes and noncriminal advantages over other means of communication, such as phone calls or snail mail.).

If you're unbothered by the presence of victims in cryptocurrencies' intended ecosystem, just skip to the other questions, which rely more on self-interest. I think they're more compelling too.
Title: Re: Is it too late [bitcoin]?
Post by: TreeTired on November 20, 2017, 04:29:38 PM
The top is officially in - or will be within the next 7 days. Bitcoin is a total Ponzi scam, a mania.  My proof of all this is that I bought $100 worth of Bitcoin (via Coinbase) today.  I am notorious for getting in on anything/everything at the top!
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 20, 2017, 04:30:48 PM
The reason one would use a cryptocurrency rather than, say, PayPal, Square, a free ACH transfer, a money wire, a credit card, or a checkout service is so that their transactions are untraceable by governments, who can subpoena financial firms. This privacy is an aspect actively promoted by supporters/sellers of cryptocurrencies, and it has real utility - to some users doing illegal things.

See https://news.bitcoin.com/backpage-effect-sex-industry-thrives-bitcoin/ (https://news.bitcoin.com/backpage-effect-sex-industry-thrives-bitcoin/)

And no, cryptocurrency speculators don't commit the crime. But their speculation does justify investments in a financial system whose main purpose or advantage over other means of trade is to hide illicit transactions from governments. (The internet, on the other hand, has many noncriminal purposes and noncriminal advantages over other means of communication, such as phone calls or snail mail.).

If you're unbothered by the presence of victims in cryptocurrencies' intended ecosystem, just skip to the other questions, which rely more on self-interest. I think they're more compelling too.

If you think Bitcoin is hiding transactions from governments, then you're a little misinformed. It is a big myth that bitcoin is anonymous. It is pseudo-anonymous and at worst, provides law enforcement and governments a new avenue for tracking illicit transactions that they never had before. All transactions on the blockchain are publicly searchable. With cash, all transactions are completely anonymous. The more money flows out of cash and into bitcoin, the more opportunities governments and law enforcement have to tracing those transactions to who's making them.

Studies have shown that it is possible to track transactions and addresses using a few techniques to who they belong to http://cseweb.ucsd.edu/~smeiklejohn/files/imc13.pdf (http://cseweb.ucsd.edu/~smeiklejohn/files/imc13.pdf). It makes for good headlines that illicit markets are using bitcoin, but the truth is that the amount of illicit activity that takes place in cash dwarfs those same markets that are within bitcoin. The IRS already tracking transactions and bitcoin activity with a service called Chainalysis to determine who isn't paying up in taxes.

If you're using bitcoin because you think you can be anonymous and you're conducting illicit activity, then you might want to think again. And if you're judging bitcoin for the illicit activity that takes place because of its capabilities, then you might not want to judge bitcoin so harshly as those capabilities are now being realized to catch those who commit crimes as well.
Title: Re: Is it too late [bitcoin]?
Post by: gp_ on November 20, 2017, 04:42:16 PM
We have different understanding of crypto. Your understanding leads you to believe it's gambling.

no, my understanding has allowed me to profit from it because i work in technology, and know how to connect dots... every commodity in existence by your definition is gambling. i get that this is space is young, but it's internet 3.0. unsure if you get / know the reference.
Title: Re: Is it too late [bitcoin]?
Post by: PDXTabs on November 20, 2017, 04:49:36 PM
If you think Bitcoin is hiding transactions from governments, then you're a little misinformed. It is a big myth that bitcoin is anonymous. It is pseudo-anonymous and at worst, provides law enforcement and governments a new avenue for tracking illicit transactions that they never had before. All transactions on the blockchain are publicly searchable. With cash, all transactions are completely anonymous. The more money flows out of cash and into bitcoin, the more opportunities governments and law enforcement have to tracing those transactions to who's making them.

I would add that there is ~1.2T USD in cash circulating the world (https://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html), and that ~50% of it is unaccounted for (https://www.npr.org/templates/story/story.php?storyId=99147699). Let's call that ~600B USD in unaccounted for currency. The total market cap for BTC is only ~138B USD. What do you think those $600B is being used for? I promise you that large amounts of it is for criminal enterprises.

For the people that think that cryptocurrency is only good for crime, please take a trip to Venezuela or Zimbabwe.
Title: Re: Is it too late [bitcoin]?
Post by: gp_ on November 20, 2017, 04:53:33 PM
I promise you that large amounts of it are for criminal enterprises.

definitely. cash in general is also more anonymous than bitcoin.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on November 20, 2017, 05:29:46 PM
Well it depends. If I'm meeting a dealer to buy something, cash is definitely superior to bitcoin. If I'm a minor drug dealer and I want to buy a pound of pure fentanyl from a chinese chemical factory (enough to make ~3,000 fake doses of heroine) and have it delivered by mail without ever meeting (or even knowing) my supplier, there certainly are advantages to being able to work with cryptocurrencies.

@ChpBstrd, I read through that link. There are sourced links to people using bitcoin to buy pornography (where I could see it having definite advantages relative to credit cards), and it sounds like people were using it to pay for backpages (a legal service) when it was cut off by the major credit card processors because some of the services advertised on the website were illegal. But the only reference to actually paying for sex with a cryptocurrency in the article was a quote from one sex worker that being paid in cash felt dirty and it would be nice if they could be paid in cryptocurrency instead.

Don't get me wrong, I don't doubt that someone, somewhere has paid for sex with bitcoin. I just don't think that the existence of cryptocurrencies makes it any easier for people to pay for sex then if they're paying with cash.
Title: Re: Is it too late [bitcoin]?
Post by: Mr Mark on November 21, 2017, 06:06:07 AM
I'm still waiting for my tulip bulbs to go back to their old highs.  Then I'll cash out and put it all into bitcoin.

👍

+1

It really has been a lost 4 centuries for the tulip market.
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on November 21, 2017, 07:20:25 AM
I'm still waiting for my tulip bulbs to go back to their old highs.  Then I'll cash out and put it all into bitcoin.

👍

+1

It really has been a lost 4 centuries for the tulip market.

I think you mean that it has been a fantastic buying opportunity.
Title: Re: Is it too late [bitcoin]?
Post by: dougules on November 21, 2017, 10:58:32 AM
We have different understanding of crypto. Your understanding leads you to believe it's gambling.

no, my understanding has allowed me to profit from it because i work in technology, and know how to connect dots... every commodity in existence by your definition is gambling. i get that this is space is young, but it's internet 3.0. unsure if you get / know the reference.

Actually, yes, buying any commodity with the idea you're going to make money on the price going up is gambling.  The risk is a lot lower with something that's had a long-standing value like real estate or gold, but it is still gambling. 
Title: Re: Is it too late [bitcoin]?
Post by: Mr Mark on November 21, 2017, 11:10:56 AM
I get the usefulness of block chain tech. Bitcoin just uses a block chain. As a semi-anonymous and low friction medium of cyber exchange also ok. But there is no need for anyone to own the stuff for that exchange to happen. You go to an app that converts $ to btc, do the transaction,  And (almost) immediately the other party converts btc to $.

The value of 1 btc will be determined by whatever the transaction cost is (in fractional btc and real world costs) And some profit for a few market makers to enable the transaction.

The rest is speculation as that real intrinsic value is quite small, no?

Unless you need bitcoin to launder money and enable sightless transfer from place to place.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 21, 2017, 12:53:27 PM
I get the usefulness of block chain tech. Bitcoin just uses a block chain. As a semi-anonymous and low friction medium of cyber exchange also ok. But there is no need for anyone to own the stuff for that exchange to happen. You go to an app that converts $ to btc, do the transaction,  And (almost) immediately the other party converts btc to $.

The value of 1 btc will be determined by whatever the transaction cost is (in fractional btc and real world costs) And some profit for a few market makers to enable the transaction.

The rest is speculation as that real intrinsic value is quite small, no?

Unless you need bitcoin to launder money and enable sightless transfer from place to place.

Converting the funds directly between BTC and fiat requires a central custodial account set up with a third-party to handle the conversion at the time of the transaction. This effectively loses one of the primary benefits of Bitcoin and the blockchain.

Bitcoin is a permission-less system where transactions are push instead of pull. Permission-less in the sense that anyone can use it without the need to verify identity first and "push" in the sense that the merchant does not receive any authority of the funds in the account. As with credit card and ACH transactions, the merchants have full authority to withdraw funds from the account and must also maintain the consumer identification information on their systems to allow for this. This is the crux of the problem with today's payment systems. They require identification to be used because they're pull based systems that give whichever merchant the authority to pull funds from the account. In doing so, every single merchant you deal with must be trusted to handle not only your funds, but your identity. The very act of being a consumer in the market means that our identities and wealth are carelessly handled by any merchant you interact with. There isn't a month that goes by without another data breach in the news. Fraud is a multi-billion dollar problem that costs everyone in the economy massive amounts of money and hardship. This is a systemic failure based on the fact that we are approaching consumer protecting from the wrong angle and we put band-aid regulations in the name of consumer protection that are ineffective and just cost even more money.

Bitcoin fixes all this. By not requiring identity, no merchant receives the identity of who's funds are being spent (similar to using cash). They're also push transactions which means that the only person who has authority to spend those funds is the one who owns them. This whole security concept would bring massive protections to the consumer and save billions of dollars for everyone involved.

Using custodial accounts to make transactions with Bitcoin might be a partial resolution to this problem, but it doesn't take full advantage of what bitcoin can provide with regard to consumer protections. I do see custodial accounts being a primary solution in developed countries at first, but I think the non-developed world that is struggling with creating proper institutions to serve their consumers and that lack the consumer protections will leap frog that approach and go directly to bitcoin or another crypto-currency instead much like they skipped landline phones and went straight to cell phones.

You make the argument that it doesn't make sense to hold BTC to simply partake in economic transactions with it, but if economic transactions are being made in BTC, then my question to you would be why would it make sense to convert to USD (assuming volatility stabilized by that time)?
Title: Re: Is it too late [bitcoin]?
Post by: shadow on November 22, 2017, 10:59:29 AM
We have different understanding of crypto. Your understanding leads you to believe it's gambling.

no, my understanding has allowed me to profit from it because i work in technology, and know how to connect dots... every commodity in existence by your definition is gambling. i get that this is space is young, but it's internet 3.0. unsure if you get / know the reference.

Are you referencing L.A.S?

Speculation and gambling have very different meanings. Speculation: taking a calculated risk on the expectation that fundamentals will drive demand. Gambling: you hope for a return base on luck. I don't view crypto as gambling.
Title: Re: Is it too late [bitcoin]?
Post by: dougules on November 22, 2017, 11:28:30 AM
We have different understanding of crypto. Your understanding leads you to believe it's gambling.

no, my understanding has allowed me to profit from it because i work in technology, and know how to connect dots... every commodity in existence by your definition is gambling. i get that this is space is young, but it's internet 3.0. unsure if you get / know the reference.

Are you referencing L.A.S?

Speculation and gambling have very different meanings. Speculation: taking a calculated risk on the expectation that fundamentals will drive demand. Gambling: you hope for a return base on luck. I don't view crypto as gambling.

There's a pretty big gray area in the middle; a lot of people seem to be low on the "calculated."  Whether you call it speculation or gambling, it seems like a much better idea to skip hording bitcoins and buy something that will get you a return.  Bitcoins may or may not be the next big thing, but it's still a form of holding cash and risky cash at that. 
Title: Re: Is it too late [bitcoin]?
Post by: frozen on November 22, 2017, 01:54:20 PM
I don’t get why Bitcoin is valued so high. Not being critical, but I don’t get the appeal.
And what are people really investing in when the invest in Bitcoin?
Who even uses Bitcoin for transactions? Drug dealers? Criminals who hack a website and hold it hostage for a large Bitcoin ransom (like the recent Greys Anatomy episode)

If you invest in real estate and rent out a home, you help provide someone with housing.
If you invest in a drug stock like Pfizer, you are investing in an American Company and in healthcare.
If you invest in Apple, you are investing in an American company who provides us with technology.

Why give your money to Bitcoin?
Title: Re: Is it too late [bitcoin]?
Post by: samustache on November 22, 2017, 02:50:27 PM
It's never too late to flip a coin and bet on the outcome. None of what I read in this thread convinces me the return is any more stable than that. That the technology might become commonplace is no guarantee that any one coin will generate a return.
I'm reminded of a bunch of investor letters I got saying 3d printers were the next big thing simply because they were cool - only, just like led tvs, everyone jumped in and they became commodities. They are still cool, but no one can actually make huge money making them...

Title: Re: Is it too late [bitcoin]?
Post by: frozen on November 22, 2017, 05:44:56 PM
CME Group - (The Chicago Mercantile Exchange & Chicago Board of Trade) , is launching Bitcoin futures on Dec. 11:
http://www.cmegroup.com/trading/bitcoin-futures.html?itm_source=cmegroup&itm_medium=flyout&itm_campaign=bitcoin&itm_content=tech_flyout

https://www.coindesk.com/cmes-bitcoin-futures-likely-start-trading-december-11/


I have not yet read through this, but considering it is launching on Dec 11, do you think it might be a good option to get in?
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on November 22, 2017, 06:08:54 PM
CME Group - (The Chicago Mercantile Exchange & Chicago Board of Trade) , is launching Bitcoin futures on Dec. 11:
http://www.cmegroup.com/trading/bitcoin-futures.html?itm_source=cmegroup&itm_medium=flyout&itm_campaign=bitcoin&itm_content=tech_flyout

https://www.coindesk.com/cmes-bitcoin-futures-likely-start-trading-december-11/


I have not yet read through this, but considering it is launching on Dec 11, do you think it might be a good option to get in?
Christopher Giancarlo, chairman of Interactive Brokers, warns this could destabilize the CME's ability to perform its function as a clearing house for ALL of its products. 

http://www.businessinsider.com/interactive-brokers-chairman-warns-about-dangers-of-bitcoin-futures-wall-street-journal-ad-2017-11

"If the Chicago Mercantile Exchange or any other clearing organization clears a cryptocurrency together with other products, then a large cryptocurrency price move that destabilizes members that clear cryptocurrencies will destabilize the clearing organization itself and its ability to satisfy its fundamental obligation to pay the winners and collect from the losers on the other products in the same clearing pool."

Systemic risk, anyone?
Title: Re: Is it too late [bitcoin]?
Post by: gp_ on November 23, 2017, 02:10:04 PM
Speculation and gambling have very different meanings. Speculation: taking a calculated risk on the expectation that fundamentals will drive demand. Gambling: you hope for a return base on luck. I don't view crypto as gambling.

agreed 100%.

seeing how an emerging technology can transform anything/everything is simply connecting dots; it just makes sense. i wouldn't expect people who are new to this space to always agree, but if you've followed bitcoin/adoption of blockchain closely for at least a couple years, it's obvious... this argument to me is no different than brick and mortar businesses vs. the internet, automobile vs. horse & buggy, etc. those examples however, are probably a little easier to comprehend.
Title: Re: Is it too late [bitcoin]?
Post by: gp_ on November 23, 2017, 02:17:23 PM
Who even uses Bitcoin for transactions? Drug dealers? Criminals who hack a website and hold it hostage for a large Bitcoin ransom (like the recent Greys Anatomy episode)

over 250,000 merchants (regular businesses) in japan accept bitcoin as payment. i use this example because japan is typically a forward thinking country when it comes to the adoption of new technology. there are many retailers in the united states who accept bitcoin as payment too (amazon is rumored to be the next huge one). with any new technology, there will always be hiccups. the unfortunate one with bitcoin is arguing over which bitcoin is the "true" bitcoin (bitcoin cash vs. bitcoin core/legacy (the original). there are many reasons for this... i believe this has stifled many from using it daily, as well as more businesses and individuals from adopting it as a form of payment. 2018 will be a huge year for cryptocurrency, and i hope the average person gains a better understanding of what cryptocurrencies are, the benefits of using them, and the myths behind them.

Title: Re: Is it too late [bitcoin]?
Post by: YttriumNitrate on November 24, 2017, 08:40:35 AM
@Shadow: I hear you. I however do not believe for a second that bitcoin is the next internet or electricity. I think it is far more likely to be the next dotcom bust. In 1999 an online toy company had a larger market cap than Toys R Us, even though ToyRUs did more sales.... even online sales. It didn't make sense. It was stupid. That online toy store went under when the tech bubble burst. Fast forward to 2017 and Toys R Us is filing bankruptcy. The technological predictions of the tech bubble are coming true, just 18 years too late. Toys R Us also wasn't brought down by an online toy store. They were brought down by Amazon, which in 1999 was an online bookstore. Blockchain tech might improve how we transfer money, it might also improve other technology, but that doesn't mean Bitcoin's price will continue to go up over time. For that to happen Bitcoin has to start replacing currencies, which for the reasons I've listed, I don't see happening... ever.
But, with Etoys you got to say cool things like "They have the internet in their DNA" and "Brick and Mortar is so last century." Nobody seems to talk about business DNA anymore as it's all about "disruptive" technologies these days (which 20 years from now will undoubtedly seem quaint as the business jargon moves on).

Also, Toy 'R Us decline is far more complicated than just "the internet killed it" and involves massive debt as a result of a leveraged buy out.
https://www.youtube.com/watch?v=4JYUo9WKkao (https://www.youtube.com/watch?v=4JYUo9WKkao)
Title: Re: Is it too late [bitcoin]?
Post by: thenextguy on November 27, 2017, 08:09:20 AM
Bitcoin is up 25% since OP asked "Is it too late?"
Title: Re: Is it too late [bitcoin]?
Post by: fattest_foot on November 27, 2017, 09:37:52 AM
6) If you are only willing to gamble what you are willing to lose - say $2,000, will that amount be enough to change your FIRE date, even if you score a 4-5X return? Would shifting slightly more of your portfolio out of bonds and into equities achieve the same overall effect on portfolio risk and returns? Is tracking e-currency prices the best use for many hours of your time?


I think this is what's keeping me from getting in on Bitcoin. Even if Bitcoin hits $100k in the next 3 years, I'd never have enough money into it to make that worthwhile. $2,000 is probably accurate for what I'd be willing to put in, so I'm looking at $20k by 2021. $20k, however, would be pretty insignificant to my financial goals.

I just don't have enough "fun money" to put into Bitcoin that would make it worthwhile.
Title: Re: Is it too late [bitcoin]?
Post by: talltexan on November 27, 2017, 09:53:52 AM
Translation: in my gut, I realize that the risks are too great for that chance at an extraordinary return.
Title: Re: Is it too late [bitcoin]?
Post by: dougules on November 27, 2017, 10:25:29 AM
Who even uses Bitcoin for transactions? Drug dealers? Criminals who hack a website and hold it hostage for a large Bitcoin ransom (like the recent Greys Anatomy episode)

over 250,000 merchants (regular businesses) in japan accept bitcoin as payment. i use this example because japan is typically a forward thinking country when it comes to the adoption of new technology. there are many retailers in the united states who accept bitcoin as payment too (amazon is rumored to be the next huge one). with any new technology, there will always be hiccups. the unfortunate one with bitcoin is arguing over which bitcoin is the "true" bitcoin (bitcoin cash vs. bitcoin core/legacy (the original). there are many reasons for this... i believe this has stifled many from using it daily, as well as more businesses and individuals from adopting it as a form of payment. 2018 will be a huge year for cryptocurrency, and i hope the average person gains a better understanding of what cryptocurrencies are, the benefits of using them, and the myths behind them.

Yes, but how many of the people exchanging money into bitcoin are actually planning to use it to buy from one of those merchants?  If most people are buying it just to cash in when it goes up, then it is a bubble.  That doesn't mean that bitcoin won't be useful in the future, but just that the exchange rate is way out of whack. 
Title: Re: Is it too late [bitcoin]?
Post by: shadow on November 27, 2017, 12:23:12 PM
There is huge risk in the space right now. Especially for bitcoin, due to potentially fraudulent tether. Proceed with caution.
Title: Re: Is it too late [bitcoin]?
Post by: ChpBstrd on November 27, 2017, 12:29:58 PM
Bitcoin is up 25% since OP asked "Is it too late?"

So are my UVXY put options. I'll know it's too late when I lose 100% of my investment in them. :))

Translation: there are all sorts of time bombs that will pay a person double-digit returns to hold them. There's a whole marketplace for stratospheric risk/rewards. Next example: Venezuelan bonds could rapidly increase if the Russians or Chinese essentially buy out the country, or the government is overthrown. Some of these scenarios are arguably more likely than "bitcoin will increase another 1,000X."

I just saw article on Fortune.com titled "Bitcoin for beginners: 3 things to know before you invest". Another on CNBC reports that 'Buy Bitcoin with credit card' is spiking as a google search term. These red flags will be obvious in hindsight.
Title: Re: Is it too late [bitcoin]?
Post by: Cassie on November 27, 2017, 12:53:20 PM
The transaction fees are high to use Bitcoin to buy things. Bitcoin is speculation but when you mine like we are you are earning the bitcoin even after paying the high electricity costs.   The  other thing is it is very complicated and you really have to know what you are doing. My son is the brains of this operation and we all have made $.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 27, 2017, 01:12:31 PM
A lot of people misunderstand that bitcoin isn't just a currency and so they place too much emphasis of its value on the idea about using it to purchase their daily coffee. Bitcoin isn't just a currency, it is both a currency and a payment network. In the modern world, where we already have payment services such as VISA, using Bitcoin to purchase coffee doesn't see like an exciting value proposition.

But, Bitcoin's value doesn't just come from being able to purchase coffee. By being both a payment network and a currency, its true value comes from the fact that it can be used to send value and thus the network itself is the value. The currency's price is just the result of that value and the connecting of people through this network.

How many here think VISA, as a company has value? It is a widely adopted payment network. If you own S&P index funds, you likely hold VISA stock, so I'm guessing most would feel that VISA as a company holds value. VISA's value therefore is derived from the idea that allowing companies and individuals to send monetary value through its network provides value.

Bitcoin is no different, in the same value proposition that VISA holds, except that it goes even further than that. Above and beyond what VISA offers, it provides the following additional value:

1) Decentralized
2) Global
3) Permission-less (anyone, anywhere can use it)
4) Counterfeit proof
5) Peer-to-Peer
6) Fraud proof consumer protection
7) Nearly unhackable
8) Immutable
9) Extensible for use with smart contracts
10) Can't be confiscated
11) Low cost/fast transactions

...And more...

If you feel that VISA has intrinsic value as a company, then you have to agree that the Bitcoin network itself, also has value. The use of this network and all those features takes place through the currency Bitcoin. The idea that the bitcoin blockchain can be decoupled from the currency bitcoin is false. The two go hand-in-hand and the bitcoin network is a one of a kind and therefore this network has value. Bitcoin is both a currency and payment network and the two are inseparable of each other. The more people who choose to use this network (and thus own its currency), the more value this network has. This value recognition is true of all networks (the internet, phones, Facebook, etc).

The price of a bitcoin token is essentially irrelevant when determining the value of what bitcoin is. If bitcoin and all of the features list above have value to people (which they do), then the network has value because of that. This is bitcoin's "intrinsic" value. The price of a single bitcoin is simply a reflection of how many people wish to use the network and how much of one's worth they'd like to be a part of this network. There are less than 16.5 million bitcoin in circulation (something like 20-30% of which is estimated to be lost for good). Therefore if the world begins to recognize the value proposition that the bitcoin network can provide the world, then to support the monetary needs of the world, a single bitcoin must be valued according to the network's utilization. That is to say that the supply of bitcoin must meet the monetary demands of its network's users.

In this sense, bitcoin today is extremely undervalued today. The number of outside people that want to be a part of this network far exceeds the number of people that are currently utilizing it. Bitcoin will have value for the foreseeable future and I can say this with great confidence because of the fact that all of the above listed features are, together, all features that only bitcoin can provide today. People won't suddenly stop demanding or wanting those features in a payment network and this is why Bitcoin will continue to exist...because it is demanded and there is a need for it in this world.

I highly recommend these reads:

http://www.runtogold.com/the-great-bitcoin-bull-market-of-2017/ (http://www.runtogold.com/the-great-bitcoin-bull-market-of-2017/)
https://fee.org/articles/what-gave-bitcoin-its-value/ (https://fee.org/articles/what-gave-bitcoin-its-value/)
Title: Re: Is it too late [bitcoin]?
Post by: effigy98 on November 27, 2017, 02:09:20 PM
No.

Crypto is not going away and bitcoin has first mover advantage. There is a good chance something like ETH will take off too. There is massive misinformation on this forum. Please go watch most of these videos as he wrote the book on bitcoin.

https://www.youtube.com/channel/UCJWCJCWOxBYSi5DhCieLOLQ

If you have decided you still want to invest (it is an investment no matter how many people call it gambling) here are the basics. This is highly speculative however, so only put in money you plan on holding long and not cash out because you need the money. You should probably limit yourself to no more than 10% of all your assets. Rebalance into other uncorrelated assets as it sky rockets so you do not relive the fun times of the dotcom crash and loose almost everything. Keep in mind, most of this negativity was around in the mid 90's for something called the "internet". People resist change, it is natural.

Go to coinbase and start dollar cost averaging in with money you are comfortable loosing. Once you get more comfortable, start using gdax for lower fees (same company).
https://www.coinbase.com/

Get a hardware wallet (or paper) and get it off the exchange since like banks, they are vulnerable to greed and hacking, but not backed up by the government printing presses. Bitcoin has never been hacked, but exchanges have.
https://www.ledgerwallet.com/products/ledger-nano-s

Title: Re: Is it too late [bitcoin]?
Post by: shadow on November 27, 2017, 02:49:49 PM
Ledger is definitely recommended. It's safe to use even if you plug it into a virus-infected pc. However, you have to pay attention to the addresses you are sending to (triple check the addresses are correct) before you click on the physical ledger hardware to confirm. There are viruses that can change copy-paste addresses to look similiar to the addresses you use.
Title: Re: Is it too late [bitcoin]?
Post by: sherr on November 27, 2017, 02:51:14 PM
Above and beyond what VISA offers, it provides the following additional value:

I'm not claiming that Bitcoin or similar will not have a place in the long-term world, but let's look at a few of these.

1) Decentralized
5) Peer-to-Peer

These are actually the same thing, are they not? And you are presuming that this is a good thing. All other considerations being equal (like availability and legality) downloading something from a central location is typically much easier / faster / better than bittorrenting it. There is a reason that the internet routes traffic through a few high-capacity backbones instead of forcing all traffic to bounce from computer to computer in some sort of crazy mesh peer-to-peer network.

2) Global

Practically speaking, so is Visa.

3) Permission-less (anyone, anywhere can use it)
10) Can't be confiscated

Okay, but that seems to have limited utility in first-world nations outside of illegal activity.

4) Counterfeit proof
7) Nearly unhackable
8) Immutable

I wouldn't really call these benefits, that's just what allows cryptocurrencies to exist as an electronic-only currency. There may be some value to the fact that it's counterfeit proof, but that's a direct contradiction to this next one.

6) Fraud proof consumer protection

No, no it's not. If I the consumer am defrauded by an online merchant (intentionally or on accident), with Visa I can initiate a charge-back and my money will reappear in my account in a mater of days. With Bitcoin I have no recourse and have just lost whatever Bitcoin I have irrevocably transferred. This in-and-of itself is an enormous advantage that traditional payment networks have over Bitcoin.

9) Extensible for use with smart contracts

Okay, great I guess. There may be an extremely limited use-case for that. I'll get really excited when the software industry learns how to always write bug-free code.

11) Low cost/fast transactions

No, it's not. Visa transactions have always been faster and are already cheaper.

No one is saying that Bitcoin / cryptocurrencies / blockchain technology doesn't have legitimate uses. But the question of "should I 'invest' in Bitcoin" requires a lot more then that.

1) You have to justify why cryptocurrencies are better enough than the existing solutions to overthrow large, well-established players. Bitcoin (in particular) can't come anywhere close to the transaction rate that Visa currently handles, so even if there are specialized uses for Bitcoin it's not looking to unseat the major financial players anytime soon.

2) You have to justify why even if Bitcoin does come into its own and find a long-term market the price of a Bitcoin should increase. The built-in deflationary nature maybe? But rising transaction costs could counteract that. That the future market is much larger than the current market? Maybe, but that remains to be seen.

3) You have to justify why Bitcoin in particular is going to be the long-term winner over other cryptocurrencies, including those that have yet to be invented. I see no particular reason other than momentum. While that may be a reason it's not a particularly good one. The transaction cost / rate alone could cause everyone to jump ship to a newer crytocurrency when the difficulty gets too high. And again to a new one after that. Forever. Even if cryptocurrencies have a long-term use, there's no reason it always has to be the same one. And at every transition the "investors" will be left with a lot of worthless 1s and 0s.

In this sense, bitcoin today is extremely undervalued today. The number of outside people that want to be a part of this network far exceeds the number of people that are currently utilizing it.

It seems completely obvious to me that the vast majority of people who "want to be a part" today really want to be a part of the huge speculative price surges, not the actual currency / transaction network.
Title: Re: Is it too late [bitcoin]?
Post by: schneider on November 27, 2017, 03:12:52 PM
We have different understanding of crypto. Your understanding leads you to believe it's gambling.

no, my understanding has allowed me to profit from it because i work in technology, and know how to connect dots... every commodity in existence by your definition is gambling. i get that this is space is young, but it's internet 3.0. unsure if you get / know the reference.

Actually, yes, buying any commodity with the idea you're going to make money on the price going up is gambling.  The risk is a lot lower with something that's had a long-standing value like real estate or gold, but it is still gambling.

I agree with this. A bitcoin, like a kilogram of gold, a flat in London (when you live in Moscow), or a 1967 1/2 Mustang, does not generate value even in the loosest sense. You may have a reason to buy any of those things that makes sense to you, but the question is how you would know when it makes sense to sell? But then, I'm one of those people who gets stressed out trying to decide how to feel about the P/E ratio of VXUS vs VTI. :)

Since this thread has been short on stories like this: I bought some BTC in the past for reasons that, in hindsight, were immature. Expressed as a fraction of my disposable income, the figure was small but large enough that I would have been mad at myself for more than a few minutes if my investment had gone to zero. Some time passed, I came to my present opinion, and I decided to liquidate my position, making a profit of, I dunno, something between one hundred and one thousand percent. That number would be more like ten thousand percent if I had held onto it today. I don't regret my decision: I did the best I could with the information I had available.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 27, 2017, 04:28:39 PM
1) Decentralized
5) Peer-to-Peer

These are actually the same thing, are they not? And you are presuming that this is a good thing. All other considerations being equal (like availability and legality) downloading something from a central location is typically much easier / faster / better than bittorrenting it. There is a reason that the internet routes traffic through a few high-capacity backbones instead of forcing all traffic to bounce from computer to computer in some sort of crazy mesh peer-to-peer network.

They're similar, but not quite the same. Peer-to-peer I mentioned in reference to the network itself. But, decentralized I mentioned in reference to not just the network, but everything in regards to the bitcoin ecosystem. For example, there is no one single person who created it. No one knows who Satoshi Nakamoto is or if it is even a single person. This was done on purpose as a truly decentralized network needs to not have a central authority over it. The development team is decentralized. There is no central exchange. There is no central wallet software that's required to use it. There is no central media authority over what bitcoin is or isn't. Decentralization runs so much deeper than just the peer-to-peer aspect of the network itself. This is what ultimately makes it so resistant to government control.

It is funny that you mention BitTorrent. It isn't true that BitTorrent is slower than centralized connections. BitTorrent can not only offer faster downloads, but can do it for cheaper. There is a reason why many large downloads (such as OS images) offer BitTorrent links as an option for download. Not only is it usually faster, but it can be offered that way for very cheap. Downloading a 5GB file from 1000 seeders that are each offering 200Kb/sec speeds will be a lot faster than downloading from an entity that you can download from at 100Mb/sec. Also, the fact that you're talking about internet routing over backbones as an argument against decentralization tells me you don't have any idea how internet routing and BGP work. If everything on the internet needed to be routed over the backbones of the internet, then the internet would not function and could never handle the total aggregate data sent daily across the network, so your argument against decentralization fails miserably here.

2) Global

Practically speaking, so is Visa.

Practically doesn't mean anything here. Only about 30 countries have what would be considered modern financial services. Roughly 4 billion people don't have access to modern financial services such as credit, savings, and insurance. So while VISA may make the claim that they offer services in 200 countries, as they do, that doesn't mean that the people of these countries has the capability to access their services. All one needs to have access to the bitcoin network is a phone and an internet connection. This is true regardless of the geographic location of that individual. Thus, by having access to the bitcoin network regardless of geographic location, you can therefore participate freely in the global economy. Therefore, Bitcoin is global, VISA is not.

3) Permission-less (anyone, anywhere can use it)
10) Can't be confiscated

Okay, but that seems to have limited utility in first-world nations outside of illegal activity.

As I said, there are 4 billion+ that lack access to banking services. Being permission-less means that they can have access to the financial services that bitcoin offers without discrimination. The fact that bitcoin can't be confiscated also means that many of the world's high net worth individuals will also be looking to bitcoin as a safe haven asset much like gold. But, instead of needing their own gold vault to store physical gold bars in, they can simply store their wealth digitally. High net worth individuals like to use safe haven assets like that because once an individual becomes rich, they like to ensure that they'll always be rich even when the sh*t hits the fan. The fact that bitcoin offers this is an extremely enticing benefit to the world's rich.

4) Counterfeit proof
7) Nearly unhackable
8) Immutable

I wouldn't really call these benefits, that's just what allows cryptocurrencies to exist as an electronic-only currency. There may be some value to the fact that it's counterfeit proof, but that's a direct contradiction to this next one.

These are all benefits. Just because you don't see them as such, doesn't mean anything. Being counterfeit proof doesn't just extend to the currency token itself. Anything digital can be make immutable and counterfeit proof. The rootstock network can be used for smart contracts that will allow for a massive amount of possibilities. Essentially the future need for notaries will become a thing of the past. Anything notarized can simply be put on the blockchain and become as immutable as bitcoin's blockchain itself. Bitcoin's blockchain will change how we handle digital information in the future. All other blockchains from other alt-coins don't offer the same level of security and immutability that bitcoin's blockchain provides. This is a huge advantage to bitcoin and a massive feature that can't be overstated.

How is being nealy unhackable not a benefit? Not sure how or why you lumped that one in there. The fact that it is decentralized and immutable makes it an extremely difficult to attempt to alter or compromise the network. It is also virtually quantum computer proof with the use of public keys that are hidden until after wallet addresses are emptied.

6) Fraud proof consumer protection

No, no it's not. If I the consumer am defrauded by an online merchant (intentionally or on accident), with Visa I can initiate a charge-back and my money will reappear in my account in a mater of days. With Bitcoin I have no recourse and have just lost whatever Bitcoin I have irrevocably transferred. This in-and-of itself is an enormous advantage that traditional payment networks have over Bitcoin.

I'll reference my previous post on this one in case you missed it:
https://forum.mrmoneymustache.com/investor-alley/is-it-too-late-(bitcoin)/msg1781165/#msg1781165 (https://forum.mrmoneymustache.com/investor-alley/is-it-too-late-(bitcoin)/msg1781165/#msg1781165)

As someone who works in Information Security in the financial services industry, I understand first-hand the shortcomings of how our traditional financial systems operate. Furthermore, as you mention chargebacks can occur due to the fact that our current centralized financial intermediaries must act as mediators to all financial transactions that take place. This comes at great cost to the consumer. On top of that, merchants that offer irreversible services are always at risk of chargebacks. This leads to another benefit of bitcoin that I didn't list in the sense that all transactions are irreversible. This allows merchants who offer irreversible services to receive irreversible transactions. There is a reason why many contractors today look to receive some type of down payment for services requested prior to doing any work.

9) Extensible for use with smart contracts

Okay, great I guess. There may be an extremely limited use-case for that. I'll get really excited when the software industry learns how to always write bug-free code.

Saying "Okay, great I guess." shows how little innovative foresight you have into how new technologies can transform the way we do things today. There is a reason why Overstock's stock has sky-rocketed recently with the announcement that they're looking to reissue their stocks via their own blockchain to counter the damage that was done to their stock via naked short selling. The bitcoin network will be used in ways that are completely revolutionary and unforeseen today. Writing bug-free code is irrevelant to this fact. Putting innovation on hold until bug-free code is presentable is a stifling attitude to take.

11) Low cost/fast transactions

No, it's not. Visa transactions have always been faster and are already cheaper.

Yes, it is fast and it is low cost. I sent $80k dollars last week on a Friday late at night after-hours for only $5. No traditional financial institution could've provided that same capability with as low of a cost. VISA transactions cost 2-4% and while those transactions don't show up on your receipts, they are baked into the costs of all purchases we make at merchants that accept VISA. Finally, merchants who accept VISA transactions, don't receive payment for those transactions until the end of the month. Meanwhile, during that time they're at risk of chargebacks. Therefore, finality of payment for VISA transactions is a month whereas with Bitcoin it is typically at most a day before confirmation and transactions that take a day to confirm are much cheaper than 2-4%.

I find this infographic very informative about the state of bitcoin's ecosystem. When discussing what bitcoin is and everything that goes with it, this provides good insight to it. Much of this ecosystem is specific to bitcoin itself and is something that no other alt-coin provides. The fact that several derivatives markets are opening up soon specifically for bitcoin futher puts all other alt-coins at a severe disadvantage when competing against bitcoin.

EDIT: I shrunk the image below since it was massive and here is a link to the full size image so people can look at the details without taking up so much space in this thread...

http://www.runtogold.com/images/bitcoin-ecosystem.jpg (http://www.runtogold.com/images/bitcoin-ecosystem.jpg)
(http://www.runtogold.com/images/bitcoin-ecosystem.jpg)
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on November 28, 2017, 08:11:01 AM
2) Global

Practically speaking, so is Visa.

Practically doesn't mean anything here. Only about 30 countries have what would be considered modern financial services. Roughly 4 billion people don't have access to modern financial services such as credit, savings, and insurance. So while VISA may make the claim that they offer services in 200 countries, as they do, that doesn't mean that the people of these countries has the capability to access their services. All one needs to have access to the bitcoin network is a phone and an internet connection. This is true regardless of the geographic location of that individual. Thus, by having access to the bitcoin network regardless of geographic location, you can therefore participate freely in the global economy. Therefore, Bitcoin is global, VISA is not.

What exactly are the requirements you're referring to that are necessary to access VISA services?

What exactly are the requirements you're referring to necessary to access bitcoin services?
Off the top of my head, I'm thinking:
- reliable computer
- reliable internet access
- reliable power
- translation services
- vendors and people who accept bitcoin

Which countries specifically meet the requirements for bitcoin, but not VISA?


Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 28, 2017, 08:53:07 AM
What exactly are the requirements you're referring to that are necessary to access VISA services?

What exactly are the requirements you're referring to necessary to access bitcoin services?
Off the top of my head, I'm thinking:
- reliable computer
- reliable internet access
- reliable power
- translation services
- vendors and people who accept bitcoin

Which countries specifically meet the requirements for bitcoin, but not VISA?

This was less of a technical point and more of a logistical point. Bringing the "unbanked" into the global economy through traditional financial services is not very efficient from a brick and mortar perspective.

To use VISA you also need identification and proper financial services available to citizens to utilize it. This means that the citizen of a country that does not have modern financial services available to them or do not have the proper identification can not obtain a VISA account through banking services in their region. Someone who is not "banked" is not capable of utilizing the VISA payment network. VISA saying that they're in 200 countries just means that there are some merchants in those countries that accept VISA or that somewhere in that country there are financial services available through which a person could obtain an account. That doesn't mean that citizens in those countries are able to access VISA services themselves and therefore they're not able to participate in the global economy.

Because bitcoin does not require identification, this means that anyone with a phone and an internet connection can use the payment network. Capital can simply flow naturally through peer to peer means if needed similar to the way that cash flows into these regions. VISA is more merchant-to-consumer based transactions where Bitcoin is more peer-to-peer based transactions. There is massive potential for bitcoin to bring in billions of people to the global economy that are not a part of it today.
Title: Re: Is it too late [bitcoin]?
Post by: Telecaster on November 28, 2017, 09:40:04 AM
What exactly are the requirements you're referring to that are necessary to access VISA services?

What exactly are the requirements you're referring to necessary to access bitcoin services?
Off the top of my head, I'm thinking:
- reliable computer
- reliable internet access
- reliable power
- translation services
- vendors and people who accept bitcoin

Which countries specifically meet the requirements for bitcoin, but not VISA?

This was less of a technical point and more of a logistical point. Bringing the "unbanked" into the global economy through traditional financial services is not very efficient from a brick and mortar perspective.

To use VISA you also need identification and proper financial services available to citizens to utilize it. This means that the citizen of a country that does not have modern financial services available to them or do not have the proper identification can not obtain a VISA account through banking services in their region. Someone who is not "banked" is not capable of utilizing the VISA payment network. VISA saying that they're in 200 countries just means that there are some merchants in those countries that accept VISA or that somewhere in that country there are financial services available through which a person could obtain an account. That doesn't mean that citizens in those countries are able to access VISA services themselves and therefore they're not able to participate in the global economy.

Because bitcoin does not require identification, this means that anyone with a phone and an internet connection can use the payment network. Capital can simply flow naturally through peer to peer means if needed similar to the way that cash flows into these regions. VISA is more merchant-to-consumer based transactions where Bitcoin is more peer-to-peer based transactions. There is massive potential for bitcoin to bring in billions of people to the global economy that are not a part of it today.

Fair points, but I think are overselling the problems with Visa a bit.  Bitcoin transactions are online.  You don't need need identification to use Visa for online transactions.  And you can buy a pre-paid Visa even if you don't have ID or access to the traditional banking system.

In underbanked parts of the world (and even in underbanked populations in this country) people rely heavily on cash.  You don't need an internet connection to turn cash into Visa cards.  But you do need one to turn cash into Bitcoin.  You can see the problem there.  The advantage I see for Bitcoin is lower transaction costs. 

A disadvantage I haven't seen anyone bring up is the difficult of pricing contracts (wages for example) in Bitcoin because no one knows what the future value of Bitcoin will be.  It is easy enough to set the price in dollars, to be paid in Bitcoin.  But that adds an extra step in each transaction.  And of course eventually you have to exchange the Bitcoin for cash, which again is another step.


Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 28, 2017, 10:02:41 AM
Fair points, but I think are overselling the problems with Visa a bit.  Bitcoin transactions are online.  You don't need need identification to use Visa for online transactions.  And you can buy a pre-paid Visa even if you don't have ID or access to the traditional banking system.

In underbanked parts of the world (and even in underbanked populations in this country) people rely heavily on cash.  You don't need an internet connection to turn cash into Visa cards.  But you do need one to turn cash into Bitcoin.  You can see the problem there.  The advantage I see for Bitcoin is lower transaction costs. 

A disadvantage I haven't seen anyone bring up is the difficult of pricing contracts (wages for example) in Bitcoin because no one knows what the future value of Bitcoin will be.  It is easy enough to set the price in dollars, to be paid in Bitcoin.  But that adds an extra step in each transaction.  And of course eventually you have to exchange the Bitcoin for cash, which again is another step.

No doubt prepaid VISA cards offer a valuable avenue onto the VISA payment network for those that are unbanked. The higher costs of those cards can add up though.

True, you may not necessarily need an internet connection to purchase a prepaid VISA card at a retailer if they're offered. But, again that goes back to the logistical challenges of maintaining a network of brick and mortar establishments in large vast regions where the unbanked are located and need to be served. I believe that, similar to the flow of foreign cash today, bitcoin can flow in the same manner throughout these regions to bring these people into the global economy. Bitcoin can move between individuals in the same manner that cash can. So when you mention that these societies rely heavily on cash, the transition should be rather seamless when it comes to using bitcoin. Cell phones and internet access  is much more ubiquitous than modern financial services are.

As far as pricing goes, I think that is less of a problem with Bitcoin itself and merely a problem due to the fact that it is still at a young stage with a small market size. As the market grows, this becomes less and less of a problem. Volatility will naturally decrease as the market grows. I think we're a long way from needing to worry about large numbers of people receiving wages in bitcoin though. I can definitely see bitcoin helping foreign workers receive wages when doing remote work for foreign companies, but outside those circumstances I don't see wages being received in bitcoin until mass adoption occurs. At which point, discussions like this will be pointless anyway.
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on November 28, 2017, 10:19:04 AM
What exactly are the requirements you're referring to that are necessary to access VISA services?

What exactly are the requirements you're referring to necessary to access bitcoin services?
Off the top of my head, I'm thinking:
- reliable computer
- reliable internet access
- reliable power
- translation services
- vendors and people who accept bitcoin

Which countries specifically meet the requirements for bitcoin, but not VISA?

This was less of a technical point and more of a logistical point. Bringing the "unbanked" into the global economy through traditional financial services is not very efficient from a brick and mortar perspective.

To use VISA you also need identification and proper financial services available to citizens to utilize it. This means that the citizen of a country that does not have modern financial services available to them or do not have the proper identification can not obtain a VISA account through banking services in their region. Someone who is not "banked" is not capable of utilizing the VISA payment network. VISA saying that they're in 200 countries just means that there are some merchants in those countries that accept VISA or that somewhere in that country there are financial services available through which a person could obtain an account. That doesn't mean that citizens in those countries are able to access VISA services themselves and therefore they're not able to participate in the global economy.

Because bitcoin does not require identification, this means that anyone with a phone and an internet connection can use the payment network. Capital can simply flow naturally through peer to peer means if needed similar to the way that cash flows into these regions. VISA is more merchant-to-consumer based transactions where Bitcoin is more peer-to-peer based transactions. There is massive potential for bitcoin to bring in billions of people to the global economy that are not a part of it today.

How does one get an internet connection without identification?  You're talking about an internet cafe kinda thing?  You believe that this is a safe enough scenario that people would trust their life savings to it?  I'd think that the total lack of consumer protections that Bitcoin has would play into adoption of this technology in this scenario.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 28, 2017, 10:45:55 AM
How does one get an internet connection without identification?  You're talking about an internet cafe kinda thing?  You believe that this is a safe enough scenario that people would trust their life savings to it?  I'd think that the total lack of consumer protections that Bitcoin has would play into adoption of this technology in this scenario.

Well many prepaid phone services don't require identification. Also, my point about identification also has to do with whether an individual needs to provide identification to use the service. This fact alone leads to discrimination by central payment authorities where perhaps sanctions are in place or the choice of doing business in a region is not justifiable. This can be a large hurdle to getting access to modern financial services in regions where, logistically, traditional financial services are not feasible. Like I said, phones and internet access are more ubiquitous than modern financial services are.

What lack of consumer protections in particular are you speaking of? Are you referring to loss of private keys?
https://forum.mrmoneymustache.com/investor-alley/is-it-too-late-(bitcoin)/msg1781165/#msg1781165 (https://forum.mrmoneymustache.com/investor-alley/is-it-too-late-(bitcoin)/msg1781165/#msg1781165)

Most people who are unbanked are less worried about "life savings" and more worried about being able to be a participant in the global economy. If someone who is unbanked can receive a peer-to-peer loan over the internet and paid out in bitcoin from the global economy and use those funds to stock a local shop, then that will go a long way toward bring many people out of poverty in many places around the world.
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on November 28, 2017, 10:59:14 AM
How does one get an internet connection without identification?  You're talking about an internet cafe kinda thing?  You believe that this is a safe enough scenario that people would trust their life savings to it?  I'd think that the total lack of consumer protections that Bitcoin has would play into adoption of this technology in this scenario.

Well many prepaid phone services don't require identification. Also, my point about identification also has to do with whether an individual needs to provide identification to use the service. This fact alone leads to discrimination by central payment authorities where perhaps sanctions are in place or the choice of doing business in a region is not justifiable. This can be a large hurdle to getting access to modern financial services in regions where, logistically, traditional financial services are not feasible. Like I said, phones and internet access are more ubiquitous than modern financial services are.

What lack of consumer protections in particular are you speaking of? Are you referring to loss of private keys?
https://forum.mrmoneymustache.com/investor-alley/is-it-too-late-(bitcoin)/msg1781165/#msg1781165 (https://forum.mrmoneymustache.com/investor-alley/is-it-too-late-(bitcoin)/msg1781165/#msg1781165)

Most people who are unbanked are less worried about "life savings" and more worried about being able to be a participant in the global economy. If someone who is unbanked can receive a peer-to-peer loan over the internet and paid out in bitcoin from the global economy and use those funds to stock a local shop, then that will go a long way toward bring many people out of poverty in many places around the world.

How does one apply for a loan without providing any identification?
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 28, 2017, 11:17:11 AM
How does one apply for a loan without providing any identification?

There are peer-to-peer lending services online that are pretty lax in their identification requirements. Bitbond is one that I've used. Granted, the less identification verification you give, the lower your borrower rating is and higher your interest rate is as well.

I don't want to get stuck arguing this point when the only point I was trying to make was that the barrier to entry for Bitcoin with regards to identification is much lower than the barrier to entry for other traditional financial services when it comes to identification. In fact, bitcoin has no identification barrier of entry. Contrast this however you'd like to other financial services.
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on November 28, 2017, 11:50:16 AM
How does one apply for a loan without providing any identification?

There are peer-to-peer lending services online that are pretty lax in their identification requirements. Bitbond is one that I've used. Granted, the less identification verification you give, the lower your borrower rating is and higher your interest rate is as well.

I don't want to get stuck arguing this point when the only point I was trying to make was that the barrier to entry for Bitcoin with regards to identification is much lower than the barrier to entry for other traditional financial services when it comes to identification. In fact, bitcoin has no identification barrier of entry. Contrast this however you'd like to other financial services.

I agree with you that using bitcoin doesn't require ID.  It's the same as using cash in this regard.  There doesn't appear to be any benefit to using bitcoin though . . .


Required information to borrow (from the bitbond terms of use - https://www.bitbond.com/terms_of_use (https://www.bitbond.com/terms_of_use)):

- Credit Check (requires Name, Address, SSN and reveals credit history, previous addresses, past employers and relatives)

This doesn't sound too different from getting a loan from a bank as far as information that you've got to provide.  Except that you're charged a non-refundable fee for them to run the credit check.  This was the only example of how Bitcoin benefits people who can't access a bank because of information problems. . . and it requires all the same information you would need from a bank.  What is the benefit that we're supposed to get excited about?
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 28, 2017, 12:09:53 PM
I agree with you that using bitcoin doesn't require ID.  It's the same as using cash in this regard.  There doesn't appear to be any benefit to using bitcoin though . . .

OK, then we're in agreement it seems.

I simply put being "global" as a benefit to bitcoin and you're nitpicking about what that actually means. You say a broad statement that there doesn't appear to be any benefit to using bitcoin when I've laid out examples of plenty.

The truth of the matter is that bitcoin's barrier to entry is the same as cash, except where cash requires physical proximity, Bitcoin does not.

Just because the services today don't take advantage of this fact, doesn't mean that the services of tomorrow won't either. I believe there will come a time where bitcoin will be able to extend monetary services beyond just personhood. This means that identity won't be required to utilize finances in the innovations we seek to implement. The implications for this are profound and it is hard to imagine what this could entail for the future simply because we have no precedent for it today. We can have millions of IoT devices all around the world that "own" their own money and pay for services and use services all on their own accord. This is only possible with a financial instrument that does not require identity. In a world where AI is aimed to take over much of our daily lives, having a currency that doesn't require personhood identification just makes sense and is a natural evolution that will support this transition.

Along these lines, another benefit that I didn't list, but should've absolutely have been listed is programmability. Bitcoin is a programmable currency and this will lead to massive amounts of innovation.

20 years ago we couldn't ever have imagined where the internet would've taken us today. The same is true when it comes to trying to determine where bitcoin will take us in the future. We lack precedent for any of this and it takes thinking outside of our current paradigm to see this.
Title: Re: Is it too late [bitcoin]?
Post by: 2Birds1Stone on November 28, 2017, 02:05:00 PM
This is your last chance to get in under $10k, it's going to $100k in the next 12 months at this pace.
Title: Re: Is it too late [bitcoin]?
Post by: ketchup on November 28, 2017, 02:10:30 PM
This is your last chance to get in under $10k, it's going to $100k in the next 12 months at this pace.
(https://imgs.xkcd.com/comics/extrapolating.png)
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on November 28, 2017, 03:00:21 PM
I agree with you that using bitcoin doesn't require ID.  It's the same as using cash in this regard.  There doesn't appear to be any benefit to using bitcoin though . . .

OK, then we're in agreement it seems.



I simply put being "global" as a benefit to bitcoin and you're nitpicking about what that actually means. You say a broad statement that there doesn't appear to be any benefit to using bitcoin when I've laid out examples of plenty.

I questioned if the 'global' benefit you listed really existed, and you were unable to provide any real world example of a benefit from bitcoin's 'global' benefit.


The truth of the matter is that bitcoin's barrier to entry is the same as cash, except where cash requires physical proximity, Bitcoin does not.

Not really.  Bitcoin requires access to the internet and a computer.  Cash does not.  That is a barrier to entry that is quite different than cash.

Just because the services today don't take advantage of this fact, doesn't mean that the services of tomorrow won't either. I believe there will come a time where bitcoin will be able to extend monetary services beyond just personhood. This means that identity won't be required to utilize finances in the innovations we seek to implement. The implications for this are profound and it is hard to imagine what this could entail for the future simply because we have no precedent for it today. We can have millions of IoT devices all around the world that "own" their own money and pay for services and use services all on their own accord. This is only possible with a financial instrument that does not require identity. In a world where AI is aimed to take over much of our daily lives, having a currency that doesn't require personhood identification just makes sense and is a natural evolution that will support this transition.

Along these lines, another benefit that I didn't list, but should've absolutely have been listed is programmability. Bitcoin is a programmable currency and this will lead to massive amounts of innovation.

20 years ago we couldn't ever have imagined where the internet would've taken us today. The same is true when it comes to trying to determine where bitcoin will take us in the future. We lack precedent for any of this and it takes thinking outside of our current paradigm to see this.

I agree, that there are potential benefits.  I guess I'm getting tripped up on the part where the future is being sold to people even though none of these benefits have really materialized as of yet.  I've dealt with enough software vaporware to be leery of these types of claims.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 28, 2017, 06:01:23 PM
I questioned if the 'global' benefit you listed really existed, and you were unable to provide any real world example of a benefit from bitcoin's 'global' benefit.

I gave numerous examples of how being global was a benefit that bitcoin provides directly. You may not accept those benefits as they are, but they're benefits. Some of these benefits might not be materialized because we're trying to fit bitcoin into our existing financial frameworks and regulatory structure. That doesn't mean that those benefits aren't sitting there with bitcoin waiting to be taken advantage of. You said it yourself even, bitcoin does not require identification and is permission-less to use. Therefore this is a direct benefit that bitcoin as a payment network provides. Just because there are limited seconary layer solutions on top of this to take advantage of this benefit or just because some regulatory structures in certain countries don't allow for this idea to be fully realized doesn't take that away from bitcoin.

The truth is that I can send someone anywhere in the world monetary value of any amount without requiring them to provide identification first. They'll receive it in a matter of minutes at any time of day and they can then (for the time being) use localbitcoins.com or any other peer-to-peer exchange method to then exchange that for fiat if they wish. Or they can spend it directly as bitcoin. Just because adoption and innovation has yet to catch up to the benefits that bitcoin can provide does not mean that bitcoin does not provide those benefits.

I think that is one of the biggest hurdles I see when discussing bitcoin with other people who are skeptical of its innovation. They have trouble seeing the value in something in a society that hasn't yet adopted the benefits of a technology. The same misconceptions I saw when the internet was in its infancy I see with bitcoin. People wondered why anyone would spend 15 minutes trying to boot a computer and get connected to the internet just to pull up a few webpages with sparse information on them. They couldn't image that a decade from then the internet would contain all of humanity's information and it would all be accessible at the tip of your finger in a matter of seconds.

Not really.  Bitcoin requires access to the internet and a computer.  Cash does not.  That is a barrier to entry that is quite different than cash.

Good point. From a technology point of view there is absolutely additional barriers to bitcoin when compared to cash. But those barriers are certainly a lot lower than what the modern financial services industry can offer. Also, once those barriers are met, there really isn't much else in the way that would prevent someone from participating in the global economy from within the bitcoin network. The more the world realizes that there is an ever growing market within this ecosystem, the more business will flock to set up shop "within" this network. Bitcoin's market cap is already larger than many countries and businesses that see this opportunity will be able to capitalize on this market.

I agree, that there are potential benefits.  I guess I'm getting tripped up on the part where the future is being sold to people even though none of these benefits have really materialized as of yet.  I've dealt with enough software vaporware to be leery of these types of claims.

Certainly it will take some time for many of these additional use cases to come to fruition. I don't think much of today's value is being hedged on those farout scenarios however. There is absolutely value in what the bitcoin network provides as it is today. There is a growing demand in the world for a monetary system that is decoupled from government. This alone has an immeasurable amount of value. The feature list I posted earlier are all features that are fully realized today. These are not vaporware features and they are all mostly features that people demand from their currency and payment networks. Therefore, if people demand it, then that means that the payment network itself has value. Unless people stop demanding these features or another better payment network comes along to provide these features, then bitcoin will always have value to its userbase.

1) Decentralized
2) Global
3) Permission-less (anyone, anywhere can use it)
4) Counterfeit proof
5) Peer-to-Peer
6) Fraud proof consumer protection
7) Nearly unhackable
8) Immutable
9) Extensible for use with smart contracts
10) Can't be confiscated
11) Low cost/fast transactions
12) Programmable
13) Deflationary monetary policy
14) Irreversible transactions
Title: Re: Is it too late [bitcoin]?
Post by: surfhb on November 28, 2017, 07:27:15 PM
What are the opinions of the future of crypto currencies with the next serious recession and bear market?   

Has anyone here who is a miner or serious speculator actually experienced a recession or bear market?   The kind where jobs are lost and you lose half your net worth in a short period?   
Title: Re: Is it too late [bitcoin]?
Post by: talltexan on November 29, 2017, 07:01:00 AM
The--ahem--underground economy in the US increases during times of recession. I cannot see how that would be bad for crypto's.
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on November 29, 2017, 07:49:21 AM
6) Fraud proof consumer protection

14) Irreversible transactions

These items in your list are contradictory.
Title: Re: Is it too late [bitcoin]?
Post by: sherr on November 29, 2017, 09:31:50 AM
6) Fraud proof consumer protection

14) Irreversible transactions

These items in your list are contradictory.

I already pointed that out. His answer (if I understood it correctly) was that the systemic gains of merchants / financial institutions not having to deal with chargebacks will end up being of greater value to the consumer than actual fraud protection.

I don't buy it personally though. Crypto transactions are irreversible. Which means there is no such thing as fraud protection for the consumer. That alone will prevent cryptocurrencies from ever replacing Visa.
Title: Re: Is it too late [bitcoin]?
Post by: surfhb on November 29, 2017, 10:52:40 AM
6) Fraud proof consumer protection

14) Irreversible transactions

These items in your list are contradictory.

I already pointed that out. His answer (if I understood it correctly) was that the systemic gains of merchants / financial institutions not having to deal with chargebacks will end up being of greater value to the consumer than actual fraud protection.

I don't buy it personally though. Crypto transactions are irreversible. Which means there is no such thing as fraud protection for the consumer. That alone will prevent cryptocurrencies from ever replacing Visa.

If this is true and if it is also true that the person who designed bitcoin is still anonymous, its blows my mind that there are intelligent people out there who feel this is a worthy place to put your hard earned money.   Unless of course greed is involved ;)
Title: Re: Is it too late [bitcoin]?
Post by: Scortius on November 29, 2017, 11:24:37 AM
The--ahem--underground economy in the US increases during times of recession. I cannot see how that would be bad for crypto's.

Because there is a difference in people using Bitcoin for short-term transactions and those using it for speculation. If the economy goes into a recession, you may see a huge sell-off event by investors trying to avoid getting caught up in an extreme price drop. Those using it for transactional purposes will still do so, but can simply increase the number of coins used based on current exchange rates.  Since a transactional use of Bitcoin involves both buying _and_ selling the coin over a short time period, it will have a much smaller effect on determining the exchange value as those holding coins for speculative purposes.
Title: Re: Is it too late [bitcoin]?
Post by: sherr on November 29, 2017, 11:33:12 AM
If this is true and if it is also true that the person who designed bitcoin is still anonymous, its blows my mind that there are intelligent people out there who feel this is a worthy place to put your hard earned money.   Unless of course greed is involved ;)

Well obviously the huge speculative price surges are primarily motivated through greed. But I think the real problem is that the people all excited about it are techies who are geeking out over the cool-technology aspect of it. I think the Finance industry and governments have been pretty universally negative on cryptocurrencies, and stand aghast that people are dumping this much money into them.

But of course to some conspiracy-oriented people that's only proof that this is going to be the next big thing and "the man" is just trying to keep them down.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 29, 2017, 12:42:51 PM
What are the opinions of the future of crypto currencies with the next serious recession and bear market?   

Has anyone here who is a miner or serious speculator actually experienced a recession or bear market?   The kind where jobs are lost and you lose half your net worth in a short period?   

Quote
I'm sure I'll be written off as the tired old man here. I'm 49.   

Was concerns me the most is that most of the under 35 crowd has only know an EXTREME period of market growth their entire investing lives.   Not just extreme but unprecedented!     

Twice I've seen my stash grow to unbelievable levels and lose its value in a matter of a year.   I've seen friends lose homes, jobs, spouses, etc. over these market crashes .   

Quote
Do any of you ever experienced an extended bear market?   Where you lost hundreds of thousands in equity value in a matter of months? 

If so, do you feel comfortable with things like bitcoin?     Yes?  How?

I want to hear from the 40+ crowd who have experienced these kinds of events.     

Quote
Oh man.    This is a millennial train wreck.   

Quote
Then again, I doubt most on this thread know anything about what a bear market is....too young, most of you.   ;)

surfhb, is there a reason why you feel that you're the only one to have ever experienced a bear market or recession? These are some of your quotes from this and the other crypto thread showing your attitude with a clear prejudice that others have never experienced an economic hardship.



Sent from my iPhone using Tapatalk
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on November 29, 2017, 01:32:04 PM
Coinbase service outage today due to all-time record high traffic.  Bitcoin's trading range was about $1,000 wide just today alone. The stampede is apparently gaining momentum.  Tulips, anyone?

(http://www.autoremarketing.com/sites/default/files/styles/story_page_main_image/public/bubble%20popping_1.jpg)
Title: Re: Is it too late [bitcoin]?
Post by: TheAnonOne on November 29, 2017, 01:48:54 PM
Prediction- the servers go back up and the price does as well...
Title: Re: Is it too late [bitcoin]?
Post by: surfhb on November 29, 2017, 01:55:00 PM
What are the opinions of the future of crypto currencies with the next serious recession and bear market?   

Has anyone here who is a miner or serious speculator actually experienced a recession or bear market?   The kind where jobs are lost and you lose half your net worth in a short period?   

Quote
I'm sure I'll be written off as the tired old man here. I'm 49.   

Was concerns me the most is that most of the under 35 crowd has only know an EXTREME period of market growth their entire investing lives.   Not just extreme but unprecedented!     

Twice I've seen my stash grow to unbelievable levels and lose its value in a matter of a year.   I've seen friends lose homes, jobs, spouses, etc. over these market crashes .   

Quote
Do any of you ever experienced an extended bear market?   Where you lost hundreds of thousands in equity value in a matter of months? 

If so, do you feel comfortable with things like bitcoin?     Yes?  How?

I want to hear from the 40+ crowd who have experienced these kinds of events.     

Quote
Oh man.    This is a millennial train wreck.   

Quote
Then again, I doubt most on this thread know anything about what a bear market is....too young, most of you.   ;)

surfhb, is there a reason why you feel that you're the only one to have ever experienced a bear market or recession? These are some of your quotes from this and the other crypto thread showing your attitude with a clear prejudice that others have never experienced an economic hardship.



Sent from my iPhone using Tapatalk

Why would I feel that way?  Lots of people on these threads have lived through recessions.   

However, since this lastest bull market is pushing a decade in length I firmly feel most younger investors don't understand the pitfalls of speculation.     I'm still waiting from some the older crowd to throw their opinion into the ring.   

I'm trying to warn people of these kind of things...that's all.   I'll wont post anymore about this.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on November 29, 2017, 02:01:32 PM
Prediction- the servers go back up and the price does as well...
I have no doubt that you will be proven correct.  The outage indicates the stampede is apparently still in its inflationary cycle, possibly hyper-inflationary at this point.

They'd better buy a lot more servers.  I have a feeling that when the stampede turns around, folks will be looking for the exit pretty much all at the same time.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on November 29, 2017, 02:30:00 PM
I'm still waiting from some the older crowd to throw their opinion into the ring. 

I was in the market during the crash of '87, so I guess I qualify.

I'm trying to warn people of these kind of things...that's all.   I'll wont post anymore about this.

Your intentions are laudable, and for very young investors, very likely on-point.  Don't let one objection throw you.  I think every generation has to experience one or two crashes for themselves.  If you enlighten just one among them, then you have done your good deed for the day. ;)

Regardless of any real merits of block-chain technologies, there simply is no rational explanation for the hyper-acceleration of the cryptos' perceived value other than "it's a bubble."

When the bubble bursts, and it will, only then will we be in the hypothetical position to realize any true benefits this technology has to offer.  I mean, tulips didn't simply vanish centuries ago; there's still a market for them today.  But it's a rational market now.  The ones who sold early bought a castle.  Those who went "all in" and got caught at the top became florists, and had to work for their bread for the rest of their days.
Title: Re: Is it too late [bitcoin]?
Post by: surfhb on November 29, 2017, 02:41:41 PM
I'm still waiting from some the older crowd to throw their opinion into the ring. 

I was in the market during the crash of '87, so I guess I qualify.

I'm trying to warn people of these kind of things...that's all.   I'll wont post anymore about this.

Your intentions are laudable, and for very young investors, very likely on-point.  Don't let one objection throw you.  I think every generation has to experience one or two crashes for themselves.  If you enlighten just one among them, then you have done your good deed for the day. ;)

Thanks!   

Like I said,  I'm still waiting to hear from any proponents of crypto currencies  who have lived and lost any sizable amount of their stash in 2008 and the early 2000s. (and 1987 ;)   
Title: Re: Is it too late [bitcoin]?
Post by: oldladystache on November 29, 2017, 02:57:20 PM
I'm still waiting from some the older crowd to throw their opinion into the ring. 

I was in the market during the crash of '87, so I guess I qualify.

I'm trying to warn people of these kind of things...that's all.   I'll wont post anymore about this.

Your intentions are laudable, and for very young investors, very likely on-point.  Don't let one objection throw you.  I think every generation has to experience one or two crashes for themselves.  If you enlighten just one among them, then you have done your good deed for the day. ;)

Thanks!   

Like I said,  I'm still waiting to hear from any proponents of crypto currencies  who have lived and lost any sizable amount of their stash in 2008 and the early 2000s. (and 1987 ;)

I lost a million in 2000. And I'm playing with bitcoin but not enough to matter. My $10,000 has turned into about $40,000 and I almost got my $10,000 out this morning and let the other $30,000 ride, but the market didn't go quite high enough before the server outage. I still have my sell order in though.

I wouldn't do this with any serious money, but I'm just entertaining myself and hoping to accidentally make some real money along the way. If I couldn't afford to lose it I wouldn't do it.
Title: Re: Is it too late [bitcoin]?
Post by: surfhb on November 29, 2017, 03:07:01 PM
I'm still waiting from some the older crowd to throw their opinion into the ring. 

I was in the market during the crash of '87, so I guess I qualify.

I'm trying to warn people of these kind of things...that's all.   I'll wont post anymore about this.

Your intentions are laudable, and for very young investors, very likely on-point.  Don't let one objection throw you.  I think every generation has to experience one or two crashes for themselves.  If you enlighten just one among them, then you have done your good deed for the day. ;)

Thanks!   

Like I said,  I'm still waiting to hear from any proponents of crypto currencies  who have lived and lost any sizable amount of their stash in 2008 and the early 2000s. (and 1987 ;)

I lost a million in 2000. And I'm playing with bitcoin but not enough to matter. My $10,000 has turned into about $40,000 and I almost got my $10,000 out this morning and let the other $30,000 ride, but the market didn't go quite high enough before the server outage. I still have my sell order in though.

I wouldn't do this with any serious money, but I'm just entertaining myself and hoping to accidentally make some real money along the way. If I couldn't afford to lose it I wouldn't do it.

Wow!   Losing $1 million dollars!    eek    I'm surprised anyone who lost so much would be ok with losing another 10K?   

BTW....congrats on anyone who has made a killing in bitcoin.   I hope your luck continues.   Honestly, I do

Title: Re: Is it too late [bitcoin]?
Post by: oldladystache on November 29, 2017, 03:21:31 PM
Quote
Wow!   Losing $1 million dollars!    eek    I'm surprised anyone who lost so much would be ok with losing another 10K?   

Once you've lost a million, survived, and regained the million, losing 10K isn't that important.
Title: Re: Is it too late [bitcoin]?
Post by: BattlaP on November 29, 2017, 03:30:09 PM
I'm so fascinated by this whole craze. It is so obviously pure FOMO psychology right now, I just can't look away. Personally I would never put my money anywhere near cryptos (even to 'explot' bubble psychology) because they are indirectly horrible in both enabling criminal activity and power consumption/pollution (the energy behind each btc transaction could power 20 US homes for a day).

I don't believe there is any evidence of any existing business (apart from criminal businesses or crypto trading platforms) gaining a competitive advantage from the application of either blockchain or cryptocurrencies. It's all talk, hot air and promises of some vague future.

Bitcoin itself is so laughably incapable of fulfilling any of its most basic promises that it's proponents all end up sounding like conmen or idiots.
anonymity - psuedonymous at best, a permanent record of all your financial activity at worst
decentralised - mining activity rapidly centralises control (major miners have 'split' into different entities to prevent concern about their >51% stake)
low fee - low fee transactions are sent to the back of the queue and are often dropped completely. fees increase when mining becomes harder
fast - often delays of multiple days and again, many transactions are ignored and dropped
limited supply aka 'there'll only ever be 21 million' - regular forks and innumerable cryptos with more appearing every day makes this a ridiculous claim
transactions per second are limited theoretically to 7 per second, in practice more like 3 per second. visa is 2,000ps on a slow day, 50,000 peak. multiple 'forks' have tried to fix or improve this basic problem and they've been defeated by juvenile reddit memelords. the promised solutions (lightning network) are vaporware, forever 6 months away

and then there's Tethers, the craziest crypto scam of them all - literally printing tens of millions of 'dollar-backed' monopoly money several times weekly with zero credible evidence that the money supposedly backing it actually exists, and then using that to buy bitcoin from another company which is owned by the same people

oh and ICOs (aka digital ponzi schemes), smart contracts (where a single bug in an immutable program can lose 300 million dollars of other peoples' money instantly and it's just another week), all bullshit, bullshit, bullshit.

Personally I think it needs to stop. Regulate the fuck out of these shitty, shitty scams or better yet outlaw them. If digital currencies are useful, let competent and accountable companies develop them instead of this backwater internet wild west. If blockchain is useful, prove it - turn it into competitive advantage instead of hype.
Title: Re: Is it too late [bitcoin]?
Post by: surfhb on November 29, 2017, 03:40:18 PM
Quote
Wow!   Losing $1 million dollars!    eek    I'm surprised anyone who lost so much would be ok with losing another 10K?   

Once you've lost a million, survived, and regained the million, losing 10K isn't that important.

Good for you!   Unfortunately, there are millions of people right now who are not wealthy like yourself who are putting their hard earned money into things like bitcoin hoping to be FIRE.    Its these people who have much to lose if they are wrong.   
Title: Re: Is it too late [bitcoin]?
Post by: thenextguy on November 29, 2017, 04:26:34 PM
If digital currencies are useful, let competent and accountable companies develop them instead of this backwater internet wild west.

You mean something like this: https://entethalliance.org/members/
Title: Re: Is it too late [bitcoin]?
Post by: phil22 on November 29, 2017, 05:44:55 PM
Personally I would never put my money anywhere near cryptos (even to 'explot' bubble psychology) because they are indirectly horrible in both enabling criminal activity and power consumption/pollution (the energy behind each btc transaction could power 20 US homes for a day).

cash, especially the US dollar, enables the vast majority of both everyday criminal activity and international organized crime.  are you in favor of eliminating cash?

the energy bitcoin uses is required for proof-of-work.  that's how it's secured and that's why you can't decide on a whim to create yourself some bitcoin out of thin air.  you need to pony up the $ and use some energy.  the "energy required per transaction" is a load of ignorant journalistic nonsense.  the energy required to create a block secures all past transactions, not just all transactions in the block.  it's the cumulative (10 years' running) proof-of-work that bitcoin users agree keeps their past transactions secure and permanent.

a non-proof-of-work cryptocurrency is free to come along and dethrone bitcoin (since it's a free market) and many are trying to do so.

limited supply aka 'there'll only ever be 21 million' - regular forks and innumerable cryptos with more appearing every day makes this a ridiculous claim

the 21 million coins limit is only enforced by consensus, as are all the other rules governing bitcoin.  you are free to go right ahead and make yourself a fork and pay yourself 1,000,000 BattlaPCoins.

If digital currencies are useful, let competent and accountable companies develop them instead of this backwater internet wild west.

accountable companies?  that's laughable.  so that when the currency has a backdoor or major bug we can file a class action suit?  companies like jp morgan chase, wells fargo, hsbc, equifax, yahoo, RSA security, infineon technologies, and even US government entities like the Office of Personnel Management, NSA, and CIA have all had major lapses in security and ethics.  you want them to create a digital currency?  open source currencies competing in a free market is the only way this can be done.
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on November 29, 2017, 06:13:01 PM
Quote
Wow!   Losing $1 million dollars!    eek    I'm surprised anyone who lost so much would be ok with losing another 10K?   

Once you've lost a million, survived, and regained the million, losing 10K isn't that important.

Can I have 10K of your unimportant money?  It's very important to me.  :P
Title: Re: Is it too late [bitcoin]?
Post by: BattlaP on November 29, 2017, 07:00:44 PM
cash, especially the US dollar, enables the vast majority of both everyday criminal activity and international organized crime.  are you in favor of eliminating cash?

false equivalence. cryptos enable criminal activity, darknet markets and rampant ransomware which would otherwise be far less prevalent. I don't particularly want to engage with you further, I've made my points and frankly you responded quite poorly to a small fraction of them.
Title: Re: Is it too late [bitcoin]?
Post by: phil22 on November 29, 2017, 09:27:40 PM
cash, especially the US dollar, enables the vast majority of both everyday criminal activity and international organized crime.  are you in favor of eliminating cash?

false equivalence. cryptos enable criminal activity, darknet markets and rampant ransomware which would otherwise be far less prevalent. I don't particularly want to engage with you further, I've made my points and frankly you responded quite poorly to a small fraction of them.

prepaid cash cards were used extensively to power ransomware before cryptocurrencies were.  isn't ransomware actually enabled by crappy software full of security flaws?

you came slinging mud, calling crypto proponents "conmen or idiots," and you don't care to respond when your ignorant points get shot down.  not surprising.  still entertaining to see the haters come out of the woodwork when the market gets a bit bubbly.

fwiw, i agreed with most of the rest of your points including FOMO/speculation, tethers, ICOs, buggy "smart" contracts, and the poor state of discussion/censorship on reddit.
Title: Re: Is it too late [bitcoin]?
Post by: BattlaP on November 29, 2017, 10:18:57 PM
I find it strange that you would agree with most of my points but call the specific one on criminal activity 'ignorant'. Do you actually believe that ransomware could be conducted anywhere NEAR the scale it's currently being propagated based on 'prepaid cash cards'? How would darknet markets function without the promised anonymity of bitcoin/monero? (I'm leaving aside that this little white lie about bitcoin has led to successful prosecutions based on information obtained from darknet markets and bitcoin's handy complete history of all transactions. Monero might actually be better at this job for mr. criminal)

And yes, haters (like me) will come out of the woodwork at times like this, to hopefully stop people like OP losing their shirts. People get can get swept up in this sort of shit and lose their kids' college funds, their life savings. I actually think the current state of things is overblown - its just too difficult currently for most people to actual obtain crypto so they mostly end up making an account somewhere and then just giving up or making tiny 'testing the waters' purchases. Most of the current liquidity/value is probably wash trading and other forms of fraud (tether) and day trading/arbitrage transactions, with a core bunch of super savvy r/bitcoiners 'dollar cost averaging' their wages into a hyper risky speculation and posting rollercoaster memes. But still, it doesn't hurt to go and answer questions like "is it too late?" with "it's never too late to observe insanity in action. grab some popcorn"

here, enjoy the latest taste
https://twitter.com/YoloCapMgmt/status/936045815973294080/photo/1
margin trading crypto. if only someone had told him this was a terrible, terrible idea, and he had the sense to listen
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on November 29, 2017, 10:28:55 PM
Do you actually believe that ransomware could be conducted anywhere NEAR the scale it's currently being propagated based on 'prepaid cash cards'?
It's called Western Union.  No Visa card required.  It's been enabling international scammers for decades.

Google "419 Eaters".

419 is the section of the Nigerian criminal code for scamming.  Nigerian Prince scam, anyone?

Bottom line: I don't believe there are any credible arguments, based on morality, against crypto currencies.  But until you can pay your tax bill with one (without first converting to USD), I will refuse to regard them as actual currencies.  Right now, it's just another bubble; nothing more or less than that.

If you can cash out in time to buy your castle, I'll applaud you.  If you can't, I'll feel your pain.  And I'll be sorry for having to do that.
Title: Re: Is it too late [bitcoin]?
Post by: talltexan on November 30, 2017, 07:09:54 AM
cash, especially the US dollar, enables the vast majority of both everyday criminal activity and international organized crime.  are you in favor of eliminating cash?

false equivalence. cryptos enable criminal activity, darknet markets and rampant ransomware which would otherwise be far less prevalent. I don't particularly want to engage with you further, I've made my points and frankly you responded quite poorly to a small fraction of them.

If you want an amazing economic story, read the case of India, which basically did this (the elimination of cash part). Seriously. Their "de-monetization" program began on Wednesday, Nov 9, 2016, which is probably why you weren't paying a lot of attention.
Title: Re: Is it too late [bitcoin]?
Post by: ChpBstrd on November 30, 2017, 11:47:32 AM
https://www.reuters.com/article/us-global-markets-bitcoin/bitcoin-loses-over-a-fifth-of-its-value-in-less-than-24-hours-idUSKBN1DU1Z3 (https://www.reuters.com/article/us-global-markets-bitcoin/bitcoin-loses-over-a-fifth-of-its-value-in-less-than-24-hours-idUSKBN1DU1Z3)

IDK if this marks a characteristic fast turnover from the peak of the bubble, but I wouldn't be surprised.

Folks, if this is not your definition of bubble, you have no definition of bubble.

Man, I wish I could buy an options straddle on bitcoin. I'd be all in.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 30, 2017, 01:57:09 PM
6) Fraud proof consumer protection

14) Irreversible transactions

These items in your list are contradictory.

How are these items contradictory? Care to elaborate a little on that?

I already pointed that out. His answer (if I understood it correctly) was that the systemic gains of merchants / financial institutions not having to deal with chargebacks will end up being of greater value to the consumer than actual fraud protection.

I don't buy it personally though. Crypto transactions are irreversible. Which means there is no such thing as fraud protection for the consumer. That alone will prevent cryptocurrencies from ever replacing Visa.

I guess you didn't understand then, because that wasn't my point at all and I said nothing along those lines at all (where did you even get that from?). Here is a link to my previous post where I discussed this in detail.

https://forum.mrmoneymustache.com/investor-alley/is-it-too-late-(bitcoin)/msg1781165/#msg1781165 (https://forum.mrmoneymustache.com/investor-alley/is-it-too-late-(bitcoin)/msg1781165/#msg1781165)

Almost the entire purpose of chargebacks are to combat fradulent transactions. Almost the entire reason we have fradulent transactions are because are POS systems are designed around giving merchants our identities and "pull" authority over the funds in our accounts. This makes every single merchant we interact with a single point of failure for massive amounts of consumer information. We then try to overlap consumer protection regulation on top of this failed system that doesn't do anything but cost more money. Case in point being the fact that Target was a PCI certified company and yet they were breached which exposed tens of millions of consumer account data and resulted in millions of dollars in damages due to fraud.

The way Bitcoin works is that payment fraud like this would completely disappear. When you make a transaction with bitcoin, the merchant doesn't receive anything. The consumer simply broadcasts a transaction to the blockchain which the merchant simply verifies was made. The merchant has no authority to pull funds and requires no identification (similar to cash) of the consumer. Therefore there is no data on the merchant side that could be compromised that would result in a loss of funds for the consumer.

Consumer refunds aren't handled any differently with bitcoin. If a consumer requires a refund from a merchant, the merchant can simply return a transaction back to the consumer for the amount that was paid. There isn't any reason for chargebacks. That's like saying we need chargebacks with cash. No you don't. If you paid for a TV in cash and you need a refund, you just get cash returned back to you.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on November 30, 2017, 02:08:01 PM

Almost the entire purpose of chargebacks are to combat fradulent transactions.

If a consumer requires a refund from a merchant, the merchant can simply return a transaction back to the consumer for the amount that was paid.
I respectfully disagree.  Far more of the times I've done charge backs was because of a shady merchant that disagreed that I was due a refund, or tried to force me to settle for a "store credit" as some kind of consolation booby-prize to replace the perfectly spendable USD that I gave them.

If I'd had to rely on the merchant to agree, I would have been stuck paying for dead batteries, expensive software that doesn't even install, upgrades that don't upgrade, power protection units that don't even conduct electricity, etc, etc, on and on.

With a credit card, I get a very authoritative say in whether I get ripped off or not.  With crypto, I'd be at the mercy of those who care only for profits; even if at the expense of fair and above-board dealings in transactions.

Whenever I hear the words, "I'm sorry, sir, our policy is . . .," I interrupt them immediately with, "Let ME explain MY policy to YOU!  And I'm only going to explain it once, so you'd better listen up."

I can become a very unpleasant person when someone tries to rip me off.  My policy has never failed me yet.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 30, 2017, 02:37:15 PM
Let me pose a couple simple questions.

-If VISA announced that they're going to begin operating in 10 new countries, would their valuation go up?
-If VISA announced that they have a new method for combating fraud on their network, would their valuation go up?
-Does VISA's valuation partly come from its assets and the capital that it owns?

Without complicating the questions any more than necessary, the answer to these questions is most certainly yes.

You see the thing with bitcoin is that everyone is so lost and caught up in the currency. But Bitcoin is a currency and a payment network.

It doesn't matter what the value of the currency is. We could value the currency at $.0001. Which, if we're talking about Satoshis, is actually about what its worth today. The media probably wouldn't be too caught up with bitcoin frenzy if its currency were valued at $.0001 and the talks about bubbles wouldn't be nearly as pronounced today. Proof to that is that bitcoin's price actually was that at one point in time and rose to dollar parity and yet bitcoin was never even on the radar for the media or anyone for that matter.

The price of the currency doesn't matter. This isn't like a physical commodity where the price of oil at $300/barrel versus $50/barrel has very real consequences in what is received for the money.

Let me make another analogy. An arcade uses token for all of the games inside. To have fun using the arcade, you must exchange your dollars for tokens and then use those tokens in the arcade games to have some fun. There is no underlying value in the token itself. However, the arcade itself does have underlying value. People go there to have fun and as a business it has real value. But, to use this business, you must use their tokens in order to play games. It doesn't matter what the exchange rate of the token is worth. That doesn't change the underlying value of what the arcade provides. The arcade decides one day, instead of exchanging 4 tokens for $1, you now only get 2 tokens for $1. You can still play the same amount of games for $1 though. So each token is worth more itself, but it still doesn't have any underlying value itself. Again, the underlying value of the arcade is still based on providing entertainment to its users.

This is Bitcoin. People who get caught up in the price of what a bitcoin is worth aren't seeing the big picture. Almost every bubble article I read on bitcoin is simply looking at the price charts of the token and comparing it to past bubbles and nothing more. They get caught up in making claims that the currency of bitcoin has no underlying value. The truth is that none of this matters.

As I mentioned previously, bitcoin is both a currency and a payment network. The currency is simply a token that is used if you wish to use this payment network. The payment network, like the arcade, is where the underlying "intrinsic" value is found. The benefits of this payment network are profound and numerous as no other payment network on earth has all of these qualities combined.

1) Decentralized
2) Global
3) Permission-less (anyone, anywhere can use it)
4) Counterfeit proof
5) Peer-to-Peer
6) Fraud proof consumer protection
7) Nearly unhackable
8) Immutable
9) Extensible for use with smart contracts
10) Can't be confiscated
11) Low cost/fast transactions
12) Programmable
13) Deflationary monetary policy
14) Irreversible transactions

VISA might have some of these benefits. SWIFT might have some of these benefits. ACH might have some of these benefits. But no traditional financial payment network has all of these features. Arguing each feature on its own compared to traditional solutions ignores the fact that bitcoin has all of these features. Some people might value some of these things and not others. For example, an immigrant might value the fact that it is both global and low cost so that they can send remittances back to family overseas. A wealthy CEO might value that it can't be confiscated and is a deflationary store of value. A web developer might value that it is programmable. A merchant might value fraud protection and no chargebacks. An activist might value that it is decentralized and permissionless. The truth is that many people will value the bitcoin payment network for different reasons and it is the combination of all these reasons that gives bitcoin its underlying value. Unless these people stop valuing these things in a payment network, then it will continue to have value.

Back to my original questions, VISA's valuation comes partly to the capital and assets that it owns. Its value also comes from the services it provides. If VISA starts operating in additional countries, the value of the company would rise because it can now reach additional customers. Likewise, bitcoin, as a payment network, has underlying value because there are over 10,000 nodes all around the world that are running this network. There is about 12 Exahash/sec worth of computing power on the network currently. That's more than about 600 of the world's top supercomputers combined. You can't separate bitcoin the currency from the bitcoin blockchain. To use the arcade, you must use their token and this is a one of a kind in the world arcade. There is no other payment network that provides all of these features (listed above) with all of the same security, decentralization, computing power, etc. Each one of the features it provides adds additional value to the network and each feature will bring in different people who value different aspects of the network.

Hopefully some people found this all helpful.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 30, 2017, 02:46:37 PM
I respectfully disagree.  Far more of the times I've done charge backs was because of a shady merchant that disagreed that I was due a refund, or tried to force me to settle for a "store credit" as some kind of consolation booby-prize to replace the perfectly spendable USD that I gave them.

If I'd had to rely on the merchant to agree, I would have been stuck paying for dead batteries, expensive software that doesn't even install, upgrades that don't upgrade, power protection units that don't even conduct electricity, etc, etc, on and on.

With a credit card, I get a very authoritative say in whether I get ripped off or not.  With crypto, I'd be at the mercy of those who care only for profits; even if at the expense of fair and above-board dealings in transactions.

Whenever I hear the words, "I'm sorry, sir, our policy is . . .," I interrupt them immediately with, "Let ME explain MY policy to YOU!  And I'm only going to explain it once, so you'd better listen up."

I can become a very unpleasant person when someone tries to rip me off.  My policy has never failed me yet.

Yes, but that's not fraud and I don't think that the payment network should be the mediator in those situations. There's nothing to say that we couldn't have regulations that prevent merchants from giving store credit where full refunds are in order (not saying that is a good idea, just an example). The payment network should provide security over the payment transaction itself, not mediation of the innumerous amount of services than any merchant can provide to a consumer. And if you don't think that you don't pay for that chargeback ability, I think you're being a little naive. Businesses account for all the lost revenue due to return policies, chargebacks, credit card fees, etc. While it might give you peace of mind to know that you can cancel a payment at any time, we'd be much better off with a system that had no merchant fees and no fraud in it to begin with. That's ultimately where real power will be returned to the consumer.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on November 30, 2017, 02:57:10 PM
Yes, but that's not fraud and I don't think that the payment network should be the mediator in those situations.
If you truly believe that, then you have an extremely narrow definition of fraud. If a transaction doesn't deliver the promised goods or services, and the merchant wants to keep your money anyway, that absolutely is fraud.

fraud
frôd/
noun
noun: fraud; plural noun: frauds

    wrongful or criminal deception intended to result in financial or personal gain.

Selling me supposedly brand new batteries that don't even have a charge is at the very least wrongful deception (even if unintentional). Refusing to give me my money back when I return them, with proof of purchase, is when it crosses over into fraud.

You might disagree about where or how specific types of fraud should be protected, but I think it's pretty inarguable that VISA, etc, already provides that protection (without new regulation), while crypto does not.

Even with new regulation, where is the enforcement mechanism?  Do I have to sue in court to get my $14 back for dead batteries? Right now all I have to do is click a few links on a web-site.  Presto-bingo.  I am protected.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 30, 2017, 03:15:46 PM
If you truly believe that, then you have an extremely narrow definition of fraud. If a transaction doesn't deliver the promised goods or services, and the merchant wants to keep your money anyway, that absolutely is fraud.

fraud
frôd/
noun
noun: fraud; plural noun: frauds

    wrongful or criminal deception intended to result in financial or personal gain.

Selling me supposedly brand new batteries that don't even have a charge is at least wrongful deception. Refusing to give me my money back when I return them is when it crosses over into fraud.

You might disagree about where or how certain types of fraud should be protected against, but I think it's pretty inarguable that VISA, etc, already provides that protection (without new regulation), while crypto does not.

Even with new regulation, where is the enforcement mechanism?  Do I have to sue in court to get my $14 back for dead batteries? Right now all I have to do is click a few links on a web-site.  Presto-bingo.  I am protected.

I'm not going to argue that your battery scenario doesn't constitute as fraud. But in an industry where fraud is a multi-billion dollar business unit, your battery scenario isn't in the discussion. VISA and its like are failing us miserably in this area and as an information security analyst in the financial industry, it is an issue I am faced with every day. While it is unfortunate that your battery scenario occurred, as consumers we have direct control of those types of interactions. We can simply stop doing business with those merchants and it will eventually become astutely clear that policies that don't favor their consumers will harm their business. In the face of true fraud however, we have little power when our identity and payment information is stolen. VISA does not provide us enough protection in that regard.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on November 30, 2017, 03:24:14 PM
I'm not going to argue that your battery scenario doesn't constitute as fraud. But in an industry where fraud is a multi-billion dollar business unit, your battery scenario isn't in the discussion. VISA and its like are failing us miserably in this area and as an information security analyst in the financial industry, it is an issue I am faced with every day. While it is unfortunate that your battery scenario occurred, as consumers we have direct control of those types of interactions. We can simply stop doing business with those merchants and it will eventually become astutely clear that policies that don't favor their consumers will harm their business. In the face of true fraud however, we have little power when our identity and payment information is stolen. VISA does not provide us enough protection in that regard.
It's not in the discussion because it isn't broken.  It works perfectly, as is.  I'm not suggesting that everything-VISA is perfect.  But your repetition of "Fraud proof consumer protection" as a crypto benefit, while omitting very salient limiting qualifiers to that, is simply untrue, no matter how many times you say it. It simply doesn't offer that. Whatever consumer protection it might provide, it is incomparable to what VISA provides.  Apples to Oranges. Or perhaps more appropriately, a whole apple (VISA) to just a wedge of an apple (crypto).

For the sake of argument, I'll concede that crypto's wedge is more robust than the corresponding wedge in VISA's apple.  But it still leave a gigantic hole, unaddressed, in the full spectrum of consumer protection.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 30, 2017, 03:52:01 PM
It's not in the discussion because it isn't broken.  It works perfectly, as is.  I'm not suggesting that everything-VISA is perfect.  But your repetition of "Fraud proof consumer protection" as a crypto benefit, while omitting very salient limiting qualifiers to that, is simply untrue. It doesn't offer that. Whatever consumer protection it might provide, it is incomparable to what VISA provides.  Apples to Oranges. Or perhaps more appropriately, a whole apple (VISA) to just a wedge of an apple (crypto).

No, it's not in the discussion because of all the slices in the fraud pie, legitimate consumer chargebacks is the smallest slice. Unauthorized payments and account takeovers are the biggest slices in the fraud space and it costs multi-billions of dollars to both consumers and merchants. Global Risk Technologies examined chargebacks and found that 86% of chargebacks by consumers were fradulent. So not only are legitimate chargebacks a small problem, but fradulent chargebacks only make a big problem even worse. Like I said, your scenario, while unfortunate, is at least a scenario where we as consumers can protect ourselves by choosing who we do business with. Bitcoin provides consumer protection against a fraud problem that we largely don't have control over. It is a problem that is rampant and expensive and costs consumers way more than any amount of faulty or poor refund practices do annually. Your continued assertion that poor refund practices is in any way comparable to the amount of fradulent transactions that occurs in the payment industry shows a misunderstand of this area.

With bitcoin, I can do business with any reputable merchant regardless of their cyber security practices or the security of the connection between us without fear of my payment or financial account being compromised now or at any time in the future. That's true consumer protection.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on November 30, 2017, 04:16:34 PM
. . . is at least a scenario where we as consumers can protect ourselves by choosing who we do business with.
No it isn't.  Your so-called "solution" only protects me from getting ripped off a second time, not the first time. Denying future dealings with that merchant will not get my money back.

This, to you, seemingly insignificant protection, has saved me far more dollars over the years than any fraudulent charges against my card (yes, I've had that happen too).

I'm not pretending to be an expert in all the other problems inherent in credit cards.  And I'm not looking at this from the perspective of an industry security specialist.  I'm looking at it as a consumer.  This one single aspect of the CC system is why I never use cash when I have a choice.  And I'll never use crypto, either, until that base is covered.

You are looking at this from a static perspective.  Once you remove that "small problem" protection, it will rapidly mushroom into a "big problem" just as soon as merchants realize that we are, quite literally, at their mercy.

Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 30, 2017, 04:21:49 PM

You might disagree about where or how specific types of fraud should be protected, but I think it's pretty inarguable that VISA, etc, already provides that protection (without new regulation), while crypto does not.

Even with new regulation, where is the enforcement mechanism?  Do I have to sue in court to get my $14 back for dead batteries? Right now all I have to do is click a few links on a web-site.  Presto-bingo.  I am protected.

It isn't true that chargebacks are provided without regulation. I want to point out, since you mentioned it, that you're probably unfamiliar with reg Z in TILA and reg E in EFT Act that allow you to do those chargebacks in the first place. These are the regulations that give consumers those reversal rights with chargebacks. I'm not saying we need regulations to protect the consumer from poor refund practices in the absense of fradulent transactions, but if regulations is what gave us chargeback rights and enforcement seems to work just fine there, then regulations could certainly be an option. Chargebacks are a poor solution to a small problem and exacerbate fraud given the fact that 86% of chargebacks themselves are fradulent.
Title: Re: Is it too late [bitcoin]?
Post by: worldtraveler on November 30, 2017, 04:27:13 PM
This is only the beginning of the bitcoin price drops!

I would think that 30% or 40% drops are right around the corner on thin transactions.

Get ready for a rush to the exit.... It's about to get messy.

This isn't going to age well.

My question to the skeptics. 

Have you ever used bitcoin, studied it, or the ecosystem? Have you read about the banks who are developing their entire future around it?
https://cointelegraph.com/news/koreas-second-largest-bank-building-secure-crypto-wallet-services

https://news.bitcoin.com/japans-sbi-crypto-businesses-mining/

Also, when would you ever considering using bitcoin? What would it take? Or do you just scream ponzi, scam, tulips until you die, regardless of how many people are using it?
Title: Re: Is it too late [bitcoin]?
Post by: seattlecyclone on November 30, 2017, 04:31:10 PM
A question for the cryptocurrency proponents on here:

At what price point would you consider a Bitcoin to be overvalued? Why?
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on November 30, 2017, 04:32:14 PM

You might disagree about where or how specific types of fraud should be protected, but I think it's pretty inarguable that VISA, etc, already provides that protection (without new regulation), while crypto does not.

Even with new regulation, where is the enforcement mechanism?  Do I have to sue in court to get my $14 back for dead batteries? Right now all I have to do is click a few links on a web-site.  Presto-bingo.  I am protected.
It isn't true that chargebacks are provided without regulation.
Where did I suggest there was no regulations for chargebacks?  Obviously I'm not going to go read a stack of regulations that have nothing to do with the point I made.

Your otherwise fairly thorough description of crypto features make it clear that I cannot get a transaction reversed without a crooked merchant agreeing to do it.

I don't care about fraudulent chargebacks, because I don't commit fraud.  It's not my problem to solve.  And yes, I do understand that the cost of dealing with that is baked into the system that we all pay for in some way or the other, so I don't want to digress about that point, either.

So let's at least agree to stay a little focused on the one point I made, ok?

A chargeback against a fraudster merchant is at least technically feasible to do with credit cards.  Since it's not technically feasible to do that with crypto, what are you suggesting the solution should be?  A law suit?  Call Tony the enforcer? Something else? 

How do I get my $600 back from a merchant I've never done business with before for a software package that won't even install, if the merchant is unwilling to cooperate?
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 30, 2017, 04:44:45 PM
. . . is at least a scenario where we as consumers can protect ourselves by choosing who we do business with.
No it isn't.  Your so-called "solution" only protects me from getting ripped off a second time, not the first time. Denying future dealings with that merchant will not get my money back.

This, to you, seemingly insignificant protection, has saved me far more dollars over the years than any fraudulent charges against my card (yes, I've had that happen too).

I'm not pretending to be an expert in all the other problems inherent in credit cards.  And I'm not looking at this from the perspective of an industry security specialist.  I'm looking at it as a consumer.  This one single aspect of the CC system is why I never use cash when I have a choice.  And I'll never use crypto, either, until that base is covered.

You are looking at this from a static perspective.  Once you remove that "small problem" protection, it will rapidly mushroom into a "big problem" just as soon as merchants realize that we are, quite literally, at their mercy.

But that isn't what you're understanding. You're not looking at this from a consumer perspective like you say you are. You're only looking at this from your perspective instead of looking at it from the perspective of the system as a whole. Estimates show that fraud costs the average organization more than 5% in revenue every year. Combine that with the fact that VISA charges 2-4% merchant fees and we're looking at between 7-9% that could be returned directly to the consumer for every purchase we make. I understand that you might feel protected because you can chargeback any transaction you want, but the truth is that comes at the hidden cost of 7-9% on every transaction you make with a credit card. I'm sure that would add up to way more than what you'd ever lose in your refund scenario each year.
Title: Re: Is it too late [bitcoin]?
Post by: thenextguy on November 30, 2017, 04:45:59 PM
This is only the beginning of the bitcoin price drops!

I would think that 30% or 40% drops are right around the corner on thin transactions.

Get ready for a rush to the exit.... It's about to get messy.

This isn't going to age well.

My question to the skeptics. 

Have you ever used bitcoin, studied it, or the ecosystem? Have you read about the banks who are developing their entire future around it?
https://cointelegraph.com/news/koreas-second-largest-bank-building-secure-crypto-wallet-services

https://news.bitcoin.com/japans-sbi-crypto-businesses-mining/

Also, when would you ever considering using bitcoin? What would it take? Or do you just scream ponzi, scam, tulips until you die, regardless of how many people are using it?

Since I am certain that it is B.S., I will never use bitcoin.  I will mock it to the end.

This guy's ancestors: "Horseless carriages?!?!? That's absurd!"
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on November 30, 2017, 04:49:51 PM
. . . is at least a scenario where we as consumers can protect ourselves by choosing who we do business with.
No it isn't.  Your so-called "solution" only protects me from getting ripped off a second time, not the first time. Denying future dealings with that merchant will not get my money back.

This, to you, seemingly insignificant protection, has saved me far more dollars over the years than any fraudulent charges against my card (yes, I've had that happen too).

I'm not pretending to be an expert in all the other problems inherent in credit cards.  And I'm not looking at this from the perspective of an industry security specialist.  I'm looking at it as a consumer.  This one single aspect of the CC system is why I never use cash when I have a choice.  And I'll never use crypto, either, until that base is covered.

You are looking at this from a static perspective.  Once you remove that "small problem" protection, it will rapidly mushroom into a "big problem" just as soon as merchants realize that we are, quite literally, at their mercy.

But that isn't what you're understanding. You're not looking at this from a consumer perspective like you say you are. You're only looking at this from your perspective instead of looking at it from the perspective of the system as a whole.

Geez Luise!  Yes, of course I am. It is the same perspective I apply to shopping for groceries, cars, services; pretty much everything.  I, the consumer, get to pick the perspective I use for my own consumer decisions. Guilty as charged. So can we get on with the point I made that you seem so eager to get away from?

I never suggested there aren't 10,000 (however many) more pressing issues from the industry's perspective, so can we please just skip all those other digressions?

How do I get my $600 back from a merchant I've never done business with before for a software package that won't even install, if the merchant is unwilling to cooperate?

You can't regulate a capability into a technology that is incapable of delivering it.  So let's just fast-forward and assume all the new regulations are now in place.  What's the mechanism for execution?  How is that consumer protection delivered to the consumer, in your view?

If your answer is, as it seems to be, "that's just not important, and there is no practical remedy with crypto," then please just say it so we can agree to disagree and wrap this up.  Then I'll happily abstain from opining on any other issues with the CC system that you want to post about.  This is a gaping flaw in the whole BitCoin-as-a-payment-system story, and that's the only point I ever made.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 30, 2017, 04:58:32 PM
Geez Luise, yes, of course I am. It is the same perspective I apply to shopping for groceries, cars, services; pretty much everything.  So can we get on with the point I made that you seem so eager to get away from?

How do I get my $600 back from a merchant I've never done business with before for a software package that won't even install, if the merchant is unwilling to cooperate?

If your answer is, as it seems to be, "that's just not important, and there is no practical remedy" then please just say it so we can agree to disagree and wrap this up.

If my choice is between paying 9% more on every transaction I make versus taking the risk that the merchant I am dealing with might not refund me in the way that I'd like, I'd take the latter every time. So we can agree to disagree.
Title: Re: Is it too late [bitcoin]?
Post by: phil22 on November 30, 2017, 05:14:44 PM
As the saying goes... "What the wise man does in the beginning, the fool does in the end."

If someone has made gains in bitcoin (or other cryptos) to date, I see no reasons not to sell it all out now, chuckle to oneself, and walk away richer instead of waiting for a huge wipe-out drop to come along.

or maybe we'll continue holding, just like we did when the bubbles popped and "the end was near" in 2011, 2013, and 2014?

have you made profits on your stock holdings?  how do you convince yourself to not sell your stocks and enjoy a nice chuckle?

Title: Re: Is it too late [bitcoin]?
Post by: harvestbook on November 30, 2017, 05:30:14 PM
Dogecoin was started as a joke and it now has a market cap of $227 million. So does it really matter if it's "worth" nothing? It's just a faith system like any other, including the US dollar.

Then again, I thought Facebook would die since it's a plaque on the human race, and now Zuck is wanting to run for president. I guess nobody knows nothing, especially me.

Title: Re: Is it too late [bitcoin]?
Post by: headquarters on November 30, 2017, 05:32:51 PM
I purchased 25 BTC when the price was around 2.60, and sold it at around 12 dollars. A few years later it was at 1,000. Now it's around 10k. Still kicking myself.
Title: Re: Is it too late [bitcoin]?
Post by: gp_ on November 30, 2017, 05:41:10 PM
If someone has made gains in bitcoin (or other cryptos) to date, I see no reasons not to sell it all out now, chuckle to oneself, and walk away richer instead of waiting for a huge wipe-out drop to come along.

because some people realize that things are just beginning...
Title: Re: Is it too late [bitcoin]?
Post by: gp_ on November 30, 2017, 05:44:58 PM
I purchased 25 BTC when the price was around 2.60, and sold it at around 12 dollars. A few years later it was at 1,000. Now it's around 10k. Still kicking myself.

my friend purchased 1,000 btc at $4, and couldn't (and can't) remember his private key!
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 30, 2017, 05:47:10 PM
A question for the cryptocurrency proponents on here:

At what price point would you consider a Bitcoin to be overvalued? Why?

I think this is the wrong question and it focuses on the price of the currency, when that really should be the focus. I'll refer to my previous post for further details on why in case you missed it here:

https://forum.mrmoneymustache.com/investor-alley/is-it-too-late-(bitcoin)/msg1791232/#msg1791232 (https://forum.mrmoneymustache.com/investor-alley/is-it-too-late-(bitcoin)/msg1791232/#msg1791232)

The reason why the price of the currency doesn't matter is this. Let's say that the price of the currency has reached $500,000 per bitcoin. Why does that matter? It doesn't. At that point volatility in the price would be miniscule. If you make $50,000 a year (regardless of whether you're paid in crypto or not), if you chose to move that money over into crypto, you'll have $50,000 worth of bitcoin. You own the same amount of monetary value, but the value in that exchange is that you'll be able to use the Bitcoin payment network to make transactions and take advantage of the features it provides.

So I don't think bitcoin can be over or undervalued. It is simply a reflection of the size of the market at that given time. Whether we chose to denominate a bitcoin as Bitcoins or Satoshis or any other unit is irrelevant. The underlying value comes from the bitcoin network, not the currency token. Therefore, the value of the token is irrelevant so long as the network continues to provide value. If it fails to provide value as a payment network, then I would not put money into it since it would not make sense to do so and likely others would see it that same way. So I don't think of it from the perspective of whether the exchange rate is over or under valued. It's more along the lines of whether or not I find value in the bitcoin network itself and whether or not I see it having continued value in the future. In which case, I do find value in it and therefore I chose to put some of my money there so that I can use the bitcoin network. If that someday ceases to be the case, then I will no longer choose to hold any bitcoin.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on November 30, 2017, 05:58:18 PM

The reason why the price of the currency doesn't matter is this. Let's say that the price of the currency has reached $500,000 per bitcoin. Why does that matter? It doesn't. At that point volatility in the price would be miniscule. If you make $50,000 a year (regardless of whether you're paid in crypto or not), if you chose to move that money over into crypto, you'll have $50,000 worth of bitcoin.
Again, I respectfully disagree.  Your assumption is apparently based on an idea that BitCoin valuation isn't a bubble.  I don't share that view.

If I earn $50,000, and I need to pay my income taxes in dollars, rather than in BitCoin, then it matters a great deal if I can't convert my $50,000 worth of BitCoin back into enough dollars to even cover my tax bill.  Not only am I unable to pay my taxes, I'll have nothing left to live on after I pay what I can.

That matters.

The only way valuation doesn't matter is if BitCoin completely displaces USD for legal tender.  Then I get paid in BitCoin, I pay taxes in BitCoin, all investments are quoted and paid for in BitCoin, and I make all other purchases and cash donations with BitCoin.  If everything else is valued in BitCoin, the question of BitCoin's valuation then becomes moot for anything other than foreign exchanges into other currencies.

Until then, valuation matters.

Then again, if BitCoin does take on the role of legal tender, what happens to the purchasing power of those who "invested" USD to buy into it early is an utterly open question with no precedence, and with no basis for conjecture.  The changeover would be governed by legislation, not by the market.  We all know how predictable and "fair" that is, right?
Title: Re: Is it too late [bitcoin]?
Post by: seattlecyclone on November 30, 2017, 06:00:36 PM
I'm actually pretty well on board with the idea that the value is in the network and the technology rather than the tokens. However to me, that speaks to the idea that if you need to use Bitcoins to complete some sort of financial transaction you should just buy the tokens you need at that point, rather than buying them now and holding for some potential future time when you might need them.

When you're buying something as an investment you do so because you believe its market value at some future point when you want to sell would be higher than it is today. By that metric, the question of whether the token is overvalued or undervalued at this moment is very relevant, and you should be able to speak to that question if you want to advocate for purchasing those tokens as an investment.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 30, 2017, 06:31:09 PM
Again, I respectfully disagree.  Your assumption is apparently based on an idea that BitCoin valuation isn't a bubble.  I don't share that view.

If I earn $50,000, and I need to pay my income taxes in dollars, rather than in BitCoin, then it matters a great deal if I can't convert my $50,000 worth of BitCoin back into enough dollars to even cover my tax bill.  Not only am I unable to pay my taxes, I'll have nothing left to live on after I pay what I can.

That matters.

The only way valuation doesn't matter is if BitCoin completely displaces USD for legal tender.  Then I get paid in BitCoin, I pay taxes in BitCoin, all investments are quoted and paid for in BitCoin, and I make all other purchases with BitCoin.  If everything else is valued in BitCoin, the question of BitCoin's valuation then becomes moot for anything other than foreign exchanges into other currencies.

Until then, valuation matters.

But not being able to convert your $50,000 worth of bitcoin back to USD operates under the assumption that the bitcoin network no longer provides value to people and therefore there are no more people looking to buy tokens in order to use the network. This is why focusing on the price misses the main concept that the value comes from the network, not the token. If you feel that the network is what provides value and you see that people understand that value and there are buyers, then you won't have any problem converting back to USD knowing that there will be people who want to use bitcoin.

With regards to bitcoin as an investment, if you're again focusing on the price, you're going to be mislead. The real answer to the question is whether or not you feel there will be more users of bitcoin tomorrow than there are today. The number of users of bitcoin today is extremely small and the number of new signups at exchanges is rapidly growing every day. Understanding the value that the network provides and knowing that the longer the network operates, the more people will come to realize this value, then the answer to your question is:

"Yes, I feel that tomorow there will be more users of bitcoin than there are today."
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on November 30, 2017, 06:44:23 PM
Again, I respectfully disagree.  Your assumption is apparently based on an idea that BitCoin valuation isn't a bubble.  I don't share that view.

If I earn $50,000, and I need to pay my income taxes in dollars, rather than in BitCoin, then it matters a great deal if I can't convert my $50,000 worth of BitCoin back into enough dollars to even cover my tax bill.  Not only am I unable to pay my taxes, I'll have nothing left to live on after I pay what I can.

That matters.

The only way valuation doesn't matter is if BitCoin completely displaces USD for legal tender.  Then I get paid in BitCoin, I pay taxes in BitCoin, all investments are quoted and paid for in BitCoin, and I make all other purchases with BitCoin.  If everything else is valued in BitCoin, the question of BitCoin's valuation then becomes moot for anything other than foreign exchanges into other currencies.

Until then, valuation matters.

But not being able to convert your $50,000 worth of bitcoin back to USD operates under the assumption that the bitcoin network no longer provides value to people and therefore there are no more people looking to buy tokens in order to use the network.
Again, you're reading way more into my statements than what I actually said.  I will not waste time arguing the opposing side of points that you want me to argue against, but that I never made, or even oppose, for that matter.

I am assuming nothing, except that the valuation of BitCoin is a bubble.

It is a fact that the perceived value of BitCoin is priced in USD.
It is a fact that the imputed value of BitCoin is determined by a free and open market.
It is a fact that volatility, regardless of whatever incredulous, and hypothetical future, is very much in play right now.
It is a fact that it lost over $500 in imputed value yesterday.  5%+ in a single day.
It is a fact that you cannot pay your taxes in BitCoin.
It is a fact that the typical honest worker does not get paid in BitCoin.
It is a fact that nothing at any significant scale is priced in BitCoin.
It is a fact that the vast majority of all purchases must be converted into USD to consummate the transaction.
It is a fact that BitCoin is not legal tender for all debts, public and private.
It is a fact that valuation matters.

So tell me, please, which of these facts you regard as assumptions, and how the valuation "doesn't matter." Then we can very quickly, and quite efficiently, agree to disagree.
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on November 30, 2017, 06:48:39 PM
6) Fraud proof consumer protection

14) Irreversible transactions

These items in your list are contradictory.

How are these items contradictory? Care to elaborate a little on that?

Sure.

If you pay your bitcoin to someone perpetrating fraud, it's gone forever.  One of the benefits of bitcoin that you tout is that here's no way of tracing who has it, and it's anonymous so there's no way of knowing who you've paid.  Since transactions can never be reversed there's therefore no way to protect a consumer in a case of fraud.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 30, 2017, 07:14:53 PM
When you're buying something as an investment you do so because you believe its market value at some future point when you want to sell would be higher than it is today. By that metric, the question of whether the token is overvalued or undervalued at this moment is very relevant, and you should be able to speak to that question if you want to advocate for purchasing those tokens as an investment.

Actually the only thing that holders do is take more bitcoin tokens out of circulation. All that means is that the amount of bitcoin available to the market to use needs to accomodate the size of that market. Since supply is restricted, the only way it accomodates a bigger market is to have a higher price. But, again, the price doesn't matter, especially for those using the network and simply converting to and from Bitcoin/USD. However, the more people who are using the network, even if you're immediately converting from BTC/USD, then the larger the demand (and thus price) to use the network will be.

So it all comes down to whether or not you feel the network provides value and that you feel people will want that value.

Again, you're reading way more into my statements than what I actually said.  I will not waste time arguing the opposing side of points that you want me to argue against, but that I never made, or even oppose.

I am assuming nothing, except that the valuation of BitCoin is a bubble.

It is a fact that the perceived value of BitCoin is priced in USD.
It is a fact that the perceived value of BitCoin is determined by a free and open market.
It is a fact that it lost over $500 in value yesterday.  5%+ in a single day.
It is a fact that you cannot pay your taxes in BitCoin.
It is a fact that the typical honest worker does not get paid in BitCoin.
It is a fact that nothing of any significant scale is priced in BitCoin.
It is a fact that the vast majority of all purchases must be converted into USD.

So please tell me again which of these facts you regard as assumptions, and how the valuation "doesn't matter."

You said that you wouldn't be able to convert back to USD, which is why I said you're assuming that the network would stop having value because that is what is required for that statement to be true. What do any of those bullet points have to do with whether or not the bitcoin network provides value? Almost everything is priced in USD for Americans since that is our current frame of reference for value. That doesn't mean that those things that we value in reference to USD don't have value (which is ridiculous for me to even say). The fact that bitcoin lost value doesn't mean anything either. With a few million in liquidity for a 5% price movement, that only explains that the network is currently small. So any variation in the number of users in any given direction can have large price fluxuations. Which again is why it is useless to focus on the price when the real trend is to focus on the usage of the network and the number of people using it. When looking from that angle it is clear that the number of users using it grows every day.

Why would one need to be able to pay taxes in bitcoin in order for it to have value? Why would one need to get paid in bitcoin for it to have value?
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on November 30, 2017, 07:23:15 PM
Sure.

If you pay your bitcoin to someone perpetrating fraud, it's gone forever.  One of the benefits of bitcoin that you tout is that here's no way of tracing who has it, and it's anonymous so there's no way of knowing who you've paid.  Since transactions can never be reversed there's therefore no way to protect a consumer in a case of fraud.

Actually anonymity is not one of the benefits that I touted and it was not in the list I posted anywhere because bitcoin is not fully anonymous.

Certainly being taken advantage of by fraudsters seeking victims like those today who call you claiming to be someone and asking for credit card info. Done it bitcoin, I agree there is little recourse to get that money back. But, I'd much rather have inherent protections against fraud that I don't have control over (unauthorized transactions and account takeovers) versus having inherent protections from something I do have control over (like being manipulated to make a payment without understanding what I'm purchasing). That's the whole point about bitcoin, I'm the only one who can authorized payments, so it gives us control of our money back instead of the fraudsters.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on November 30, 2017, 07:24:02 PM
When you're buying something as an investment you do so because you believe its market value at some future point when you want to sell would be higher than it is today. By that metric, the question of whether the token is overvalued or undervalued at this moment is very relevant, and you should be able to speak to that question if you want to advocate for purchasing those tokens as an investment.

Actually the only thing that holders do is take more bitcoin tokens out of circulation. All that means is that the amount of bitcoin available to the market to use needs to accomodate the size of that market. Since supply is restricted, the only way it accomodates a bigger market is to have a higher price. But, again, the price doesn't matter, especially for those using the network and simply converting to and from Bitcoin/USD. However, the more people who are using the network, even if you're immediately converting from BTC/USD, then the larger the demand (and thus price) to use the network will be.

So it all comes down to whether or not you feel the network provides value and that you feel people will want that value.

Again, you're reading way more into my statements than what I actually said.  I will not waste time arguing the opposing side of points that you want me to argue against, but that I never made, or even oppose.

I am assuming nothing, except that the valuation of BitCoin is a bubble.

It is a fact that the perceived value of BitCoin is priced in USD.
It is a fact that the perceived value of BitCoin is determined by a free and open market.
It is a fact that it lost over $500 in value yesterday.  5%+ in a single day.
It is a fact that you cannot pay your taxes in BitCoin.
It is a fact that the typical honest worker does not get paid in BitCoin.
It is a fact that nothing of any significant scale is priced in BitCoin.
It is a fact that the vast majority of all purchases must be converted into USD.

So please tell me again which of these facts you regard as assumptions, and how the valuation "doesn't matter."

You said that you wouldn't be able to convert back to USD . . . <misdirection snipped>

Why would one need to be able to pay taxes in bitcoin in order for it to have value? Why would one need to get paid in bitcoin for it to have value?
More deflections and digressions.  Stop running away. I never said, or even implied, that BitCoin doesn't have value. Value doesn't equal valuation.

You said valuation doesn't matter:


The reason why the price of the currency doesn't matter is this. Let's say that the price of the currency has reached $500,000 per bitcoin. Why does that matter? It doesn't.
I never said you couldn't convert BitCoin to USD.  I never said the BitCoin network didn't have value.

I'm not going to waste time arguing in opposition or support of points I never made, just because you want to argue the other side, solely for the purpose of deflecting discussion away from the point I actually did make.

That's called a straw man.  It's a weak-sauce tactic employed to avoid debating a point you know you can't win; just like the "consumer protection" debate you've apparently conceded by silently withdrawing from that discussion.

And just so it doesn't get lost behind your latest smokescreen, the only point I did make was that VALUATION DOES MATTER. You said it doesn't matter.  I say it does.  You don't need to write a novel about everything else, excluding that singular difference of opinion.  Stay on point, or agree to disagree (or just silently withdraw again).

At the very least, you should display the courage to back up your own words, or just continue retreating from them.  I don't really care which of those you choose to do.  But I won't allow you to stuff words into my mouth that I never so much as even whispered to myself.  If you actually do have something to say, it really doesn't have to be all so complicated and convoluted.  Just say it, in your own words, and stop pretending that you are qualified to speak for me.

I can assure you that you aren't even remotely qualified to speak for me.  So all of that nonsense is  just a waste of time, and an all-too-obvious ploy to cover your retreat while you run away from your own words.
Title: Re: Is it too late [bitcoin]?
Post by: waltworks on November 30, 2017, 08:08:35 PM
This guy's ancestors: "Horseless carriages?!?!? That's absurd!"

I think you can only use this analogy if it goes something like this:
-Horseless carriages are invented. They all kinda suck but the potential is obvious.
-Company A starts selling a horseless carriage that *really* sucks and has obvious problems, but they're first to market.
-Horseless carriages from company A and a variety of other companies (most of which don't even make any cars or know anything about how to make cars) are snapped up as fast as they can be made by ravenous buyers who immediately park them indoors and never drive them, because they're expecting them to sextuple in value in the next week.
-Retired grandmas and gullible people who have never invested in anything in their lives bid Company A's cars up to thousands of times their original value, to the point that to actually drive the car would be pure folly.

My point is that you can be all in on the *technology* involved while still realizing that Bitcoin itself (both the product and the valuation) are a bad joke/bubble and that it's pretty likely that a lot of people will lose their shirts.

-W
Title: Re: Is it too late [bitcoin]?
Post by: surfhb on November 30, 2017, 08:47:09 PM
At its current rate of growth, in 3 years bitcoin will be worth more than the total US GDP.   Obviously bitcoin cannot survive at its current trajectory and Capital will eventually run out, big investors will bail causing a severe crash.

Blockchain technology may well indeed become a foundation of the future of capital and finance, but that does not mean bitcoin is going to survive...along with the money you people are thinking of putting into it.   

Someone is going to be holding the hot potato.   Don't fuck with your money...its too important.
Title: Re: Is it too late [bitcoin]?
Post by: seattlecyclone on November 30, 2017, 09:54:14 PM
When you're buying something as an investment you do so because you believe its market value at some future point when you want to sell would be higher than it is today. By that metric, the question of whether the token is overvalued or undervalued at this moment is very relevant, and you should be able to speak to that question if you want to advocate for purchasing those tokens as an investment.

Actually the only thing that holders do is take more bitcoin tokens out of circulation. All that means is that the amount of bitcoin available to the market to use needs to accomodate the size of that market. Since supply is restricted, the only way it accomodates a bigger market is to have a higher price. But, again, the price doesn't matter, especially for those using the network and simply converting to and from Bitcoin/USD. However, the more people who are using the network, even if you're immediately converting from BTC/USD, then the larger the demand (and thus price) to use the network will be.

So it all comes down to whether or not you feel the network provides value and that you feel people will want that value.

Yes, the price to use the network is quite high. It's been over $5 per transaction for a month now (https://bitinfocharts.com/comparison/bitcoin-transactionfees.html). This is an artifact of the protocol design inherent in the network. The rate of block discovery is predetermined, the size of each block is strictly limited, and transactions take a certain amount of space on the block. The network is basically maxed out. It can't accept any greater transaction volume than it currently has. People keep bidding up the transaction fees to get their transaction accepted by the network, and in so doing they make the network completely useless for small-value transactions. This seems like a major flaw for a so-called "currency."

But that doesn't seem to have any inherent relationship to the value of the currency tokens themselves. People just using the network to facilitate financial transactions don't care what the price is. I think we're all agreed on this point. They'll buy some number of coins and send them to another person, who will immediately sell them again. I'm therefore not convinced that the price of the coins should have anything to do with the number of people using the network. The transaction rate is basically maxed out as is. The price seems to be driven by speculation amongst people who are trying to use the coins as an investment rather than as a currency.

So, it all comes back to my initial question. What is a fair value for a bitcoin? At what price would you agree that the price is too high and sell yours?
Title: Re: Is it too late [bitcoin]?
Post by: BattlaP on December 01, 2017, 02:39:37 AM
When you're buying something as an investment you do so because you believe its market value at some future point when you want to sell would be higher than it is today. By that metric, the question of whether the token is overvalued or undervalued at this moment is very relevant, and you should be able to speak to that question if you want to advocate for purchasing those tokens as an investment.

what you just described is speculation, requiring a 'greater fool' to sell your whatever to later on.
investments are based on expected returns, such as dividends, rent, capital growth, business expansion, etc. 'fundamentals', if you will. none of which bitcoin possesses.

I know this is probably what you're trying to wring out of the enthusiasts eventually but I'll leapfrog that and just point out the obvious.
Title: Re: Is it too late [bitcoin]?
Post by: mubington on December 01, 2017, 06:38:57 AM
I'm generally bullish on crypto in general over a 10 year + period, but don't want to keep up with best practices for security and alt coin diversification,  as this seems like quite a skilled and labour intensive job

So is there a recommendation for a managed, security minded trust or fund I can invest in with relatively low costs that will track the industry in general?
Title: Re: Is it too late [bitcoin]?
Post by: sherr on December 01, 2017, 07:11:38 AM
I already pointed that out. His answer (if I understood it correctly) was that the systemic gains of merchants / financial institutions not having to deal with chargebacks will end up being of greater value to the consumer than actual fraud protection.

I don't buy it personally though. Crypto transactions are irreversible. Which means there is no such thing as fraud protection for the consumer. That alone will prevent cryptocurrencies from ever replacing Visa.

I guess you didn't understand then, because that wasn't my point at all and I said nothing along those lines at all (where did you even get that from?).

Oh I don't know, maybe because you say things like this?

But that isn't what you're understanding. You're not looking at this from a consumer perspective like you say you are. You're only looking at this from your perspective instead of looking at it from the perspective of the system as a whole. Estimates show that fraud costs the average organization more than 5% in revenue every year. Combine that with the fact that VISA charges 2-4% merchant fees and we're looking at between 7-9% that could be returned directly to the consumer for every purchase we make. I understand that you might feel protected because you can chargeback any transaction you want, but the truth is that comes at the hidden cost of 7-9% on every transaction you make with a credit card. I'm sure that would add up to way more than what you'd ever lose in your refund scenario each year.

Almost the entire purpose of chargebacks are to combat fradulent transactions. Almost the entire reason we have fradulent transactions are because are POS systems are designed around giving merchants our identities and "pull" authority over the funds in our accounts. This makes every single merchant we interact with a single point of failure for massive amounts of consumer information. We then try to overlap consumer protection regulation on top of this failed system that doesn't do anything but cost more money. Case in point being the fact that Target was a PCI certified company and yet they were breached which exposed tens of millions of consumer account data and resulted in millions of dollars in damages due to fraud.

Consumers are not the victims in that scenario, the banks are (the consumers will initiate a chargeback and be made whole again, the banks will be out the money if the merchants can't or won't refund it). You are intentionally confusing protecting *merchants* and *banks* from fraud when we are talking about protecting *consumers* from fraud. Protecting merchants /banks from fraud is a valid consideration, sure. But bitcoin offers exactly zero *consumer* fraud protection, which is what we're talking about. So stop saying it does.
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on December 01, 2017, 07:35:48 AM
Sure.

If you pay your bitcoin to someone perpetrating fraud, it's gone forever.  One of the benefits of bitcoin that you tout is that here's no way of tracing who has it, and it's anonymous so there's no way of knowing who you've paid.  Since transactions can never be reversed there's therefore no way to protect a consumer in a case of fraud.

Actually anonymity is not one of the benefits that I touted and it was not in the list I posted anywhere because bitcoin is not fully anonymous.

Because bitcoin does not require identification, this means that anyone with a phone and an internet connection can use the payment network. Capital can simply flow naturally through peer to peer means if needed similar to the way that cash flows into these regions.

?

Certainly being taken advantage of by fraudsters seeking victims like those today who call you claiming to be someone and asking for credit card info. Done it bitcoin, I agree there is little recourse to get that money back. But, I'd much rather have inherent protections against fraud that I don't have control over (unauthorized transactions and account takeovers) versus having inherent protections from something I do have control over (like being manipulated to make a payment without understanding what I'm purchasing). That's the whole point about bitcoin, I'm the only one who can authorized payments, so it gives us control of our money back instead of the fraudsters.

Let's say I want to buy a widget.  I find an online merchant on the global market selling widgets for a good price.

- I pay for it with bitcoin.  No shipment comes.  I have no recourse or options.

- I pay for it with my credit card.  No shipment comes.  I dispute the charges and get my money back.


I'd much rather have protection from things that have occasionally happened to me (items not as described or not shipped from a seller) rather than the imaginary boogeymen (unauthorized transactions and account takeovers) that you're worried about.
Title: Re: Is it too late [bitcoin]?
Post by: simonsez on December 01, 2017, 08:32:25 AM
If my choice is between paying 9% more on every transaction I make versus taking the risk that the merchant I am dealing with might not refund me in the way that I'd like, I'd take the latter every time.
9% on every transaction?

I get gas at Costco using a credit card that takes 4% off that price.  Costco gas is typically about 20 cents per gallon cheaper than surrounding gas stations.  If a Bitcoin gas station opens up, will it beat Costco's price by 9%?

Is there a Bitcoin grocery store that will be 9% cheaper than current ones?  I also get 3% back on those purchases with a credit card.

Groceries and gas are the bulk of my credit card transactions.  I'm all ears if I can reduce my expenditures by ~5-9%.

Bonus points potential for Bitcoin - lower my non-credit card transactions by 9% as well, e.g. mortgage and student loan payments - that'd be great!

I'm surprised MMM doesn't espouse Bitcoin more often if you can save 9% on every transaction.  It seems like the obvious choice for frugal-minded people, so odd.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 01, 2017, 08:48:46 AM
sherr and GuitarStv, what you're not understanding however is that even though the fraud costs of unauthorized transactions and account takeovers are "picked up" by merchants and banks, it is a systemic problem with massive costs and those costs are shared by everyone. You may think that you don't pay for it, but you do. It is an externalized cost no different than the bludgeoning costs of poor health or pollution. It doesn't matter whether or not fraud ever happens to you directly much the same way that it doesn't matter if a heart attack doesn't happen to you. You still pay for it. Saying that health care protects the patient from heart attacks because it will cover the costs of treatment and passes those costs on to everyone is no different than saying that our current system of fraud protection protects us from fraud because it covers the costs of individualized fraud and passes those costs on to everyone. Both of which ignores the main idea about what protection should be about: prevention.

To blatantly ignore it and say that the individual consumer isn't paying for it therefore it has no effect on them it absolutely ridiculous. If you both don't want to understand that, that's fine. We can just agree to disagree. I have nothing more to say about it.

Simonsez, no unfortunately you wouldn't save money by switching to bitcoin and shopping at the same locations. This is definitely a notable problem in a transition to bitcoin. It is no different than taking the personal desire to become healthier yourself and wishing for the rest of the country to do the same. In the mean time everyone else will still be having heart attacks for which the costs will still be shared by everyone. The same is true with bitcoin and fraud. So even if I switch to bitcoin and take advantage of its fraud protection, the industry as a whole will still have the financial burden on it and therefore I'll still be paying for it. I'm just espousing the benefits of bitcoin in hopes that we see a world with less systemic fraud in the same way that I hope that one day heart attacks are a thing of the past.
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on December 01, 2017, 09:00:58 AM
sherr and GuitarStv, what you're not understanding however is that even though the fraud costs of unauthorized transactions and account takeovers are "picked up" by merchants and banks, it is a systemic problem with massive costs and those costs are shared by everyone. You may think that you don't pay for it, but you do. It is an externalized cost no different than the bludgeoning costs of poor health or pollution. It doesn't matter whether or not fraud ever happens to you directly much the same way that it doesn't matter if a heart attack doesn't happen to you. You still pay for it. Saying that health care protects the patient from heart attacks because it will cover the costs of treatment and passes those costs on to everyone is no different than saying that our current system of fraud protection covers the costs of individualized fraud and passes those costs on to everyone. Both of which ignores the main idea about what protection should be about: prevention.

So, you are arguing that you best protect the consumer by creating a mechanism for the fraud to happen predominantly on an individual level?



Sure.

If you pay your bitcoin to someone perpetrating fraud, it's gone forever.  One of the benefits of bitcoin that you tout is that here's no way of tracing who has it, and it's anonymous so there's no way of knowing who you've paid.  Since transactions can never be reversed there's therefore no way to protect a consumer in a case of fraud.

Actually anonymity is not one of the benefits that I touted and it was not in the list I posted anywhere because bitcoin is not fully anonymous.

Because bitcoin does not require identification, this means that anyone with a phone and an internet connection can use the payment network. Capital can simply flow naturally through peer to peer means if needed similar to the way that cash flows into these regions.

?

I'm still confused by this part.  Could you explain this better to me?  Is bitcoin anyonymous like cash (and thus can be used by anyone with a phone and internet connection) . . . or is it not anonymous and easy to trace who has what bitcoins?
Title: Re: Is it too late [bitcoin]?
Post by: seattlecyclone on December 01, 2017, 09:09:17 AM
Sure.

If you pay your bitcoin to someone perpetrating fraud, it's gone forever.  One of the benefits of bitcoin that you tout is that here's no way of tracing who has it, and it's anonymous so there's no way of knowing who you've paid.  Since transactions can never be reversed there's therefore no way to protect a consumer in a case of fraud.

Actually anonymity is not one of the benefits that I touted and it was not in the list I posted anywhere because bitcoin is not fully anonymous.

Because bitcoin does not require identification, this means that anyone with a phone and an internet connection can use the payment network. Capital can simply flow naturally through peer to peer means if needed similar to the way that cash flows into these regions.

?

I would call bitcoin pseudonymous at best. Every transaction is recorded forever in the public record. Person names are not recorded in the blockchain, but it's possible to trace a Bitcoin from its initial mining through every transaction it's ever been through. If at any point that Bitcoin is involved in a transaction where personally identifying information is collected (such as if you order something to have shipped to you, or you convert to fiat currency on a major exchange that collects this information to comply with local banking laws), your name will become associated with that bitcoin at that point in time, at least in that merchant's database. One could imagine such records (even from legitimate transactions) being collected as part of a criminal investigation, working backwards and forwards along the blockchain to try and identify people involved in illegitimate transactions.

The only way to remain truly anonymous when using bitcoin is to avoid such transactions entirely. Always trade bitcoins for goods or services with people who are keeping no record of your name or address.

Needless to say, this pattern does not fit how most people behave in commerce.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 01, 2017, 09:12:30 AM
I'm still confused by this part.  Could you explain this better to me?  Is bitcoin anyonymous like cash (and thus can be used by anyone with a phone and internet connection) . . . or is it not anonymous and easy to trace who has what bitcoins?

Bitcoin does not require identification which therefore means it can't be discriminatory against who can use it and who can't use it. Much like anyone can pick up a dollar bill off the ground and spend it at the store. However, bitcoin is not fully anonymous which means that all transactions are tracked and therefore offers a trail behind for investigators to follow. It's as if every dollar bill's serial number was documented each time it exchanged hands on a publicly viewable ledger. There are methods by which law enforcement can use that information to follow the flow of money through the system. If at any point in time identification was leaked for any given transaction, the origin of that bitcoin can be traced through the entire blockchain. So yes, there is a difference between anonymity and the requiring of identification to be able to use bitcoin. They are not mutually bound features and bitcoin does not provide anonymity.

EDIT: seattlecyclone beat me to the answer...
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on December 01, 2017, 09:15:35 AM
Sure.

If you pay your bitcoin to someone perpetrating fraud, it's gone forever.  One of the benefits of bitcoin that you tout is that here's no way of tracing who has it, and it's anonymous so there's no way of knowing who you've paid.  Since transactions can never be reversed there's therefore no way to protect a consumer in a case of fraud.

Actually anonymity is not one of the benefits that I touted and it was not in the list I posted anywhere because bitcoin is not fully anonymous.

Because bitcoin does not require identification, this means that anyone with a phone and an internet connection can use the payment network. Capital can simply flow naturally through peer to peer means if needed similar to the way that cash flows into these regions.

?

I would call bitcoin pseudonymous at best. Every transaction is recorded forever in the public record. Person names are not recorded in the blockchain, but it's possible to trace a Bitcoin from its initial mining through every transaction it's ever been through. If at any point that Bitcoin is involved in a transaction where personally identifying information is collected (such as if you order something to have shipped to you, or you convert to fiat currency on a major exchange that collects this information to comply with local banking laws), your name will become associated with that bitcoin at that point in time, at least in that merchant's database. One could imagine such records (even from legitimate transactions) being collected as part of a criminal investigation, working backwards and forwards along the blockchain to try and identify people involved in illegitimate transactions.

The only way to remain truly anonymous when using bitcoin is to avoid such transactions entirely. Always trade bitcoins for goods or services with people who are keeping no record of your name or address.

Needless to say, this pattern does not fit how most people behave in commerce.

So, then although:
10) Can't be confiscated

is true, it should therefore be possible to set up a system to mark bitcoins as stolen / used in fraudulent transactions so that people are prevented from spending them again in the future?  This would enable a level of consumer protection.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 01, 2017, 09:18:10 AM
Bitcoin is the first cryptocurrency but bitcoin is not all of cryptocurrency. There is a clear distinction. Some of the arguments that apply to bitcoin do not apply to all of cryptocurrency (lack of fundamentals and returns; high electric sourcing vs lower power requirement; un-usability due to high fees, unreliable confirmation times, and replace-by-fee vulnerability; etc).

I do not care for bitcoin, however, cryptocurrency and blockchain is here and now, and will only grow increasingly in momentum, until it is deeply enmeshed with modern society. For reference, powerledger (I don't own any, nor am I advocating for it; just using as an example) is an indication of how consumers will be able to own highly liquid assets and trade them as utilities, such as energy, water, and other resources (selling electricity directly to other consumers in a decentralized manner through cryptocurrency).

There is alot of criticisms against the crypto space and much of it is valid (end user security, centralized fiat gateways, government intervention, etc). However, every system will have its inefficiencies. Credit cards allow chargebacks but crypto do not; for the consumer, this is great protection. On the flipside, this is a push-vs-pull mechanism, and there are processing costs, as well as far greater susceptibility to data-mining. For the provider of services, especially if they are on the other side of the world, they bear risk due to customer chargeback after they provide the service; for much of the world, the credit card system and banking services are inaccessible. There are very real use-cases for crypto, despite its inability to offer chargebacks to customers (which can possibly be offset in the future through blockchain smart contracts).

Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 01, 2017, 09:23:25 AM
So, you are arguing that you best protect the consumer by creating a mechanism for the fraud to happen predominantly on an individual level?

I'm simply saying we're better off with a system that prevents the largest brunt of the costs of fraud across the industry (fraudulent transactions and account takeovers) and be left to our own devices to avoid situations where we deal with shady merchants with poor return policies and avoid the will to send money over the phone to some Nigerian Price. If I go to a reputable merchant with decent return policies, I know I'll be able to return my good even without the threat of a chargeback.

If someone sends money over the phone to a Nigerian Price, then I shouldn't be forced to share the costs of that stupidity. That person should just chalk it up to one of life's lessons as harsh as that may sound. Fortunately (or unfortunately depending on your perspective), fraud like this pales in comparison to the fraud I mentioned that's the result of massive data breaches on a regular basis.
Title: Re: Is it too late [bitcoin]?
Post by: sherr on December 01, 2017, 09:35:00 AM
sherr and GuitarStv, what you're not understanding however is that even though the fraud costs of unauthorized transactions and account takeovers are "picked up" by merchants and banks, it is a systemic problem with massive costs and those costs are shared by everyone. You may think that you don't pay for it, but you do.

I do understand all that, that's what I said and what you took such issue with:

I already pointed that out. His answer (if I understood it correctly) was that the systemic gains of merchants / financial institutions not having to deal with chargebacks will end up being of greater value to the consumer than actual fraud protection.

I don't buy it personally though. Crypto transactions are irreversible. Which means there is no such thing as fraud protection for the consumer. That alone will prevent cryptocurrencies from ever replacing Visa.

I guess you didn't understand then, because that wasn't my point at all and I said nothing along those lines at all (where did you even get that from?).

And I still don't buy it. If consumer fraud protection becomes impossible then consumer fraud will skyrocket. I'd much rather exist in a system where fraud protections exist and we all have to live with a small transactional fee to support those protections than one where they don't exist. And it's not like bitcoin transactions are actually cheaper, they're not and only going to get more expensive.

So, then although:
10) Can't be confiscated

is true, it should therefore be possible to set up a system to mark bitcoins as stolen / used in fraudulent transactions so that people are prevented from spending them again in the future?  This would enable a level of consumer protection.

Yes, but it would only operate by consensus. Which is to say that it wouldn't operate at all.
Title: Re: Is it too late [bitcoin]?
Post by: Telecaster on December 01, 2017, 02:52:04 PM

Also, when would you ever considering using bitcoin? What would it take? Or do you just scream ponzi, scam, tulips until you die, regardless of how many people are using it?

I basically view all money as illusion.  I don't care if you call it bitcoin, dollars, or seashells.  But I run a business.  Here is when I would consider accepting or using bitcoin when 1) I can pay my taxes and payroll with it, which currently is prohibited by law, and 2) if the price was stable.  For business purposes, you simply can't have your money be as volatile as bitcoin.  Can't do it. 
Title: Re: Is it too late [bitcoin]?
Post by: Little Aussie Battler on December 01, 2017, 02:56:44 PM
Back to OP's question, it's never too late to take up gambling.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 01, 2017, 04:02:49 PM
https://www.reuters.com/article/us-global-markets-bitcoin/bitcoin-loses-over-a-fifth-of-its-value-in-less-than-24-hours-idUSKBN1DU1Z3 (https://www.reuters.com/article/us-global-markets-bitcoin/bitcoin-loses-over-a-fifth-of-its-value-in-less-than-24-hours-idUSKBN1DU1Z3)

IDK if this marks a characteristic fast turnover from the peak of the bubble, but I wouldn't be surprised.

Folks, if this is not your definition of bubble, you have no definition of bubble.

Man, I wish I could buy an options straddle on bitcoin. I'd be all in.
According to this article, you can!

https://www.investopedia.com/articles/investing/033115/it-possible-trade-bitcoin-options.asp

However, with implied volatility sometimes in the hundreds, that may damper your enthusiasm a little.

Maybe playing a straddle on CME Group might be a less nausea-inducing proxy for bitcoin.  Both CBOE and CME launch bitcoin futures contracts on 12/18. Maybe not exactly what you're looking for in a bitcoin straddle (they're going to make money regardless of bitcoin's direction), but you wouldn't even have to wait until the 18th to test-drive that, or some other more directional strategy.

Then again, if a hiccup in clearing bitcoin contracts drives CME into insolvency (as at least one person has warned), maybe a straddle would be an appropriate strategy anyway.  ;)

According to this article, you can trade options on futures contracts as well, but there's probably going to be that implied volatility gorilla there, too.  But you would get the juice from a straddle in both directions.

https://www.investopedia.com/articles/active-trading/052214/trading-options-futures-contracts.asp
Title: Re: Is it too late [bitcoin]?
Post by: ChpBstrd on December 03, 2017, 08:13:08 PM
https://www.reuters.com/article/us-global-markets-bitcoin/bitcoin-loses-over-a-fifth-of-its-value-in-less-than-24-hours-idUSKBN1DU1Z3 (https://www.reuters.com/article/us-global-markets-bitcoin/bitcoin-loses-over-a-fifth-of-its-value-in-less-than-24-hours-idUSKBN1DU1Z3)

IDK if this marks a characteristic fast turnover from the peak of the bubble, but I wouldn't be surprised.

Folks, if this is not your definition of bubble, you have no definition of bubble.

Man, I wish I could buy an options straddle on bitcoin. I'd be all in.
According to this article, you can!

https://www.investopedia.com/articles/investing/033115/it-possible-trade-bitcoin-options.asp

However, with implied volatility sometimes in the hundreds, that may damper your enthusiasm a little.

Maybe playing a straddle on CME Group might be a less nausea-inducing proxy for bitcoin.  Both CBOE and CME launch bitcoin futures contracts on 12/18. Maybe not exactly what you're looking for in a bitcoin straddle (they're going to make money regardless of bitcoin's direction), but you wouldn't even have to wait until the 18th to test-drive that, or some other more directional strategy.

Then again, if a hiccup in clearing bitcoin contracts drives CME into insolvency (as at least one person has warned), maybe a straddle would be an appropriate strategy anyway.  ;)

According to this article, you can trade options on futures contracts as well, but there's probably going to be that implied volatility gorilla there, too.  But you would get the juice from a straddle in both directions.

https://www.investopedia.com/articles/active-trading/052214/trading-options-futures-contracts.asp
Thanks for the tip / update, ILD. Unfortunately, the cryptocurrency options company mentioned in the article has some steep qualifications to set up an account. It's essentially limited to institutions.

https://ledgerx.com/trade-on-ledgerx/ (https://ledgerx.com/trade-on-ledgerx/)

The angry mob with torches, pitchforks, and suddenly-outraged-politicians came after financial industry participants who facilitated the dot com and housing bubbles. Perhaps there's some hesitation this time around because everyone in the financial industry knows cryptocurrencies are a bubble.
Title: Re: Is it too late [bitcoin]?
Post by: dougules on December 04, 2017, 10:58:47 AM

Also, when would you ever considering using bitcoin? What would it take? Or do you just scream ponzi, scam, tulips until you die, regardless of how many people are using it?

I basically view all money as illusion.  I don't care if you call it bitcoin, dollars, or seashells.  But I run a business.  Here is when I would consider accepting or using bitcoin when 1) I can pay my taxes and payroll with it, which currently is prohibited by law, and 2) if the price was stable.  For business purposes, you simply can't have your money be as volatile as bitcoin.  Can't do it.

Can you imagine a store labeling the prices on their shelves in bitcoin?

This is a good a good example of deflation.  A loaf of bread went from 3 millibits to 0.2 millibits in a year.  Now people are hoarding cash hoping goods will be cheaper in the future.  That's not a stable currency.   
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 04, 2017, 11:26:29 AM

I basically view all money as illusion.  I don't care if you call it bitcoin, dollars, or seashells.  But I run a business.  Here is when I would consider accepting or using bitcoin when 1) I can pay my taxes and payroll with it, which currently is prohibited by law, and 2) if the price was stable.  For business purposes, you simply can't have your money be as volatile as bitcoin.  Can't do it.

Can you imagine a store labeling the prices on their shelves in bitcoin?

This is a good a good example of deflation.  A loaf of bread went from 3 millibits to 0.2 millibits in a year.  Now people are hoarding cash hoping goods will be cheaper in the future.  That's not a stable currency.

Many businesses that deal with crypto handle volatility by automatically converting to usd through processors like coinbase; and issuing refunds in usd.

Deflation/inflation is subjective in a way. A stable currency precludes a fixed rate: 1 unit of something would always equal one loaf of bread. One of the ways I imagine a stable currency has greater chance to exist is if future automation replaces human labor of food production; and a hybrid system (decentralized crypto algorithm and distribution with centralized governance) issues crypto that suffice to cover daily needs. 1 unit could always be pegged to a loaf of bread or bowl of soup, which is administered through automation.

Title: Re: Is it too late [bitcoin]?
Post by: JAYSLOL on December 04, 2017, 12:12:54 PM

Also, when would you ever considering using bitcoin? What would it take? Or do you just scream ponzi, scam, tulips until you die, regardless of how many people are using it?

I basically view all money as illusion.  I don't care if you call it bitcoin, dollars, or seashells.  But I run a business.  Here is when I would consider accepting or using bitcoin when 1) I can pay my taxes and payroll with it, which currently is prohibited by law, and 2) if the price was stable.  For business purposes, you simply can't have your money be as volatile as bitcoin.  Can't do it.

Can you imagine a store labeling the prices on their shelves in bitcoin?

This is a good a good example of deflation.  A loaf of bread went from 3 millibits to 0.2 millibits in a year.  Now people are hoarding cash hoping goods will be cheaper in the future.  That's not a stable currency.

This is my issue with Bitcoin too
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 04, 2017, 12:24:05 PM
Can you imagine a store labeling the prices on their shelves in bitcoin?

This is a good a good example of deflation.  A loaf of bread went from 3 millibits to 0.2 millibits in a year.  Now people are hoarding cash hoping goods will be cheaper in the future.  That's not a stable currency.

There are a couple of misunderstandings in this post that I'd like to point out.

The first being that Bitcoin at the moment is not deflationary. It is inflationary and at the moment it is experiencing inflation at about 4%. The only reason why its price is going up is because demand in outpacing the rate of that inflation dramatically.

The point at which we'd see prices of goods displayed in bitcoin wouldn't happen until critical mass adoption has taken place for an extended period of time and a large portion of our economy is taking place in bitcoin. At that point demand will have likely stabilized which would mean that the volatility of its price would've dramatically decreased as well.

At that point bitcoin will likely be deflationary in nature due to the much lower rate of inflation (mined bitcoins) and the rate at which bitcoins are permanently lost. This will lead to a stable slowly growing value over time.

There are some misconceptions I feel about deflationary currencies that lead people to think that hording will take place with the currency and result in a massive decrease in consumer spending. However, real world economics has shown us that this is not the case. For example, today people line up outside doors on release day to purchase the new iPhone even though they'd be able to purchase that same phone for half the price one or two years later. While this is not currency economics at play, it is psychological economics that would lead a person to make the decision of whether to hold off a purchase knowing their buying power will be higher (2x) in a year or two for the same product. Also, people have basic needs that need to be met such as food, shelter, and clothing that most certainly would not be put off simply because of the deflationary aspect of the currency being used. If a person earns a salary in a deflationary currency, part of their weekly earnings will always go towards those basic needs before any deflationary effects of the currency are even felt. In other words, consumerism is a much more powerful economic force than deflation is.

What deflation does do is help protect worker wages over time as opposed to our current inflationary system that erodes wages over time. Wages are typically sticky which means that they don't adjust as easily to changes in the economic environment. So if worker wages are inherently tied to a deflationary currency, this will help protect the buying power of the working class regardless of whether or not working class citizens are receiving wage increases that meet the rate of inflation over time (and thus promote a more stable economy).

The idea that hording would take place of the currency under conditions where deflation is at or below 4% I believe to be false though. Today's massive price growth for bitcoin is not due to deflation though. If we reach a point where prices of goods are displayed in bitcoin and salaries are earned in bitcoin, then it will likely be the case that mass adoption has taken place in which case the price volatility will have decreased dramatically due to a stabilized demand. At that point the deflationary effect of bitcoin would simply be due to the rate at which bitcoins are lost and permanently removed from the market supply. In the meantime, as shadow said, volatility can be taken out of the equation for good purchases by continuing to peg the price of goods in a more stable currency such as the USD.

Let's not forget, currencies are not a zero-sum game. Bitcoin can become widely adopted and be an integral part of our world economy while perfectly co-existing with fiat currencies. This is a much more likely scenario contrary to what some on both sides of the virtual coin you're on would claim.
Title: Re: Is it too late [bitcoin]?
Post by: zoltani on December 04, 2017, 01:49:38 PM
I see random people on facebook with no investing experience posting about bitcoin and how to buy "stock" in cryptos. Is this the modern day equivalent of the shoe shine boy?

Title: Re: Is it too late [bitcoin]?
Post by: frozen on December 05, 2017, 09:21:04 AM
If I were to invest in bitcoin this late in the game, what is your advice?
How would someone who is just learning about Bitcoin and other crypto currencies invest for the first time?
Are Bitcoin futures offered via CME group available to individual investors?
Title: Re: Is it too late [bitcoin]?
Post by: Cwadda on December 05, 2017, 10:01:32 AM
Quote
I see random people on facebook with no investing experience posting about bitcoin and how to buy "stock" in cryptos. Is this the modern day equivalent of the shoe shine boy?
Yes, it's awful. 

They also post about it being a passive investment opportunity, which is even worse.
Title: Re: Is it too late [bitcoin]?
Post by: Cwadda on December 05, 2017, 10:03:01 AM
Quote
If I were to invest in bitcoin this late in the game, what is your advice?
Don't.  You won't see people around these forums advocating for it. The point of MMM is to get rich slow.

Quote
How would someone who is just learning about Bitcoin and other crypto currencies invest for the first time?
There is a documentary on Netflix about it. I haven't seen it but have been meaning to.  It got good reviews.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 05, 2017, 11:03:34 AM
Keep in mind a future is a leveraged bet on the underlying asset.  Leverage increases volatility.  Cryptos are volatile enough as it is.  I don't comprehend why anyone would want to make a leveraged bet on them to increase volatility.

The CME group proposal as best as I can understand it is half-baked since it does not address which bitcoin, bitcoin future contracts are to be settled against if there is an intervening hard fork between when the futures contract is written and when it settles.  This oversight is ripe for manipulation.

What makes you think that volatility will increase when futures markets open up? It is widely expected to decrease volatility.

Leverage works both ways and in CME's futures market, every long position must be matched with a corresponding short position.

Also, CME's futures market will have volatility limits imposed like some of their other markets have in place to limit or halt trading if there are price fluctuations beyond specific thresholds (https://www.investopedia.com/news/could-bitcoin-futures-help-limit-volatility/ (https://www.investopedia.com/news/could-bitcoin-futures-help-limit-volatility/)).

Right now in the bitcoin market, there is no reciprocal pressure on the market when panic selling ensues because there aren't many options out there for shorting your position. This means that investors are completely exposed to volatility which is why panic selling takes place. These futures markets will give investors opportunities to limit their risk in the market and thus this will have an effect on the underlying market.

Also, I don't think CME is making an oversight in regards to hard forks. They state on their website that there will be a policy in place for viable hard forks should one be planned. Also, their reference rate is based on several large exchanges and therefore their pricing in their futures market is directly dependent on how the market itself reacts to the hardfork. I don't think there will be much of a conflict in existing futures contracts in the event of a hardfork.
Title: Re: Is it too late [bitcoin]?
Post by: talltexan on December 05, 2017, 12:29:06 PM
Can you imagine a store labeling the prices on their shelves in bitcoin?

This is a good a good example of deflation.  A loaf of bread went from 3 millibits to 0.2 millibits in a year.  Now people are hoarding cash hoping goods will be cheaper in the future.  That's not a stable currency.

There are a couple of misunderstandings in this post that I'd like to point out.

The first being that Bitcoin at the moment is not deflationary. It is inflationary and at the moment it is experiencing inflation at about 4%. The only reason why its price is going up is because demand in outpacing the rate of that inflation dramatically.



Can you provide more details about how you calculated this 4% figure? Jargon is fine, I have a graduate degree in economics.
Title: Re: Is it too late [bitcoin]?
Post by: jorjor on December 05, 2017, 12:56:24 PM
Can you imagine a store labeling the prices on their shelves in bitcoin?

This is a good a good example of deflation.  A loaf of bread went from 3 millibits to 0.2 millibits in a year.  Now people are hoarding cash hoping goods will be cheaper in the future.  That's not a stable currency.

There are a couple of misunderstandings in this post that I'd like to point out.

The first being that Bitcoin at the moment is not deflationary. It is inflationary and at the moment it is experiencing inflation at about 4%. The only reason why its price is going up is because demand in outpacing the rate of that inflation dramatically.



Can you provide more details about how you calculated this 4% figure? Jargon is fine, I have a graduate degree in economics.

He's just saying that at the current rate at which Bitcoins are mined, the total supply will increase about 4% this year. There were 16.4 million BTC in mid-2017. The reward rate is 12.5 BTC per block. At a block rate of around 10 minutes per block, that adds 650000ish BTC per year, or around 17.06 million in mid-2018, for an increase of about 4%.

That doesn't count the lost Bitcoins that are out of circulation which would leverage the trend rate. For example, if enough were lost forever such that there are really only 12 million in circulation in mid-2017, adding 650,000 BTC would give you an increase in the trend rate of about 5.5%. BTC are still being lost today, but I'd guess it's at a lower rate now that they are worth more and the stakes are higher.

That rate trends down to 0% over time.

ETA: I edited to add the calculations while lifeanon was posting essentially the same thing just below this.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 05, 2017, 01:00:21 PM
Can you provide more details about how you calculated this 4% figure? Jargon is fine, I have a graduate degree in economics.

Currently, every block mined rewards 12.5 new bitcoins. The network is designed to mine one block every 10 minutes on average. This means that each hour will introduce 75 new bitcoin to circulation. There is currently a total of about 16.7 million bitcoin that have been mined to date. This means that annually at a rate of 12.5 new bitcoin every 10 minutes, there will be about 657,000 new bitcoins added (until the next halving in ~2020). So the annual inflation rate is around 4%...

657,000/16,700,000 = 3.93%

https://charts.bitcoin.com/chart/inflation (https://charts.bitcoin.com/chart/inflation)
https://www.reddit.com/r/Bitcoin/comments/1s3buc/chart_of_bitcoin_inherent_inflation_rate_til_it/?st=jau1dgkw&sh=c08ff143 (https://www.reddit.com/r/Bitcoin/comments/1s3buc/chart_of_bitcoin_inherent_inflation_rate_til_it/?st=jau1dgkw&sh=c08ff143)
Title: Re: Is it too late [bitcoin]?
Post by: talltexan on December 05, 2017, 01:08:16 PM
Thank you for that clarification. The change in money supply by itself is not enough to compare to an "inflation" rate, because the later includes a measure of the price of real goods and services that are produced using that currency. Comparing that 4% figure to any mainstream measure of inflation in the US economy would not be correct.

For Bitcoin, the set of goods/services are very different than for the average household using the US Dollar, they would skew more towards web/computer related items, and, yes, some "gray market" transactions. I have never heard of a rent or housing transaction being done in bitcoin, although I am sure there are several like this by now. The definition you give for reaching that 4% figure would be more akin to the growth of a measure of money supply, such as M1, which is the amount of currency in circulation, as well as liquid deposits in checking accounts.

According to data from the FRB of St. Louis, this measure increased by about 7.5% over the twelve months ending in October 2017.https://fred.stlouisfed.org/series/M1SL (https://fred.stlouisfed.org/series/M1SL) Indeed this would suggest that during those twleve months, the money supply for the US economy increased faster than did that for the "Bitcoin Economy."
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 05, 2017, 01:30:13 PM
Don't.  You won't see people around these forums advocating for it. The point of MMM is to get rich slow.

The traits that I relate to are frugality, minimalism, and stoicism. It's irrelevant to me to take into consideration that acquiring wealth should have a time restriction.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 05, 2017, 01:49:06 PM
Thank you for that clarification. The change in money supply by itself is not enough to compare to an "inflation" rate, because the later includes a measure of the price of real goods and services that are produced using that currency. Comparing that 4% figure to any mainstream measure of inflation in the US economy would not be correct.

For Bitcoin, the set of goods/services are very different than for the average household using the US Dollar, they would skew more towards web/computer related items, and, yes, some "gray market" transactions. I have never heard of a rent or housing transaction being done in bitcoin, although I am sure there are several like this by now. The definition you give for reaching that 4% figure would be more akin to the growth of a measure of money supply, such as M1, which is the amount of currency in circulation, as well as liquid deposits in checking accounts.

According to data from the FRB of St. Louis, this measure increased by about 7.5% over the twelve months ending in October 2017.https://fred.stlouisfed.org/series/M1SL (https://fred.stlouisfed.org/series/M1SL) Indeed this would suggest that during those twleve months, the money supply for the US economy increased faster than did that for the "Bitcoin Economy."

I wasn't making any comparison to anything else. I was merely discussion bitcoin's inflation rate in regards to the currency itself. I wasn't discussing anything with regards to something like the consumer price index (CPI) which is what I think you're alluding to which takes into account the price of goods and wages, etc.

Since bitcoin is a negligible part of our economy, it has a negligible impact on the CPI and therefore it isn't measurable at this point. If bitcoin were to ever become a major part of our economy, it will absolutely be deflationary in nature due to the amount of bitcoin being lost compared to the amount in circulation. By the time that were to occur, the number of newly mined bitcoin will be extremely small. However, by that time, its volatility would also be very low due to the relatively static nature of the supply and demand for it it.
Title: Re: Is it too late [bitcoin]?
Post by: BattlaP on December 05, 2017, 02:03:50 PM
Please provide examples of the real-world, practical applications of deflationary currencies which support the claims that they are so great compared to inflationary ones.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 05, 2017, 02:25:07 PM
Please provide examples of the real-world, practical applications of deflationary currencies which support the claims that they are so great compared to inflationary ones.

Well there really isn't any real world example of inherently deflationary or inflationary currencies themselves. So it really comes down to looking historically to see how the economy (low unemployment, economic growth, etc) has performed during periods of deflation and inflation.

Several federal reserve economists did just that and looked historically at economic performance during periods of inflation and deflation. They found a much higher correlation between inflation and depressions and that there were many more periods of growth during periods of deflation than there were periods of depression.

https://www.minneapolisfed.org/research/sr/sr331.pdf (https://www.minneapolisfed.org/research/sr/sr331.pdf)

"... the only episode in which we find evidence of a link between deflation and depression is the Great Depression (1929-34). We find virtually no evidence of such a link in any other period. ... What is striking is that nearly 90% of the episodes with deflation did not have depression. In a broad historical context, beyond the Great Depression, the notion that deflation and depression are linked virtually disappears."

https://mises.org/library/deflating-deflation-myth (https://mises.org/library/deflating-deflation-myth)
Title: Re: Is it too late [bitcoin]?
Post by: talltexan on December 05, 2017, 02:32:13 PM
That's because the long period of deflation that occurred during the late industrial revolution (think 1865-1913) came with extraordinary productivity growth. The productivity growth caused both the deflation and the prosperity.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 05, 2017, 02:41:53 PM
That's because the long period of deflation that occurred during the late industrial revolution (think 1865-1913) came with extraordinary productivity growth. The productivity growth caused both the deflation and the prosperity.
That's a light bulb moment for me.  I think it would be hard to argue that the productivity and prosperity growth over the last two or three decades wasn't similarly extraordinary.

As I follow the summaries of the fed meetings, it seems they are quite perplexed at why inflation is so persistently resistant to ignite; struggling to hit their target.

Perhaps a valid argument to be ever-vigilant in trying to combat deflation?
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 05, 2017, 02:46:00 PM
That's because the long period of deflation that occurred during the late industrial revolution (think 1865-1913) came with extraordinary productivity growth. The productivity growth caused both the deflation and the prosperity.

Are you suggesting that there has been no growth in productivity since post-WWII where there has also been no notable deflationary periods? Has our economy changed so drastically that these periods cannot be compared?

"Note that most of the episodes in the data set that have deflation and no depression occurred
under a gold standard; does that somehow make them irrelevant for shedding light on deflations
under a fiat system? No. If we interpret such standards as a rule with some commitment, as many
(like Bordo and Finn Kydland 1995) do, then these episodes seem at least as relevant for thinking
about the effects of following a Friedman rule as are the episodes in the post-WWII data, when
policy was more discretionary. And if we think that the world economy has changed so much since
WWII that all the data before it sheds no light on what might happen in an economy today, then
there is not much to discuss, since in the post-WWII period, there are no episodes of deflation.
Moreover, as has been commonly noted, inflation is actually negatively related to output growth in
the post-WWII data.

A more compelling objection is that the data from periods of world wars are just not relevant
for other periods. We thus investigate the data excluding all war-related episodes. We find that war
does seem to play a role in generating depression. Of the 21 depression episodes without deflation,
10 were related to a world war: 4 during WWI, 3 during WWII, and 3 right after WWII. (We
view Japan’s dismal growth in 1949—54 as war-related.) But that does not change our result about
deflation and depression. Based on all of the data outside of the Great Depression, a regression
of output growth on inflation has a slope coefficient of .04 (.03). Excluding all the data from
the war-related episodes (1914—19, 1939—44, 1944—49) and the 1949—54 episode for Japan gives a
slope coefficient of .10 (.03). These data thus show little or no relationship between deflation and
depression. This finding is consistent with that of Michael Bordo, John Landon-Lane, and Angela
Redish (2002)."
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 05, 2017, 02:47:12 PM
Actually it looks like productivity per unit of labor growth is actually declining significantly in the last couple of decades.

(https://cdn.static-economist.com/sites/default/files/images/2012/09/blogs/free-exchange/us_total_factor_business_productivity.png)
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 05, 2017, 02:48:48 PM
That's because the long period of deflation that occurred during the late industrial revolution (think 1865-1913) came with extraordinary productivity growth. The productivity growth caused both the deflation and the prosperity.

Are you suggesting that there has been no growth in productivity since post-WWII where there has also been no notable deflationary periods? Has our economy changed so drastically that these periods cannot be compared?

Yes actually. We went from a gold backed currency which meant an essentially fixed supply of currency prior to the great depression, to a non-backed currency which let central banks increase or decrease the money supply after world war II.

With a fixed money supply, changes in the size of the economy (and the velocity of money) are the main drivers of inflation/deflation. Once the size of the money supply can change it has big impacts on inflations/deflation which I'm guessing tend to swamp out the effects of changes in money velocity or the size of the economy (although maybe talltexan can comment on this point since I don't have any actual economics training).
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 05, 2017, 03:23:33 PM
Actually it looks like productivity per unit of labor growth is actually declining significantly in the last couple of decades.

Don't mistake a decreasing rate of productivity growth for negative productivity growth.

Yes actually. We went from a gold backed currency which meant an essentially fixed supply of currency prior to the great depression, to a non-backed currency which let central banks increase or decrease the money supply after world war II.

That was kind of the point I was making.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 05, 2017, 03:55:31 PM
Actually it looks like productivity per unit of labor growth is actually declining significantly in the last couple of decades.

Don't mistake a decreasing rate of productivity growth for negative productivity growth.

Of course. If anything what we're seeing is a reverse to more "normal" levels of productivity growth. I was making the point that the last couple of decades haven't been anything extraordinary in terms of productivity growth. (ILikeDividends was saying that the last several decades were extraordinary.)

Quote
Yes actually. We went from a gold backed currency which meant an essentially fixed supply of currency prior to the great depression, to a non-backed currency which let central banks increase or decrease the money supply after world war II.

That was kind of the point I was making.

Wait so you agree it's not informative to compare the relationship between monetary policy and economic growth between pre-greater depression and post-greater depression datasets? If so, yes we're in agreement. But then what was the original point you were making with the link to the minneapolis fed study? (Which does makes comparisons combining those two datasets).
Title: Re: Is it too late [bitcoin]?
Post by: waltworks on December 05, 2017, 04:06:05 PM
Comparing a ~90% agrarian economy with a ~1% agrarian one probably doesn't make much sense.

-W
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 05, 2017, 04:12:37 PM
Wait so you agree it's not informative to compare the relationship between monetary policy and economic growth between pre-greater depression and post-greater depression datasets? If so, yes we're in agreement. But then what was the original point you were making with the link to the minneapolis fed study? (Which does makes comparisons combining those two datasets).

The original question (as posed by BattlaP) was to provide examples of deflationary currencies (of which a gold-backed USD would apply) which support the idea that economic growth and stability can occur when compared to a currency that is inflated in response to the economy. This historical review does just that. It should also be noted that during the gold standard, the supply of the US dollar was not fixed, it was merely tied to the supply of gold.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 05, 2017, 04:15:45 PM
Actually it looks like productivity per unit of labor growth is actually declining significantly in the last couple of decades.

Don't mistake a decreasing rate of productivity growth for negative productivity growth.

Of course. If anything what we're seeing is a reverse to more "normal" levels of productivity growth. I was making the point that the last couple of decades haven't been anything extraordinary in terms of productivity growth. (ILikeDividends was saying that the last several decades were extraordinary.)

I stand corrected.  So, to the point of my question, if I extend the time-frame of productivity growth back to 1947, roughly equivalent to talltexan's timeframe, would you then consider that productivity growth sufficiently extraordinary, as compared to talltexan's reference?

In other words, is a deflationary spiral, à la the Great Depression, a likely risk for the same reasons? Or is that specific scenario now mitigated by the transition from gold to a fiat currency?

And for extra credit, any thoughts about why the fed has been so apparently ineffective at nudging inflation up?  Perhaps the answer is that we are in unprecedented times with no historical guide, until we normalize again and reverse all or most of the QE that was done since 2008?

I recall then chairman Bernanke promising, on TV, that QE would not result in inflation.  It appears he was correct.  Could it be that we are now stuck in an alternate economic universe, unable to inflate meaningfully, until that QE is unwound?

I can barely wrap my head around these questions. If QE defrosted the locked up credit markets, it seems quite reasonable to suggest that reversing QE would have the opposite effect.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 05, 2017, 04:37:33 PM
Oh absolutely. The 1950s and 1960s were a time of extraordinary economic growth in the USA. But because the money supply wasn't tied to the amount of gold sitting in bank vaults, the currency supply could be expanded with the economy, so you didn't see deflation as the size of the economy (and hence the total number of transactions that had to happen every day) increased.

If you trust the fed to behave intelligently, then yes, the risk of a deflationary spiral like what we saw in the great depression is much lower when the size of the money supply is arbitrary (fiat) rather than approximately fixed (gold backed).

Now the counter argument, which is also valid, is that the risk of an inflationary spiral is much greater when the size of the money supply is arbitrary rather than approximately fixed.

Edit about the extra credit question: I think the problem is that we're living in a time where there is a surplus of capital looking for high return (but safe) investments and a shortage of good investments (which gets back to that decrease in productivity growth). You see this in how much cash most major companies are holding on to today, and also how much funding is available to startups like Uber and AirBnB which might ultimately make loads of money, but might also go bankrupt, but are already valued in the double digit billions.

If there's no good place to invest money to earn a strong return, giving more money to the rich (the people who were holding the assets which were purchased by the Fed as part of QE) doesn't simulate inflation because they don't invest the money, they sit on it. So the money supply goes up, but the velocity of money goes down, and prices stay the same.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 05, 2017, 04:48:16 PM
Oh absolutely. The 1950s and 1960s were a time of extraordinary economic growth in the USA.
I think that economic growth in the USA (as opposed to productivity growth) for that period was unique, and very materially influenced by the devastation of much of the world's manufacturing and labor capacity resulting from WWII.  The US went largely unscathed in both regards.

If I recall correctly, the US "only" lost about a quarter million men in WWII.  Yes, that's a huge and tragic number, but nothing compared to all of WWII's casualties around the world. The majority of the US service men and women came back to join a still intact economy.

Also resulting from WWII, the job opportunities for women broadened way out to include just about any job a man could do; increasing the effective size of the labor pool.

Those factors left the USA with a competitive advantage that would take a few decades for the rest of the world to catch up to.
Title: Re: Is it too late [bitcoin]?
Post by: waltworks on December 05, 2017, 04:53:47 PM
To follow up on Maizeman's point, though - you can have a money supply that is fixed but slowly increasing (current US dollars, or gold, for example), fixed but slowly decreasing (Bitcoin will eventually act this way), or anything else.

In other words, you can not trust politicians to do the right thing with the money supply, but that's a separate question from whether or not inflation/deflation are good or bad. My personal feeling is that bitcoin's design probably dooms it as a currency because of the deflation problem, but it might be able to be a sort of virtual gold (setting aside for now the other issue, which is that bitcoin is just being bought/hoarded, not actually used much).

-W
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 05, 2017, 04:58:21 PM
That's certainly true, but don't discount the effects of near universal electrification, which was largely completed in the 1940s. After the war it was suddenly possible to design and build and sell all sorts of new labor saving machines from refrigerators to vacuum cleaners to electric typewriters and have them be usable basically anywhere in the USA. At the same time the interstate highway system was vastly lowering barriers to commerce, and a half dozen other major step changes in the technology and infrastructure that powered our economy kicked in around the same time.

I tend to put more weight on these factors and less on the reduced destruction of WWII in the USA relative to the rest of the world, because you see the same dramatic economic growth in places like China when the same technological and infrastructure factors kick in (for them in the '90s and '00s), but *shrug.*
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 05, 2017, 05:01:55 PM
That's certainly true, but don't discount the effects of near universal electrification, which was largely completed in the 1940s. After the war it was suddenly possible to design and build and sell all sorts of new labor saving machines from refrigerators to vacuum cleaners to electric typewriters and have them be usable basically anywhere in the USA. At the same time the interstate highway system was vastly lowering barriers to commerce, and a half dozen other major step changes in the technology and infrastructure that powered our economy kicked in around the same time.

I tend to put more weight on these factors and less on the reduced destruction of WWII in the USA relative to the rest of the world, because you see the same dramatic economic growth in places like China when the same technological and infrastructure factors kick in (for them in the '90s and '00s), but *shrug.*
All valid points.  It's been a pleasure exchanging thoughts with you. Apologies to everyone else for the off-topic digression.

Edit to add: I've bold-texted a very synergistic point in your post with some of the positive effects of WWII.  Many of those innovations you mentioned freed up women to pursue careers, other than "housewife," which arguably wouldn't have been open to them were it not for WWII pulling them into male-dominated occupations, e.g., building war planes, producing munitions, tanks, etc.

Not intended as an argument, just to emphasize that WWII, as well as all of your other points, had self reinforcing synergistic effects that boosted economic growth during that specific period, and beyond.

That specific result had a permanent effect.  But it first exerted its influence on economic growth in the USA during the immediate decades following the war.  The devastation around the rest of the world provided the customer base needed to absorb those women into the American workforce beyond the need to replace the male casualties of the war, without the social disruption that might have occurred if they had simply competed to displace their male counterparts in the workforce.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 05, 2017, 05:08:27 PM
To follow up on Maizeman's point, though - you can have a money supply that is fixed but slowly increasing (current US dollars, or gold, for example), fixed but slowly decreasing (Bitcoin will eventually act this way), or anything else.

In other words, you can not trust politicians to do the right thing with the money supply, but that's a separate question from whether or not inflation/deflation are good or bad. My personal feeling is that bitcoin's design probably dooms it as a currency because of the deflation problem, but it might be able to be a sort of virtual gold (setting aside for now the other issue, which is that bitcoin is just being bought/hoarded, not actually used much).

-W

This gets back to the debate we've had a couple of times about which is the most important characteristic of a currency: facilitating transactions, acting as a store of value, or acting as a unit of account (salary contracts or mortgages denominated in bitcoin would be really REALLY bad ideas). So while I don't agree with you that bitcoin's design dooms it as a currency, I agree with most of the rest of your post, and the part I disagree with says more about how we each define what it means to be a currency than about differences in our predictions for the future of bitcoin.

It's worth mentioning that bitcoin's design with a fixed maximum number of coins ever produced isn't universal among cryptocurrencies. For example, ethereum's roadmap calls for a fixed number of new currency units to be added to the money supply every year in perpetuity. However, this still represents a smaller percent of the total money supply each year, so the growth of the supply of ether will approach, but never reach 0%/year.

I don't know that there is any reason you couldn't design a cryptocurrency which did have a fixed annual percent growth in the money supply each year (which could check of the box of a "money supply that is fixed but slowly increasing") and for all I know there is already an altcoin out there which does just that.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 05, 2017, 05:14:45 PM
It isn't out of the question for the Fed to introduce its own cryptocurrency that has all the characteristics needed for both utility and regulation. The Fed is not the only central bank kicking this idea around, but that's not likely coming any time soon.

Federal Reserve May Introduce A Cryptocurrency In The Future
https://www.investopedia.com/news/federal-reserve-may-introduce-cryptocurrency-future/

It would be interesting to see what effect, if any, such a move would have on the speculative bubble in bitcoin.  Assuming that bubble doesn't pop before then, that as.

Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 05, 2017, 05:26:02 PM
In other words, you can not trust politicians to do the right thing with the money supply, but that's a separate question from whether or not inflation/deflation are good or bad. My personal feeling is that bitcoin's design probably dooms it as a currency because of the deflation problem, but it might be able to be a sort of virtual gold (setting aside for now the other issue, which is that bitcoin is just being bought/hoarded, not actually used much).

Isn't that somewhat of a paradoxical proposition though? If bitcoin's adoption rate were ever to reach a point where its deflationary monetary policy would have a noticable impact on the economy (for better or for worse), then wouldn't that mean that bitcoin had succeeded in becoming adopted as a currency which would invalidate your claim that bitcoin was doomed to succeed?

In my opinion there are a lot more reasons why bitcoin could possibly fail and its deflationary monetary policy isn't one of them. In fact, I think its monetary policy is one of its biggest reasons why people are adopting at this point at all. Given the fact that most people have lived under the influences of inflationary economic cycles, I think there is a longing among many to inject a deflationary monetary policy into our world economy.

I think the main point that I was trying to convey was that economies are extremely complex and there are an immense number of factors at play that lead to deflationary or inflationary economic cycles. I don't think anyone can make a claim that a deflationary currency (like bitcoin) will lead to the deflationary spiral that many purport considering we historically haven't really seen that to be the case.

Bitcoin's monetary policy is just one monetary policy in a sea of crypto-currencies all of which have varying degrees of inflationary and deflationary policies. We don't know if long term its monetary policy will be best for whatever economic conditions that arrive at our doorsteps. The idea behind a decentralized currency such as that isn't to lock us into a monetary policy forever, but to allow the greater economic community decide that policy for itself with a transparency that is unparalleled in comparison to fiat currencies today.
Title: Re: Is it too late [bitcoin]?
Post by: talltexan on December 06, 2017, 07:23:47 AM
This discussion really took off without me...you guys are doing a great job thinking through the issues. Some important books on the topic:

Capital in the Twenty-First Century by Thomas Picketty (early on this book discusses the importance of the Gold Standard in holding down inflation in Europe and US during the 1800's).

The Rise and Fall of American Growth by Robert J. Gordon (you can watch his Ted Talk here: https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwivoqXIyvXXAhUq0oMKHauUAl4QtwIIJzAA&url=https%3A%2F%2Fwww.ted.com%2Ftalks%2Frobert_gordon_the_death_of_innovation_the_end_of_growth&usg=AOvVaw0C8-meuYA4-z1aQJPHcHMu (https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwivoqXIyvXXAhUq0oMKHauUAl4QtwIIJzAA&url=https%3A%2F%2Fwww.ted.com%2Ftalks%2Frobert_gordon_the_death_of_innovation_the_end_of_growth&usg=AOvVaw0C8-meuYA4-z1aQJPHcHMu)

A Culture of Growth by Joel Mokyr. (he usually takes the opposing side to Dr. Gordon, insisting that dynamic growth in today's economy is still possible)



Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 06, 2017, 08:18:29 AM
That's certainly true, but don't discount the effects of near universal electrification, which was largely completed in the 1940s. After the war it was suddenly possible to design and build and sell all sorts of new labor saving machines from refrigerators to vacuum cleaners to electric typewriters and have them be usable basically anywhere in the USA. At the same time the interstate highway system was vastly lowering barriers to commerce, and a half dozen other major step changes in the technology and infrastructure that powered our economy kicked in around the same time.

I tend to put more weight on these factors and less on the reduced destruction of WWII in the USA relative to the rest of the world, because you see the same dramatic economic growth in places like China when the same technological and infrastructure factors kick in (for them in the '90s and '00s), but *shrug.*
All valid points.  It's been a pleasure exchanging thoughts with you. Apologies to everyone else for the off-topic digression.

Edit to add: I've bold-texted a very synergistic point in your post with some of the positive effects of WWII.  Many of those innovations you mentioned freed up women to pursue careers, other than "housewife," which arguably wouldn't have been open to them were it not for WWII pulling them into male-dominated occupations, e.g., building war planes, producing munitions, tanks, etc.

Not intended as an argument, just to emphasize that WWII, as well as all of your other points, had self reinforcing synergistic effects that boosted economic growth during that specific period, and beyond.

That specific result had a permanent effect.  But it first exerted its influence on economic growth in the USA during the immediate decades following the war.  The devastation around the rest of the world provided the customer base needed to absorb those women into the American workforce beyond the need to replace the male casualties of the war, without the social disruption that might have occurred if they had simply competed to displace their male counterparts in the workforce.

Wow, I missed your edit, just spotted it when talltexan bumped the thread. (With my apologies as well for going so far off topic.)

It certainly hadn't occurred to me how the lack of devastation in the USA relative to the rest of the industrialized world could have played into the USA being able to absorb large numbers of women into the (paid) labor force without significant economic disruption (since all that extra labor could be put to work building things for export around the world). But now that you bring it up it certainly seems plausible that this did play a significant role. And because every discussion of labor force participation needs a good graph showing changes in the participation rates for men and women from post-world war II to today: https://aneconomicsense.files.wordpress.com/2016/10/labor-force-participation-rate-ages-25-to-54-all-male-female-jan-1948-to-sept-2016.png (Long story short, the participation of working age women in the paid labor force grew from 35% to 75% in the four decades following world war II, that's a really big change.)
Title: Re: Is it too late [bitcoin]?
Post by: JAYSLOL on December 06, 2017, 08:43:02 AM
I see random people on facebook with no investing experience posting about bitcoin and how to buy "stock" in cryptos. Is this the modern day equivalent of the shoe shine boy?

Yes, just the other day I saw a post on Facebook by a guy I know from high school who has no computer science, financial or investment experience post about how it's not too late to get rich with Bitcoin. 
Title: Re: Is it too late [bitcoin]?
Post by: 2Birds1Stone on December 06, 2017, 08:45:42 AM
This is your last chance to get in under $10k, it's going to $100k in the next 12 months at this pace.
(https://imgs.xkcd.com/comics/extrapolating.png)

+30% since my post ;)
Title: Re: Is it too late [bitcoin]?
Post by: ketchup on December 06, 2017, 09:03:39 AM
This is your last chance to get in under $10k, it's going to $100k in the next 12 months at this pace.
(https://imgs.xkcd.com/comics/extrapolating.png)

+30% since my post ;)
Fair enough.  I realized some mining gains and sold some yesterday morning at the then-all-time-high ($11,600), but kept some of my BTC for fun. :)  It'll be worth a pretty penny in a few years if John McAfee still has a penis.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 06, 2017, 09:11:54 AM
Wow, I missed your edit, just spotted it when talltexan bumped the thread. (With my apologies as well for going so far off topic.)

It certainly hadn't occurred to me how the lack of devastation in the USA relative to the rest of the industrialized world could have played into the USA being able to absorb large numbers of women into the (paid) labor force without significant economic disruption (since all that extra labor could be put to work building things for export around the world). But now that you bring it up it certainly seems plausible that this did play a significant role. And because every discussion of labor force participation needs a good graph showing changes in the participation rates for men and women from post-world war II to today: https://aneconomicsense.files.wordpress.com/2016/10/labor-force-participation-rate-ages-25-to-54-all-male-female-jan-1948-to-sept-2016.png (Long story short, the participation of working age women in the paid labor force grew from 35% to 75% in the four decades following world war II, that's a really big change.)

FWIW, I also heard other narratives surrounding the push behind women entering the workforce. The other narrative being that due to the stagnant working-class wages since the 70's, it lead to women needing enter the workforce to help support their families. I'm sure it is a mixture of all of the above.
Title: Re: Is it too late [bitcoin]?
Post by: dougules on December 06, 2017, 10:46:56 AM
Can you imagine a store labeling the prices on their shelves in bitcoin?

This is a good a good example of deflation.  A loaf of bread went from 3 millibits to 0.2 millibits in a year.  Now people are hoarding cash hoping goods will be cheaper in the future.  That's not a stable currency.

There are a couple of misunderstandings in this post that I'd like to point out.

The first being that Bitcoin at the moment is not deflationary. It is inflationary and at the moment it is experiencing inflation at about 4%. The only reason why its price is going up is because demand in outpacing the rate of that inflation dramatically.

The point at which we'd see prices of goods displayed in bitcoin wouldn't happen until critical mass adoption has taken place for an extended period of time and a large portion of our economy is taking place in bitcoin. At that point demand will have likely stabilized which would mean that the volatility of its price would've dramatically decreased as well.

At that point bitcoin will likely be deflationary in nature due to the much lower rate of inflation (mined bitcoins) and the rate at which bitcoins are permanently lost. This will lead to a stable slowly growing value over time.

There are some misconceptions I feel about deflationary currencies that lead people to think that hording will take place with the currency and result in a massive decrease in consumer spending. However, real world economics has shown us that this is not the case. For example, today people line up outside doors on release day to purchase the new iPhone even though they'd be able to purchase that same phone for half the price one or two years later. While this is not currency economics at play, it is psychological economics that would lead a person to make the decision of whether to hold off a purchase knowing their buying power will be higher (2x) in a year or two for the same product. Also, people have basic needs that need to be met such as food, shelter, and clothing that most certainly would not be put off simply because of the deflationary aspect of the currency being used. If a person earns a salary in a deflationary currency, part of their weekly earnings will always go towards those basic needs before any deflationary effects of the currency are even felt. In other words, consumerism is a much more powerful economic force than deflation is.

What deflation does do is help protect worker wages over time as opposed to our current inflationary system that erodes wages over time. Wages are typically sticky which means that they don't adjust as easily to changes in the economic environment. So if worker wages are inherently tied to a deflationary currency, this will help protect the buying power of the working class regardless of whether or not working class citizens are receiving wage increases that meet the rate of inflation over time (and thus promote a more stable economy).

The idea that hording would take place of the currency under conditions where deflation is at or below 4% I believe to be false though. Today's massive price growth for bitcoin is not due to deflation though. If we reach a point where prices of goods are displayed in bitcoin and salaries are earned in bitcoin, then it will likely be the case that mass adoption has taken place in which case the price volatility will have decreased dramatically due to a stabilized demand. At that point the deflationary effect of bitcoin would simply be due to the rate at which bitcoins are lost and permanently removed from the market supply. In the meantime, as shadow said, volatility can be taken out of the equation for good purchases by continuing to peg the price of goods in a more stable currency such as the USD.

Let's not forget, currencies are not a zero-sum game. Bitcoin can become widely adopted and be an integral part of our world economy while perfectly co-existing with fiat currencies. This is a much more likely scenario contrary to what some on both sides of the virtual coin you're on would claim.

I think this missed the paradigm that is lacking.  From the perspective of the price of goods as priced in bitcoin, it's deflation.  Instead of thinking about the value of bitcoin going up in relation to dollars and goods, think about the value of goods and dollars going way down when you're looking from the perspective of paying in bitcoin.  That's deflation.  Because of that deflation, people actually are hoarding cash that they could otherwise be using to  buy furniture, collectibles, cars, or actual investments like stocks.  Bitcoin is cash.  They're hoping that bitcoin will go up in relation to dollars.  If you look at it from the perspective of bitcoin, though, they're actually hoping they will be able to use their cash (bitcoin) to buy the items they actually want at a cheaper price (when priced in bitcoin) in the future.  This is what you actually see happening right now.

At some point bitcoin may stabilize, but that point is not now.  I don't think all the volatility is helping bitcoin except that it may be worth it as a massive marketing campaign.  We're discussing it right now, so that aspect is working well.   

Bitcoin may have a place in the future, but that won't be until people are buying it to actually use for purchases or at least to store value long-term as you would with gold.  As long as most bitcoin is being exchanged with the idea of making quick money we're in a bubble. 
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 06, 2017, 05:51:08 PM
This discussion really took off without me...you guys are doing a great job thinking through the issues. Some important books on the topic:

Capital in the Twenty-First Century by Thomas Picketty (early on this book discusses the importance of the Gold Standard in holding down inflation in Europe and US during the 1800's).

The Rise and Fall of American Growth by Robert J. Gordon (you can watch his Ted Talk here: https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwivoqXIyvXXAhUq0oMKHauUAl4QtwIIJzAA&url=https%3A%2F%2Fwww.ted.com%2Ftalks%2Frobert_gordon_the_death_of_innovation_the_end_of_growth&usg=AOvVaw0C8-meuYA4-z1aQJPHcHMu (https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwivoqXIyvXXAhUq0oMKHauUAl4QtwIIJzAA&url=https%3A%2F%2Fwww.ted.com%2Ftalks%2Frobert_gordon_the_death_of_innovation_the_end_of_growth&usg=AOvVaw0C8-meuYA4-z1aQJPHcHMu)

A Culture of Growth by Joel Mokyr. (he usually takes the opposing side to Dr. Gordon, insisting that dynamic growth in today's economy is still possible)
Thanks for posting that.

I watched the Ted Talk from Dr. Gordon.

And I just found an hour and half Youtube video on Joel Mokyr's book.

https://www.youtube.com/watch?v=wNbe7uwbiKE

I haven't watched it yet, but I thought it might save anyone else who cares the time and expense of buying the book.

Edit to add: and here's a 1:45 lecture from Thomas Piketty on his book:

https://www.youtube.com/watch?v=RRI6JuxTyrQ
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 06, 2017, 06:25:54 PM
I just watched the Robert Jordan Ted Talk video, I'd highly recommend it to anyone else following this thread, thanks for posting it TallTexan.

It really explains why people who'd lived through the changes created by technological progress between 1910 and 1960 really found it plausible we'd have flying cars and be visiting other planets by the year 2010.
Title: Re: Is it too late [bitcoin]?
Post by: mjr on December 06, 2017, 06:57:36 PM
I just watched the Robert Jordan Ted Talk video

Maizeman a Wheel of Time reader :-) ?
Title: Re: Is it too late [bitcoin]?
Post by: worldtraveler on December 06, 2017, 07:58:45 PM
Now we see the results. Bitcoiners are HODLers. They save. They hoard. They have turned against consumption in favor of saving. I see it myself all around me. Young people who are invested in Bitcoin turn down luxury consumption. They don’t own cars. They bike and walk. They don’t spend big on dinners. They live off cheap groceries. They know that everything they consume today eats into their capacity for consumption, investment, and building wealth for the future.

If you ever despair of the future, just consider how much capital is currently being built up in the crypto sector. There will come a time, maybe in five to 15 years, when all this deferred consumption is going to be unleashed on the world economy in the form of real capital to build wealth and prosperity. And consider too: this is not about one economy, not about one nation. It’s about the whole world, capital and prosperity without borders.

The pundits can fulminate all they want. Technology doesn’t care.

https://fee.org/articles/in-defense-of-bitcoin-hoarding/
Title: Re: Is it too late [bitcoin]?
Post by: worldtraveler on December 06, 2017, 08:02:14 PM
Bitcoin will be scaling within the next year.  Instant micro transactions with basically no cost.

https://www.coindesk.com/lightning-last-test-shows-bitcoin-scaling-solution-almost-ready/?utm_content=bufferca149&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 06, 2017, 08:02:47 PM
I just watched the Robert Jordan Ted Talk video

Maizeman a Wheel of Time reader :-) ?

Oh that's why he uses a middle initial. I knew I recognized the name from somewhere. ;-)
Title: Re: Is it too late [bitcoin]?
Post by: waltworks on December 06, 2017, 08:07:04 PM
You know it's a bubble when dead fantasy authors start showing up on TED talks about crypto!

Hmm. Jordan "died" just before bitcoin was introduced...

-W
Title: Re: Is it too late [bitcoin]?
Post by: worldtraveler on December 06, 2017, 09:17:11 PM
For people looking to enter in the space, watch all of Andrea's videos.  He has a way with explaining everything so newbies can understand.  Take your time and don't rush in.  Buy a portion of bitcoin that you're comfortable with.  This is not going away. Don't let everyone here tell you it's a scam ponzi.

https://www.youtube.com/user/aantonop/videos
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 07, 2017, 06:48:08 AM
So much for these unhackable cryptos...

http://money.cnn.com/2017/12/07/technology/nicehash-bitcoin-theft-hacking/index.html

And, since by its nature the bitcoins can't be recovered -- they are not subject to government seizure, remember -- nicehash can kiss them goodbye.

In theory the bitcoin protocol itself might be "nearly unhackable" (whatever that means), but in practice it's only a matter of time before a breach could hit you, too....

To those thinking of buying a bitcoin or other crypto, you're money is gone when you buy.  Whether you can cash out later and get any money back is a completely different story.  Just ask all those poor folks who lost their private keys or kept their bitcoins at a hacked exchange.  There is no legal remedy or regulation to resolve these problems, nor is there a large organization with good customer service to "make things right." 

Here is your only remedy if you suffer a problem with bitcoin: Go sh*t in your hat.

For someone who dislikes crypto-currencies so much, you certainly hang around these parts frequently spreading FUD like no one's business.
Title: Re: Is it too late [bitcoin]?
Post by: ketchup on December 07, 2017, 07:39:29 AM
And that's why you learn what the hell you're doing before you do anything with crypto.  Not your own private keys, not your Bitcoin.  Nicehash pays out when you hit 0.01BTC accumulated with them if you use a non-Nicehash wallet (like clearly from this, everyone should).  I had about $12 (I think) worth with them that wasn't paid out to my real wallet yet.  I'll live.
Title: Re: Is it too late [bitcoin]?
Post by: waltworks on December 07, 2017, 08:42:00 AM
For people looking to enter in the space, watch all of Andrea's videos.  He has a way with explaining everything so newbies can understand.  Take your time and don't rush in.  Buy a portion of bitcoin that you're comfortable with.  This is not going away. Don't let everyone here tell you it's a scam ponzi.

To be fair, it can be an unsustainable bubble very easily without being a scam (there are certainly scams associated with lots of cryptos, but the concept itself isn't a scam) or a ponzi scheme (in which the money coming in from later investors is used to pay the early investors and create the illusion of great returns).

I don't think anyone here would claim that bitcoin is either of those things. We are just saying that when random investing naifs are talking something up on Facebook (no matter what it is!) you should probably run the other way.

-W
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 07, 2017, 09:05:34 AM
Now up $4400 in about 36 hours.

As Walt said, you can be very optimistic about the long term potential of cryptocurrencies, and still be worried that the current price trajectory of bitcoin is in a bubble that is going to result in a lot of people who are completely new to crypto buying during the rapid upswing getting burned by losses in a crash, damaging the reputation of cryptocurrencies as a whole, and causing harm to the general public's interest in the adoption of cryptocurrencies to actually make payments in the medium term.

Also, credit where credit is due, I didn't think the incipient launch of "bitcoin futures" would have such a big effect on the price of the currency itself. Lifeanon predicted that this news would cause a big uptick in demand (and hence price). With the first bitcoin futures market launching on Sunday, it is clear that I was wrong in my prediction, and Lifeanon was correct.
Title: Re: Is it too late [bitcoin]?
Post by: ketchup on December 07, 2017, 09:07:46 AM
Now up $4400 in about 36 hours.

As Walt said, you can be very optimistic about the long term potential of cryptocurrencies, and still be worried that the current price trajectory of bitcoin is in a bubble that is going to result in a lot of people who are completely new to crypto buying during the rapid upswing getting burned by losses in a crash, damaging the reputation of cryptocurrencies as a whole, and causing harm to the general public's interest in the adoption of cryptocurrencies to actually make payments in the medium term.

Also, credit where credit is due, I didn't think the incipient launch of "bitcoin futures" would have such a big effect on the price of the currency itself. Lifeanon predicted that this news would cause a big uptick in demand (and hence price). With the first bitcoin futures market launching on Sunday, it is clear that I was wrong in my prediction, and Lifeanon was correct.
We'll see what happens when futures actually launch though.  Some on /r/bitcoin and the like seem to think "big money" is entering right now in an effort to pump and dump via shorting it once futures are available and it'll correct next week.  Nobody really knows though, of course.  My crystal ball is in the shop.

Also, I sold about a grand's worth of BTC just before this 36 hour ridiculous gain.  Whee.
Title: Re: Is it too late [bitcoin]?
Post by: waltworks on December 07, 2017, 09:24:17 AM
As Walt said, you can be very optimistic about the long term potential of cryptocurrencies, and still be worried that the current price trajectory of bitcoin is in a bubble that is going to result in a lot of people who are completely new to crypto buying during the rapid upswing getting burned by losses in a crash, damaging the reputation of cryptocurrencies as a whole, and causing harm to the general public's interest in the adoption of cryptocurrencies to actually make payments in the medium term.

People are not thinking of these as currencies, they are thinking of them as magic free money. When that comes to an end (and there's still no way to go buy a bagel for lunch with any of them) I *hope* that some form of low transaction cost crypto payments system survives and is widely adopted. I agree with Maizeman here, though - the existing price trajectory is a bad thing in the long run.

The removal of the stranglehold of the credit card companies and money transfer fees is the societal benefit we want here. That 2-5% skimmed off the top of every transaction is a HUGE drag and an enormous waste. I *hate* that I can't accept quick electronic payments from customers or send payments to vendors without someone (ok, really, everyone) paying these fees.

That idea is getting lost in the "just buy as much bitcoin as you can because it always goes up" craziness. The goal here should be to let people seamlessly pay for and be paid for things (as cheaply and securely as possible) without *any excitement or expectation of crazy gains at all*. It should be boring!

-W
Title: Re: Is it too late [bitcoin]?
Post by: Lews Therin on December 07, 2017, 09:27:22 AM
Why is there an increase in value in Bitcoins? I don't understand why someone would pay 2$ for 1$ (since Bitcoin is an exchange mechanism)
Title: Re: Is it too late [bitcoin]?
Post by: worldtraveler on December 07, 2017, 09:43:24 AM
Just watched 12million bought at 17.7k in seconds.  These aren't normal people buying.  This is just the beginning.  The herd is coming
Title: Re: Is it too late [bitcoin]?
Post by: worldtraveler on December 07, 2017, 09:44:07 AM
http://www.zerohedge.com/news/2017-12-07/banks-issue-last-minute-warning-about-risks-bitcoin-futures-trading-asks-regulator-r

”Thomas Peterffy, a pioneer of electronic trading and head of Interactive Brokers, has warned that the introduction of bitcoin futures into a clearing house could increase systemic risk. On Wednesday Interactive said its clients would be unable to short the bitcoin futures market because of the extreme volatility of bitcoin.
Title: Re: Is it too late [bitcoin]?
Post by: waltworks on December 07, 2017, 09:51:58 AM
At what point do regulators step in? I mean, if the value gets high enough (especially if people are creating Bitcoin derivatives), it *does* become a systemic risk. Right now a bunch of people would lose a bunch of money, but not enough to cause a recession or other downstream consequences. Give it another couple orders of magnitude and it's a big big problem.

Man, I'm glad I'm FI and don't have to worry about this. It would drive me a little bit nuts to either own or NOT own any bitcoin during times like these. As it stands I can just break out the popcorn and hope that not too many people get hurt.

-W
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 07, 2017, 01:59:55 PM
At what point do regulators step in? I mean, if the value gets high enough (especially if people are creating Bitcoin derivatives), it *does* become a systemic risk. Right now a bunch of people would lose a bunch of money, but not enough to cause a recession or other downstream consequences. Give it another couple orders of magnitude and it's a big big problem.

Man, I'm glad I'm FI and don't have to worry about this. It would drive me a little bit nuts to either own or NOT own any bitcoin during times like these. As it stands I can just break out the popcorn and hope that not too many people get hurt.

-W

Actually the higher the value goes, the lower the risk would be because volatility would go down. The global derivatives market is already a system risk. Adding the straw that is bitcoin to the camel's back I don't think will make much of a difference. Regulators haven't really stepped in on the unregulated ~$1.2 quadrillion derivatives market yet, what would make them step in on a few billion dollar derivative market?

Also, I don't think the risk goes away whether your FI or not, unless you've found a way to not be tied to the markets or the economy in anyway.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 07, 2017, 02:22:59 PM
Now up $4400 in about 36 hours.

As Walt said, you can be very optimistic about the long term potential of cryptocurrencies, and still be worried that the current price trajectory of bitcoin is in a bubble that is going to result in a lot of people who are completely new to crypto buying during the rapid upswing getting burned by losses in a crash, damaging the reputation of cryptocurrencies as a whole, and causing harm to the general public's interest in the adoption of cryptocurrencies to actually make payments in the medium term.

Also, credit where credit is due, I didn't think the incipient launch of "bitcoin futures" would have such a big effect on the price of the currency itself. Lifeanon predicted that this news would cause a big uptick in demand (and hence price). With the first bitcoin futures market launching on Sunday, it is clear that I was wrong in my prediction, and Lifeanon was correct.

Actually I was wrong too. I was far too low in my estimate. I didn't think the price would be anywhere near what it is currently. As you and others have stated, that is quite alarming. I'm a big bitcoin bull long-term, but I'm not rabid to the point where I can't recognize when something might not be sustainable.

It isn't the price that I'm concerned with. What's also alarming is the fact that the big price spike today was largely seen on Coinbase which is the market entry point for all new users to bitcoin. That means that the large spike in price likely has to do with new users making first time purchases. New users are a good thing, but when it happens in a frenzy like it did today, then that's probably not going to end well for many of those new users. Especially considering the fact that arbitrage sharks were just circling around waiting to eat some of the new users willing to buy at sky high prices relative to the going rate for bitcoin on most other exchanges.
Title: Re: Is it too late [bitcoin]?
Post by: waltworks on December 07, 2017, 02:33:20 PM
Also, I don't think the risk goes away whether your FI or not, unless you've found a way to not be tied to the markets or the economy in anyway.

Sorry, those paragraphs were intended to be separate thoughts. Poorly written on my part. What I meant was that I don't have to spend any time kicking myself for not putting all my money in bitcoin a year ago, nor do I have to sweat out when to sell my Bitcoin gains. I can just watch and be entertained.

If the whole economy goes to hell because of bitcoin somehow, I'm just as screwed as everyone else. :)

-W
Title: Re: Is it too late [bitcoin]?
Post by: thenextguy on December 07, 2017, 02:47:26 PM
Why is there an increase in value in Bitcoins? I don't understand why someone would pay 2$ for 1$ (since Bitcoin is an exchange mechanism)

Currencies are constantly increasing/decreasing in value. It's not unique to Bitcoin.

https://www.bloomberg.com/markets/currencies

Title: Re: Is it too late [bitcoin]?
Post by: seattlecyclone on December 07, 2017, 02:53:44 PM
Why is there an increase in value in Bitcoins? I don't understand why someone would pay 2$ for 1$ (since Bitcoin is an exchange mechanism)

Currencies are constantly increasing/decreasing in value. It's not unique to Bitcoin.

https://www.bloomberg.com/markets/currencies



Yes, but for most currencies a 1% change in a day is a pretty big deal. I know that something costing $10 today will cost roughly $10 tomorrow.

Bitcoin has doubled in the past month. They're not really the same thing.
Title: Re: Is it too late [bitcoin]?
Post by: thenextguy on December 07, 2017, 02:58:34 PM
Why is there an increase in value in Bitcoins? I don't understand why someone would pay 2$ for 1$ (since Bitcoin is an exchange mechanism)

Currencies are constantly increasing/decreasing in value. It's not unique to Bitcoin.

https://www.bloomberg.com/markets/currencies



Yes, but for most currencies a 1% change in a day is a pretty big deal. I know that something costing $10 today will cost roughly $10 tomorrow.

Bitcoin has doubled in the past month. They're not really the same thing.

The post I was responding to implied that currencies shouldn't change in price. (Why is there an increase in value in Bitcoins?) The poster didn't question the rapid or large changes in Bitcoin price, but the mere fact that it was changing at all. So you're adding irrelevant details to the topic being discussed: Do currencies change in price? The answer is "yes." All the time.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 07, 2017, 03:15:16 PM
Why is there an increase in value in Bitcoins? I don't understand why someone would pay 2$ for 1$ (since Bitcoin is an exchange mechanism)

Currencies are constantly increasing/decreasing in value. It's not unique to Bitcoin.

https://www.bloomberg.com/markets/currencies



Yes, but for most currencies a 1% change in a day is a pretty big deal. I know that something costing $10 today will cost roughly $10 tomorrow.

Bitcoin has doubled in the past month. They're not really the same thing.

The post I was responding to implied that currencies shouldn't change in price. (Why is there an increase in value in Bitcoins?) The poster didn't question the rapid or large changes in Bitcoin price, but the mere fact that it was changing at all. So you're adding irrelevant details to the topic being discussed: Do currencies change in price? The answer is "yes." All the time.
A dollar is going to be worth a 100 cents regardless of whether its exchange rate rises or falls against the Euro.  You will only notice that difference if you're trying to buy an asset or commodity (bread, for instance) with USD which is priced in Euros, because you have to then exchange your dollars for Euros at the going rate in order to purchase that bread.

I won't get into a debate about whether gold or bitcoins are currencies.  Regardless of where you stand on that, it is inarguable that both are assets that react to the forces of supply and demand.  And that is why both gold and bitcoins go up or down in price at any given time.  They are both assets that are subject to market forces, priced in whatever currency you happen to be buying or selling them in at the time.

If you want to "spend" a part of your bitcoin on a loaf of bread, you have to sell enough of it to pay for the bread, and pay capital gains tax (if any) first, at the market price, before you can do that.  You could probably spend your bitcoin directly to get access restored to your hacked computer, but I kind of consider that to be an outlier scenario at the moment.
Title: Re: Is it too late [bitcoin]?
Post by: Aggie1999 on December 07, 2017, 03:50:17 PM
So much for these unhackable cryptos...

http://money.cnn.com/2017/12/07/technology/nicehash-bitcoin-theft-hacking/index.html

And, since by its nature the bitcoins can't be recovered -- they are not subject to government seizure, remember -- nicehash can kiss them goodbye.

In theory the bitcoin protocol itself might be "nearly unhackable" (whatever that means), but in practice it's only a matter of time before a breach could hit you, too....

To those thinking of buying a bitcoin or other crypto, you're money is gone when you buy.  Whether you can cash out later and get any money back is a completely different story.  Just ask all those poor folks who lost their private keys or kept their bitcoins at a hacked exchange.  There is no legal remedy or regulation to resolve these problems, nor is there a large organization with good customer service to "make things right." 

Here is your only remedy if you suffer a problem with bitcoin: Go sh*t in your hat.

For someone who dislikes crypto-currencies so much, you certainly hang around these parts frequently spreading FUD like no one's business.

+1
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 07, 2017, 03:54:52 PM
A dollar is going to be worth a 100 cents regardless of whether its exchange rate rises or falls against the Euro. 

A bitcoin is going to be worth 100,000,000 satoshis regardless of whether its exchange rate rises or falls against the dollar.

I hope you realize why that doesn't make sense now, right?

You will only notice that difference if you're trying to buy an asset or commodity (bread, for instance) with USD which is priced in Euros, because you have to then exchange your dollars for Euros at the going rate in order to purchase that bread.

I won't get into a debate about whether gold or bitcoins are currencies.  Regardless of where you stand on that, it is inarguable that both are assets that react to the forces of supply and demand.  And that is why both gold and bitcoins go up or down in price at any given time.  They are both assets that are subject to market forces, priced in whatever currency you happen to be buying or selling them in at the time.

If you want to "spend" a part of your bitcoin on a loaf of bread, you have to sell some if first, at the market price, before you can do that.  You could probably spend your bitcoin directly to get access restored to your hacked computer, but I kind of consider that to be an outlier scenario at this point.

A US dollar does have a value that rises and falls in and of itself regardless of whether or not you're exchanging it for another foreign currency. If you're only looking at the exchange rate between the USD and a EUR, for example, you're only looking at the relativity between the two. So if the USD falls compared to the EUR, some of that difference could be due to the EUR's strength and some of that could be due to the USD's decline.

Meanwhile, back home if part of the drop in the USD compared to the EUR was due to the USD's decline in value, then a loaf of bread will suddenly be more expensive to buy with US dollars. You might not notice it day to day, but you most certainly will over the course of a few years or even decades.

Like thenextguy said, all currencies change in price and that change is noted in its actual value whether you're exchanging it for another currency or for a good at the store.

Volatility will come down with bitcoin as its market matures. Volatility is not a critique against bitcoin, but a critique against the fact that the market is as small as it is. However, price volatility is not a hinderence to its use as a currency or medium of exchange if all goods are still priced in USD or any other fiat currency. The cost in bitcoin can simply be adjusted or calculated at the time of purchase when paying with bitcoin and this can happen automatically with whatever POS system is being used. There's no need to adjust good prices according to the price of a bitcoin. It is however a hinderence to lending which is why you won't see loans pegged to the price of a bitcoin for quite a while. Loans can be issued in bitcoin, but as with goods, their amounts and amortization schedules will be pegged to USD to protect the borrowers and lenders from large increases or decreases over the course of the loan.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 07, 2017, 04:08:30 PM
A dollar is going to be worth a 100 cents regardless of whether its exchange rate rises or falls against the Euro. 

A bitcoin is going to be worth 100,000,000 satoshis regardless of whether its exchange rate rises or falls against the dollar.

I hope you realize why that doesn't make sense now, right?

Please explain how it doesn't make sense.  I will have 100 cents worth of buying power in the USA regardless of whether the USD rises or falls against the Euro.  Its value or utility doesn't change here regardless of whether it goes up or down against the Euro.

Bitcoin doesn't have an "exchange rate" any more than gold does.  Both have a market price.

I agree that a bitcoin is going to be worth 100,000,000 satoshis regardless of whether its price goes up in dollar terms or not.  Are you saying that your statement doesn't make sense?

I don't realize a capital gain or loss when the dollar's buying power changes due to inflation or deflation.
A fifty year old dollar is still worth a dollar now.  It just has less buying power now.

Your situation with bitcoin is similar, but with one very big difference.  You can't buy much of anything with your bitcoin without first realizing a capital gain or loss by selling it for whatever the market thinks it's worth in current dollars at that time; just like with gold.

If I hide a dollar under my mattress for 10 years, I can still spend it for whatever goods or services it will buy at a later time, without realizing a taxable gain or loss.

You can't even hide a bitcoin under your mattress, but that's neither here nor there.
Title: Re: Is it too late [bitcoin]?
Post by: dougules on December 07, 2017, 04:35:58 PM
A dollar is going to be worth a 100 cents regardless of whether its exchange rate rises or falls against the Euro. 

A bitcoin is going to be worth 100,000,000 satoshis regardless of whether its exchange rate rises or falls against the dollar.

I hope you realize why that doesn't make sense now, right?

Please explain how it doesn't make sense.  I will have 100 cents worth of buying power in the USA regardless of whether the USD rises or falls against the Euro.  Its value or utility doesn't change here regardless of whether it goes up or down against the Euro.

Bitcoin doesn't have an "exchange rate" any more than gold does.  Both have a market price.

I agree that a bitcoin is going to be worth 100,000,000 satoshis regardless of whether its price goes up in dollar terms or not.  Are you saying that your statement doesn't make sense?

I don't realize a capital gain or loss when the dollar's value changes due to inflation or deflation.

Your situation with bitcoin is similar, but with one very big difference.  You can't buy much of anything with your bitcoin without first realizing a capital gain or loss by selling it for whatever the market thinks it's worth in current dollars at that time; just like with gold.

If I hide a dollar under my mattress for 10 years, I can still spend it for whatever goods or services it will buy at a later time, without realizing a taxable gain or loss.

You can't even hide a bitcoin under your mattress, but that's neither here nor there.

It is an exchange rate.  Bitcoin is or at least is meant to be a currency.  The idea was that you'd be able to pay for a croissant and coffee with it.  And that's also why holding bitcoin is holding cash. 
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 07, 2017, 04:44:15 PM
A dollar is going to be worth a 100 cents regardless of whether its exchange rate rises or falls against the Euro. 

A bitcoin is going to be worth 100,000,000 satoshis regardless of whether its exchange rate rises or falls against the dollar.

I hope you realize why that doesn't make sense now, right?

Please explain how it doesn't make sense.  I will have 100 cents worth of buying power in the USA regardless of whether the USD rises or falls against the Euro.  Its value or utility doesn't change here regardless of whether it goes up or down against the Euro.

Bitcoin doesn't have an "exchange rate" any more than gold does.  Both have a market price.

I agree that a bitcoin is going to be worth 100,000,000 satoshis regardless of whether its price goes up in dollar terms or not.  Are you saying that your statement doesn't make sense?

I don't realize a capital gain or loss when the dollar's value changes due to inflation or deflation.

Your situation with bitcoin is similar, but with one very big difference.  You can't buy much of anything with your bitcoin without first realizing a capital gain or loss by selling it for whatever the market thinks it's worth in current dollars at that time; just like with gold.

If I hide a dollar under my mattress for 10 years, I can still spend it for whatever goods or services it will buy at a later time, without realizing a taxable gain or loss.

You can't even hide a bitcoin under your mattress, but that's neither here nor there.

It is an exchange rate.  Bitcoin is or at least is meant to be a currency.  The idea was that you'd be able to pay for a croissant and coffee with it.  And that's also why holding bitcoin is holding cash.
I'd love to be a fly on the wall when you try to explain that to the IRS auditor for not reporting your capital gains.

You can conflate market price with exchange rate if you wish to, but that doesn't make it true.

And you can "intend" it to be a currency all you want.  I'm not going to debate that any more than you would debate about whether my intentions could turn a bowl of oatmeal into a currency..
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 07, 2017, 04:46:55 PM
You can't even hide a bitcoin under your mattress, but that's neither here nor there.

Actually you can if you have a hard copy private key, but that's also neither here nor there. ;-)

Quote
Bitcoin doesn't have an "exchange rate" any more than gold does.  Both have a market price.

I'd argue exchange rate vs market price is a distinction without a difference. The whether you say market price or exchange rate, you need variable numbers of dollars to buy a given amount of euros, RMB, bitcoin, gold, or porkbellies. In all four cases that price is determined by how many people are willing to buy (and at what prices) and how many are willing to sell (and at what prices).

But I remain open to being proven wrong though. How would you define the difference between a market price and an exchange rate (other than that one applies to a currency and one applies to a commodity, because that would just become circular reasoning).

Quote
I don't realize a capital gain or loss when the dollar's value changes due to inflation or deflation. ... If I hide a dollar under my mattress for 10 years, I can still spend it for whatever goods or services it will buy at a later time, without realizing a taxable gain or loss.

That's because you live in the USA where our tax code is denominated in dollars. If you lived in Europe or China where the tax codes use Euros or RMB you would indeed realize taxable gains or losses as the value of a dollar changed. If you hold Euros or RMB in the USA you would indeed incur tax liability as the the market price of these currencies increased (in USD terms). I think these are actually taxed as ordinary income, not capital gains.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 07, 2017, 05:00:52 PM
You can't even hide a bitcoin under your mattress, but that's neither here nor there.

Actually you can if you have a hard copy private key, but that's also neither here nor there. ;-)

Quote
Bitcoin doesn't have an "exchange rate" any more than gold does.  Both have a market price.

I'd argue exchange rate vs market price is a distinction without a difference. The whether you say market price or exchange rate, you need variable numbers of dollars to buy a given amount of euros, RMB, bitcoin, gold, or porkbellies. In all four cases that price is determined by how many people are willing to buy (and at what prices) and how many are willing to sell (and at what prices).

But I remain open to being proven wrong though. How would you define the difference between a market price and an exchange rate (other than that one applies to a currency and one applies to a commodity, because that would just become circular reasoning).

Quote
I don't realize a capital gain or loss when the dollar's value changes due to inflation or deflation. ... If I hide a dollar under my mattress for 10 years, I can still spend it for whatever goods or services it will buy at a later time, without realizing a taxable gain or loss.

That's because you live in the USA where our tax code is denominated in dollars. If you lived in Europe or China where the tax codes use Euros or RMB you would indeed realize taxable gains or losses as the value of a dollar changed. If you hold Euros or RMB in the USA you would indeed incur tax liability as the the market price of these currencies increased (in USD terms). I think these are actually taxed as ordinary income, not capital gains.

I said I wasn't going to debate whether bitcoin is a currency, and I'm going to hold to that.

But I think I can convince you of the difference in those terms simply by using the dictionary.

ex·change rate
noun
noun: exchange rate; plural noun: exchange rates; noun: rate of exchange; plural noun: rates of exchange

    the value of one currency for the purpose of conversion to another.

cur·ren·cy
ˈkərənsē/
noun
noun: currency; plural noun: currencies

    1.
    a system of money in general use in a particular country.
    "the dollar was a strong currency"
    synonyms:   money, legal tender, cash, banknotes, bills, notes, coins, coinage, specie
    "foreign currency"
    2.
    the fact or quality of being generally accepted or in use.
    "the term gained currency during the second half of the 20th century"
    synonyms:   prevalence, circulation, exposure; More
    acceptance, popularity
    "a term that has gained new currency"
        the time during which something is in use or operation.

Bitcoin fails the test on both counts.

USD, Euros, and RMB all pass with flying colors.

Now, I'm not saying that bitcoin isn't a currency.  But that doesn't mean that I agree that it's a currency, either.  I'm simply saying that by definition, it doesn't have an exchange rate, while it very clearly does have a market price.

I concede the point about hiding it under a mattress.  Well played. ;)
Title: Re: Is it too late [bitcoin]?
Post by: Lews Therin on December 07, 2017, 05:04:21 PM
The moment it gets accepted (Which is what people are betting on) it will be a currency/method of exchange.... If it ever does.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 07, 2017, 05:07:39 PM
Please explain how it doesn't make sense.  I will have 100 cents worth of buying power in the USA regardless of whether the USD rises or falls against the Euro.  Its value or utility doesn't change here regardless of whether it goes up or down against the Euro.

Bitcoin doesn't have an "exchange rate" any more than gold does.  Both have a market price.

I agree that a bitcoin is going to be worth 100,000,000 satoshis regardless of whether its price goes up in dollar terms or not.  Are you saying that your statement doesn't make sense?

I don't realize a capital gain or loss when the dollar's buying power changes due to inflation or deflation.
A fifty year old dollar is still worth a dollar now.  It just has less buying power now.

Your situation with bitcoin is similar, but with one very big difference.  You can't buy much of anything with your bitcoin without first realizing a capital gain or loss by selling it for whatever the market thinks it's worth in current dollars at that time; just like with gold.

If I hide a dollar under my mattress for 10 years, I can still spend it for whatever goods or services it will buy at a later time, without realizing a taxable gain or loss.

You can't even hide a bitcoin under your mattress, but that's neither here nor there.

Because that's no different than saying that the value of a dollar is a dollar. It isn't necessarily that it doesn't make sense, but just that it is an absurb obviousness that wasn't in question by anyone. A dog will always be a dog too.

Just $1 buys you a bagel today doesn't mean that will always hold true. An exchange rate between two different currencies is only the relativity of those values between the currencies being exchanged.

The fact that bitcoin needs to be exchanged before being spent is irrelevant as to whether it has the capability of being used as a currency. If you take a euro to a US store, you probably won't be able to buy much with it. That doesn't mean that it doesn't have use as a currency at all. It's just that you'll have better success with it in Europe. If you use bitcoin in Japan where merchant adoption is much higher, then you won't find this as being a problem. Considering the fact that bitcoin is a global currency, then it is to be expected that its success as a currency would vary greatly by region.

Being forced to pay taxes on any capital gains or losses on every exchange of bitcoin in the US is definitely a hindrance to its use as a currency (what relevance was this to the discussion?). I do have hope that will change someday in the US. But, that's a local regulatory problem for whatever region you're in. Since bitcoin is global, that's not the case for everyone that goes to use it as currency (why were capital gains brought up?).

The original point that was being discussed however was just simply the fact that currencies go up and down in value and that is not unique to bitcoin alone. I don't know what you're arguing and why there were so many tangents taken here. Excuse me if I jumped all around, but I'm just trying to address each of the various points you brought up.

Looking back at thenextguy's post who you responded to, it looks like you're now in agreement with him (that currencies can change value in their own right). So I guess we all are in agreement. So that's great! Cheers.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 07, 2017, 05:23:34 PM
Please explain how it doesn't make sense.  I will have 100 cents worth of buying power in the USA regardless of whether the USD rises or falls against the Euro.  Its value or utility doesn't change here regardless of whether it goes up or down against the Euro.

Bitcoin doesn't have an "exchange rate" any more than gold does.  Both have a market price.

I agree that a bitcoin is going to be worth 100,000,000 satoshis regardless of whether its price goes up in dollar terms or not.  Are you saying that your statement doesn't make sense?

I don't realize a capital gain or loss when the dollar's buying power changes due to inflation or deflation.
A fifty year old dollar is still worth a dollar now.  It just has less buying power now.

Your situation with bitcoin is similar, but with one very big difference.  You can't buy much of anything with your bitcoin without first realizing a capital gain or loss by selling it for whatever the market thinks it's worth in current dollars at that time; just like with gold.

If I hide a dollar under my mattress for 10 years, I can still spend it for whatever goods or services it will buy at a later time, without realizing a taxable gain or loss.

You can't even hide a bitcoin under your mattress, but that's neither here nor there.

Because that's no different than saying that the value of a dollar is a dollar. It isn't necessarily that it doesn't make sense, but just that it is an absurb obviousness that wasn't in question by anyone. A dog will always be a dog too.

I'm glad we can agree on that.

Quote

Just $1 buys you a bagel today doesn't mean that will always hold true. An exchange rate between two different currencies is only the relativity of those values between the currencies being exchanged.

The fact that bitcoin needs to be exchanged before being spent is irrelevant as to whether it has the capability of being used as a currency. If you take a euro to a US store, you probably won't be able to buy much with it. That doesn't mean that it doesn't have use as a currency at all. It's just that you'll have better success with it in Europe. If you use bitcoin in Japan where merchant adoption is much higher, then you won't find this as being a problem. Considering the fact that bitcoin is a global currency, then it is to be expected that its success as a currency would vary greatly by region.

I never disputed whether it has the capability of being used as a currency.  Bowls of oatmeal have the capability of being used as currency too.  Something being accepted as a currency has nothing inherently to do with what it is or can do.

Quote

Being forced to pay taxes on any capital gains or losses on every exchange of bitcoin in the US is definitely a hindrance to its use as a currency (what relevance was this to the discussion?). I do have hope that will change someday in the US. But, that's a local regulatory problem for whatever region you're in. Since bitcoin is global, that's not the case for everyone that goes to use it as currency (why were capital gains brought up?).

If it did not elucidate anything for you, you should feel free to ignore it.

Quote
The original point that was being discussed however was just simply the fact that currencies go up and down in value and that is not unique to bitcoin alone. I don't know what you're arguing and why there were so many tangents taken here. Excuse me if I jumped all around, but I'm just trying to address each of the various points you brought up.

Looking back at thenextguy's post who you responded to, it looks like you're now in agreement with him (that currencies can change value in their own right). So I guess we all are in agreement. So that's great! Cheers.
Yes, I too think it's good that we can agree on stuff we never disagreed about. 
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 07, 2017, 05:51:58 PM
Quote
I'd argue exchange rate vs market price is a distinction without a difference. The whether you say market price or exchange rate, you need variable numbers of dollars to buy a given amount of euros, RMB, bitcoin, gold, or porkbellies. In all four cases that price is determined by how many people are willing to buy (and at what prices) and how many are willing to sell (and at what prices).

But I remain open to being proven wrong though. How would you define the difference between a market price and an exchange rate (other than that one applies to a currency and one applies to a commodity, because that would just become circular reasoning).

I said I wasn't going to debate whether bitcoin is a currency, and I'm going to hold to that.

But I think I can convince you of the difference in those terms simply by using the dictionary.

ex·change rate
noun
noun: exchange rate; plural noun: exchange rates; noun: rate of exchange; plural noun: rates of exchange

    the value of one currency for the purpose of conversion to another.

cur·ren·cy
ˈkərənsē/
noun
noun: currency; plural noun: currencies

    1.
    a system of money in general use in a particular country.
    "the dollar was a strong currency"
    synonyms:   money, legal tender, cash, banknotes, bills, notes, coins, coinage, specie
    "foreign currency"
    2.
    the fact or quality of being generally accepted or in use.
    "the term gained currency during the second half of the 20th century"
    synonyms:   prevalence, circulation, exposure; More
    acceptance, popularity
    "a term that has gained new currency"
        the time during which something is in use or operation.

Bitcoin fails the test on both counts.

USD, Euros, and RMB all pass with flying colors.

Now, I'm not saying that bitcoin isn't a currency.  But that doesn't mean that I agree that it's a currency, either.  I'm simply saying that by definition, it doesn't have an exchange rate, while it very clearly does have a market price.

I concede the point about hiding it under a mattress.  Well played. ;)

If I follow the reasoning from your two definitions, your argument is:

(A) the difference between an exchange rate and a market price is that an exchange rate is defined as the rate at which two currencies can be converted from one to the other, and a market price is is the rate at which one currency and one commodity can be converted from one to the other
(B) if bitcoin is not a currency, USD and bitcoin, by definition, cannot have an exchange rate.

I don't actually disagree with either A or B. But I will say that the logically consequence of accepting those two statements is that stating "[I think] Bitcoin doesn't have an "exchange rate" any more than gold does.  Both have a market price." is simply another way of restating "[I think] Bitcoin is not a currency."

Which is a perfectly reasonably view to hold. But saying bitcoin has a market price rather than an exchange rate is not a form of evidence that bitcoin isn't a currency, it's a somewhat less direct way of informing the reader that your view is that bitcoin is not a currency.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 07, 2017, 05:55:59 PM
Quote
I'd argue exchange rate vs market price is a distinction without a difference. The whether you say market price or exchange rate, you need variable numbers of dollars to buy a given amount of euros, RMB, bitcoin, gold, or porkbellies. In all four cases that price is determined by how many people are willing to buy (and at what prices) and how many are willing to sell (and at what prices).

But I remain open to being proven wrong though. How would you define the difference between a market price and an exchange rate (other than that one applies to a currency and one applies to a commodity, because that would just become circular reasoning).

I said I wasn't going to debate whether bitcoin is a currency, and I'm going to hold to that.

But I think I can convince you of the difference in those terms simply by using the dictionary.

ex·change rate
noun
noun: exchange rate; plural noun: exchange rates; noun: rate of exchange; plural noun: rates of exchange

    the value of one currency for the purpose of conversion to another.

cur·ren·cy
ˈkərənsē/
noun
noun: currency; plural noun: currencies

    1.
    a system of money in general use in a particular country.
    "the dollar was a strong currency"
    synonyms:   money, legal tender, cash, banknotes, bills, notes, coins, coinage, specie
    "foreign currency"
    2.
    the fact or quality of being generally accepted or in use.
    "the term gained currency during the second half of the 20th century"
    synonyms:   prevalence, circulation, exposure; More
    acceptance, popularity
    "a term that has gained new currency"
        the time during which something is in use or operation.

Bitcoin fails the test on both counts.

USD, Euros, and RMB all pass with flying colors.

Now, I'm not saying that bitcoin isn't a currency.  But that doesn't mean that I agree that it's a currency, either.  I'm simply saying that by definition, it doesn't have an exchange rate, while it very clearly does have a market price.

I concede the point about hiding it under a mattress.  Well played. ;)

If I follow the reasoning from your two definitions, your argument is:

(A) the difference between an exchange rate and a market price is that an exchange rate is defined as the rate at which two currencies can be converted from one to the other, and a market price is is the rate at which one currency and one commodity can be converted from one to the other
(B) if bitcoin is not a currency, USD and bitcoin, by definition, cannot have an exchange rate.

I don't actually disagree with either A or B. But I will say that the logically consequence of accepting those two statements is that stating "[I think] Bitcoin doesn't have an "exchange rate" any more than gold does.  Both have a market price." is simply another way of restating "[I think] Bitcoin is not a currency."

Which is a perfectly reasonably view to hold. But saying bitcoin has a market price rather than an exchange rate is not a form of evidence that bitcoin isn't a currency, it's a somewhat less direct way of informing the reader that your view is that bitcoin is not a currency.

I'll repeat (since you probably didn't see my edit) that I'm merely stating what should be an obvious fact, that by definition, bitcoin doesn't have an exchange rate.  I don't need to agree or disagree with that in order to cite definitions from the dictionary, or use words properly from the dictionary in a sentence.

While you probably can deduce what my real opinion is, I don't need or want to join in on a debate that I don't  personally think has any merit in being argued.  The distinction between exchange rate and market price should be self-evident to anyone who wants to use those terms.

When I correspond with other people, I make every effort to choose words having semantics that don't need to be debated.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 07, 2017, 06:12:41 PM
You're certainly welcome to state that bitcoin does not satisfy your own definition of the word currency. But I still don't see what the exchange rate/market price distinction adds to the discussion other than being a more complicated way of indicating the same view about whether bitcoin is or isn't a currency.

The reason I think you're trying to back away from that debate is that the same word will have different meanings to different people, and be defined differently in different dictionaries. For example, I'm not sure where you found you set of dictionary definitions. I looked currency up on dictionary.com (http://www.dictionary.com/browse/currency) and this is what I found there.

Quote
currency
[kur-uh n-see, kuhr-]

noun, plural currencies.
1. something that is used as a medium of exchange; money.
2. general acceptance; prevalence; vogue.
3. a time or period during which something is widely accepted and circulated.

So I'm happy to put aside the debate about whether bitcoin is or is not a currency. Arguing with people about the meanings of word (rather than the concepts behind those words) isn't particularly satisfying. My point is simply that once we do put the currency/not-currency debate aside, there is no remaining distinction between the idea represented by the words "exchange rate" and the idea represented by the words "market price."
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 07, 2017, 06:34:26 PM
A dollar is going to be worth a 100 cents regardless of whether its exchange rate rises or falls against the Euro.  You will only notice that difference if you're trying to buy an asset or commodity (bread, for instance) with USD which is priced in Euros, because you have to then exchange your dollars for Euros at the going rate in order to purchase that bread.

I won't get into a debate about whether gold or bitcoins are currencies.  Regardless of where you stand on that, it is inarguable that both are assets that react to the forces of supply and demand.  And that is why both gold and bitcoins go up or down in price at any given time.  They are both assets that are subject to market forces, priced in whatever currency you happen to be buying or selling them in at the time.

If you want to "spend" a part of your bitcoin on a loaf of bread, you have to sell enough of it to pay for the bread, and pay capital gains tax (if any) first, at the market price, before you can do that.  You could probably spend your bitcoin directly to get access restored to your hacked computer, but I kind of consider that to be an outlier scenario at the moment.

It seems like either ILikeDividends is in the mood to argue semantics or I'm just having a hard time understanding the point trying to be made and how we got to discussing what is being discussed. This was your original post that started the discussion in Reply #265. If your 6 posts were to simply say that you don't think that Bitcoin is a currency (which is a very roundabout way of doing so), why not be forthright and just say that and discuss that as opposed to arguing semantics about something completely unrelated?

For the sake of being even more forthright, since this was your original post and it seems like all 6 of your posts were simply an attempt to explain why bitcoin is not a currency, then can you answer this question? Given your above quoted reply, if Bitcoin were being used widely to be spent directly on goods (just like in your outlier scenario above), then wouldn't that qualify bitcoin as a currency to you? I'm not sure how you could answer 'no' to that without leading to some irrationality at somepoint along the way.

I say this because in Japan you can easily use Bitcoin as a currency to purchase goods directly in many local shops and it is recognized as legal tender there. So if Bitcoin is recognized as a currency in at least one nation, then wouldn't that classify it as currency? Most national fiat currencies are only recognized as legal tender in their respective nation, that doesn't disqualify their classification as being recognized as currencies regardless of your origin.

I know you said that you didn't want to debate that, but it seems like after 6 posts of strange circular replies from you, you've been doing that all along anyway.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 07, 2017, 06:47:41 PM
You're certainly welcome to state that bitcoin does not satisfy your own definition of the word currency. But I still don't see what the exchange rate/market price distinction adds to the discussion other than being a more complicated way of indicating the same view about whether bitcoin is or isn't a currency.

The reason I think you're trying to back away from that debate is that the same word will have different meanings to different people, and be defined differently in different dictionaries. For example, I'm not sure where you found you set of dictionary definitions. I looked currency up on dictionary.com (http://www.dictionary.com/browse/currency) and this is what I found there.

Quote
currency
[kur-uh n-see, kuhr-]

noun, plural currencies.
1. something that is used as a medium of exchange; money.
2. general acceptance; prevalence; vogue.
3. a time or period during which something is widely accepted and circulated.

So I'm happy to put aside the debate about whether bitcoin is or is not a currency. Arguing with people about the meanings of word (rather than the concepts behind those words) isn't particularly satisfying. My point is simply that once we do put the currency/not-currency debate aside, there is no remaining distinction between the idea represented by the words "exchange rate" and the idea represented by the words "market price."

I actually have already stated my opinion about whether bitcoin is a currency upthread.  I'm not actually trying to hide my opinion.  I just don't want to engage in a debate over it.

If I mistakenly saw other nuances to the question asked by the post I responded to, which weren't actually valid, it wouldn't be the first time I've committed such an offense.  I apologize to any who were offended, without reservation.

However, there is no debate to back away from.  Hey, I'm ok using the dictionary of your choice.  If your argument is founded on that first definition, then bitcoin fails that, too.

Your dictionary defines medium of exchange as follows:
noun
1. anything generally accepted as representing a standard of value and exchangeable for goods or services.

Again, we weren't having a debate about whether bitcoin is a currency; at least I wasn't.  But that doesn't mean I'm willing to dismiss the meaning of words, and make up new unconventional semantics that other people won't understand, either, and then use them in correspondence.

Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 07, 2017, 06:53:02 PM
A dollar is going to be worth a 100 cents regardless of whether its exchange rate rises or falls against the Euro.  You will only notice that difference if you're trying to buy an asset or commodity (bread, for instance) with USD which is priced in Euros, because you have to then exchange your dollars for Euros at the going rate in order to purchase that bread.

I won't get into a debate about whether gold or bitcoins are currencies.  Regardless of where you stand on that, it is inarguable that both are assets that react to the forces of supply and demand.  And that is why both gold and bitcoins go up or down in price at any given time.  They are both assets that are subject to market forces, priced in whatever currency you happen to be buying or selling them in at the time.

If you want to "spend" a part of your bitcoin on a loaf of bread, you have to sell enough of it to pay for the bread, and pay capital gains tax (if any) first, at the market price, before you can do that.  You could probably spend your bitcoin directly to get access restored to your hacked computer, but I kind of consider that to be an outlier scenario at the moment.

It seems like either ILikeDividends is in the mood to argue semantics or I'm just having a hard time understanding the point trying to be made and how we got to discussing what is being discussed. This was your original post that started the discussion in Reply #265. If your 6 posts were to simply say that you don't think that Bitcoin is a currency (which is a very roundabout way of doing so), why not be forthright and just say that and discuss that as opposed to arguing semantics about something completely unrelated?

For the sake of being even more forthright, since this was your original post and it seems like all 6 of your posts were simply an attempt to explain why bitcoin is not a currency, then can you answer this question? Given your above quoted reply, if Bitcoin were being used widely to be spent directly on goods (just like in your outlier scenario above), then wouldn't that qualify bitcoin as a currency to you? I'm not sure how you could answer 'no' to that without leading to some irrationality at somepoint along the way.

As I've stated numerous times, I'm not going to be drawn into a debate that has no merit.  I would derive no satisfaction in convincing you one way or another on whether bitcoin is a currency or not.

That would be akin to engaging in a religious debate with you.  That would also be a complete waste of time.

Quote
I say this because in Japan you can easily use Bitcoin as a currency to purchase goods directly in many local shops and it is recognized as legal tender there. So if Bitcoin is recognized as a currency in at least one nation, then wouldn't that classify it as currency? Most national fiat currencies are only recognized as legal tender in their respective nation, that doesn't disqualify their classification as being recognized as currencies regardless of your origin.

I know you said that you didn't want to debate that, but it seems like after 6 posts of strange circular replies from you, you've been doing that all along anyway.
You have an uncanny knack for seeing arguments where there are none.  I'm not arguing semantics, I'm simply showing them to you without opining one way or another.

If you want to argue against either of those dictionary's definitions, then have at it.  I won't join in that debate either.

If you want to continue redefining words with your own "secret" meaning, have fun with that, too.  Just don't be too shocked if nobody has a clue what you're talking about.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 07, 2017, 07:09:30 PM
In my original post I stated that, unless one is debating whether something is or isn't a currency, I was aware of no other difference between an exchange rate and a market price.

After several rounds of discussion back and forth with you, I remain unaware of any other differences between an exchange rate and a market price.

But that doesn't mean I'm willing to dismiss the meaning of words, and make up new unconventional semantics that other people won't understand, either, and then use them in correspondence.

Please point to the post where I proposed unconventional semantics?
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 07, 2017, 07:17:04 PM
In my original post I stated that, unless one is debating whether something is or isn't a currency, I was aware of no other difference between an exchange rate and a market price.

The difference between exchange rate and market price does not depend on whether we are debating anything, or on whether you are aware of that difference.

Quote
After several rounds of discussion back and forth with you, I remain unaware of any other differences between an exchange rate and a market price.

But that doesn't mean I'm willing to dismiss the meaning of words, and make up new unconventional semantics that other people won't understand, either, and then use them in correspondence.

Please point to the post where I proposed unconventional semantics?
That was an assumption on my part.  As far as I know, you have not explicitly redefined the meaning of the term, "currency."  However, if my assumption was incorrect, then I can't for the life of me figure out why we keep going around and around on this.

This is getting interesting now.  Are you now offering an opinion that bitcoin is not a currency?  Just curious.  Personally, I don't care one way or another.

If you do think it's a currency, then I don't need a quote from you to justify my assumption that you don't agree with the conventional semantics.

You can prove my assumption correct or incorrect in your next post, if you care to.  I won't try to change your mind in either case.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 07, 2017, 07:29:01 PM
As I've stated numerous times, I'm not going to be drawn into a debate that has no merit.  I would derive no satisfaction in convincing you one way or another on whether bitcoin is a currency or not.

That would be akin to engaging in a religious debate with you.  That would also be a complete waste of time.

Likewise, but then I find it puzzling that you just spent 7 posts having that very exact debate in an extremely indirect way. For someone who is against wasting time, I find it even more odd considering the fact that yours was the post that originally even brought up the question as the whether or not bitcoin was a currency or not (no one else here was putting that into question at all).

Quote
You have an uncanny knack for seeing arguments where there are none.  I'm not arguing semantics, I'm simply showing them to you without opining one way or another.

Actually I'm just baffled at trying to understand the difference between that...

Quote
If you want to continue redefining words with your own "secret" meaning, have fun with that, too.  Just don't be too shocked if nobody has a clue what you're talking about.

I wasn't defining any words at all in any of my posts. Care to quote me where I defined any words with secret meaning?
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 07, 2017, 07:31:07 PM
As I've stated numerous times, I'm not going to be drawn into a debate that has no merit.  I would derive no satisfaction in convincing you one way or another on whether bitcoin is a currency or not.

That would be akin to engaging in a religious debate with you.  That would also be a complete waste of time.

Likewise, but then I find it puzzling that you just spent 7 posts having that very exact debate in an extremely indirect way. For someone who is against wasting time, I find it even more on considering the fact that yours was the post that originally even brought up the question as the whether or not bitcoin was a currency or not (no one else here was putting that into question at all).

I don't consider having fun a waste of time.  I find the intensity of your apparent desperation to draw me into a debate that will never occur fascinating and thoroughly entertaining.

Quote
Quote
You have an uncanny knack for seeing arguments where there are none.  I'm not arguing semantics, I'm simply showing them to you without opining one way or another.

Actually I'm just baffled at trying to understand the difference between that...

Acknowledged.

Quote
Quote
If you want to continue redefining words with your own "secret" meaning, have fun with that, too.  Just don't be too shocked if nobody has a clue what you're talking about.

I wasn't defining any words at all in any of my posts. Care to quote me where I defined any words with secret meaning?

If you'll scroll up one post, I think my last reply should pretty much apply to your question as well.  And the invitation to resolve the question is extended to you, too.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 07, 2017, 07:45:13 PM
In my original post I stated that, unless one is debating whether something is or isn't a currency, I was aware of no other difference between an exchange rate and a market price.

The difference between exchange rate and market price does not depend on whether we are debating anything, or on whether you are aware of that difference.

You are correct that there could still be another difference in the ideas represented by these terms which I'm unaware of. But since you've yet to propose any additional differences we are left with three possibilities:

1) there are no additional differences between the two terms
2) there is some additional technical difference neither of us aware of (but there is no functional difference between this and #1 for the purposes of our discussion)
3) there is a difference you're aware of, that I'm not aware of, and for some reason you don't want to state what it is (which seems unlikely but if so would make further discussion with you seem particularly fruitless).

But that doesn't mean I'm willing to dismiss the meaning of words, and make up new unconventional semantics that other people won't understand, either, and then use them in correspondence.

Please point to the post where I proposed unconventional semantics?
That was an assumption on my part.  As far as I know, you have not explicitly redefined the meaning of the term, "currency."  However, if my assumption was incorrect, then I can't for the life of figure out why we keep going around and around on this.

This is getting interesting now.  Are you now offering an opinion that bitcoin is not a currency?  Just curious.  Personally, I don't care one way or another.

If you do think it's a currency, then my assumption doesn't need a quote from you to justify my assumption that you don't agree with the conventional semantics.

I've found the best way to avoid debates I'm not interested in (and I'm really not interested in having this debate, with either side) is to genuinely not have a position, rather than stating or implying "I believe X, but I don't want to discuss or debate it."

All I'm trying to get across at this point* is that -- unless option #3 above is correct -- a discussion of whether bitcoin has an exchange rate with the US dollar or a market price in US dollars is the exact same discussion as whether bitcoin is or isn't a currency. There's no additional information content.

*Originally I was trying to figure out if you were trying to convey some additional idea with the exchange rate vs. market price distinction.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 07, 2017, 07:57:35 PM
In my original post I stated that, unless one is debating whether something is or isn't a currency, I was aware of no other difference between an exchange rate and a market price.

The difference between exchange rate and market price does not depend on whether we are debating anything, or on whether you are aware of that difference.

You are correct that there could still be another difference in the ideas represented by these terms which I'm unaware of. But since you've yet to propose any additional differences we are left with three possibilities:

1) there are no additional differences between the two terms
2) there is some additional technical difference neither of us aware of (but there is no functional difference between this and #1 for the purposes of our discussion)
3) there is a difference you're aware of, that I'm not aware of, and for some reason you don't want to state what it is (which seems unlikely but if so would make further discussion with you seem particularly fruitless).


But that doesn't mean I'm willing to dismiss the meaning of words, and make up new unconventional semantics that other people won't understand, either, and then use them in correspondence.

Please point to the post where I proposed unconventional semantics?
That was an assumption on my part.  As far as I know, you have not explicitly redefined the meaning of the term, "currency."  However, if my assumption was incorrect, then I can't for the life of figure out why we keep going around and around on this.

This is getting interesting now.  Are you now offering an opinion that bitcoin is not a currency?  Just curious.  Personally, I don't care one way or another.

If you do think it's a currency, then my assumption doesn't need a quote from you to justify my assumption that you don't agree with the conventional semantics.

I've found the best way to avoid debates I'm not interested in (and I'm really not interested in having this debate, with either side) is to genuinely not have a position, rather than stating or implying "I believe X, but I don't want to discuss or debate it."

All I'm trying to get across at this point* is that -- unless option #3 above is correct -- a discussion of whether bitcoin has an exchange rate with the US dollar or a market price in US dollars is the exact same discussion as whether bitcoin is or isn't a currency. There's no additional information content.

*Originally I was trying to figure out if you were trying to convey some additional idea with the exchange rate vs. market price distinction.
This isn't a multiple choice question.  The only thing I ever asserted, apart from actually using that term properly in a sentence, is that, by definition, bitcoin doesn't have an exchange rate.

If you don't agree with that, then I propose that we agree to disagree.

You can agree, disagree, agree to disagree, continue posting, or withdraw.  Those are really the only multiple choices available.

It seems that the only thing we are debating is whether we are actually having a debate or not about bitcoin as a currency.  And I'm quite happy to debate that.  I never said I wouldn't debate anything.  I just said I wouldn't debate whether bitcoin is a currency or not.  And I won't.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 07, 2017, 08:14:05 PM
So in summation, after rounds and rounds of discussion in response to the very simple question "How would you define the difference between a market price and an exchange rate (other than that one applies to a currency and one applies to a commodity)?" the answer is there are no other differences between the two terms you would care to name.

You really could have saved us both a lot of time (and everyone else following this thread a lot of extremely boring posts) if you'd just said that at the beginning.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 07, 2017, 08:35:22 PM
So in summation, after rounds and rounds of discussion in response to the very simple question "How would you define the difference between a market price and an exchange rate (other than that one applies to a currency and one applies to a commodity)?" the answer is there are no other differences between the two terms you would care to name.

You really could have saved us both a lot of time (and everyone else following this thread a lot of extremely boring posts) if you'd just said that at the beginning.

You said flatly, without qualification, that you'd argue there was no distinguishable difference between the two terms.

I'd argue exchange rate vs market price is a distinction without a difference.

Then you said this:

Quote
But I remain open to being proven wrong though. How would you define the difference between a market price and an exchange rate (other than that one applies to a currency and one applies to a commodity, because that would just become circular reasoning).
I proved you wrong on my very first reply, and then you were the one who flooded the thread with redundant posts after that.

I didn't agree (or fully even understand) how currency vs commodity amounts to circular reasoning, but I didn't want to debate that point.  That point was neither resolved or conceded without comment from me; i.e., we never debated it.  I merely withdrew from that point.

Based on your articulation of the point you said you were willing to argue, it quite understandably wasn't obvious that your acceptable proof was contingent on anything more than what you said you'd argue for.
Title: Re: Is it too late [bitcoin]?
Post by: waltworks on December 07, 2017, 08:56:25 PM
Indeed, this is a dumb argument.

I am more interested in the conundrum that something that had the promise to make money flow more easily and cheaply between normal people has been hijacked by nutty speculators such that it's practically useless for it's intended (ok, who knows what the intent really was, but still) purpose. The coming (who knows when) crash will give the whole industry a black eye and probably tie us to the stupid credit card processors and their vampire fees for another decade.

-W
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 07, 2017, 09:36:05 PM
New summary: you are not interested in answering my original question: "How would you define the difference between a market price and an exchange rate (other than that one applies to a currency and one applies to a commodity)?" and apparently have been trying to have an unrelated argument.

I don't know how I could have been clearer about the question I was asking than I was in my original post. However, it's clear you feel very strongly about whatever separate discussion you've been having the whole time.

I apologize for taking so long to realize we have been apparently been having completely unrelated conversations, thank you for clarifying.

(https://imgs.xkcd.com/comics/one-sided.png)
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 07, 2017, 10:03:38 PM
New summary: you are not interested in answering my original question: "How would you define the difference between a market price and an exchange rate (other than that one applies to a currency and one applies to a commodity)?" and apparently have been trying to have an unrelated argument.

I don't know how I could have been clearer about the question I was asking than I was in my original post. However, it's clear you feel very strongly about whatever separate discussion you've been having the whole time.

I apologize for taking so long to realize we have been apparently been having completely unrelated conversations, thank you for clarifying.

(https://imgs.xkcd.com/comics/one-sided.png)

I am literally thrilled to finally find some common ground with you on this.  If the distinction between currency versus commodity is deemed irrelevant, then the distinction between exchange rate and market price is equally meaningless.

I propose we jointly declare this debate resolved.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 07, 2017, 10:07:51 PM
I am literally thrilled to finally find some common ground with you on this.  If the distinction between currency versus commodity is deemed irrelevant, then the distinction between exchange rate and market price is equally meaningless.

I propose we declare this debate resolved.

Exactly! Yes, if we can agree on that point then we are, in fact, in agreement.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 07, 2017, 10:11:53 PM
I am literally thrilled to finally find some common ground with you on this.  If the distinction between currency versus commodity is deemed irrelevant, then the distinction between exchange rate and market price is equally meaningless.

I propose we declare this debate resolved.

Exactly! Yes, if we can agree on that point then we are, in fact, in agreement.

<Gavel slams with a loud whack.>  The resolution is adopted.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 08, 2017, 08:03:06 AM
Thats it????  That's your rebuttal??

I guess there wasn't much you disagreed with then...


And yeah, this is a forum for people who are seeking financial independence, not a crypto fan-club.  So, assuming the mods will still have me, I'll continue to giving advice I think will help advance people towards the goal of FI.  This includes not speculating on cryptos.  I do weigh in on other topics as well. Sometimes I agree with the consensus, sometimes not.

You know, for being on a financial independence forum, you certainly spend a lot of time hanging around these parts talking nothing but cryptos.

That was my rebuttal because that has already be discussed with you and it has been explained several times here and in the other Bitcoin threads which you were a part of why Bitcoin's blockchain is so secure.

You even had a post you created yourself here where you questioned this very topic of security with a clear misunderstand of how it all works:

https://forum.mrmoneymustache.com/investor-alley/things-i-don't-understand-about-bitcoin/ (https://forum.mrmoneymustache.com/investor-alley/things-i-don't-understand-about-bitcoin/)

Here you said:

"3.) It's secure... But for how long?  Taking into account the ever increasing computing power, at what point will it be simple to brute-force into bitcoin wallets.  The blockchain is a public ledger so I assume someone could download the whole thing and set a stable of computers against determining the private key for high value bitcoin wallets until they are cracked.  With the exponential advance of computing power, i.e. Moore's Law, how far away are we really?"

In another post, you said:

"I believe that the block-chain is growing exponentially such that at a certain point the power/energy required to continue to validate the blocks in the block chain will be impossibly large.  At that point the network will collapse under its own weight and no new transactions will be validated."

It seems like you have a misunderstanding on how the blockchain works and why it is so secure. As someone who works in Information Security, I will take to time to explain a few things for you.

Bitcoin's security comes from several specific areas and I'll list out the three of the most important ones:

1) Decentralization: Bitcoin's main security protection comes from the fact that it is a decentralized network. There are currently tens of thousands of bitcoin nodes around the world that each store their own copy of the entire blockchain and that validate and propagate blocks across the network to ensure they are valid blocks that meet all the rules of the network. This makes it theoretically impossible to hack the entire network. If there were a remote code execution vulnerability in the bitcoin core software, you'd be able to compromise and run code on that individual node itself, but the blockchain is public information, so there is no confidential data to steal. You could compromise the keys that are stored on that individual's node and potential steal bitcoin from one user, but that isn't a compromise that threatens the entire network. Contrast this to traditional centralized institutions that store massive amounts of confidential consumer information. Many of the data breaches that take place go unnoticed for months or even years, meanwhile millions of dollars are lost due to unauthorized transaction fraud because of these breaches. These damages are completely lost and unrecoverable, not unlike lost bitcoin are today. Most large companies that handle payment information now have cyber-security insurance to help pay for damages in the event of a breach to protect the consumers. This same protection can be applied to centralized bitcoin organizations. Insurance payouts can be used to return the stolen amounts of bitcoin back to consumers that lost it for those people that had bitcoin stored with centralized institutions. Breaches against central authorities that result in financial loss for consumers is not a critique against bitcoin, it is a critique against centralization. However, the Bitcoin network has a solution for this. It allows for users to take security into their own hands by giving them the power to own their private keys. This eliminates the central single point of failure inherent in our institutions today and makes it much more difficult for attackers to steal large amounts of funds from massive stockpiles of information.


2) Proof-of-work: Proof of work is what is used to include transactions onto the blockchain so that they're immutable and permanently stored as part of the transaction history for the public ledger. SHA256 is a hashing algorithm. Hashing algorithms are considered one-way encryption. That means that there is data loss involved in the process and the output can never be transformed back to the input that created it. That means the only viable method of retrieving the input from the output is to simply brute-force all possible combinations. For a primer on how secure 256-bit hashing is, here is a good video to watch:

https://www.youtube.com/watch?v=S9JGmA5_unY (https://www.youtube.com/watch?v=S9JGmA5_unY)

Also, here is a snippet of text regarding the thermodynamics required of today's computing technology in order to break 256-bit security:

"We cannot even imagine a world where 256-bit brute force searches are possible. It requires some fundamental breakthroughs in physics and our understanding of the universe.

One of the consequences of the second law of thermodynamics is that a certain amount of energy is necessary to represent information. To record a single bit by changing the state of a system requires an amount of energy no less than kT, where T is the absolute temperature of the system and k is the Boltzman constant. (Stick with me; the physics lesson is almost over.)

Given that k = 1.38 × 10−16 erg/K, and that the ambient temperature of the universe is 3.2 Kelvin, an ideal computer running at 3.2 K would consume 4.4 × 10−16 ergs every time it set or cleared a bit. To run a computer any colder than the cosmic background radiation would require extra energy to run a heat pump.

Now, the annual energy output of our sun is about 1.21 × 1041 ergs. This is enough to power about 2.7 × 1056 single bit changes on our ideal computer; enough state changes to put a 187-bit counter through all its values. If we built a Dyson sphere around the sun and captured all its energy for 32 years, without any loss, we could power a computer to count up to 2192. Of course, it wouldn't have the energy left over to perform any useful calculations with this counter.

But that's just one star, and a measly one at that. A typical supernova releases something like 1051 ergs. (About a hundred times as much energy would be released in the form of neutrinos, but let them go for now.) If all of this energy could be channeled into a single orgy of computation, a 219-bit counter could be cycled through all of its states.

These numbers have nothing to do with the technology of the devices; they are the maximums that thermodynamics will allow. And they strongly imply that brute-force attacks against 256-bit keys will be infeasible until computers are built from something other than matter and occupy something other than space."



Another unique property to hashing is that every unique input has a completely unique output. Currently, there are no known collisions for the SHA256 algorithm that bitcoin uses. This means that for all the infinite possible inputs, we have currently not found any two inputs that yield the same output. This is critical for the next security feature. For each new block that is added to the blockchain, the hash of the previous block is included and hashed into the new block. This is what creates the immutable blockchain. This means that if any prior block were to be altered, the entire proof of work that went into all blocks there afterward would need to be rehashed in order for the blockchain to stay valid.

Currently, the bitcoin network consists of the most computing power in any one single network in the world. There is more computing power on the bitcoin network that the total of the world's 600 top supercomputers combined. This is an immense amount of computing power that provides bitcoin its security and is completely unique to bitcoin's blockchain. I am not sure exactly the current number as it is constantly changing, but in order for the entire bitcoin blockchain to be reworked, the current bitcoin network would need to calculate for something like 200 days straight. This means that for any other entity that wanted to alter the transaction history of the bitcoin blockchain, not only would you need to have more computing power than the rest of the bitcoin network, but you'd need to put it to work for a very long time which would quickly become cost prohibitive (as if having that much computing power wouldn't be cost prohibitive for one single entity in the first place). The further any given block is buried in the blockchain, the more secure it becomes. Estimates are something around the vicinity of $60 billion dollars to attempt to "counterfeit" one single bitcoin which means economically it just makes sense to purchase bitcoin on the market as opposed to trying to cheat the system. That cost will only continue to rise as more computing power is added to the network.


3) Quantum computing protection: Now the idea of computers being made of something other than matter and occuying something other than space (as noted in the quote above) alludes to the idea of quantum computers. Quantum computers use qubits instead of bits consisting of 1's and 0's. Qubits can be a 1 or a 0 and essentially any superposition of those two states. Using specific algorithms (like Shor's algo), quantum computers can take an integer and finds its prime factors extremely quickly because of the fact that it can solve for many states at the same and solve the equation in polynomial time.

In otherwords, given a public key (which is based on two very large prime numbers), you can find the original prime used numbers which is essentially the private key. Bitcoin uses public and private keys for digital signatures for securing bitcoins for their owners. However, bitcoin uses clever techniques to protect against the threat of quantum computing. Whenever a transaction is signed to send money to another address, its public key is added to the signed transaction so that the network and recipient can verify that the signer was indeed the owner of the bitcoin's being sent. Because addresses are hashes of the public key, this means that the only time that the actual public key is exposed is when the bitcoin address is actually being emptied and sent to the recipient. This is why it is important to never use the same bitcoin address twice. By the time a quantum computer receives the public key in order to attempt to decipher the private key from it, the address will have already been emptied of bitcoin and be worthless. Since quantum computers are not efficient at solving hashing equations, this protects bitcoin from the threat of quantum computers. Should there be a need to change encryption algorithms or increase the key size, this can be done through an upgrade and due to the decentralized nature of the network, the threat of this type of issue in the future is a much bigger threat to existing traditional centralized institutions that depend on these same encryption algorithms for security and rely on single points of failure to protect massive amounts of confidential data.


This is just a small sample of some of the more major components of the security that bitcoin provides and I hope I explained it in a way that is easy to understand.

L.A.S., I gave you the rebuttal I did because it is clear from your posts that after information like this is provided for you, you still continue to post FUD information about bitcoin such as an article about a data breach that is not unique to bitcoin, but is commonplace among every industry out there. The fact that the bitcoin that were stolen cannot be recovered is no different from the billions of USD that are stolen every year before even the data breaches that were the root cause were even discovered. At least when bitcoin is stolen, it is apparent immediately that they are gone compared to the covert fraud that takes place from compromised payment information every single day before it becomes clear there was a breach somewhere.

You're free to post on any topic you'd like, but don't mistake what you're posting as advice to anyone when it is clear from your post history that you have a clear bias against this technology and a lack of understanding of it as well. I welcome any open dialog and debate and if you'd like to engage in that, I'd be more than happy to.
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on December 08, 2017, 10:20:34 AM
L.A.S., I gave you the rebuttal I did because it is clear from your posts that after information like this is provided for you, you still continue to post FUD information about bitcoin such as an article about a data breach that is not unique to bitcoin, but is commonplace among every industry out there. The fact that the bitcoin that were stolen cannot be recovered is no different from the billions of USD that are stolen every year before even the data breaches that were the root cause were even discovered. At least when bitcoin is stolen, it is apparent immediately that they are gone compared to the covert fraud that takes place from compromised payment information every single day before it becomes clear there was a breach somewhere.

The difference with bitcoin is that there is no consumer protection at all.  Once money has been stolen it's gone.  I mean, if there's a data breach at my bank at a billion dollars are lost . . . I don't care because it doesn't impact me.  If my credit card is stolen and there are fraudulent charges, they don't impact me.  When there's a data breach at a place holding bitcoin for people, each of those people will lose their funds.  There also currently exists no real way to trace the missing money.

While I agree with you that there's a lot of cool security technology involved with crypto-currencies, your continual refusal to acknowledge the poor (non-existent) level of consumer protection that comes from using them is a bit odd.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 08, 2017, 10:29:51 AM
L.A.S., I gave you the rebuttal I did because it is clear from your posts that after information like this is provided for you, you still continue to post FUD information about bitcoin such as an article about a data breach that is not unique to bitcoin, but is commonplace among every industry out there. The fact that the bitcoin that were stolen cannot be recovered is no different from the billions of USD that are stolen every year before even the data breaches that were the root cause were even discovered. At least when bitcoin is stolen, it is apparent immediately that they are gone compared to the covert fraud that takes place from compromised payment information every single day before it becomes clear there was a breach somewhere.

The difference with bitcoin is that there is no consumer protection at all.  Once money has been stolen it's gone.  I mean, if there's a data breach at my bank at a billion dollars are lost . . . I don't care because it doesn't impact me.  If my credit card is stolen and there are fraudulent charges, they don't impact me.  When there's a data breach at a place holding bitcoin for people, each of those people will lose their funds.  There also currently exists no real way to trace the missing money.

While I agree with you that there's a lot of cool security technology involved with crypto-currencies, your continual refusal to acknowledge the poor (non-existent) level of consumer protection that comes from using them is a bit odd.

Shall I assume that you don't agree that bitcoin is suitable for wide adoption and a general acceptance as a standard of value and a medium of exchange?

I have no noteworthy disagreements with your post.  Just curious. ;)
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 08, 2017, 10:45:51 AM
The difference with bitcoin is that there is no consumer protection at all.  Once money has been stolen it's gone.  I mean, if there's a data breach at my bank at a billion dollars are lost . . . I don't care because it doesn't impact me.  If my credit card is stolen and there are fraudulent charges, they don't impact me.  When there's a data breach at a place holding bitcoin for people, each of those people will lose their funds.  There also currently exists no real way to trace the missing money.

That's not really a difference. If there is a data breach at a company, there will likely be millions of dollars that were permanently stolen that can never be returned. The company covers those costs for the consumer. Why can't that same thing be true for centralized companies that handle bitcoin? It isn't the currency that is providing the protection in either case. Most data breaches that occur go unnoticed for months all the while millions of dollars are being stolen. The protections that are in place that protect the consumer are not protections provided by the currency, they're just simply protections provided by the companies because they'd like to stay in business. The customers are protected not because they were able to retrieve the stolen funds (that's almost never the case), but simply because they're protecting their business...the customers...by not putting the loss on them. Cyber-security insurance is a massive industry now for this very reason. Coinbase undoubtedly has as massive insurance policy to protect their customers in the same way that many other companies that handle confidential information do.

If we're talking about individuals holding their own private keys, then the comparison there is no different to anyone holding cash. Once its stolen, its likely gone forever unless you can find who stole it. The same is true for bitcoin.
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on December 08, 2017, 10:50:02 AM
L.A.S., I gave you the rebuttal I did because it is clear from your posts that after information like this is provided for you, you still continue to post FUD information about bitcoin such as an article about a data breach that is not unique to bitcoin, but is commonplace among every industry out there. The fact that the bitcoin that were stolen cannot be recovered is no different from the billions of USD that are stolen every year before even the data breaches that were the root cause were even discovered. At least when bitcoin is stolen, it is apparent immediately that they are gone compared to the covert fraud that takes place from compromised payment information every single day before it becomes clear there was a breach somewhere.

The difference with bitcoin is that there is no consumer protection at all.  Once money has been stolen it's gone.  I mean, if there's a data breach at my bank at a billion dollars are lost . . . I don't care because it doesn't impact me.  If my credit card is stolen and there are fraudulent charges, they don't impact me.  When there's a data breach at a place holding bitcoin for people, each of those people will lose their funds.  There also currently exists no real way to trace the missing money.

While I agree with you that there's a lot of cool security technology involved with crypto-currencies, your continual refusal to acknowledge the poor (non-existent) level of consumer protection that comes from using them is a bit odd.

Shall I assume that you don't agree that bitcoin is suitable for wide adoption and a general acceptance as a standard of value and a medium of exchange?

I have no noteworthy disagreements with your post.  Just curious. ;)

I think that the potential exists, but this is one of several bugs that needs to be worked out for that to happen.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 08, 2017, 10:52:21 AM
I think that the potential exists, but this is one of several bugs that needs to be worked out for that to happen.

Then we have nothing to argue about.  Apologies for the intrusion. ;)
Title: Re: Is it too late [bitcoin]?
Post by: simonsez on December 08, 2017, 11:11:14 AM
If we're talking about individuals holding their own private keys, then the comparison there is no different to anyone holding cash. Once its stolen, its likely gone forever unless you can find who stole it. The same is true for bitcoin.
Wait, Bitcoin has something similar to FDIC?  If someone robs my bank, I'm still good to go.

Or do you mean if someone robs me on the street and takes the cash I carry with me that is the same as people's Bitcoin private keys being stolen?  The former is likely to be $20.  I'm not sure what the average value of Bitcoin private keys is but I suspect the order of magnitude is different.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 08, 2017, 11:17:03 AM
If we're talking about individuals holding their own private keys, then the comparison there is no different to anyone holding cash. Once its stolen, its likely gone forever unless you can find who stole it. The same is true for bitcoin.

I think cash is actually a very good analogy.*

Many of the concerns people have about using bitcoin as a store of wealth (as apposed to a method of facilitating transactions) are the exact same concerns which would arise with using cash as a store of wealth. In both cases, transactions are irreversible, which both decreases transaction costs and increases wealth.

The lack of consumer protections against either theft of fraudulent protections really isn't a big concern for me in either case as long as the overall sums of money are small. (If someone steals my wallet with a few hundred bucks in it, I'm out that money in just the same unrecoverable fashion as if someone steals the private key to my bitcoin wallet.) I've never used the chargeback functions on credit cards, so for me they don't provide a lot of extra value over using cash/bitcoin for day to day transactions.

In contrast, if I had a significant fraction of my total net worth tied up in either a bitcoin wallet or a big pile of 100 dollar bills in my apartment, I suspect I would be much more stressed, and sleep less well at night, than I am with most of my total net worth tied up in index funds, bank accounts, and real estate.

*For a sense of the logistical and security problems faced by using physical cash as a store of wealth, reading up on the marijuana industry in the USA, where many states have legalized the trade, but the federal government prevents these business from opening bank accounts, is a great resource.
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on December 08, 2017, 11:23:13 AM
If we're talking about individuals holding their own private keys, then the comparison there is no different to anyone holding cash. Once its stolen, its likely gone forever unless you can find who stole it. The same is true for bitcoin.

I think cash is actually a very good analogy.*

Many of the concerns people have about using bitcoin as a store of wealth (as apposed to a method of facilitating transactions) are the exact same concerns which would arise with using cash as a store of wealth. In both cases, transactions are irreversible, which both decreases transaction costs and increases wealth.

The lack of consumer protections against either theft of fraudulent protections really isn't a big concern for me in either case as long as the overall sums of money are small. (If someone steals my wallet with a few hundred bucks in it, I'm out that money in just the same unrecoverable fashion as if someone steals the private key to my bitcoin wallet.) I've never used the chargeback functions on credit cards, so for me they don't provide a lot of extra value over using cash/bitcoin for day to day transactions.

In contrast, if I had a significant fraction of my total net worth tied up in either a bitcoin wallet or a big pile of 100 dollar bills in my apartment, I suspect I would be much more stressed, and sleep less well at night, than I am with most of my total net worth tied up in index funds, bank accounts, and real estate.

*For a sense of the logistical and security problems faced by using physical cash as a store of wealth, reading up on the marijuana industry in the USA, where many states have legalized the trade, but the federal government prevents these business from opening bank accounts, is a great resource.

Forgive me if I'm wrong, but isn't that the complete opposite scenario of most bitcoin investors at the moment?  Few people have only a couple hundred dollars of bitcoin, most appear to be hoarding large sums with the intent to use as an investment rather than for any transactions that can be carried out.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 08, 2017, 11:27:59 AM
Well, to clarify, I'm not an (intentional) bitcoin investor. So don't take any of my posts as representing the "buy bitcoin" worldview.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 08, 2017, 11:44:07 AM
Again, to reiterate though, the critique about protection from breaches is not a critique against bitcoin itself, it is just a critique against centralized organizations that don't provide adequate protections for their consumers. It is only a matter of time where it is common place to have larger bitcoin institutions (like Coinbase) that provide the same consumer protections against data breaches that today's traditional institutions provide.

The benefit that bitcoin does provide the individual is that if they choose not to trust that central authority (which many around the world don't and shouldn't), then you can choose to take security into your own hands.

I do this myself and I am fully confident in my ability to store a large amounts of bitcoin securely. I have a seed stamped on to steel that I used Shamir39 to generate a 2 of 3 seed. Those three copies are stored in geographically diverse locations from each other. I only need 2 of the 3 different seeds to restore my bitcoin. My seed was also generated off-line using 12 rolls of 4 dice and a quarter and it has never touched an online computer before. Obviously, taking security this seriously is not something that everyone will do our have the know how to do, but the technologies are there (hardware wallets, etc) to allow for adequate security for the individual. Additional technologies that will continue to increase ease of use will no doubt be developed. In my opinion, this gives a much greater degree of security when compared to straight cash.

Also, further technologies for institutional protections will continue to be developed. Coinbase has already implemented some such features such as their Vault accounts. Multi-signature online custodial accounts provide a mix of both worlds that allows the end-user to own a portion of the private key along with another party and a combination of the keys are needed for withdrawals. Withdrawals with Coinbase's Vault accounts take 2 days to go through which allow for adequate reaction time in the event of an unauthorized withdrawal. Again, these are technologies and system designs that can be layered on top of bitcoin. Critiquing bitcoin for a failure in centralized institutions to provide adequate protections to their consumers only validates the main concept behind bitcoin's decentralized design in the first place.
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on December 08, 2017, 11:52:13 AM
Again, to reiterate though, the critique about protection from breaches is not a critique against bitcoin itself, it is just a critique against centralized organizations that don't provide adequate protections for their consumers. It is only a matter of time where it is common place to have larger bitcoin institutions (like Coinbase) that provide the same consumer protections against data breaches that today's traditional institutions provide.

Are you sure about that?  Most financial institutions do not actually hold large quantities of cash at any given time, it's digitally recorded debt that gets swapped back and forth all over the place.  It's not possible for someone to break into the bank and cart away all of the money.  It seems like any institution holding bitcoin would need to actually have the bitcoin, and therefore be vulnerable to this concern wouldn't it?
Title: Re: Is it too late [bitcoin]?
Post by: moof on December 08, 2017, 11:55:11 AM
Again, to reiterate though, the critique about protection from breaches is not a critique against bitcoin itself, it is just a critique against centralized organizations that don't provide adequate protections for their consumers. It is only a matter of time where it is common place to have larger bitcoin institutions (like Coinbase) that provide the same consumer protections against data breaches that today's traditional institutions provide.
...
Report back when I can get FDIC backed Bitcoin accounts to store my crap in.  None of the Bitcoin infrastructure has ever been tested against a bank run.  Well, actually Mt. Gox did and it failed miserably.
Title: Re: Is it too late [bitcoin]?
Post by: FI40 on December 08, 2017, 12:07:23 PM
I do this myself and I am fully confident in my ability to store a large amounts of bitcoin securely. I have a seed stamped on to steel that I used Shamir39 to generate a 2 of 3 seed. Those three copies are stored in geographically diverse locations from each other. I only need 2 of the 3 different seeds to restore my bitcoin. My seed was also generated off-line using 12 rolls of 4 dice and a quarter and it has never touched an online computer before. Obviously, taking security this seriously is not something that everyone will do our have the know how to do, but the technologies are there (hardware wallets, etc) to allow for adequate security for the individual. Additional technologies that will continue to increase ease of use will no doubt be developed. In my opinion, this gives a much greater degree of security when compared to straight cash.

I'm just curious, when you have your seed stamped on steel (it's really weird to say that btw) in different geographic locations, can you still use your bitcoins easily, i.e. do you need to find 2 of your 3 seeds every time you want to buy something with your bitcoin, or buy more bitcoins? If so that is inconvenient. If not then please educate this ignoramus.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 08, 2017, 12:11:23 PM
Are you sure about that?  Most financial institutions do not actually hold large quantities of cash at any given time, it's digitally recorded debt that gets swapped back and forth all over the place.  It's not possible for someone to break into the bank and cart away all of the money.  It seems like any institution holding bitcoin would need to actually have the bitcoin, and therefore be vulnerable to this concern wouldn't it?

Most data breaches do not consist of heist style robberies where millions of dollars are exfiltrated (as you noted). It is the payment information and PII that is exfiltrated. This often happens without the companies knowing. The fraud/theft then happens afterward in the form of unauthorized transactions. Yes, financial organizations holding bitcoin would need to store that bitcoin, but the positive trade off is that you don't have aftermarket fraud taking place in the form of unauthorized transactions. On top of that, if bitcoin is stolen, it is noticeable immediately after the funds are withdrawn as opposed to having a breach remain dormant for months or years on end while consumer data is being stolen.

Report back when I can get FDIC backed Bitcoin accounts to store my crap in.  None of the Bitcoin infrastructure has ever been tested against a bank run.  Well, actually Mt. Gox did and it failed miserably.

FDIC does not insure against fraud though (which is what the discussion was about). I agree that FDIC insurance would be valuable in the event of institutional insolvency. But, again, that is not a critique against bitcoin, that's a critique against the institutions around it. We may very well see a day where FDIC/NCUA type insurances are extended to bitcoin accounts as well.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 08, 2017, 12:15:54 PM
I'm just curious, when you have your seed stamped on steel (it's really weird to say that btw) in different geographic locations, can you still use your bitcoins easily, i.e. do you need to find 2 of your 3 seeds every time you want to buy something with your bitcoin, or buy more bitcoins? If so that is inconvenient. If not then please educate this ignoramus.

That's my cold storage vault. That very secure wallet contains 99% of my bitcoin. I rarely ever withdraw from it (maybe once a month) and I can still send money to it any time without needing the seed. The seed is only needed for spending. I chose to stamp it on steel so that it is better protected against fire, corrosion, electricity, and water (compared to just storing it on paper in a fire safe, for example). For spending, I just use the online wallet through Coinbase where I keep small amounts of funds (<$1000) at any given time. I have a bitcoin debit card tied to that wallet that allows me to spend that bitcoin anywhere VISA is accepted without any transaction fees.

Hope that helps.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 08, 2017, 12:17:52 PM
Yeah, what kind of steel did you use?  Steel, even many "stainless" steels varieties are still prone to rust, pitting, and corrosion over long durations and poor environmental  conditions...  Its why they don't use it for coins, at least not in the U.S.

100% stainless AISI 304 steel
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on December 08, 2017, 12:37:03 PM
Are you sure about that?  Most financial institutions do not actually hold large quantities of cash at any given time, it's digitally recorded debt that gets swapped back and forth all over the place.  It's not possible for someone to break into the bank and cart away all of the money.  It seems like any institution holding bitcoin would need to actually have the bitcoin, and therefore be vulnerable to this concern wouldn't it?

Most data breaches do not consist of heist style robberies where millions of dollars are exfiltrated (as you noted). It is the payment information and PII that is exfiltrated. This often happens without the companies knowing. The fraud/theft then happens afterward in the form of unauthorized transactions. Yes, financial organizations holding bitcoin would need to store that bitcoin, but the positive trade off is that you don't have aftermarket fraud taking place in the form of unauthorized transactions. On top of that, if bitcoin is stolen, it is noticeable immediately after the funds are withdrawn as opposed to having a breach remain dormant for months or years on end while consumer data is being stolen.

Agreed mostly.

The difference is that data breaches do not really financially impact end users under our current banking system.  Data breaches will directly impact end users who have bitcoin held somewhere.  So the case of a data breach with bitcoin is very similar to a heist style robbery that hits safety deposit boxes where someone has squirreled away some cash.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 08, 2017, 01:39:03 PM
Agreed mostly.

The difference is that data breaches do not really financially impact end users under our current banking system.  Data breaches will directly impact end users who have bitcoin held somewhere.  So the case of a data breach with bitcoin is very similar to a heist style robbery that hits safety deposit boxes where someone has squirreled away some cash.

Again, that is a critique against the institutions providing services for costumers, not against bitcoin. Data breaches with most traditional financial institutions do not impact the end user because most of those institutions value their business and purchase insurance so that if a breach were to occur, it doesn't have to impact their customers.

Case in point, Coinbase is insured in this same way against data breaches as it states on their website:

"Digital Currency

All digital currency that Coinbase holds online is fully insured. This means that if Coinbase were to suffer a breach of its online storage, the insurance policy would pay out to cover any customer funds lost as a result.

The insurance policy covers any losses resulting from a breach of Coinbase’s physical security, cyber security, or by employee theft.

Coinbase holds less than 2% of customer funds online. The rest is held in offline storage."
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 08, 2017, 01:44:27 PM
Agreed mostly.

The difference is that data breaches do not really financially impact end users under our current banking system.  Data breaches will directly impact end users who have bitcoin held somewhere.  So the case of a data breach with bitcoin is very similar to a heist style robbery that hits safety deposit boxes where someone has squirreled away some cash.

Again, that is a critique against the institutions providing services for costumers, not against bitcoin. Data breaches with most traditional financial institutions do not impact the end user because most of those institutions value their business and purchase insurance so that if a breach were to occur, it doesn't have to impact their customers.

Case in point, Coinbase is insured in this same way against data breaches as it states on their website:

"Digital Currency

All digital currency that Coinbase holds online is fully insured. This means that if Coinbase were to suffer a breach of its online storage, the insurance policy would pay out to cover any customer funds lost as a result.

The insurance policy covers any losses resulting from a breach of Coinbase’s physical security, cyber security, or by employee theft.

Coinbase holds less than 2% of customer funds online. The rest is held in offline storage."


No insurance covering acts of God? Destruction from acts of war?  Not trying to gin up a religious debate.  Just curious.  I'm trying to read that language the way the insurance adjuster might.

I mean, insurance companies aren't filthy rich because they pay out on every claim, right?
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 08, 2017, 01:55:14 PM
I read it as meaning only 2% of the bitcoins held are insured.  Since it only refers to insurance for bitcoins held "online" and only 2% is held online.  So, I'm guessing the other 98% held offline is uninsured?
Good point.  Are you an insurance adjuster by any chance?  ;)
Title: Re: Is it too late [bitcoin]?
Post by: talltexan on December 08, 2017, 02:11:14 PM
So there's a pretty high chance of a future in which some form of crypto currency is accepted by many merchants as a payment. No one is denying that, right? Even people who don't want to own Bitcoin now think that future is coming, right?
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 08, 2017, 02:19:08 PM
So there's a pretty high chance of a future in which some form of crypto currency is accepted by many merchants as a payment. No one is denying that, right? Even people who don't want to own Bitcoin now think that future is coming, right?
Heck, most of our money is already moved around digitally.  Why stop short of crypto?

Even the federal reserve (and other central banks) have kicked that idea around.  They don't speak highly of bitcoin, but in my mind, a federal reserve issued fiat-friendly crypto, eventually, is as near a certainty as the sun coming up tomorrow. Hello FDIC insurance.  Settle your tax bill with the IRS using crypto, anyone? ;)

Volatility and valuation will never be problems searching for solutions.  No price discovery needed.

Acceptance by merchants, at least in the USA, will not be optional.  Acceptance will be required by law, unless specifically exempted. Then again, maybe credit card companies will step up and solve that problem with existing partnerships and infrastructure.  Either way, problem solved. 

I don't seriously expect any central bank to embrace a "global" crypto currency, such as bitcoin.  That would cede too much authority over monetary policy, and I just can't imagine congress authorizing that.  I'll let the lawyer-inclined members debate whether a constitutional amendment would be needed for that.
Title: Re: Is it too late [bitcoin]?
Post by: dougules on December 08, 2017, 02:36:09 PM
So there's a pretty high chance of a future in which some form of crypto currency is accepted by many merchants as a payment. No one is denying that, right? Even people who don't want to own Bitcoin now think that future is coming, right?

Even if it is the future, you still have the two real questions of

- Will it be Bitcoin specifically?

- Is the current exchange rate justified right now?

I think the answers are "maybe" and "most likely no." 
Title: Re: Is it too late [bitcoin]?
Post by: waltworks on December 08, 2017, 03:15:36 PM
I could see Zelle taking over most of the money-transferring market. I've already had a number of customers use it, though I think there's a ~$2k daily transaction limit. Early days, of course.

-W
Title: Re: Is it too late [bitcoin]?
Post by: phil22 on December 08, 2017, 06:06:15 PM
top post of r/jokes today is highly relevant here: https://np.reddit.com/r/Jokes/comments/7ieoji/a_boy_asked_his_bitcoininvesting_dad/
Title: Re: Is it too late [bitcoin]?
Post by: BattlaP on December 09, 2017, 11:39:07 PM
So there's a pretty high chance of a future in which some form of crypto currency is accepted by many merchants as a payment. No one is denying that, right? Even people who don't want to own Bitcoin now think that future is coming, right?

I think it will look very different to anything around now. The whole model whereby the inventors, their mates and early adopters end up owning a significant percentage of the total supply, is unnecessary, overtly scamish and detrimental to adoption efforts. I think if there turns out to be any benefits to any of the concepts over current banking solutions, they will be integrated into the backend of existing institutions and the frontend of interacting with day-to-day finances will not change at all for the individual. The average person doesn't know or care about cryptography, it will be managed behind the scenes. Any actually successful 'crypto currency' in terms of actual daily use will most likely be created 'above board' by existing banking institutions.

The notion that such a thing can only be invented/created through an evolutionary 'free market' free-for-all meme war that we are currently seeing is a naive libertarian belief/desire. I think there's a chance that it ends up going so badly that the whole notion will become something that culture will look upon in the same way as pyramid schemes, MLM, beanie babies, etc, which could really slow down or kill development/investment/interest/adoption of the ideas.

I've said it before and I'll say it again, I have yet to see any proof of the existing application of cryptocurrencies/blockchain (that haven't been bastardised into being basically databases anyway) that leads to an undeniable competitive advantage that means businesses need to adopt it or risk being left behind. The overwhelming bulk (if not literally all) of journalism you see reporting on 'adoption' are companies doing preliminary investigation, experimentation, or just signing up to lists (ethereum foundation) that are essentially them saying 'sure, we'll use your technology if it ever becomes practical and advantageous' (basically, hedging their bets). Or the name 'blockchain' being applied to things which are obviously not blockchain as it espoused by the crypto community (eg the recent ASX news).
Title: Re: Is it too late [bitcoin]?
Post by: chasesfish on December 10, 2017, 04:48:29 AM
I could see Zelle taking over most of the money-transferring market. I've already had a number of customers use it, though I think there's a ~$2k daily transaction limit. Early days, of course.

-W

Zelle's impact on Venmo, Paypal, ect will be interesting.  The banks are slow, but they own Zelle and it can be instantaneous vs. through an intermediary.
Title: Re: Is it too late [bitcoin]?
Post by: libertarian4321 on December 10, 2017, 06:02:58 AM
Bitcoin.  A "currency" that no one uses to buy stuff with.  Backed by nothing but the faith of a small number of American millennials and a lot of rich Chinese trying to smuggle money out of their country.  It's all about smuggling and speculative "investing."

Reminds me more of a 1999 profitless ".com" than an investment (plus the smuggling).

It's in full mania mode now, so the end game (collapse) is likely near.

Though, as with all manias, a certain number of fools who had not heard of Bitcoin before a week ago, will pile on at the end ("Greater Fool" theory of investing) and lose nearly everything they invest.
Title: Re: Is it too late [bitcoin]?
Post by: YttriumNitrate on December 10, 2017, 07:52:17 AM
It's in full mania mode now, so the end game (collapse) is likely near.
Don't forget the old saying that the market can stay irrational longer than you can stay solvent.


My typical gauge for determining if a correction/collapse is coming is to watch and see if the particular investment is discussed on Christmas day at the gathering of my extended family.* If bitcoin is not discussed two weeks from now, then my prediction is that bitcoin is good until 2019.

**I purposefully won't be bringing up the topic to see if someone else does.
Title: Re: Is it too late [bitcoin]?
Post by: theolympians on December 10, 2017, 11:33:41 AM
I have some thoughts on bitcoin. First it is a currency, but no one here that I have seen (just skimming through the posts, if I missed one) has used it as such. In the press, there hasn't been any discussion on what large numbers of people are purchasing with it. I am sure it has happened, "businesses accept it", though at what level I am not sure. As someone posted here, how would a business price something in bitcoin with such swings in volatility?

Secondly, why would anyone use bitcoin as opposed to dollars or any other currency? The plus is anonymity. That is a good thing only if you are trying to hide what you are doing. I bet the Norks, Chinese, and Russians love it. For the average person, is hiding what you are doing that important day-to-day?

Finally, "bitcoin is going up!" at a rocket rate. Reading the posts here, and reviewing the press, everyone seems to be trying to lasso the rocket to get rich quick (or even just to make a little extra). I believe that will work as long as people keep pumping money into the system buying into the dream. When that slows, or when the big players cash out......

It might be the way of the future, but at some point governments are going to get involved and heavily regulate it. There was post buried in here that less than 2% is insured by coinbase. There is no protection there, so if someone boosts your wallet they will be zero help.

In short, it just looks like a gambling frenzy to me; wrapped up in financial terms. That said if you bought bitcoin when it was 1$, you'd be sitting pretty. Now that is over $10000, it has to climb to even more super-highs to realize more modest gains.
Title: Re: Is it too late [bitcoin]?
Post by: Aggie1999 on December 10, 2017, 01:55:36 PM
There was post buried in here that less than 2% is insured by coinbase. There is no protection there, so if someone boosts your wallet they will be zero help.

The 2% is the amount of crypto Coinbase says they keep in online storage. They say rest is kept in offline storage. They claim all crypto funds are fully insured from theft on their side. Who knows if it is or not. They specifically say no funds will be covered for someone hacking an individual account. I would not keep anything in Coinbase or any other exchange except that which is needed to trade.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 10, 2017, 02:16:54 PM
I have some thoughts on bitcoin. First it is a currency, but no one here that I have seen (just skimming through the posts, if I missed one) has used it as such. In the press, there hasn't been any discussion on what large numbers of people are purchasing with it. I am sure it has happened, "businesses accept it", though at what level I am not sure. As someone posted here, how would a business price something in bitcoin with such swings in volatility?

Secondly, why would anyone use bitcoin as opposed to dollars or any other currency? The plus is anonymity. That is a good thing only if you are trying to hide what you are doing. I bet the Norks, Chinese, and Russians love it. For the average person, is hiding what you are doing that important day-to-day?

*Waves* Hi there! I've used bitcoin to actually pay for goods online.

I wasn't trying to be anonymous,* but the very first time I bought bitcoin I was ordering something from India, from a company I hadn't heard of before, and I didn't feel at all comfortable giving them my credit card info and setting up a bank wire for a $60 purchase seemed ridiculous.

Like paypal, the nice thing about using bitcoin to process payments is that it's "push" driven, rather than "pull" driven, so you can do business with someone without having to trust them to A) not decide to bill you again later without your consent, B) use appropriate data security so no one else can steal your credit card info and run around buying all sorts of stuff on your account. Unlike paypal, transactions have the potential be be very low cost, and you don't have to worry about paypal draining bank accounts you have linked to you paypal account if someone does a chargeback (or various other (https://gizmodo.com/i-cant-afford-not-to-have-that-money-the-worst-paypa-1705854399)  horror stories (https://news.ycombinator.com/item?id=13851124)). At the time, transaction fees were on the order of $0.05, and the whole thing went quite smoothly.

Right now the fees are ridiculously high, and I agree with you that the rapid run up in price has brought in a lot of people who are buying bitcoin in the hopes of making a lot of money rather than because they're actually needing to use it to buy and sell things.

*And bitcoin is not a particularly good way to stay anonymous. If you were actually getting into the drug trade I assume you'd pick a currency like monero instead.
Title: Re: Is it too late [bitcoin]?
Post by: surfhb on December 10, 2017, 02:24:02 PM
I have some thoughts on bitcoin. First it is a currency, but no one here that I have seen (just skimming through the posts, if I missed one) has used it as such. In the press, there hasn't been any discussion on what large numbers of people are purchasing with it. I am sure it has happened, "businesses accept it", though at what level I am not sure. As someone posted here, how would a business price something in bitcoin with such swings in volatility?

Secondly, why would anyone use bitcoin as opposed to dollars or any other currency? The plus is anonymity. That is a good thing only if you are trying to hide what you are doing. I bet the Norks, Chinese, and Russians love it. For the average person, is hiding what you are doing that important day-to-day?

*Waves* Hi there! I've used bitcoin to actually pay for goods online.

I wasn't trying to be anonymous,* but the very first time I bought bitcoin I was ordering something from India, from a company I hadn't heard of before, and I didn't feel at all comfortable giving them my credit card info and setting up a bank wire for a $60 purchase seemed ridiculous.

Like paypal, the nice thing about using bitcoin to process payments is that it's "push" driven, rather than "pull" driven, so you can do business with someone without having to trust them to A) not decide to bill you again later without your consent, B) use appropriate data security so no one else can steal your credit card info and run around buying all sorts of stuff on your account. Unlike paypal, transactions have the potential be be very low cost, and you don't have to worry about paypal draining bank accounts you have linked to you paypal account if someone does a chargeback (or various other (https://gizmodo.com/i-cant-afford-not-to-have-that-money-the-worst-paypa-1705854399)  horror stories (https://news.ycombinator.com/item?id=13851124)). At the time, transaction fees were on the order of $0.05, and the whole thing went quite smoothly.

Right now the fees are ridiculously high, and I agree with you that the rapid run up in price has brought in a lot of people who are buying bitcoin in the hopes of making a lot of money rather than because they're actually needing to use it to buy and sell things.

*And bitcoin is not a particularly good way to stay anonymous. If you were actually getting into the drug trade I assume you'd pick a currency like monero instead.

Not a very good reason to buy a product with bitcoin IMO.   First off you are not accountable if someone steals your account and secondly, your product is insured if you have an issue with the vendor.     

BTW....NO ONE should ever link their bank account to anything online OR even use one for purchases.   I learned that lesson before.   Use a credit card!!!  Its a no brainer.     No way in hell I'm going to give a vendor my hard earned money within an anonymous environment!
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 10, 2017, 02:50:46 PM
Not a very good reason to buy a product with bitcoin IMO.   First off you are not accountable if someone steals your account and secondly, your product is insured if you have an issue with the vendor.     

BTW....NO ONE should ever link their bank account to anything online OR even use one for purchases.   I learned that lesson before.   Use a credit card!!!  Its a no brainer.     No way in hell I'm going to give a vendor my hard earned money within an anonymous environment!

I definitely agree with you that credit card > bank account for online purchases.

In my observation cleaning up the mess left behind by credit card/identity theft is a huge pain and hassle even if the loses are ultimately covered by someone other than you. I'd much rather work with "push" based methods for online payments instead of "pull" and never have to go through the hassle in the first place. I acknowledge other people with weight the same pros and cons and come to the opposite conclusion.

Anyway, I'm not trying to convince you to replace your credit card spending with bitcoin spending. But if the question is whether anyone in this thread has used bitcoin to make purchases, the answer is "yes."

Title: Re: Is it too late [bitcoin]?
Post by: aspiringnomad on December 10, 2017, 07:35:38 PM
It's in full mania mode now, so the end game (collapse) is likely near.
Don't forget the old saying that the market can stay irrational longer than you can stay solvent.


My typical gauge for determining if a correction/collapse is coming is to watch and see if the particular investment is discussed on Christmas day at the gathering of my extended family.* If bitcoin is not discussed two weeks from now, then my prediction is that bitcoin is good until 2019.

**I purposefully won't be bringing up the topic to see if someone else does.

Oh, this old bubble indicator is already flashing like crazy for me personally. Besides being a frequent topic of conversation amongst those with some knowledge of it, two of my older friends who have absolutely zero interest in new technology and/or serious investments have independently registered new Coinbase accounts in the past week. One jumped right into the craze and just bought some BTC despite my warning that they're playing with fire. Neither has any interest in cryptocurrency other than to try to sell it to a greater fool. What strikes me as really odd is that these are among the last people I would have expected to jump on the crypto bandwagon. These two happened to ask me my thoughts about it, assuming that I had some knowledge of it and then they largely viewed my skepticism with their own (uninformed) skepticism about my views. I can't imagine how many millions more are doing the same and I also can't imagine it'll end well for many.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 11, 2017, 10:44:10 AM
For the average person, is hiding what you are doing that important day-to-day?

You may not value privacy, but alot of people do. Use-cases would include looking up embarassing medical conditions, freedom of expression vs self-censorship and chilling effects, entertainment derived from tipping an online stripper, purchasing file download software for foot fetish, debating political and religious views without persecution, protection from stalking or other effects if you are a celebrity or well-known personality, and other situations protecting identity or sensitive data that warrants confidentiality.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 11, 2017, 10:58:59 AM
Forgive me if I'm wrong, but isn't that the complete opposite scenario of most bitcoin investors at the moment?  Few people have only a couple hundred dollars of bitcoin, most appear to be hoarding large sums with the intent to use as an investment rather than for any transactions that can be carried out.

The original premise was that bitcoin would have use-cases that would compel people to acquire it to use; and this would therefore escalate demand and value. However, rising use-cases and transactions have shifted to newer, superior crypto. My prediction is that by 2019, bitcoin's market dominance will dip below 50% (it's currently 62.4% and one year ago it was 86%). There will be crypto that will outperform bitcoin; and a few of these crypto have the potential for a huge breakout due to true onchain scalability, mass adoption, and compelling use-cases (superior remittance system, access to online financial services, a platform that allows payment networks to instantly settle and various units of value to be traded with each other, etc).   
Title: Re: Is it too late [bitcoin]?
Post by: Enigma on December 12, 2017, 02:17:38 AM
For argument's sake, lets call it a Fad (possibly even a pyramid scheme)...  It has value but for the most part you are now seeing Bitcoin everywhere in the news.  As of Monday (yesterday), it is now being traded on the futures market.  2014 the US IRS said gains were taxable so the government makes their cut on the profits.  Every time a chain is completed via mining a little more bitcoin makes itself into the market (It costs money, electricity, and time to produce).

That aside it is limited.  Unlike currency printing there is a finite amount.  Even with the decimal points the lowest denomination is a satoshi (0.00000001 bitcoin).  If one satoshi becomes worth 1 cent ($.01) then one bitcoin becomes worth $1M.  It will take 100 years before all the bitcoin is completely mined.  By design more cannot be created.

"The combined value of the US paper currency printed each day is thought to be about $900 million"

Pros:
Governments cannot control the value of bitcoin.  They can try to regulate the currency exchanges but hundreds if not thousands of computers worldwide agree to each new block entered into the Bitchain.  Kind of reminds me of how governments try to take down WikiLeaks.  The issue is everyone started mirroring the site.  Causing the site to always be up.

If you don't trust your country's banking system (no FDIC/SPIC), the current government (mass corruption), local currency (over inflated/worthless), or a million other reasons then the global cryptocurrency has value.

So after doing weeks of research lots of youtube videos for and against, I have decided to go the route of investing $3k into where the market currently is.  Gives me a better chance to see it from an inside perspective rather than speculate.  Plus if one day, CryptoCurrencies completely replace the paper currency of the US (not money due to no gold standard since 1971).
Title: Re: Is it too late [bitcoin]?
Post by: worldtraveler on December 12, 2017, 04:51:17 AM
https://www.financemagnates.com/cryptocurrency/news/gmo-internet-pay-employees-bitcoin/

The giant company was relatively quick to get into cryptocurrency, announcing the establishment of a cryptocurrency exchange, GMO Wallet, at the beginning of 2017.

It launched a blockchain development service for customers in July, and a Bitcoin mining operation in September.

At the time, the company said: “We believe that cryptocurrencies will develop into ‘new universal currencies’ available for use by anyone from any country or region to freely exchange ‘value,’ creating a ‘new borderless economic zone.”

In keeping with this national enthusiasm for digital money, the company stated in a press release today: “GMO Internet Group has decided to introduce a system that allows part of the salary’s payment to be received by Bitcoin in order to promote ownership of the [employees’] virtual currency.”

Needless to say, such a massive company deciding to pay employees in Bitcoin is a major step for digital money.
Title: Re: Is it too late [bitcoin]?
Post by: Indexer on December 13, 2017, 05:21:48 AM
Report back when I can get FDIC backed Bitcoin accounts to store my crap in.  None of the Bitcoin infrastructure has ever been tested against a bank run.  Well, actually Mt. Gox did and it failed miserably.

FDIC does not insure against fraud though (which is what the discussion was about). I agree that FDIC insurance would be valuable in the event of institutional insolvency. But, again, that is not a critique against bitcoin, that's a critique against the institutions around it. We may very well see a day where FDIC/NCUA type insurances are extended to bitcoin accounts as well.

FDIC doesn't protect against fraud. It does protect against the institution going bankrupt. The institution protects against fraud. Therefore, if the fraud was bad enough that the institution became insolvent FDIC would step in to reimburse depositors.

I don't see bitcoin getting FDIC insurance or anything similar. SIPC, which protects investment accounts, has already said they will not reimburse stolen bitcoins. They also have ponzi scheme and fraud alerts on bitcoin, but that's another conversation. FDIC and SIPC have strings attached. Banks and investment firms have know your customer laws, anti-money laundering laws, and suspicious transaction reports. I highly doubt any government would extend the same protection to bitcoin when bitcoin's appeal is that it gets around those laws.




If we are going to keep calling bitcoin a currency I have an important question. Is anyone using it to buy things? I hear about companies accepting it, but does anyone actually use it? I know there are illegal transactions it is used for, but it's current price can only be justified if people think it will go mainstream. Is it being used for regular legal transactions? I imagine there are a few, but do we have any data on how frequently?

Transaction fees: I've read in multiple places of late that a transaction can take a week unless you pay $20 for priority processing. I thought bitcoin was supposed to be faster and cheaper. $20 for a same day transaction... that's the international wire fee at many major banks. Credit card and ACH transactions, what bitcoin should be competing against, clear much faster and much cheaper.

I've heard about how it is easier for international transfers, but I know someone who tried to do that and the receiving company would only do the transaction if the buyer insured the bitcoin against market fluctuations. They didn't want to agree to $200k in bitcoins and then have the bitcoins drop in value to $160k before they could sell them. The buyer didn't want to insure the bitcoin either, too much risk. They opted for a bank wire transfer. Fee was probably $20...
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on December 13, 2017, 07:45:14 AM
If we are going to keep calling bitcoin a currency I have an important question. Is anyone using it to buy things?

No, not really.  Aside from drug/child prostitute related uses, there's really only disadvantage for most people and companies in attempting to use bitcoin as a currency at the moment.  Data regarding frequency of uses of bitcoin to buy things is never going to be available because there's no record kept of what a bitcoin transaction is actually for.


Transaction fees: I've read in multiple places of late that a transaction can take a week unless you pay $20 for priority processing. I thought bitcoin was supposed to be faster and cheaper. $20 for a same day transaction... that's the international wire fee at many major banks. Credit card and ACH transactions, what bitcoin should be competing against, clear much faster and much cheaper.

I've heard about how it is easier for international transfers, but I know someone who tried to do that and the receiving company would only do the transaction if the buyer insured the bitcoin against market fluctuations. They didn't want to agree to $200k in bitcoins and then have the bitcoins drop in value to $160k before they could sell them. The buyer didn't want to insure the bitcoin either, too much risk. They opted for a bank wire transfer. Fee was probably $20...

The behaviour you're describing is caused by the design of bitcoin.  The blockchain is the permanent record of all bitcoin transactions.  When you 'spend' a bitcoin, you say 'I want to transfer this bitcoin to XXX'.  Then you have to pay a fee and wait for this to be recorded on the blockchain.

Just including this information in a block on the blockchain isn't enough to guarantee that the transaction has been made (on average several times a day a single block from the blockchain becomes orphaned - which means that the record of transactions might not actually be kept).  Each block produced after the block that contains your transaction makes it less likely that your transaction will be orphaned and forgotten.  The current standard with bitcoin is to wait for at least six blocks after the transaction (so 7 blocks total) before you consider the transaction confirmed.  It is an average of 10 minutes per block to complete, but this number can grow or shrink depending on the hash power of the Bitcoin network.

A block handles about 2500 transactions.  I mentioned that you have to pay a fee to include your transaction in a block.  If you pay a bigger fee, you get higher in the queue to have your transaction happen.  If there are more transactions taking place than can fit in a single block, then you can choose to wait for the next block (or maybe the next block after that, or after that, etc.) for a lower price.  Bitcoin has recently become popular, so there are longer queues for transactions . . . so if you want to complete your transaction more quickly you have to shell out lots of money or you have to wait a long time.
Title: Re: Is it too late [bitcoin]?
Post by: zoltani on December 13, 2017, 09:18:16 AM
I found this article "HOW TO MAKE A MINT: THE CRYPTOGRAPHY OF ANONYMOUS ELECTRONIC CASH" written by the NSA in 1996. It makes me question the who and why behind its creation.

http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm


Title: Re: Is it too late [bitcoin]?
Post by: sherr on December 13, 2017, 09:53:07 AM
I found this article "HOW TO MAKE A MINT: THE CRYPTOGRAPHY OF ANONYMOUS ELECTRONIC CASH" written by the NSA in 1996. It makes me question the who and why behind its creation.

I wouldn't read too much into it. No new technology springs from a void, they all are developments of previous years / decades worth of foundational work. The NSA is possibly the world's most expert organization on things related to cryptography, so it's completely unsurprising that they would have looked at stuff like this before.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 13, 2017, 11:41:32 AM
I wouldn't read too much into it. No new technology springs from a void, they all are developments of previous years / decades worth of foundational work. The NSA is possibly the world's most expert organization on things related to cryptography, so it's completely unsurprising that they would have looked at stuff like this before.

NSA had backdoor access (private key) to the early cryptography that was sold and used by businesses. This issue actually still prevails in today's infrastructure: (example) google controls the master key for gmail. Of course, blockchain with zero-proof resolves this (decentralized messaging), which would allow greater security for trade secrets. 
Title: Re: Is it too late [bitcoin]?
Post by: sherr on December 13, 2017, 01:59:52 PM
I wouldn't read too much into it. No new technology springs from a void, they all are developments of previous years / decades worth of foundational work. The NSA is possibly the world's most expert organization on things related to cryptography, so it's completely unsurprising that they would have looked at stuff like this before.

NSA had backdoor access (private key) to the early cryptography that was sold and used by businesses. This issue actually still prevails in today's infrastructure: (example) google controls the master key for gmail. Of course, blockchain with zero-proof resolves this (decentralized messaging), which would allow greater security for trade secrets.

I am not a crypto expert, but I don't think this response makes much sense. First of all because it doesn't seem to apply to anything we were talking about.

Secondly, Google knows about the contents of your GMail not because of any secret cryto backdoor, but because you are sending them unencrypted emails that they store in their database on their servers. You are using their application, of course they can look at it and see what's in it. You don't want them to? Okay, then pre-encrypt your message and copy the encrypted nonsense blob into GMail. Now they can't read it. They can still see the blob, but they won't understand what it says.

Yes it is known that the NSA had backdoored several crypto algorithms in several different ways. You can read about some of them starting here:
https://en.wikipedia.org/wiki/National_Security_Agency#Bypassing_encryption

It is also reasonably suspected that they have unknown-to-the-public tricks that weaken several others. And that's part of the point, they know more than anyone else. They are a thousand times smarter and sneakier than you and I put together. So it's almost literally impossible to tell what they can do and what is just rumor.

Blockchain / cryptocurrencies are no more immune than their underlying cryto algorithms. Certainly not from decentralized messaging, that's a minor speed bump to them not a roadblock. And as a non-crypto-expert it's not clear to me what zero-knowledge proofs have to do with anything. Nor does zero-knowledge proofs have anything really to do with decentralized messaging.

All that being said, just because the NSA published a paper 20 years ago that laid some of the groundwork for cryptocurrencies means nothing about the security or vulnerability of blockchain / cryptocurrencies. The NSA also has an interest in making sure strong crypto works so that no one else can spy on them. And banks don't want people to be able to steal from them, and software companies don't want to be at fault if software they sell to their customers ends up getting them hacked, etc. So there is a lot of work that goes into making sure that crypo algorithms actually are working as advertised, and presumably blockchain / cryptocurrencies would be using the best-available algorithms, not known-weak ones.

I could be wrong about everything and it could be that you know way more about this than I do, but I would caution people in general about just throwing around jargon and pretending it's a magic solution to a problem. Crypto is really hard and there are probably only tens of people worldwide who actually really truly know what they're talking about. If you're not one of them you basically have to trust that they're not missing something. But at the same time I don't have any reason to suspect that blockchain / cryptocurrencies are vulnerable to anything, and that article should not make anyone suspicious of anything either.

Edit: This is also why the FBI and anyone else who complains about why the government should have backdoors into crypto algorithms "for national security reasons" should be boo'd out of office. There is no such thing as a backdoor that only the "good guys" can use. Either crypto is strong and your bank transactions are secure and your blockchain works and your private messages are private and the website you are visiting is actually the real website it says it is, or it's not and it's only a matter of time before the "bad guys" figure out how to break it (if they havn't already). There is no in-between. Support politicians who support real crypto, literally the entire internet depends on it.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 13, 2017, 02:38:41 PM
"Bitcoin plays a very small role as a payment system.  It is a highly speculative asset."

"It is not a stable source of value, and it doesn't constitute legal tender."

Quotes from outgoing fed chair, Janet Yellen, about two hours ago.

http://money.cnn.com/2017/12/13/investing/bitcoin-janet-yellen-federal-reserve/index.html

No doubt these remarks will not be regarded as surprising by many on this thread.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 13, 2017, 03:53:26 PM
I wouldn't read too much into it. No new technology springs from a void, they all are developments of previous years / decades worth of foundational work. The NSA is possibly the world's most expert organization on things related to cryptography, so it's completely unsurprising that they would have looked at stuff like this before.

NSA had backdoor access (private key) to the early cryptography that was sold and used by businesses. This issue actually still prevails in today's infrastructure: (example) google controls the master key for gmail. Of course, blockchain with zero-proof resolves this (decentralized messaging), which would allow greater security for trade secrets.

I am not a crypto expert, but I don't think this response makes much sense. First of all because it doesn't seem to apply to anything we were talking about.

My post was a general statement acknowledging yours, saying that yes, the NSA was and are highly involved with cryptography; yes, they have a history with it. I think we're both coming from different frames of reference.   

Quote
Secondly, Google knows about the contents of your GMail not because of any secret cryto backdoor, but because you are sending them unencrypted emails that they store in their database on their servers. You are using their application, of course they can look at it and see what's in it. You don't want them to? Okay, then pre-encrypt your message and copy the encrypted nonsense blob into GMail. Now they can't read it. They can still see the blob, but they won't understand what it says.

You're using their service, so yes, they have access to all your activities; your gmail is encrypted within their service; gmail to gmail is encrypted but not outside of that (though are workarounds but that requires the receiver a way to decrypt what you encrypted). I'm using them as an example to illustrate the lack of transaction or communications medium that offer greater privacy protection where it would be needed (political activists or journalists or where someone simply wants to use email services without their data being scanned and collected for advertising purposes).

Quote
Blockchain / cryptocurrencies are no more immune than their underlying cryto algorithms. Certainly not from decentralized messaging, that's a minor speed bump to them not a roadblock. And as a non-crypto-expert it's not clear to me what zero-knowledge proofs have to do with anything. Nor does zero-knowledge proofs have anything really to do with decentralized messaging.

Most blockchains right now only offer public-private key functionality at the endpoint, and not between transactions. Zero-knowledge allows encryption between transactions. If we're able to build email or messaging protocol on top of these endpoints in zero-knowledge environments, now we have true decentralized email. It can offer other use-cases where businesses can transact without revealing trade secrets, yet are able to guarantee certain work has been performed. Zero-knowledge and variant tech allows mathematical expression stating that yes, you're the owner of the private key, you can prove it without exposing what the private key is.

Quote
All that being said, just because the NSA published a paper 20 years ago that laid some of the groundwork for cryptocurrencies means nothing about the security or vulnerability of blockchain / cryptocurrencies. The NSA also has an interest in making sure strong crypto works so that no one else can spy on them. And banks don't want people to be able to steal from them, and software companies don't want to be at fault if software they sell to their customers ends up getting them hacked, etc. So there is a lot of work that goes into making sure that crypo algorithms actually are working as advertised, and presumably blockchain / cryptocurrencies would be using the best-available algorithms, not known-weak ones.

I could be wrong about everything and it could be that you know way more about this than I do, but I would caution people in general about just throwing around jargon and pretending it's a magic solution to a problem. Crypto is really hard and there are probably only tens of people worldwide who actually really truly know what they're talking about. If you're not one of them you basically have to trust that they're not missing something. But at the same time I don't have any reason to suspect that blockchain / cryptocurrencies are vulnerable to anything, and that article should not make anyone suspicious of anything either.

I'm not suspicious of blockchain. My earlier reference about nsa backdoor never meant to imply an nsa backdoor into blockchain. I don't consider myself an expert on cryptography at all; my knowledge stems from a university network security class, where we learned about Bob and Alice and performed some cryptographic calculations, and where I also had to write a paper on cryptography; and years of blockchain interest. I consider myself to have an enthusiast knowledge.
Title: Re: Is it too late [bitcoin]?
Post by: thenextguy on December 13, 2017, 03:56:49 PM
"Bitcoin plays a very small role as a payment system.  It is a highly speculative asset."

"It is not a stable source of value, and it doesn't constitute legal tender."

Quotes from outgoing fed chair, Janet Yellen, about two hours ago.

http://money.cnn.com/2017/12/13/investing/bitcoin-janet-yellen-federal-reserve/index.html

No doubt these remarks will not be regarded as surprising by many on this thread.

I don't really have much of an issue with her assessment. Seems pretty spot on to me and non-controversial.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 13, 2017, 04:03:03 PM
@sherr

Adding to what I said earlier: I'm excited about blockchain because it represents a new form of digital communication; it effectively resolves a network protocol issue (byzantine general's problem, which was once thought to be unsolvable). The decentralized aspect makes it extremely difficult or impractical to be backdoored.
Title: Re: Is it too late [bitcoin]?
Post by: talltexan on December 15, 2017, 07:03:37 AM
Thank you for this comment about the Byzantine general. I found this useful article that really answers some of my skepticism about the Blockchain.

https://medium.com/@DebrajG/how-the-byzantine-general-sacked-the-castle-a-look-into-blockchain-370fe637502c (https://medium.com/@DebrajG/how-the-byzantine-general-sacked-the-castle-a-look-into-blockchain-370fe637502c)
Title: Re: Is it too late [bitcoin]?
Post by: ChpBstrd on December 15, 2017, 10:04:40 AM
(https://pbs.twimg.com/media/DOHka7iWsAAsU4Q.jpg[)
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 15, 2017, 11:36:14 AM
I just wanted to add some info to the discussion about "backdoors" with regard to bitcoin.

The only way anyone can ever spend bitcoin that you own is to be able to sign a transaction from an UTXO using the associated private key. Even if proof-of-work were compromised (51% attack), they would still need to be able to compose and sign a transaction with the private key associated with a UTXO. If you're not reusing bitcoin addresses after spending from them (which you shouldn't be), then you shouldn't have to worry about double spending in the event of a (highly unlikely) 51% attack and you also won't have to worry about your public keys being exposed for bitcoin addresses that still contain funds.

The question then becomes, how well is your private key protected from attack, given a known bitcoin address? To understand that, you have to understand how bitcoin addresses are composed.

Bitcoin addresses are made up of the public key that is first hashed with SHA256 and then it is hashed with RIPEMD160. That result is then hashed twice with SHA256 and the first 4-bytes are used as a checksum and appended to the previous RIPEMD160 hash. This checksum prevents people from mistyping in a bitcoin address and sending bitcoin to an invalid address where it would be permanently lost. A version number is prefixed to this payload and then the prefix+RIPEMD160hash+checksum is then run through Base58check encoding. This encoding is the same type of encoding as Base64 encoding except it omits several characters such as "O,0,I,l" so that bitcoin addresses avoid characters that are difficult to determine when various fonts are used to display them.

It is a pretty clever use of hashing and encoding to not only provide security for the public key being used, but to also make it easy for people to type in bitcoin addresses and not worry about making a mistake and losing funds.

One of the important things to understand about this is that because the public key is hashed twice with two different hashing algorithms, there would need to be a significant compromise in both of those algorithms (SHA256 and RIPEMD160) in order to lead to a compromise in the actual underlying public key used for that bitcoin address. If you aren't able to determine what the public key is, then it is impossible to determine what the private key is for that bitcoin address as well. If you can't determine the private key, then there is no way for anyone to be able to spend any of the funds that are sent to that bitcoin address.

This is why bitcoin is such a secure method of transacting. Because it is a push mechanism for conducting transactions and because of the techniques that are used for protecting that push mechanism (digital signatures+hashing), it makes it nearly impossible for a set of circumstances to arise that would lead to a fundamental compromise in the way that private/public keys are secured.

This is why it comes down to: protect your private key and your funds are most assuredly protected. Without your private or public key, there really isn't any way for anyone to compromise it otherwise. The idea that anyone would have a "backdoor" in any of this is completely unfounded.
Title: Re: Is it too late [bitcoin]?
Post by: ChpBstrd on December 15, 2017, 01:17:00 PM
If it is so safe, why is it constantly getting hacked? (And yes, intermediaries/wallets are parts of the system too.)

If it's not a bubble, why does it look like every other bubble?
(https://pbs.twimg.com/media/DOHka7iWsAAsU4Q.jpg)

If it's not a bubble, what is the fair market value of one coin? What would cause that to change? At what price would you sell everything tomorrow?
Title: Re: Is it too late [bitcoin]?
Post by: aspiringnomad on December 15, 2017, 01:24:53 PM
If it's not a bubble, why am I getting ads on the MMM forum for a free crypto masterclass from this dork? ;)
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 15, 2017, 01:29:23 PM
If it's not a bubble, why am I getting ads on the MMM forum for a free crypto masterclass from this dork? ;)
Because he knows it's a bubble, and doesn't dare touch it with his own money.

Just like every other get-rich-quick internet "Guru," he'll rack up profits "teaching" you how to do something he never even heard of until last week.

His bread is buttered by suckers, rather than by practicing what he preaches.

I'll bet you a ten-spot to a doughnut that his, "free Masterclass," is nothing more than a long list of glowing testimonials and a standard marketing pitch for his, "Super Duper Double Top Secret Advanced Class," for "only" $597 $297, marked down just for those who order today.
Title: Re: Is it too late [bitcoin]?
Post by: Tonyahu on December 15, 2017, 01:31:08 PM
If it is so safe, why is it constantly getting hacked? (And yes, intermediaries/wallets are parts of the system too.)

If it's not a bubble, why does it look like every other bubble?

If it's not a bubble, what is the fair market value of one coin? What would cause that to change? At what price would you sell everything tomorrow?

How much would you pay for value that can be moved anywhere in the world with a low fee, fast speed and is completely permission-less and immune to censorship and seizure? There is nothing like that currently in place, the only comparison can be Gold but Gold is incredibly difficult to move and store.
Title: Re: Is it too late [bitcoin]?
Post by: dj on December 15, 2017, 01:33:32 PM
I'm interested in bitcoin. I'm 26. Should I go through Vanguard to buy it if I decided I wanted to? Or is an app a better option?

I literally would put only what I don't care to lose and leave it there for 2-4 weeks and see what happens.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 15, 2017, 01:46:30 PM
If it is so safe, why is it constantly getting hacked? (And yes, intermediaries/wallets are parts of the system too.)

No, Bitcoin isn't constantly getting hacked and no, intermediaries and wallets are not a part of the system. That's like saying that the internet is getting hacked because of some schmuck's Wordpress website was hacked because they were using an outdated version. There is no more obligation to using any given service or wallet in order to use Bitcoin as there is to running Wordpress for a website.

Wallets and intermediaries are services built on top of Bitcoin, they're not Bitcoin. When choosing to use Bitcoin, you can choose to use various services and wallets and your decision to use any given service will be based on your own risk assessment as to whether or not you want to expose yourself to any of those services and tools that are built on top of Bitcoin. All these services are aimed at providing additional ease of use and features above and beyond what bitcoin provides. It goes without saying that any additional complexity beyond the Bitcoin protocol itself will add security risks just like any of the myriad application services that are built on top of any of the base layer protocols that make up the internet adds security risks. It pays to do proper research into the various applications built on top of Bitcoin and the security risks associated with them. If you want the ultimate level of security, then running a full Bitcoin node gets you as close to the Bitcoin blockchain as you can get.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 15, 2017, 02:08:39 PM
If it's not a bubble, why does it look like every other bubble?

The problem I have when people try to line up bitcoin's price rise in comparison to other past historical bubble is that bitcoin's price rise came from a value of $0. No other historical bubble came from a starting price of $0. They were all established markets that became greatly skewed and out of balance for various reasons. This is why they were bubbles because of the fact that their rise above the previous market equilibrium was so extraordinary. Bitcoin also has a completely restricted supply that has no means of reacting to demand, unlike every other bubble on that list.

Have you ever looked what the price of bitcoin looks like on a logarithmic scale? See for yourself: https://blockchain.info/charts/market-price?showDataPoints=false&show_header=true&daysAverageString=1&timespan=all&scale=1&address= (https://blockchain.info/charts/market-price?showDataPoints=false&show_header=true&daysAverageString=1&timespan=all&scale=1&address=)

That is probably a better way at historically looking at the price of bitcoin given the fact that it was a bootstrapped currency that originated from a starting price of $0. How else in the world would you expect a restricted supply currency to become widely used without it going parabolic on a linear scale? Even if that adoption took place over the course of several decades (which is unlikely for digital technology), it would still look parabolic given the kind of drastic value differences in the starting and end points at hand.
Title: Re: Is it too late [bitcoin]?
Post by: Telecaster on December 15, 2017, 02:17:29 PM
How much would you pay for value that can be moved anywhere in the world with a low fee, fast speed and is completely permission-less and immune to censorship and seizure? There is nothing like that currently in place, the only comparison can be Gold but Gold is incredibly difficult to move and store.

Damn near nothing. 
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on December 15, 2017, 02:20:23 PM
If it's not a bubble, why does it look like every other bubble?

The problem I have when people try to line up bitcoin's price rise in comparison to other past historical bubble is that bitcoin's price rise came from a value of $0. No other historical bubble came from a starting price of $0. They were all established markets that became greatly skewed and out of balance for various reasons. This is why they were bubbles because of the fact that their rise above the previous market equilibrium was so extraordinary. Bitcoin also has a completely restricted supply that has no means of reacting to demand, unlike every other bubble on that list.

Have you ever looked what the price of bitcoin looks like on a logarithmic scale? See for yourself: https://blockchain.info/charts/market-price?showDataPoints=false&show_header=true&daysAverageString=1&timespan=all&scale=1&address= (https://blockchain.info/charts/market-price?showDataPoints=false&show_header=true&daysAverageString=1&timespan=all&scale=1&address=)

That is probably a better way at historically looking at the price of bitcoin given the fact that it was a bootstrapped currency that originated from a starting price of $0. How else in the world would you expect a restricted supply currency to become widely used without it going parabolic on a linear scale? Even if that adoption took place over the course of several decades (which is unlikely for digital technology), it would still look parabolic given the kind of drastic value differences in the starting and end points at hand.

I guess we're not counting the pre-bubble phase of bitcoin from 2009 to mid 2013, and the 2014 buildup and drop.
Title: Re: Is it too late [bitcoin]?
Post by: Telecaster on December 15, 2017, 02:22:04 PM
I'm interested in bitcoin. I'm 26. Should I go through Vanguard to buy it if I decided I wanted to? Or is an app a better option?

I literally would put only what I don't care to lose and leave it there for 2-4 weeks and see what happens.

Sweet Jesus.  ^ This is how we know we are in bubble. 
Title: Re: Is it too late [bitcoin]?
Post by: dj on December 15, 2017, 02:24:57 PM
You're welcome!
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 15, 2017, 02:26:05 PM
If it's not a bubble, why does it look like every other bubble?

The problem I have when people try to line up bitcoin's price rise in comparison to other past historical bubble is that bitcoin's price rise came from a value of $0. No other historical bubble came from a starting price of $0.
It is truly astonishing that you would define a bubble based on whether the asset ever had a starting price of $0; even more astonishing that you would actually state that position in a public forum.

But, ok, I'll play.

How tulips came to the Netherlands - and even saved lives
http://www.dw.com/en/how-tulips-came-to-the-netherlands-and-even-saved-lives/a-40208176
Quote
In the 16th century, Ogier Ghiselin de Busbecq was serving as the ambassador of the Habsburg monarchy to the Ottoman Empire. While visiting Turkish sultan Suleiman the Magnificant, a fan of tulips, he was given some bulbs to take back to Vienna.

De Busbecq then passed the tulip bulbs on to his friend, Flemish botanist Charles de l'Écluse, the prefect to the emperor's garden in Vienna.
When d'Écluse left Vienna to teach at a university in Leiden, Netherlands, he brought the bulbs along and planted them there.
Starting as a mere gift, tulip bulbs flourished, and then became the bubble that sets the standard for every bubble ever since.

So I suppose you reject the notion that there ever was a tulip bubble, since it came to the Netherlands by way of a (free) gift?  I really don't know what other conclusion to draw from your statement.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 15, 2017, 02:26:58 PM
I guess we're not counting the pre-bubble phase of bitcoin from 2009 to mid 2013, and the 2014 buildup and drop.

What do you mean? That's the whole point of looking at it from a logarithmic scale. It shows how the previous historical rises in the price of bitcoin were much more astronomical in relativity than compared to now.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 15, 2017, 02:30:04 PM
It is truly astonishing that you would define a bubble based on whether the asset ever had a starting price of $0.

Where did I define a bubble as whether or not it ever had a starting price of $0? Don't put words in my mouth.
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on December 15, 2017, 02:33:45 PM
I guess we're not counting the pre-bubble phase of bitcoin from 2009 to mid 2013, and the 2014 buildup and drop.

What do you mean? That's the whole point of looking at it from a logarithmic scale. It shows how the previous historical rises in the price of bitcoin were much more astronomical in relativity than compared to now.

You were saying that the starting price of bitcoin before the bubble phase was 0$.  I was pointing out that for the first four years or so, bitcoin wasn't 0$ and wasn't in a bubble.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 15, 2017, 02:37:47 PM
It is truly astonishing that you would define a bubble based on whether the asset ever had a starting price of $0.

Where did I define a bubble as whether or not it ever had a starting price of $0? Don't put words in my mouth.

Um, here:

If it's not a bubble, why does it look like every other bubble?

The problem I have when people try to line up bitcoin's price rise in comparison to other past historical bubble is that bitcoin's price rise came from a value of $0. No other historical bubble came from a starting price of $0.
 
That was your answer to a question asking you to explain why bitcoin isn't a bubble.

Silly me, that's what I assumed you actually thought.
Title: Re: Is it too late [bitcoin]?
Post by: runbikerun on December 15, 2017, 02:40:21 PM
It is truly astonishing that you would define a bubble based on whether the asset ever had a starting price of $0.

Where did I define a bubble as whether or not it ever had a starting price of $0? Don't put words in my mouth.

"The problem I have when people try to line up bitcoin's price rise in comparison to other past historical bubble is that bitcoin's price rise came from a value of $0."

There may be some incredibly narrow semantic needle to be threaded here, but under any non-tortured reading of the above sentence, you're saying that it doesn't make sense to compare Bitcoin to historical bubbles because Bitcoin started from zero. From there, it is an extremely short journey to the conclusion that you think the start from zero means we're not dealing with a bubble. Like I said, there may be a very narrow and specific reading of what you said that doesn't imply that you think a starting point of zero means it's not a bubble, but to nine out of ten readers that's the conclusion that would be drawn.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 15, 2017, 03:16:17 PM
I guess we're not counting the pre-bubble phase of bitcoin from 2009 to mid 2013, and the 2014 buildup and drop.

What do you mean? That's the whole point of looking at it from a logarithmic scale. It shows how the previous historical rises in the price of bitcoin were much more astronomical in relativity than compared to now.

You were saying that the starting price of bitcoin before the bubble phase was 0$.  I was pointing out that for the first four years or so, bitcoin wasn't 0$ and wasn't in a bubble.

I'm underlying the key word here. You're saying bitcoin is in a bubble today. Which I completely agree with given the behavior of prices in 2017, and the fact that all the discussion I hear about it in non-geeky venues is focused solely on the price increase, not on actual use cases. 

Others are saying that bitcoin, itself, is a bubble, which would mean that has no underlying utility at all, which I disagree with because I do think it, or similar cyptocurrencies, do provide some utility to our society.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 15, 2017, 03:31:18 PM
Quote
The problem I have when people try to line up bitcoin's price rise in comparison to other past historical bubble is that bitcoin's price rise came from a value of $0.

For clarification, this response is not me defining whether an asset or investment is in a bubble based on whether or not it ever had a starting price of $0. That's what ILikeDividends claimed, but that's not what I meant. To put it more clearly, the key part of that statement that was missed was the "in comparison" portion. In other words, looking at bubbles relative to each other simply based on the prices of the underlying in each given bubble is a complete failure in analysis. A $0 starting point is not a defining characteristic of what makes a bubble or not, that's absolutely true, we're not in disagreement there. But, it makes no sense to compare bubbles simply on the merits of their prices without understanding the underlying forces in the market behind those prices.

This is why looking at the price of bitcoin on a logarithmic scale is so important. You could've easily taken a snapshot of bitcoin's price at numerous points along the way and it would yield a similar curve to match up to historical bubbles just like the above chart showed. Yet, doing so wouldn't give you any indicator at all as to whether or not you're dealing with a bubble in bitcoin or any other asset for that matter. For example, you could've taken a snapshot starting in Jan 2012 when it had a starting price of $4 and then had "today's" price on that graph be Jan 2014 where it had a price of around $1000. That's a multiplier of 250x and it would've dwarfed every bubble on that chart. In otherwords, this chart skews data historically simply based on arbitrary prices without regard to what determines those prices in the market.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 15, 2017, 03:42:32 PM
I guess we're not counting the pre-bubble phase of bitcoin from 2009 to mid 2013, and the 2014 buildup and drop.

What do you mean? That's the whole point of looking at it from a logarithmic scale. It shows how the previous historical rises in the price of bitcoin were much more astronomical in relativity than compared to now.

You were saying that the starting price of bitcoin before the bubble phase was 0$.  I was pointing out that for the first four years or so, bitcoin wasn't 0$ and wasn't in a bubble.

I'm underlying the key word here. You're saying bitcoin is in a bubble today. Which I completely agree with given the behavior of prices in 2017, and the fact that all the discussion I hear about it in non-geeky venues is focused solely on the price increase, not on actual use cases. 

Others are saying that bitcoin, itself, is a bubble, which would mean that has no underlying utility at all, which I disagree with because I do think it, or similar cyptocurrencies, do provide some utility to our society.
While I wouldn't disagree that stating "bitcoin is in a bubble" would be more grammatically correct than stating "bitcoin is a bubble," but I would argue that the latter expression shouldn't be taken as anything more than a less-than-perfect version of the former expression.

Personally, I don't think it refers to any utility it might have. E.g., if I referred to "tulip mania" as the "tulip bubble," would you spend any time puzzling over how a tulip could BE a bubble?

But if it's possible to find common ground here, I would at least agree that, "bitcoin is a bubble," is a nonsensical statement, if taken too literally.
Title: Re: Is it too late [bitcoin]?
Post by: Telecaster on December 15, 2017, 03:43:21 PM
Quote
The problem I have when people try to line up bitcoin's price rise in comparison to other past historical bubble is that bitcoin's price rise came from a value of $0.

For clarification, this response is not me defining whether an asset or investment is in a bubble based on whether or not it ever had a starting price of $0. That's what ILikeDividends claimed, but that's not what I meant. To put it more clearly, the key part of that statement that was missed was the "in comparison" portion. In other words, looking at bubbles relative to each other simply based on the prices of the underlying in each given bubble is a complete failure in analysis. A $0 starting point is not a defining characteristic of what makes a bubble or not, that's absolutely true, we're not in disagreement there. But, it makes no sense to compare bubbles simply on the merits of their prices without understanding the underlying forces in the market behind those prices.


Okay.  So what is the market force driving the rise in bitcoin?  Is it:

1) People are clamoring to buy and sell stuff with bitcoin therefore driving demand? Or,

2)  People are buying bitcoin hoping to participate in future price increases?



Title: Re: Is it too late [bitcoin]?
Post by: waltworks on December 15, 2017, 03:54:50 PM
It can be simultaneously true that bitcoin (and other cryptos) are massively overvalued/well into bubble territory, AND that some of them (which may or may not be extant today) will be someday useful for making transactions.

If I were a big crypto guy I'd be *furious* about the bubble. It makes it hard/impossible to actually buy things, and it runs the risk of discrediting the whole enterprise after the inevitable collapse such that Goldman Sachs' or Chase's take on the blockchain is the one that ends up getting widely used.

-W
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 15, 2017, 04:29:40 PM
Waltworks and ILikeDividends, I think we are in fact in agreement here.
Title: Re: Is it too late [bitcoin]?
Post by: Indexer on December 15, 2017, 04:47:23 PM
Going to repeat my earlier questions and see if anyone pro-bitcoin will bite.

Is anyone using it to buy legal goods and services?

I imagine there are a few, but do we have any data on the frequently?

If the answer is no, which I assume it is, then bitcoin has no future. I get the very strong impression it is only be traded back and worth between speculators and that no one is actually using it... outside of money laundering and buying drugs.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 15, 2017, 04:58:22 PM
Is anyone using it to buy legal goods and services?

Yes, I have used it to buy legal goods from overseas. If transactions fees don't come way back down from their current prices in the mid-$20 I'm not going to ever again though (although I might try some other cryptocurrency instead at some point in the future).

Quote
I imagine there are a few, but do we have any data on the frequently?

To the best of my knowledge there isn't any good data on specifically legal usage frequency. Bitpay says they are on track to process approx. $1 billion worth of bitcoin payments. That's almost certainly all payments for legal goods and services, but who knows whether that's 1% of the the total volume being used for actual payments, or 10% or 50%.
Title: Re: Is it too late [bitcoin]?
Post by: sherr on December 15, 2017, 05:09:10 PM
AND that some of them (which may or may not be extant today) will be someday useful for making transactions.

This is an undervalued point. There are already today crytocurrencies that are better than Bitcoins for any particular use-case. You can transfer value worldwide for cheaper and faster with any of them. So then what is Bitcoin's long-term valuation? Nothing. The only thing driving the prices and continued use is speculation and momentum. There will come a day when bitcoin transactions are too slow or too expensive or too hard compared to something else, and everyone will jump ship to the other thing. And then the same thing will happen to that and they'll jump ship to the next thing.

I'm sure that there are some long-term use-cases that will make cryptocurrencies stick around. But the long-term value of any particular cryptocurrency will always be zero, and people who jump  in to the middle of a price spike will loose their shirts when the bubble pops. Cryptocurrencies and Blockchain as a *technology* I think has some staying power. Any individual implementation is transient.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 15, 2017, 05:13:03 PM
AND that some of them (which may or may not be extant today) will be someday useful for making transactions.

This is an undervalued point. There are already today crytocurrencies that are better than Bitcoins for any particular use-case. You can transfer value worldwide for cheaper and faster with any of them. So then what is Bitcoin's long-term valuation? Nothing. The only thing driving the prices and continued use is speculation and momentum. There will come a day when bitcoin transactions are too slow or too expensive or too hard compared to something else, and everyone will jump ship to the other thing. And then the same thing will happen to that and they'll jump ship to the next thing.

I'm sure that there are some long-term use-cases that will make cryptocurrencies stick around. But the long-term value of any particular cryptocurrency will always be zero, and people who jump  in to the middle of a price spike will loose their shirts when the bubble pops. Cryptocurrencies and Blockchain as a *technology* I think has some staying power. Any individual implementation is transient.
One could argue that this is now a historical fact, rather than mere speculation about the future.

'Bitcoin Jesus' is 'really, really concerned' about the future of the digital currency
https://www.cnbc.com/2017/12/11/bitcoin-jesus-is-really-really-concerned-about-the-future-of-the-digital-currency.html

Since this guy, AKA Roger Ver, reportedly turned $25K into $244 million buying into bitcoin at a dollar, I would dare say that he speaks from a pretty strong position of authority, and he seems to agree with your points, exactly as you stated them.
Title: Re: Is it too late [bitcoin]?
Post by: WhiteTrashCash on December 15, 2017, 05:22:09 PM
It may be too late to get into bitcoin investing, but it's never too late to get into baseball card investing. I have a Ken Griffey Jr. rookie card that I'm willing to part with. Cheap.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 15, 2017, 05:24:55 PM
It may be too late to get into bitcoin investing, but it's never too late to get into baseball card investing. I have a Ken Griffey Jr. rookie card that I'm willing to part with. Cheap.
Cheap?  Ok, I'll bid $18,000.  Going once, going twice . . .

(BTW, what is a baseball card, what is a rookie card, and who the heck is Ken Griffey Jr?)
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 15, 2017, 05:42:01 PM
Is anyone using it to buy legal goods and services?

I imagine there are a few, but do we have any data on the frequently?

If the answer is no, which I assume it is, then bitcoin has no future.

I use bitcoin for all my purchases. Granted, probably about 95% of my purchases are made off-chain through a payment provider, but I do make many purchases with bitcoin as on-chain transactions for a few legal services that I use that justify the on-chain transaction costs (which are about $4-6 for me at the moment).

I suppose I don't understand the emphasis on the necessity for bitcoin to be used for everyday legal goods and services to justify its existance. Bitcoin has use cases that extend well beyond paying for your coffee (remittance, censorship resistant store of value, international payments, programmability, irreversible transactions, etc). In fact, I'd argue that a proof-of-work crypto-currency like bitcoin's last use case should be coffee purchases. We already have plenty of payment technologies that can provide services such as that without requiring the security that a decentralized censorship resistant proof-of-work payment network provides. For the most part, fast and cheap transactions don't require that level of security. Therefore, requiring the full proof-of-work of the most secure payment network on the planet (Bitcoin) is not required. This is why side chain solutions for scaling are being introduced for bitcoin and why intermediary payment providers or other less secure crypto-currencies can offer better "coffee payment services" than on-chain bitcoin transactions can provide. That being said, the fact that people are paying anywhere from $4-$15 for on-chain bitcoin transactions shows that the network provides value to the people looking to transact on it. So if you're assuming that bitcoin has no future because there aren't enough coffee cups being purchased with it, then I'm afraid you miss the entire point of Bitcoin.
Title: Re: Is it too late [bitcoin]?
Post by: waltworks on December 15, 2017, 05:45:52 PM
It may be too late to get into bitcoin investing, but it's never too late to get into baseball card investing. I have a Ken Griffey Jr. rookie card that I'm willing to part with. Cheap.

I'll trade you all my copies of X-men #1. With all the different covers. Best investment ever! They're printing 7 million and maybe 100,000 people want to actually read it, it's an instant collector's item!

-W
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 15, 2017, 06:06:17 PM
I suppose I don't understand the emphasis on the necessity for bitcoin to be used for everyday legal goods and services to justify its existance. Bitcoin has use cases that extend well beyond paying for your coffee (remittance, censorship resistant store of value, international payments, programmability, irreversible transactions, etc). In fact, I'd argue that a proof-of-work crypto-currency like bitcoin's last use case should be coffee purchases. We already have plenty of payment technologies that can provide services such as that without requiring the security that a decentralized censorship resistant proof-of-work payment network provides. For the most part, fast and cheap transactions don't require that level of security. Therefore, requiring the full proof-of-work of the most secure payment network on the planet (Bitcoin) is not required. This is why side chain solutions for scaling are being introduced for bitcoin and why intermediary payment providers or other less secure crypto-currencies can offer better "coffee payment services" than on-chain bitcoin transactions can provide.

The problem isn't that there are some use cases that can still work with $20 transaction fees. The problem is that once those other cyptocurrencies start getting a lot more real world use for things like buying cups of coffee where transaction fees should really be a few cents at most to be competitive, it's hard to see why those new more cost effective cyptocurrencies couldn't also replace bitcoin for the use cases where people would be willing to pay a $20 transaction fee. (Because who wouldn't rather pay $0.02 than $20, all things being equal?).
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 15, 2017, 06:29:19 PM
The problem isn't that there are some use cases that can still work with $20 transaction fees. The problem is that once those other cyptocurrencies start getting a lot more real world use for things like buying cups of coffee where transaction fees should really be a few cents at most to be competitive, it's hard to see why those new more cost effective cyptocurrencies couldn't also replace bitcoin for the use cases where people would be willing to pay a $20 transaction fee. (Because who wouldn't rather pay $0.02 than $20, all things being equal?).

I'll argue the opposite of that. As I said, there are already plenty of other crypto-currencies and payment systems out there that can be used for buying cups of coffee. This misunderstands the value that the Bitcoin proof-of-work network provides. No other currency has found a way to provide the decentralized security and censorship resistance that the Bitcoin network can provide while at the same time being able to scale to meet the global demand that a POS system requires. The truth of the matter is that POS payments don't require that level of security and so therefore it makes no sense to sacrifice the one thing that makes Bitcoin unique (decentralized censorship resistance provided by proof-of-work). This is why the Lightning Network is such a novel concept. It allows for massive scalability (millions of tx/sec) without requiring any proof-of-work, but can still settle back to the same secure blockchain when needed. Another solution could be to possibly utilize atomic swaps between another crypto-currency that can handle higher volume, but isn't as decentralized or use the same secure proof-of-work Bitcoin provides.

You can only choose two, unless you can break the laws of physics:
1) Fast, cheap on-chain txs
2) Secure, censorship-resistant txs
3) Widespread adoption
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 15, 2017, 06:35:22 PM
The problem isn't that there are some use cases that can still work with $20 transaction fees. The problem is that once those other cyptocurrencies start getting a lot more real world use for things like buying cups of coffee where transaction fees should really be a few cents at most to be competitive, it's hard to see why those new more cost effective cyptocurrencies couldn't also replace bitcoin for the use cases where people would be willing to pay a $20 transaction fee. (Because who wouldn't rather pay $0.02 than $20, all things being equal?).

I'll argue the opposite of that. As I said, there are already plenty of other crypto-currencies and payment systems out there that can be used for buying cups of coffee. This misunderstands the value that the Bitcoin proof-of-work network provides. No other currency has found a way to provide the decentralized security and censorship resistance that the Bitcoin network can provide while at the same time being able to scale to meet the global demand that a POS system requires. The truth of the matter is that POS payments don't require that level of security and so therefore it makes no sense to sacrifice the one thing that makes Bitcoin unique (decentralized censorship resistance provided by proof-of-work). This is why the Lightning Network is such a novel concept. It allows for massive scalability (millions of tx/sec) without requiring any proof-of-work, but can still settle back to the same secure blockchain when needed. Another solution could be to possibly utilize atomic swaps between another crypto-currency that can handle higher volume, but isn't as decentralized or use the same secure proof-of-work Bitcoin provides.

You can only choose two, unless you can break the laws of physics:
1) Fast, cheap on-chain txs
2) Secure, censorship-resistant txs
3) Widespread adoption
Apart from you, and maybe 100 other people, who actually knows what this means, or even cares?

I can wholly appreciate why someone in Venezuela or China would, out of desperation, use bitcoin to "stache" (pun intended) their wealth in a presumptuously safer place, but I doubt any of them would understand, or have even the slightest appreciation for any merits (if any actually exist, net net) for what you just said.

They are desperate to preserve their wealth, and would doubtless choose the baseball card option, if they thought that was a more viable choice.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 15, 2017, 06:44:04 PM
Apart from you, and maybe 100 other people, who actually know what this means, or even cares?

I can wholly see why someone in Venezuela or China would want to use bitcoin to "stache" (pun intended) their wealth in a safer place, but I doubt any of them would understand, or have even the slightest appreciation for any merits (if any exist) for what you just said.

You don't seem to be giving humans that much credit. I'm pretty sure if you asked someone what a URL was back in the early days of the internet, you'd probably get a lot of blank stares as well.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 15, 2017, 06:49:00 PM
Apart from you, and maybe 100 other people, who actually know what this means, or even cares?

I can wholly see why someone in Venezuela or China would want to use bitcoin to "stache" (pun intended) their wealth in a safer place, but I doubt any of them would understand, or have even the slightest appreciation for any merits (if any exist) for what you just said.

You don't seem to be giving humans that much credit. I'm pretty sure if you asked someone what a URL was back in the early days of the internet, you'd probably get a lot of blank stares as well.
That pretty much makes my point.  Bitcoin is a newborn babe, still wailing away in the infirmary, as compared to URLs and the internet.

(I give humans the credit they have earned.  After all, I kind of qualify as a member of that same category)
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 15, 2017, 06:56:20 PM
That pretty much makes my point.  Bitcoin is a newborn babe, still wailing away in the hospital, as compared to URLs and the internet.

(I give humans the credit they have earned.  After all, I kind of qualify as a member of that same category)

If your point was that bitcoin is a newborn babe, in response to what in regard to my post does that argument apply?
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 15, 2017, 07:04:30 PM
That pretty much makes my point.  Bitcoin is a newborn babe, still wailing away in the hospital, as compared to URLs and the internet.

(I give humans the credit they have earned.  After all, I kind of qualify as a member of that same category)

If your point was that bitcoin is a newborn babe, in response to what in regard to my post does that argument apply?

I'm sure it was just an oversight that you "accidentally" edited out your comment that I replied to, so I'll help you out there; just 'cause I'm a good guy at heart.  Hint: look for the bold text I've added to your comment.  Therein lies the answer to your latest question.

Apart from you, and maybe 100 other people, who actually know what this means, or even cares?

I can wholly see why someone in Venezuela or China would want to use bitcoin to "stache" (pun intended) their wealth in a safer place, but I doubt any of them would understand, or have even the slightest appreciation for any merits (if any exist) for what you just said.

You don't seem to be giving humans that much credit. I'm pretty sure if you asked someone what a URL was back in the early days of the internet, you'd probably get a lot of blank stares as well.

Given the proper context, my reply should now make a little more sense to you:
Quote
That pretty much makes my point.  Bitcoin is a newborn babe, still wailing away in the infirmary, as compared to URLs and the internet.

(I give humans the credit they have earned.  After all, I kind of qualify as a member of that same category)

No need to thank me.  I'll just consider this my good deed for the day.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 15, 2017, 07:17:26 PM
I'm sure it was just an oversight that you neglected to include your comment that I replied to, so I'll help you out there; just 'cause I'm a good guy at heart.  Hint: look for the bold text I've added to your comment.  Therein lies the answer to your latest question.

Debating you is painful sometimes, lol.

I originally posted about Bitcoin's proof-of-work security stating in Reply #384:

Quote
I'll argue the opposite of that. As I said, there are already plenty of other crypto-currencies and payment systems out there that can be used for buying cups of coffee. This misunderstands the value that the Bitcoin proof-of-work network provides. No other currency has found a way to provide the decentralized security and censorship resistance that the Bitcoin network can provide while at the same time being able to scale to meet the global demand that a POS system requires.

In response to this, in Reply #385 you said:
Quote
Apart from you, and maybe 100 other people, who actually knows what this means, or even cares?

To which I responded with the URL comment.

You then responded in Reply #388 with:
Quote
That pretty much makes my point.  Bitcoin is a newborn babe, still wailing away in the infirmary, as compared to URLs and the internet.

To which I asked:

Quote
If your point was that bitcoin is a newborn babe, in response to what in regard to my post does that argument apply?

So again, where in my original response (Reply #384) does bitcoin being a "newborn babe" apply?
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 15, 2017, 07:22:27 PM
I'm sure it was just an oversight that you neglected to include your comment that I replied to, so I'll help you out there; just 'cause I'm a good guy at heart.  Hint: look for the bold text I've added to your comment.  Therein lies the answer to your latest question.

Debating you is painful sometimes, lol.

I originally posted about Bitcoin's proof-of-work security stating in Reply #384:

Quote
I'll argue the opposite of that. As I said, there are already plenty of other crypto-currencies and payment systems out there that can be used for buying cups of coffee. This misunderstands the value that the Bitcoin proof-of-work network provides. No other currency has found a way to provide the decentralized security and censorship resistance that the Bitcoin network can provide while at the same time being able to scale to meet the global demand that a POS system requires.

In response to this, in Reply #385 you said:
Quote
Apart from you, and maybe 100 other people, who actually knows what this means, or even cares?

To which I responded with the URL comment.

You then responded in Reply #388 with:
Quote
That pretty much makes my point.  Bitcoin is a newborn babe, still wailing away in the infirmary, as compared to URLs and the internet.

To which I asked:

Quote
If your point was that bitcoin is a newborn babe, in response to what in regard to my post does that argument apply?

So again, where in my original response (Reply #384) does bitcoin being a "newborn babe" apply?
I didn't even know we were debating something.  I merely expressed (and then unsuccessfully attempted to explain) the point of an opinion.

However, if you regard this a debate, then I will rest my case on statements I've already made, and formally withdraw, with the undisputed understanding that my opinion was not understood by you.

Giving you the benefit of the doubt, I will naturally assume that you wouldn't have agreed with my opinion, even if you had understood it.
Title: Re: Is it too late [bitcoin]?
Post by: thenextguy on December 15, 2017, 07:53:29 PM
It may be too late to get into bitcoin investing, but it's never too late to get into baseball card investing. I have a Ken Griffey Jr. rookie card that I'm willing to part with. Cheap.

Sorry dude, the baseball card bubble ended years ago.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 15, 2017, 07:55:09 PM
I'll argue the opposite of that. As I said, there are already plenty of other crypto-currencies and payment systems out there that can be used for buying cups of coffee. This misunderstands the value that the Bitcoin proof-of-work network provides. No other currency has found a way to provide the decentralized security and censorship resistance that the Bitcoin network can provide while at the same time being able to scale to meet the global demand that a POS system requires. The truth of the matter is that POS payments don't require that level of security and so therefore it makes no sense to sacrifice the one thing that makes Bitcoin unique (decentralized censorship resistance provided by proof-of-work). This is why the Lightning Network is such a novel concept. It allows for massive scalability (millions of tx/sec) without requiring any proof-of-work, but can still settle back to the same secure blockchain when needed. Another solution could be to possibly utilize atomic swaps between another crypto-currency that can handle higher volume, but isn't as decentralized or use the same secure proof-of-work Bitcoin provides.

Criticisms against lightning network:
https://www.youtube.com/watch?v=UYHFrf5ci_g&feature=youtu.be&repost
https://www.reddit.com/r/btc/comments/7jnr31/the_lightning_network_is_not_at_alpha_release/
https://www.reddit.com/r/btc/comments/64de93/basic_questions_about_the_lightning_network/

Also, bitcoin core is less secure than bitcoin cash. The segwit change to signature validation added an additional point of risk.

Quote
You can only choose two, unless you can break the laws of physics:
1) Fast, cheap on-chain txs
2) Secure, censorship-resistant txs
3) Widespread adoption

I choose all 3 and a proof-of-stake crypto.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 15, 2017, 08:00:06 PM
Since bitcoin cash and bitcoin core share the same pow algorithm, if there is ever an exodus of mining power, due to bitcoin core's adjustment time, it has far greater systemic risk to very, very slow transactions leading to potentially severe consequences.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 15, 2017, 08:33:55 PM
Criticisms against lightning network:
https://www.youtube.com/watch?v=UYHFrf5ci_g&feature=youtu.be&repost
https://www.reddit.com/r/btc/comments/7jnr31/the_lightning_network_is_not_at_alpha_release/
https://www.reddit.com/r/btc/comments/64de93/basic_questions_about_the_lightning_network/

Also, bitcoin core is less secure than bitcoin cash. The segwit change to signature validation added an additional point of risk.

Quote
You can only choose two, unless you can break the laws of physics:
1) Fast, cheap on-chain txs
2) Secure, censorship-resistant txs
3) Widespread adoption

I choose all 3 and a proof-of-stake crypto.

I certainly agree that there are some valid criticisms against the lightning network (ie, channel monitoring), but make no mistake it is a legitimate scaling solution that can handle thousands, if not millions, of transactions/sec with out requiring proof-of-work being it. I watched the video that you posted regarding the lightning network and there were a lot of myths spouted about the lightning network in it and bitcoin in general (stealing bitcoins, centralization, Satoshi's vision>Gavin, etc). The Lightning Network has been successfully tested (on mainnet) amongst several clients for compatibility and therefore the link you posted with regards to the development stage it is in is pointless and doesn't really make an effort to critique the network on any merit.

Please explain to me (technically) how bitcoin core is less secure than bitcoin cash? SegWit resolved transaction malleability which was a legitimate security concern. By having the transaction idenifier no longer take into account the signature, an attack who modifies the signature cannot also modify the transaction identifier. Just blindly saying that SegWit is an additional point of risk without explaining that point of risk is a faulty argument against it. On top of that, Bitcoin's network is much more decentralized compared to Bcash, both by hash rate and by node count/location. Considering the fact that a vast majority of bcash's hashrate is controlled by a single entity, it is an extremely centralized currency. Its nodes are also much more centralized when compared to Bitcoin cores. This decentralization across all aspects is what provides the censorship resistance that is required of a proof-of-work network.

Finally, how would it ever be possible to scale, on-chain, a proof-of-work system that can process millions of transactions per second. Give the fact that 1MB blocks can process about 6 transactions per second, in order to process transactions on the order of millions of transactions per second, that'd require blocks on the order of terabytes in size. There is simply no way you can propogate blocks of that size and have them reach all the necessary nodes around the world every 10 minutes. It isn't possible. Secondary solutions are required, whether it is atomic swaps with non-proof-of-work currencies (which Bcash can't do because it doesn't have SegWit) or something like the Lightning Network.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 15, 2017, 09:46:52 PM
I certainly agree that there are some valid criticisms against the lightning network (ie, channel monitoring), but make no mistake it is a legitimate scaling solution that can handle thousands, if not millions, of transactions/sec with out requiring proof-of-work being it. I watched the video that you posted regarding the lightning network and there were a lot of myths spouted about the lightning network in it and bitcoin in general (stealing bitcoins, centralization, Satoshi's vision>Gavin, etc). The Lightning Network has been successfully tested (on mainnet) amongst several clients for compatibility and therefore the link you posted with regards to the development stage it is in is pointless and doesn't really make an effort to critique the network on any merit.

We'll see how lightning network play outs; I'm neutral about it.

Quote
Please explain to me (technically) how bitcoin core is less secure than bitcoin cash? SegWit resolved transaction malleability which was a legitimate security concern. By having the transaction idenifier no longer take into account the signature, an attack who modifies the signature cannot also modify the transaction identifier. Just blindly saying that SegWit is an additional point of risk without explaining that point of risk is a faulty argument against it. On top of that, Bitcoin's network is much more decentralized compared to Bcash, both by hash rate and by node count/location. Considering the fact that a vast majority of bcash's hashrate is controlled by a single entity, it is an extremely centralized currency. Its nodes are also much more centralized when compared to Bitcoin cores. This decentralization across all aspects is what provides the censorship resistance that is required of a proof-of-work network.

In the original bitcoin, the way a coin is transferred is taking the prior signature and the next user's public key, and hashing that. Miners saw this data and updated the utxo to the ledger. The original bitcoin was defined as a chain of digital signatures, and accompanying that was a longstanding economic model base on being able to verify the signatures. Segwit removes miners ability to 'witness' the signatures. It changed the economics and weakened the security model. In segwit, signatures have no value; the lack of witnessing a signature can allow malicious miners to redirect transactions to their own address. This, in addition to pruning and increasingly rewarding segwit transactions, creates a situation of new risk.

Here's a more in-depth article can about segwit risk: https://calvinayre.com/2017/06/19/bitcoin/risks-segregated-witness-opening-door-mining-cartels-undermine-bitcoin-network/ 

Quote
Finally, how would it ever be possible to scale, on-chain, a proof-of-work system that can process millions of transactions per second. Give the fact that 1MB blocks can process about 6 transactions per second, in order to process transactions on the order of millions of transactions per second, that'd require blocks on the order of terabytes in size. There is simply no way you can propogate blocks of that size and have them reach all the necessary nodes around the world every 10 minutes. It isn't possible. Secondary solutions are required, whether it is atomic swaps with non-proof-of-work currencies (which Bcash can't do because it doesn't have SegWit) or something like the Lightning Network.

That's what we're about to find out in 2018. Plasma aims to achieve millions of transactions per second onchain; and it will be implemented in omg; which will be initially launched on tendermint. Omg will be a modularized blockchain platform. From the tendermint website:

"Thus far, all blockchains “stacks” (such as Bitcoin) have had a monolithic design. That is, each blockchain stack is a single program that handles all the concerns of a decentralized ledger; this includes P2P connectivity, the “mempool” broadcasting of transactions, consensus on the most recent block, account balances, Turing-complete contracts, user-level permissions, etc.

Using a monolithic architecture is typically bad practice in computer science. It makes it difficult to reuse components of the code, and attempts to do so result in complex maintanence procedures for forks of the codebase. This is especially true when the codebase is not modular in design and suffers from “spaghetti code”.

Another problem with monolithic design is that it limits you to the language of the blockchain stack (or vice versa). In the case of Ethereum which supports a Turing-complete bytecode virtual-machine, it limits you to languages that compile down to that bytecode; today, those are Serpent and Solidity.

In contrast, our approach is to decouple the consensus engine and P2P layers from the details of the application state of the particular blockchain application. We do this by abstracting away the details of the application to an interface, which is implemented as a socket protocol."

1 second transactions and thousands of transactions-per-second capability to start, further facilitated by network advancements (faster internet, faster propagation, increase in processing power, etc).

Title: Re: Is it too late [bitcoin]?
Post by: sherr on December 15, 2017, 11:55:52 PM
AND that some of them (which may or may not be extant today) will be someday useful for making transactions.

This is an undervalued point. There are already today crytocurrencies that are better than Bitcoins for any particular use-case. You can transfer value worldwide for cheaper and faster with any of them. So then what is Bitcoin's long-term valuation? Nothing. The only thing driving the prices and continued use is speculation and momentum. There will come a day when bitcoin transactions are too slow or too expensive or too hard compared to something else, and everyone will jump ship to the other thing. And then the same thing will happen to that and they'll jump ship to the next thing.

I'm sure that there are some long-term use-cases that will make cryptocurrencies stick around. But the long-term value of any particular cryptocurrency will always be zero, and people who jump  in to the middle of a price spike will loose their shirts when the bubble pops. Cryptocurrencies and Blockchain as a *technology* I think has some staying power. Any individual implementation is transient.
One could argue that this is now a historical fact, rather than mere speculation about the future.

'Bitcoin Jesus' is 'really, really concerned' about the future of the digital currency
https://www.cnbc.com/2017/12/11/bitcoin-jesus-is-really-really-concerned-about-the-future-of-the-digital-currency.html

Since this guy, AKA Roger Ver, reportedly turned $25K into $244 million buying into bitcoin at a dollar, I would dare say that he speaks from a pretty strong position of authority, and he seems to agree with your points, exactly as you stated them.

I have noticed that lifeanon suddenly "magically" becomes extremely active about some other topic whenever this point is raised. Funny that. It's almost like he's merely a troll who has a vested interest in Bitcoin (specifically) being successful for as long as possible.
Title: Re: Is it too late [bitcoin]?
Post by: runbikerun on December 16, 2017, 01:25:59 AM
Quote
The problem I have when people try to line up bitcoin's price rise in comparison to other past historical bubble is that bitcoin's price rise came from a value of $0.

For clarification, this response is not me defining whether an asset or investment is in a bubble based on whether or not it ever had a starting price of $0. That's what ILikeDividends claimed, but that's not what I meant. To put it more clearly, the key part of that statement that was missed was the "in comparison" portion. In other words, looking at bubbles relative to each other simply based on the prices of the underlying in each given bubble is a complete failure in analysis. A $0 starting point is not a defining characteristic of what makes a bubble or not, that's absolutely true, we're not in disagreement there. But, it makes no sense to compare bubbles simply on the merits of their prices without understanding the underlying forces in the market behind those prices.

This is why looking at the price of bitcoin on a logarithmic scale is so important. You could've easily taken a snapshot of bitcoin's price at numerous points along the way and it would yield a similar curve to match up to historical bubbles just like the above chart showed. Yet, doing so wouldn't give you any indicator at all as to whether or not you're dealing with a bubble in bitcoin or any other asset for that matter. For example, you could've taken a snapshot starting in Jan 2012 when it had a starting price of $4 and then had "today's" price on that graph be Jan 2014 where it had a price of around $1000. That's a multiplier of 250x and it would've dwarfed every bubble on that chart. In otherwords, this chart skews data historically simply based on arbitrary prices without regard to what determines those prices in the market.

I know this was intended as an explanation of how bitcoin isn't in a bubble, but to me it reads as confirmation that bitcoin has never been anything except a bubble. Logarithmic growth by itself isn't necessarily a guarantee that something is in a bubble (although it's a useful indicator), but logarithmic growth for years on end is hard to classify as anything except a bubble. Your argument regarding logarithmic growth feels a lot like someone whipping out a PowerPoint presentation during an evacuation to explain that this isn't an emergency, the building has always been on fire.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 16, 2017, 07:08:51 AM
I know this was intended as an explanation of how bitcoin isn't in a bubble, but to me it reads as confirmation that bitcoin has never been anything except a bubble.

Hey, Ilikedividends? Statements like the one above are why I spend time clarifying the difference between say that something is in a bubble and that something is a bubble. ;-)
Title: Re: Is it too late [bitcoin]?
Post by: Nate79 on December 16, 2017, 10:10:28 AM
Recent article in Wall Street Journal today says that 51 out of 53 economic experts and forecasters surveyed says Bitcoin is a classic bubble.

Sent from my SAMSUNG-SM-G930A using Tapatalk

Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 16, 2017, 11:27:25 AM
I know this was intended as an explanation of how bitcoin isn't in a bubble, but to me it reads as confirmation that bitcoin has never been anything except a bubble.

Hey, Ilikedividends? Statements like the one above are why I spend time clarifying the difference between say that something is in a bubble and that something is a bubble. ;-)
Looks like a tied score to me.  You should at least feel some gratification in taking half a victory lap. ;)
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 16, 2017, 12:20:36 PM
Ugh, we're clearly having separate discussions past each other again. Nevermind.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 16, 2017, 12:45:54 PM
Ugh, we're clearly having separate discussions past each other again. Nevermind.
Well, hmm.  I thought we already agreed that, if taken too literally, that statement you quoted is nonsensical. 

If you were referring to that post to illustrate your prior point, well, I'd have to say, yes, I still agree.  That was as good an example as any.

Maybe I'm missing something more subtle than that? It wouldn't be a first.
Title: Re: Is it too late [bitcoin]?
Post by: WhiteTrashCash on December 16, 2017, 02:46:17 PM
It may be too late to get into bitcoin investing, but it's never too late to get into baseball card investing. I have a Ken Griffey Jr. rookie card that I'm willing to part with. Cheap.

Sorry dude, the baseball card bubble ended years ago.

That's.
The.
Joke.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 16, 2017, 04:29:11 PM
In the original bitcoin, the way a coin is transferred is taking the prior signature and the next user's public key, and hashing that. Miners saw this data and updated the utxo to the ledger. The original bitcoin was defined as a chain of digital signatures, and accompanying that was a longstanding economic model base on being able to verify the signatures. Segwit removes miners ability to 'witness' the signatures. It changed the economics and weakened the security model. In segwit, signatures have no value; the lack of witnessing a signature can allow malicious miners to redirect transactions to their own address. This, in addition to pruning and increasingly rewarding segwit transactions, creates a situation of new risk.

Here's a more in-depth article can about segwit risk: https://calvinayre.com/2017/06/19/bitcoin/risks-segregated-witness-opening-door-mining-cartels-undermine-bitcoin-network/ 

This is not true at all. Saying that signatures have no value with SegWit is completely false. They're still the basis and necessity for being able to spend one's bitcoins. Craig Wright has a history of misinformation (Satoshi Nakamoto ID theft?) and he has always downplayed the role that nodes play in the bitcoin network and overstates the role that miners play in the network. Any node that recognizes SegWit transactions and addresses see the signatures and therefore will validate those transactions and blocks. What Craig Wright is stating in that article would essentially result in a hard fork. It is only the old nodes that wouldn't see the witness data for SegWit transactions, so if a miner were to attempt to spend transactions that didn't meet the rules of the network according to the nodes that recognize SegWit, they'd effectively be performing a hardfork and creating a blockchain that is ignoring the rules of the network that dictate that those coins can't be spent without a valid signature. A miner attempting to mine a block trying to steal coins from SegWit transactions, those blocks would only be recognized by a few old nodes on the network and that block would get quickly orphaned as soon as more legitimate blocks that all the rest of the SegWit nodes recognize get mined. In other words, this is no different of a 51% attack under a SegWit scenario than we would have under a non-SegWit network. This is a similar soft-fork technique that P2SH scripts used when implemented.

As we've already seen this year, it has been shown that miners have much less power over the network than they've realized and Craig Wright (the author of your article) has always neglected the power that the nodes and userbase/market have in dictating the direction that the network takes.

https://seebitcoin.com/2017/02/segwit-facts-not-anyone-can-spend-so-stop-saying-they-can/ (https://seebitcoin.com/2017/02/segwit-facts-not-anyone-can-spend-so-stop-saying-they-can/)

I don't know the technical side of OMG and how that works, so I can't comment there. I'd have to do some research on it more. Thanks for the info.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 16, 2017, 05:33:41 PM
This is not true at all. Saying that signatures have no value with SegWit is completely false. They're still the basis and necessity for being able to spend one's bitcoins. Craig Wright has a history of misinformation (Satoshi Nakamoto ID theft?) and he has always downplayed the role that nodes play in the bitcoin network and overstates the role that miners play in the network. Any node that recognizes SegWit transactions and addresses see the signatures and therefore will validate those transactions and blocks. What Craig Wright is stating in that article would essentially result in a hard fork. It is only the old nodes that wouldn't see the witness data for SegWit transactions, so if a miner were to attempt to spend transactions that didn't meet the rules of the network according to the nodes that recognize SegWit, they'd effectively be performing a hardfork and creating a blockchain that is ignoring the rules of the network that dictate that those coins can't be spent without a valid signature. A miner attempting to mine a block trying to steal coins from SegWit transactions, those blocks would only be recognized by a few old nodes on the network and that block would get quickly orphaned as soon as more legitimate blocks that all the rest of the SegWit nodes recognize get mined. In other words, this is no different of a 51% attack under a SegWit scenario than we would have under a non-SegWit network. This is a similar soft-fork technique that P2SH scripts used when implemented.

As we've already seen this year, it has been shown that miners have much less power over the network than they've realized and Craig Wright (the author of your article) has always neglected the power that the nodes and userbase/market have in dictating the direction that the network takes.

I'll concede that segwit signatures retain value, but remain firm that the economic model has changed to increased risk, due to segwit. User non-mining nodes cannot validate transactions. Miners are the ones who decide what to validate. User nodes cannot stop what miners validate. If the reward or reason is large enough, and large number of miners collude on malicious behavior, then the chances of a hardfork are very high. What do miners lose, in this situation, and what do they stand to gain? You can't simply assume that it can't happen, or if it happens, that it will not be a big impact, especially when there is a chance of it happening.

There are a ton of controversy surrounding segwit signatures. Physicist and chief scientist of bitcoin unlimited, Peter Rizun, backs up the claim that segwit signatures have little or no value (let's make the distinction to mean monetary value (https://www.youtube.com/watch?v=hO176mdSTG0&feature=youtu.be&t=783). Segwit also poses a forensics issue: "SegWit is not concerned with maintaining digital signatures, only with validating transactions as they occur. The SegWit approach creates significant uncertainty as to whether only a hash of signature data can meet the e-SIGN statutory requirements to prove a digital signature." https://www.coindesk.com/the-risks-of-bitcoins-segregated-witness-problems-under-us-contract-law/

Segwit changed the economic model and introduced a point of risk.

Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 16, 2017, 06:22:02 PM
I'll concede that segwit signatures retain value, but remain firm that the economic model has changed to increased risk, due to segwit. User non-mining nodes cannot validate transactions. Miners are the ones who decide what to validate. User nodes cannot stop what miners validate. If the reward or reason is large enough, and large number of miners collude on malicious behavior, then the chances of a hardfork are very high. What do miners lose, in this situation, and what do they stand to gain? You can't simply assume that it can't happen, or if it happens, that it will not be a big impact, especially when there is a chance of it happening.

There are a ton of controversy surrounding segwit signatures. Physicist and chief scientist of bitcoin unlimited, Peter Rizun, backs up the claim that segwit signatures have little or no value (let's make the distinction to mean monetary value (https://www.youtube.com/watch?v=hO176mdSTG0&feature=youtu.be&t=783). Segwit also poses a forensics issue: "SegWit is not concerned with maintaining digital signatures, only with validating transactions as they occur. The SegWit approach creates significant uncertainty as to whether only a hash of signature data can meet the e-SIGN statutory requirements to prove a digital signature." https://www.coindesk.com/the-risks-of-bitcoins-segregated-witness-problems-under-us-contract-law/

Segwit changed the economic model and introduced a point of risk.

What are you talking about that non-mining nodes cannot validate transactions? Non-mining nodes are the very nodes that validate transactions. Miners don't validate anything. I bolded your statement above because that statement is fundementally not true. Miners perform the proof-of-work to build each of the blocks, but they don't validate those blocks. Only the non-mining nodes that store the blockchain validate whether or not a block that a miner solved is valid. This is the key misunderstanding that Craig Wright and Peter Rizun in his presentation have. We even saw this play out quite vividly this year with several of the hardforks that occurred (Bcash and S2X). Hashpower does not get to dictate what bitcoin is and isn't. A massive number of bitcoin core nodes validate and accept SegWit blocks and transactions and they view all witness data. The market sees bitcoin as having SegWit implemented and so do all the exchanges that are a part of this ecosystem. As we saw with the BCash EDA hassle this year, hashpower had little sway in what the market viewed as being bitcoin.

If you watch Peter Rizun's video that you linked to, the very first question that was asked pointed out this very clear misunderstanding and Peter Rizun's response was...

"I'm assuming that the non-mining nodes don't have too much influence over the protocol."

Peter Rizun views the bitcoin ecosystem as a closed system from the standpoint of miners and only miners. As we've seen, this is a faulty viewpoint and it isn't how the economical market reacts to what bitcoin is and isn't. If all nodes are validating SegWit blocks with witness data and the market views this as bitcoin and all the exchanges view this as bitcoin and there is massive economic activity that occurs with SegWit transactions, then the miners have very little influence with regard to trying to take over SegWit transactions without witness data. This will only get more and more true as time goes on and more and more economic activity occurs with SegWit transactions that include the witness data. As exchanges like Coinbase and many others make their transition to SegWit, it will become less and less likely that there would ever be an attempt to hard fork away from SegWit. That's essentially what is being argued here...that the miners would make an attempt to hard fork away from a Bitcoin network that uses SegWit and back onto a chain that does not recognize SegWit transactions. The economic model has not changed at all. In fact, it is the economic model (the market determines what Bitcoin is and isn't) that makes this arguement invalid in the first place. What you're essentially arguing is that nodes that don't recognize SegWit transactions that strip witness data will someday be the nodes that determine that Bitcoin no longer utilizes SegWit. In doing so, a hardfork would occur and the market would also need to agree with that fact idea...given the fact that the market would likely have billions of dollars locked up in SegWit addresses, I can assure you that would not happen.

Miners can hardfork to their hearts content, we've all seen how well that has worked in the past for them.
Title: Re: Is it too late [bitcoin]?
Post by: phil22 on December 16, 2017, 06:45:49 PM
What are you talking about that non-mining nodes cannot validate transactions? Non-mining nodes are the very nodes that validate transactions. Miners don't validate anything.

false.  miners validate the entire history of the blockchain (that's the whole point) to decide which blockchain to work on top of, and miners validate all outstanding transactions in the mempool when deciding which transactions to include in a block.

Hashpower does not get to dictate what bitcoin is and isn't.

false again.  hashpower does determine which blockchain is the "concensus" blockchain.  again, that's the whole point.  hashpower = secure blockchain = bitcoin.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 16, 2017, 07:16:39 PM
false.  miners validate the entire history of the blockchain (that's the whole point) to decide which blockchain to work on top of, and miners validate all outstanding transactions in the mempool when deciding which transactions to include in a block.

Wrong, the decentralized network of non-mining nodes that store a copy of the blockchain is what validates the historical blockchain. The mining nodes simply take a hash of the latest block from those nodes to work on top of for the current block that they're processing. They can certainly choose which transactions to process from the mempool, but if they don't build a valid block that the non-mining nodes agree to, then they will have wasted their hash power. That's the whole point in how the checks and balances work between nodes and miners. If a miner builds an invalid block, that block will not be accepted by the network.

Quote
false again.  hashpower does determine which blockchain is the "concensus" blockchain.  again, that's the whole point.  hashpower = secure blockchain = bitcoin.

That's not really true as we saw and was proven this year. Hashpower is completely economically driven. If the market and ecosystem values bitcoin as being a certain chain and the tokens on the forked chain don't hold any value, then the miners would be operating at a loss under the rules of the forked chain. While they might be able to hold out for a short while, if the market does not get behind that forked chain, then ultimately the miners would need to mine the more profitable chain to stay in business. There is certainly a give and take between the two forces, but it just isn't true that hashpower is what determines what the bitcoin blockchain is. History clearly shows this to be true, so I don't really feel as if I need to argue it.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 17, 2017, 01:06:39 AM
false.  miners validate the entire history of the blockchain (that's the whole point) to decide which blockchain to work on top of, and miners validate all outstanding transactions in the mempool when deciding which transactions to include in a block.

Wrong, the decentralized network of non-mining nodes that store a copy of the blockchain is what validates the historical blockchain. The mining nodes simply take a hash of the latest block from those nodes to work on top of for the current block that they're processing. They can certainly choose which transactions to process from the mempool, but if they don't build a valid block that the non-mining nodes agree to, then they will have wasted their hash power. That's the whole point in how the checks and balances work between nodes and miners. If a miner builds an invalid block, that block will not be accepted by the network.

Quote
false again.  hashpower does determine which blockchain is the "concensus" blockchain.  again, that's the whole point.  hashpower = secure blockchain = bitcoin.

That's not really true as we saw and was proven this year. Hashpower is completely economically driven. If the market and ecosystem values bitcoin as being a certain chain and the tokens on the forked chain don't hold any value, then the miners would be operating at a loss under the rules of the forked chain. While they might be able to hold out for a short while, if the market does not get behind that forked chain, then ultimately the miners would need to mine the more profitable chain to stay in business. There is certainly a give and take between the two forces, but it just isn't true that hashpower is what determines what the bitcoin blockchain is. History clearly shows this to be true, so I don't really feel as if I need to argue it.

There are two opposing schools of thought here.

One says user fullnodes are needed to keep miners honest, to enforce consensus rules against miners violating them. The more user fullnodes there are, the greater the security for bitcoin.

The other says miners, themselves, are the nodes that keep themselves in checks and balances; other miners reject invalid transactions. Most users do not need to run user fullnodes. In the original nonsegwit economic model, miners are incentivized to not accept or perform fraud, which would harm the network and their mining investments. A simple model: 

Remove user fullnodes:
Bitcoin network = miners + user fullnodes
You still have bitcoin.

Remove miners:
Bitcoin network = miners + user fullnodes
You no longer have bitcoin.

Conclusion:
Bitcoin = miners
Bitcoin can function without user fullnodes; and before user fullnodes, this was how it functioned.

Here's a good article about the this school of thought: "Why “non-mining full nodes” are a terrible idea." that fundamentally disagrees with normal users needing to run fullnodes. https://medium.com/@olivierjanss/why-non-mining-full-nodes-are-a-terrible-idea-ad3c49f7a7b6

Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 17, 2017, 06:45:01 AM
Shadow, the argument you're making against "user" full-nodes is not an argument I ever made. Not once did I ever mention "user" full-nodes or making the case for the ability of users to run full-nodes on Raspberry Pis.

There is a big difference between "user" full-nodes and just the idea of full-nodes in general. Essentially if you're a non-mining Bitcoin business, you're going to want to run a full node. As a business, you're not going to want to trust your business to some other third-party that is running a full-node. Secondly, Coinbase, for example, as an Exchange will want to run a full-node to ensure that their transactions are fully validated and that they're also a complete check and balance against the rest of the community. If the only full-nodes out there were miners, then that would mean miners would be able to dictate the business decisions that Coinbase as an exchange were to make. Also, since Coinbase is a business that relies directly on its userbase, Coinbase has a vested interest in listening to that user base to determine what path to follow. This is the key market mechanism that people miss when they place too much emphasis on the power that miners have over Bitcoin. Coinbase isn't in the mining business, but it most assuredly is in the business of making sure that Bitcoin follows the path that the market demands. That is essentially its entire business model and that model depends directly on running a non-mining full-node.

The article you linked to and the argument you've made only make sense when talking about "user" full-nodes, but don't make much sense in the context of what I stated above.

Finally, if you value decentralization (which the article never mentions), then you must also value non-mining full-nodes. I run cold-storage watch only Electrum SPV wallet. At any given time it is connected to about 10 different servers, many of them are Tor hidden servers, and are very geographically diverse. This is a very critical component when it comes to creating a payment network that is censorship resistant. Bitcoin mining is essentially performing energy market arbitrage by being able to be located in areas with cheap electricity. Because of this, there is a reason why a large chunk of the mining resources are located in China. I mine with an ASIC at my house and use the Slushpool mining pool since it gives me a vote as to which Bitcoin version I mine for. Since most mining takes place in pools, if only miners were the ones running full-nodes, then my SPV wallet would not be making nearly as many diverse connections around the globe. This is very bad for decentralization and censorship resistance. Large numbers of geographically diverse full-nodes provides a proper check against mining, especially when that mining is not nearly as geographically diverse.

I agree that Bitcoin without mining is not Bitcoin, but if you put too much emphasis on the power that mining has over the network, then I'd absolutely argue that Bitcoin without a large number of geographically diverse full-nodes is not Bitcoin either.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 17, 2017, 09:27:52 AM
Shadow, the argument you're making against "user" full-nodes is not an argument I ever made. Not once did I ever mention "user" full-nodes or making the case for the ability of users to run full-nodes on Raspberry Pis.

There is a big difference between "user" full-nodes and just the idea of full-nodes in general. Essentially if you're a non-mining Bitcoin business, you're going to want to run a full node. As a business, you're not going to want to trust your business to some other third-party that is running a full-node. Secondly, Coinbase, for example, as an Exchange will want to run a full-node to ensure that their transactions are fully validated and that they're also a complete check and balance against the rest of the community. If the only full-nodes out there were miners, then that would mean miners would be able to dictate the business decisions that Coinbase as an exchange were to make. Also, since Coinbase is a business that relies directly on its userbase, Coinbase has a vested interest in listening to that user base to determine what path to follow. This is the key market mechanism that people miss when they place too much emphasis on the power that miners have over Bitcoin. Coinbase isn't in the mining business, but it most assuredly is in the business of making sure that Bitcoin follows the path that the market demands. That is essentially its entire business model and that model depends directly on running a non-mining full-node.

The article you linked to and the argument you've made only make sense when talking about "user" full-nodes, but don't make much sense in the context of what I stated above.


My statements don't disagree with this. Businesses that accept btc will want to run nonmining fullnodes. Enthusiasts and researchers may want to run a nonmining fullnode.

Quote
Finally, if you value decentralization (which the article never mentions), then you must also value non-mining full-nodes. I run cold-storage watch only Electrum SPV wallet. At any given time it is connected to about 10 different servers, many of them are Tor hidden servers, and are very geographically diverse. This is a very critical component when it comes to creating a payment network that is censorship resistant. Bitcoin mining is essentially performing energy market arbitrage by being able to be located in areas with cheap electricity. Because of this, there is a reason why a large chunk of the mining resources are located in China. I mine with an ASIC at my house and use the Slushpool mining pool since it gives me a vote as to which Bitcoin version I mine for. Since most mining takes place in pools, if only miners were the ones running full-nodes, then my SPV wallet would not be making nearly as many diverse connections around the globe. This is very bad for decentralization and censorship resistance. Large numbers of geographically diverse full-nodes provides a proper check against mining, especially when that mining is not nearly as geographically diverse.

I agree that Bitcoin without mining is not Bitcoin, but if you put too much emphasis on the power that mining has over the network, then I'd absolutely argue that Bitcoin without a large number of geographically diverse full-nodes is not Bitcoin either.

The thing about decentralization in a proof-of-work, is that it faces unsustainability and other risks. Every performance tweak, every optimization, every competitive advantage, every newer model of of asic, creates a situation where miners must adapt similiar enhancements to compete. Factor in areas where you get cheap electricity. Miners are ok as long as they operate in the black, but if they can't keep up with costs (higher and higher costs, or btc value doesn't keep pace with costs), they have to shutdown part of the mining operation or they may even entirely have to give it up.

Another thing about decentralization is that there is no agreement on what constitutes decentralization in a proof-of-work crypto. Miners are distributed groups, but we see a trend toward greater and greater centralization base on the factors listed above. Those who support running nonmining fullnodes says the more people that run fullnodes the better: for example, 100 users, 10 miners, and if 90 people are nonmining fullnodes, then you've extended decentralization by including nonmining fullnodes across 90% of users. You limit a protocol blocksize increase base on this decentralized reasoning 

The problem with this is that it affects usability. The crucial aspect impacted is infrastructure. The people who believe concentrated pools of miners are ok, given the factors of increasing efficiency that will phase out smaller miners, also believe that decentralization naturally results from a higher blocksize limit, which increases usability. Businesses are the ones who must at least run nonmining fullnodes because they process customer transactions. So greater usability --> more users --> more businesses. Now, you have 1000 users, 10 miners or even more (systems that rent mining power to normal users increase), and 90 businesses that run nonmining fullnodes. The percentage of nonmining fullnodes are lower than in the limited blocksize scenario (10% vs 90%), but that does not make it more centralized then the other scenario.
 
It seems to a be question of perspective: which situation would actually better defend against centralization?
Title: Re: Is it too late [bitcoin]?
Post by: phil22 on December 17, 2017, 11:05:45 AM
The mining nodes simply take a hash of the latest block from those nodes to work on top of for the current block that they're processing.

sorry but there's no point in continuing this discussion in this thread.  you've obviously been misinformed.

mining nodes don't have to take a block hash from non-mining nodes.  miners can ignore new blocks coming in from the network and create their own chain in secret, then broadcast this secret chain later once they have the most cumulative proof of work.  that's how a "51%" attack works.

They can certainly choose which transactions to process from the mempool, but if they don't build a valid block that the non-mining nodes agree to, then they will have wasted their hash power.

that's all they do.  there's no other way for transactions end up in a block.  if the majority of miners are working on a chain a node doesn't consider valid, and the node wants to follow a different chain, then the node has to follow some other consensus rules.  the node would then not be a "bitcoin" node.  in fact this is exactly how the bitcoin forks work.

Quote
false again.  hashpower does determine which blockchain is the "concensus" blockchain.  again, that's the whole point.  hashpower = secure blockchain = bitcoin.

That's not really true as we saw and was proven this year.
...
History clearly shows this to be true, so I don't really feel as if I need to argue it.

i don't know what you're talking about.  no other chain has ever had the most cumulative proof of work.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 17, 2017, 11:14:56 AM
My statements don't disagree with this. Businesses that accept btc will want to run nonmining fullnodes. Enthusiasts and researchers may want to run a nonmining fullnode.

I agree. I was a little confused then that you linked to an article that was literally titled: "Why non-mining full nodes are a terrible idea." and you claimed that Bitcoin = miners. If you agree that non-mining full-nodes are a critical component of the Bitcoin network, then we can agree there, but it didn't seem as if your post was arguing for that at all.

Quote
The thing about decentralization in a proof-of-work, is that it faces unsustainability and other risks. Every performance tweak, every optimization, every competitive advantage, every newer model of of asic, creates a situation where miners must adapt similiar enhancements to compete. Factor in areas where you get cheap electricity. Miners are ok as long as they operate in the black, but if they can't keep up with costs (higher and higher costs, or btc value doesn't keep pace with costs), they have to shutdown part of the mining operation or they may even entirely have to give it up.

Another thing about decentralization is that there is no agreement on what constitutes decentralization in a proof-of-work crypto. Miners are distributed groups, but we see a trend toward greater and greater centralization base on the factors listed above. Those who support running nonmining fullnodes says the more people that run fullnodes the better: for example, 100 users, 10 miners, and if 90 people are nonmining fullnodes, then you've extended decentralization by including nonmining fullnodes across 90% of users. You limit a protocol blocksize increase base on this decentralized reasoning 

The problem with this is that it affects usability. The crucial aspect impacted is infrastructure. The people who believe concentrated pools of miners are ok, given the factors of increasing efficiency that will phase out smaller miners, also believe that decentralization naturally results from a higher blocksize limit, which increases usability. Businesses are the ones who must at least run nonmining fullnodes because they process customer transactions. So greater usability --> more users --> more businesses. Now, you have 1000 users, 10 miners or even more (systems that rent mining power to normal users increase), and 90 businesses that run nonmining fullnodes. The percentage of nonmining fullnodes are lower than in the limited blocksize scenario (10% vs 90%), but that does not make it more centralized then the other scenario.
 
It seems to a be question of perspective: which situation would actually better defend against centralization?

It seems like you operate with a very black and white perspective.

Since hashrate within mining pools can be fairly dispersed, I don't feel there is a need to have a large number of mining pools, so long as the hashrate within them is fairly decentralized. So long as you have enough mining pools to cover the varying degrees of consesus, then you can withstand various attacks and censorship. Since mining pools are more abstract and application layer entities, it is very hard to censor a mining pool itself even if there are only a few of them. Having a geographically decentralized and disperse group of non-mining full nodes however is even more important since often these groups of nodes need to talk the Bitcoin protocol across the internet and often are businesses themselves that depend on these nodes to run their business. Since these business operate within the jurisdiction of any given nation, it would be much easier to censor non-mining full-nodes than it would be to censor any given mining pool of diverse miners. As I stated earlier, it is this large group of decentralized and geographically disperse non-mining full-nodes that provide a proper check against the mining infrastructure.

Again, I'm not for or against a bigger blocksize at some point. It will need to be an inevitable change to be made to the protocol in order to scale it even with adequate side chain solutions in place. But, I feel like you're straying from the original argument and trying to now squeeze a blocksize debate into the picture where there was none previously. Aside from acknowledging that blocksize increases are not a valid form of scaling exponentially (which is needed for large scale adoption), then I understand the need for blocksizes that are larger than the current restriction today.

However, our original argument was in regard to whether mining is the central form of power within the Bitcoin network and ecosystem and whether or not SegWit introduces security flaws. As I've stated, unless you feel that miners are the sole dictators of Bitcoin, then SegWit does not introduce any more security issues than were already present with the risk of a 51% attack or a contentious hardfork driven by miners. I stand by my position on the fact that non-mining full-nodes are a check and balance against miners and even though you've now strayed into a separate debate altogether (block-size), I haven't heard a valid argument against having that check and balance in place. That check and balance provides security and will ensure that SegWit is a secure part of Bitcoin going forward that can't simply be contentiously removed one day by a malicious group of miners, no matter how strong they think they are.
Title: Re: Is it too late [bitcoin]?
Post by: lifeanon269 on December 17, 2017, 11:31:23 AM
sorry but there's no point in continuing this discussion in this thread.  you've obviously been misinformed.

mining nodes don't have to take a block hash from non-mining nodes.  miners can ignore new blocks coming in from the network and create their own chain in secret, then broadcast this secret chain later once they have the most cumulative proof of work.  that's how a "51%" attack works.

But they still need to choose a valid block height to operate from as a point of fork. That was my point. They obviously don't need to pull that block from a non-mining node, but that misses the point that they'd certainly need to pull that block from a legitimate chain (whether their own copy or not) in order to present their fork chain for consensus. Otherwise what would be the point of forking?

Quote
that's all they do.  there's no other way for transactions end up in a block.  if the majority of miners are working on a chain a node doesn't consider valid, and the node wants to follow a different chain, then the node has to follow some other consensus rules.  the node would then not be a "bitcoin" node.  in fact this is exactly how the bitcoin forks work.

I'm not up for arguing semantics, so please don't underline my sentence and claim like I was stating anything other than what was clearly typed out. We're in full agreement with how transactions end up in a block.

Quote
i don't know what you're talking about.  no other chain has ever had the most cumulative proof of work.

I agree we haven't. But that's certainly not without an effort to have one, as was shown with the proposed SegWit2X fork. That was a proposed hardfork that had a majority of hashrate behind it. Had it gone through, it would have been the most cumulative proof of work chain. However, due to the lack of support from the community, the number of non-mining full-nodes in opposition, and the lack of ecosystem support (exchanges, payment operators, etc), then the fork didn't go through (not taking into account that the code itself was screwed up).
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 17, 2017, 12:31:12 PM
However, our original argument was in regard to whether mining is the central form of power within the Bitcoin network and ecosystem and whether or not SegWit introduces security flaws. As I've stated, unless you feel that miners are the sole dictators of Bitcoin, then SegWit does not introduce any more security issues than were already present with the risk of a 51% attack or a contentious hardfork driven by miners. I stand by my position on the fact that non-mining full-nodes are a check and balance against miners and even though you've now strayed into a separate debate altogether (block-size), I haven't heard a valid argument against having that check and balance in place. That check and balance provides security and will ensure that SegWit is a secure part of Bitcoin going forward that can't simply be contentiously removed one day by a malicious group of miners, no matter how strong they think they are.

My stance remains: 1) miners are essential and a central component to bitcoin, because they are the ones who validate transactions and update the ledger in return for coins; 2) as already pointed out, segwit created a point of vulnerability. I haven't been convinced otherwise.

Title: Re: Is it too late [bitcoin]?
Post by: talltexan on December 18, 2017, 08:33:29 AM
It may be too late to get into bitcoin investing, but it's never too late to get into baseball card investing. I have a Ken Griffey Jr. rookie card that I'm willing to part with. Cheap.

Sorry dude, the baseball card bubble ended years ago.

Don't you dare drag Junior into this. That man is one of the most talented athletes ever, and nothing but a class Act.*

*Besides, he's still on the Reds' payroll today because he signed a brilliant contract with a ton of deferred money, so he's probably being paid by them in bitcoin, too
Title: Re: Is it too late [bitcoin]?
Post by: Mr Mark on December 19, 2017, 06:47:42 AM
Ughhh, my friend is obsessed with bitcoin and I was this close to investing $3k as experiment money in August but I didn’t because I set a goal for my Vanguard account ($100k) and haven’t reached that yet. Now I’m kinda kicking myself and wondering if I should invest now or leave the game to the more fearless? (I still wouldn’t invest more than $3k max).  If I don’t do it, will I be regretting it in 5 years?

BTC when OP asked the question: $7813.50
BTC now: $18211

Gain: +133%
CAGR: OMFG

Title: Re: Is it too late [bitcoin]?
Post by: talltexan on December 19, 2017, 12:39:40 PM
Bitcoin is exactly as risky today as it was in November. It's just more expensive now...
Title: Re: Is it too late [bitcoin]?
Post by: Cassie on December 19, 2017, 03:07:59 PM
Recently we sold most of ours. WE decided a bird in the hand is better and just kept a few in case it goes up even more.
Title: Re: Is it too late [bitcoin]?
Post by: seattlecyclone on December 19, 2017, 03:11:07 PM
Ughhh, my friend is obsessed with bitcoin and I was this close to investing $3k as experiment money in August but I didn’t because I set a goal for my Vanguard account ($100k) and haven’t reached that yet. Now I’m kinda kicking myself and wondering if I should invest now or leave the game to the more fearless? (I still wouldn’t invest more than $3k max).  If I don’t do it, will I be regretting it in 5 years?

BTC when OP asked the question: $7813.50
BTC now: $18211

Gain: +133%
CAGR: OMFG



Come on, it only needs to double about 15 more times before everyone holding at least 1 BTC is a USD billionaire. At this surely sustainable growth rate that should happen by this time next year.
Title: Re: Is it too late [bitcoin]?
Post by: hgjjgkj on December 19, 2017, 10:10:58 PM
How do people feel about coinbase adding BCH?
Title: Re: Is it too late [bitcoin]?
Post by: MrThatsDifferent on December 19, 2017, 10:46:51 PM
Ughhh, my friend is obsessed with bitcoin and I was this close to investing $3k as experiment money in August but I didn’t because I set a goal for my Vanguard account ($100k) and haven’t reached that yet. Now I’m kinda kicking myself and wondering if I should invest now or leave the game to the more fearless? (I still wouldn’t invest more than $3k max).  If I don’t do it, will I be regretting it in 5 years?

BTC when OP asked the question: $7813.50
BTC now: $18211

Gain: +133%
CAGR: OMFG



Come on, it only needs to double about 15 more times before everyone holding at least 1 BTC is a USD billionaire. At this surely sustainable growth rate that should happen by this time next year.

Damn! In August when my best friend tried to get me to buy bitcoin it was $3k and I thought that was too high to buy in. He thought $10k was the ceiling and it would take a year.
Title: Re: Is it too late [bitcoin]?
Post by: Scandium on December 20, 2017, 02:40:02 PM
Bitcoin is exactly as risky today as it was in November. It's just more expensive now...

yeah. To be fair, with zero intrinsic value the PE ratio (or whatever) is no worse at $20k than at $2k..
Title: Re: Is it too late [bitcoin]?
Post by: dougules on December 20, 2017, 03:45:04 PM
Bitcoin is exactly as risky today as it was in November. It's just more expensive now...

yeah. To be fair, with zero intrinsic value the PE ratio (or whatever) is no worse at $20k than at $2k..

There is no PE ratio because E=0.
Title: Re: Is it too late [bitcoin]?
Post by: Scandium on December 20, 2017, 04:44:51 PM
Bitcoin is exactly as risky today as it was in November. It's just more expensive now...

yeah. To be fair, with zero intrinsic value the PE ratio (or whatever) is no worse at $20k than at $2k..

There is no PE ratio because E=0.
Exactly. Just like intrinsic value, and potential value, or future earnings, or spending power, etc etc. Math is easy when it's all zero!
Title: Re: Is it too late [bitcoin]?
Post by: phil22 on December 20, 2017, 05:14:21 PM
How do people feel about coinbase adding BCH?

open competition between BTC and BCH is good.  the actual announcement and start of trading didn't go well, but i don't think that will matter either way in the long run.

my guess is all the people that tried to make a quick buck and sold all their BCH early now regret it because of the current price of BCH.  if BCH drops to zero they'll be vindicated but i don't think that's likely.
Title: Re: Is it too late [bitcoin]?
Post by: CanuckExpat on December 20, 2017, 07:53:47 PM
Recent article in Wall Street Journal today says that 51 out of 53 economic experts and forecasters surveyed says Bitcoin is a classic bubble.

Sent from my SAMSUNG-SM-G930A using Tapatalk

It is very hard call a bubble/top without the benefit of hindsight:
(https://pensionpartners.com/wp-content/uploads/2017/08/charts9.png)

From this great series of charts (https://pensionpartners.com/put-these-charts-on-your-wall/)
Title: Re: Is it too late [bitcoin]?
Post by: dougules on December 21, 2017, 07:19:08 AM
Recent article in Wall Street Journal today says that 51 out of 53 economic experts and forecasters surveyed says Bitcoin is a classic bubble.

Sent from my SAMSUNG-SM-G930A using Tapatalk

It is very hard call a bubble/top without the benefit of hindsight:
(https://pensionpartners.com/wp-content/uploads/2017/08/charts9.png)

From this great series of charts (https://pensionpartners.com/put-these-charts-on-your-wall/)

There's a difference between calling a bubble and calling a top.  You can be in a bubble for years.
Title: Re: Is it too late [bitcoin]?
Post by: asosharp on December 21, 2017, 08:07:42 AM
Forgive me if I'm wrong, but isn't that the complete opposite scenario of most bitcoin investors at the moment?  Few people have only a couple hundred dollars of bitcoin, most appear to be hoarding large sums with the intent to use as an investment rather than for any transactions that can be carried out.

The original premise was that bitcoin would have use-cases that would compel people to acquire it to use; and this would therefore escalate demand and value. However, rising use-cases and transactions have shifted to newer, superior crypto. My prediction is that by 2019, bitcoin's market dominance will dip below 50% (it's currently 62.4% and one year ago it was 86%). There will be crypto that will outperform bitcoin; and a few of these crypto have the potential for a huge breakout due to true onchain scalability, mass adoption, and compelling use-cases (superior remittance system, access to online financial services, a platform that allows payment networks to instantly settle and various units of value to be traded with each other, etc).

I recall reading something about how a bank (or some financial institution) was trialling cryptocurrency. One of the team mates was totally into Bitcoin and had personally invested into it but after performing the rigourous tests he decided that it was a bad investment as it takes hours to transact.

I didn't know about the dip in market dominance but I'm also not surprised. That's why I think Dash, Ripple, and other similar crypto will win the day. The only thing is I don't think Dash and Ripple are seriously considered a digital currency as opposed to Bitcoin.

Ethereum might win as well but I have heard they are having some serious problems as well. I'm not too sure about Litecoin though as I'm not sure what its use cases are.
Title: Re: Is it too late [bitcoin]?
Post by: Gondolin on December 21, 2017, 10:12:44 AM
Quote
At this surely sustainable growth rate that should happen by this time next year

Just in time for me to buy the Carolina Panthers with my bitcoin billions!
Title: Re: Is it too late [bitcoin]?
Post by: ChpBstrd on December 21, 2017, 12:05:32 PM
It really is the dot-com bust all over again.

https://www.marketwatch.com/story/long-island-iced-teas-stock-rockets-nearly-500-after-changing-name-to-long-blockchain-2017-12-21?siteid=yhoof2&yptr=yahoo
Title: Re: Is it too late [bitcoin]?
Post by: JAYSLOL on December 21, 2017, 12:34:11 PM
It really is the dot-com bust all over again.

https://www.marketwatch.com/story/long-island-iced-teas-stock-rockets-nearly-500-after-changing-name-to-long-blockchain-2017-12-21?siteid=yhoof2&yptr=yahoo

OMFG
Title: Re: Is it too late [bitcoin]?
Post by: bacchi on December 21, 2017, 12:40:40 PM
It really is the dot-com bust all over again.

https://www.marketwatch.com/story/long-island-iced-teas-stock-rockets-nearly-500-after-changing-name-to-long-blockchain-2017-12-21?siteid=yhoof2&yptr=yahoo

OMFG

I just read that too.

What's a good name for the impending bust? The dotcom era led to the dotbomb. The bitcoin era has a...bitless crash?


Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 21, 2017, 01:23:27 PM
It really is the dot-com bust all over again.

https://www.marketwatch.com/story/long-island-iced-teas-stock-rockets-nearly-500-after-changing-name-to-long-blockchain-2017-12-21?siteid=yhoof2&yptr=yahoo

OMFG

I just read that too.

What's a good name for the impending bust? The dotcom era led to the dotbomb. The bitcoin era has a...bitless crash?

VaporCoin?
Title: Re: Is it too late [bitcoin]?
Post by: Scandium on December 21, 2017, 01:29:05 PM
It really is the dot-com bust all over again.

https://www.marketwatch.com/story/long-island-iced-teas-stock-rockets-nearly-500-after-changing-name-to-long-blockchain-2017-12-21?siteid=yhoof2&yptr=yahoo

OMFG

WTF? That's not real is it? Pivoting from iced tea to blockchain.. something? Whaa??

And to be fair to the dot-com boom those companies at least had the potential to make money. Pets.com could have been profitable, at some point. BTC can...eh, function as a highly volatile middle-man to buy starbucks, which is instantly converted to USD.
Title: Re: Is it too late [bitcoin]?
Post by: Nate79 on December 21, 2017, 06:13:38 PM
Recent article in Wall Street Journal today says that 51 out of 53 economic experts and forecasters surveyed says Bitcoin is a classic bubble.

Sent from my SAMSUNG-SM-G930A using Tapatalk

It is very hard call a bubble/top without the benefit of hindsight:
(https://pensionpartners.com/wp-content/uploads/2017/08/charts9.png)

From this great series of charts (https://pensionpartners.com/put-these-charts-on-your-wall/)
Sure. These are economic experts, not kindergardeners.

Sent from my SAMSUNG-SM-G930A using Tapatalk

Title: Re: Is it too late [bitcoin]?
Post by: phil22 on December 21, 2017, 07:22:09 PM
Recent article in Wall Street Journal today says that 51 out of 53 economic experts and forecasters surveyed says Bitcoin is a classic bubble.

Sent from my SAMSUNG-SM-G930A using Tapatalk

It is very hard call a bubble/top without the benefit of hindsight:
(https://pensionpartners.com/wp-content/uploads/2017/08/charts9.png)

From this great series of charts (https://pensionpartners.com/put-these-charts-on-your-wall/)
Sure. These are economic experts, not kindergardeners.

Sent from my SAMSUNG-SM-G930A using Tapatalk

i hope you don't heed the financial advice of these "economic experts":

here's The Economist in October 2011, with the price around $3: "BITCOIN, briefly the world's favorite cryptocurrency, is in trouble."
https://www.economist.com/blogs/babbage/2011/10/virtual-currencies

here's CNN Money in April 2013, with the price around $80: "Bitcoin bubble may have burst"
http://money.cnn.com/2013/04/12/investing/bitcoin-bubble/index.html

here's The Economist again in November 2013, with the price around $1000: "the recent price surge, driven by Chinese investors stashing money offshore, looks like a classic bubble."
https://www.economist.com/news/leaders/21590901-it-looks-overvalued-even-if-digital-currency-crashes-others-will-follow-bitcoin

and again in May 2015, with the price near $225: "Six-and-a-half years on, the bankers may feel they can relax a little. Interest in bitcoin has waned."
https://www.economist.com/news/special-report/21650295-or-it-next-big-thing

here's The Wall Street Journal in June 2017, with the price near $3000: "Bitcoin [...] roughly tripled this year.  Given bitcoin’s history of volatility, a tumble at some point seems inevitable."
https://www.wsj.com/articles/bitcoin-drives-to-a-new-high-but-is-it-headed-for-a-crash-1496771053
Title: Re: Is it too late [bitcoin]?
Post by: CanuckExpat on December 21, 2017, 08:17:45 PM
I didn't post that graph to say whether it is true that we are in a bubble or not, nor whether it would be prudent to invest in Bitcoin or not, but rather about the fallacy of making predictions without hindsight, especially if you were going to act on them (no shorting is available that I know of).

It's a bit of a semantics argument, but I'm not sure one can call a bubble until it is popped. It has to be done with hindsight.
Title: Re: Is it too late [bitcoin]?
Post by: phil22 on December 21, 2017, 08:43:24 PM
agreed that hindsight is needed to declare bitcoin was "in" a bubble.  time will tell if bitcoin altogether "is" a bubble.  if you look at the log chart the history appears a lot less dramatic, but it's still climbing at an unsustainable pace:

(https://i.imgur.com/16vqzhZ.jpg)
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 21, 2017, 08:50:47 PM
I didn't post that graph to say whether it is true that we are in a bubble or not, nor whether it would be prudent to invest in Bitcoin or not, but rather about the fallacy of making predictions without foresight, especially if you were going to act on them (no shorting is available that I know of).

It's a bit of a semantics argument, but I'm not sure one can call a bubble until it is popped. It has to be done with hindsight.
Call me a sematics geek, but it's a bubble.  It can continue to be a bubble for another 10 years, but it's a bubble, nevertheless.  Hopefully, many can make fortunes before the bubble bursts.  But it will burst.  I don't intend to be there when it does, and I won't regret the potential billions I could have made in the mean time.  There is potentially functional value with this technology, but there is no economic value.

At some point, the functional value of this technology will be exploited.  But it will not be in the form of a currency.  The company that can exploit that will be the next Google, but they are not on the investment horizon yet.

Right now, there are penny stock Tea companies (who actually just sell tea) changing their names to "block chain Tea," and realizing a 1,000% appreciation in share price in mere days (less than a week), simply because of a name change.

That's a bubble, my friend, no matter how you want to slice it, semantically.

And, unlike BCOs, they fall under the regulatory purview of the SEC.

The regulators commeth.
Title: Re: Is it too late [bitcoin]?
Post by: ChpBstrd on December 21, 2017, 08:57:44 PM
Recent article in Wall Street Journal today says that 51 out of 53 economic experts and forecasters surveyed says Bitcoin is a classic bubble.

Sent from my SAMSUNG-SM-G930A using Tapatalk

It is very hard call a bubble/top without the benefit of hindsight:
(https://pensionpartners.com/wp-content/uploads/2017/08/charts9.png)

From this great series of charts (https://pensionpartners.com/put-these-charts-on-your-wall/)
Sure. These are economic experts, not kindergardeners.

Sent from my SAMSUNG-SM-G930A using Tapatalk

i hope you don't heed the financial advice of these "economic experts":

here's The Economist in October 2011, with the price around $3: "BITCOIN, briefly the world's favorite cryptocurrency, is in trouble."
https://www.economist.com/blogs/babbage/2011/10/virtual-currencies

here's CNN Money in April 2013, with the price around $80: "Bitcoin bubble may have burst"
http://money.cnn.com/2013/04/12/investing/bitcoin-bubble/index.html

here's The Economist again in November 2013, with the price around $1000: "the recent price surge, driven by Chinese investors stashing money offshore, looks like a classic bubble."
https://www.economist.com/news/leaders/21590901-it-looks-overvalued-even-if-digital-currency-crashes-others-will-follow-bitcoin

and again in May 2015, with the price near $225: "Six-and-a-half years on, the bankers may feel they can relax a little. Interest in bitcoin has waned."
https://www.economist.com/news/special-report/21650295-or-it-next-big-thing

here's The Wall Street Journal in June 2017, with the price near $3000: "Bitcoin [...] roughly tripled this year.  Given bitcoin’s history of volatility, a tumble at some point seems inevitable."
https://www.wsj.com/articles/bitcoin-drives-to-a-new-high-but-is-it-headed-for-a-crash-1496771053
^ It really is the dot-com bust all over again.
Title: Re: Is it too late [bitcoin]?
Post by: Mighty-Dollar on December 21, 2017, 11:31:28 PM
Recent article in Wall Street Journal today says that 51 out of 53 economic experts and forecasters surveyed says Bitcoin is a classic bubble.

Sent from my SAMSUNG-SM-G930A using Tapatalk
Well 51 out of 53 were right. Down more than 50% off it's high.
Title: Re: Is it too late [bitcoin]?
Post by: KTG on December 22, 2017, 08:10:57 AM
Bitcoin is so stupid. Imagine if the US dollar behaved like Bitcoin. The US economy would be in ruin.

Stay away from this nonsense. If you do throw money at it (I refuse to call it investing) assume you will lose it, and if you win, its just like going to the casino.
Title: Re: Is it too late [bitcoin]?
Post by: thenextguy on December 22, 2017, 11:10:50 AM
This is only the beginning of the bitcoin price drops!

I would think that 30% or 40% drops are right around the corner on thin transactions.

Get ready for a rush to the exit.... It's about to get messy.

This isn't going to age well.

My question to the skeptics. 

Have you ever used bitcoin, studied it, or the ecosystem? Have you read about the banks who are developing their entire future around it?
https://cointelegraph.com/news/koreas-second-largest-bank-building-secure-crypto-wallet-services

https://news.bitcoin.com/japans-sbi-crypto-businesses-mining/

Also, when would you ever considering using bitcoin? What would it take? Or do you just scream ponzi, scam, tulips until you die, regardless of how many people are using it?

Ahhem...


https://www.cnbc.com/2017/12/22/bitcoin-plunges-below-12000-on-coinbase-as-rout-accelerates-now-down-40-percent-from-record.html

Uh...if you invested on the day you made that post, November 30th. You'd be up over 30% today. Nice try though.
Title: Re: Is it too late [bitcoin]?
Post by: KTG on December 22, 2017, 11:30:33 AM
Exactly... you just said invested. I can invest in playing slot machines too. And when I am up I can say this was a worthwhile investment, but we all know its just gambling.

Bitcoin and others are supposed to be a currency, which needs to be stable, which they are far from. So people are not buying them to use as a currency, especially since any place that does accept them also legally has to accept their local country's currency as well, which they will already have. They are buying them because they see the value going up and don't want to be left out. That is speculation. Its essentially gambling.

Its going to be fun coming back to this thread in a few years when all this implodes, and there are tons of people who will be left crying, the congressional hearings that follow, and eventually these random currencies become sanctioned by governments. Much like the way the US prevents banks and credit card companies from dealing directly with online casinos. Yes, you can get money into and out of them, but it is a pain in the ass and time consuming. I don't doubt something similar will happen with Bitcoin and others.
Title: Re: Is it too late [bitcoin]?
Post by: phil22 on December 22, 2017, 03:33:47 PM
Exactly... you just said invested. I can invest in playing slot machines too. And when I am up I can say this was a worthwhile investment, but we all know its just gambling.

Bitcoin and others are supposed to be a currency, which needs to be stable, which they are far from. So people are not buying them to use as a currency, especially since any place that does accept them also legally has to accept their local country's currency as well, which they will already have. They are buying them because they see the value going up and don't want to be left out. That is speculation. Its essentially gambling.

Its going to be fun coming back to this thread in a few years when all this implodes, and there are tons of people who will be left crying, the congressional hearings that follow, and eventually these random currencies become sanctioned by governments. Much like the way the US prevents banks and credit card companies from dealing directly with online casinos. Yes, you can get money into and out of them, but it is a pain in the ass and time consuming. I don't doubt something similar will happen with Bitcoin and others.

do you think this downturn in bitcoin's price is fundamentally different than the downturns in 2011, 2013, or 2014?  or are cryptocurrencies categorically not able to survive long-term for some particular reason?
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 22, 2017, 03:51:27 PM
Exactly... you just said invested. I can invest in playing slot machines too. And when I am up I can say this was a worthwhile investment, but we all know its just gambling.

Bitcoin and others are supposed to be a currency, which needs to be stable, which they are far from. So people are not buying them to use as a currency, especially since any place that does accept them also legally has to accept their local country's currency as well, which they will already have. They are buying them because they see the value going up and don't want to be left out. That is speculation. Its essentially gambling.

Its going to be fun coming back to this thread in a few years when all this implodes, and there are tons of people who will be left crying, the congressional hearings that follow, and eventually these random currencies become sanctioned by governments. Much like the way the US prevents banks and credit card companies from dealing directly with online casinos. Yes, you can get money into and out of them, but it is a pain in the ass and time consuming. I don't doubt something similar will happen with Bitcoin and others.

do you think this downturn in bitcoin's price is fundamentally different than the downturns in 2011, 2013, or 2014?  or are cryptocurrencies categorically not able to survive long-term for some particular reason?
Tulips didn't just disappear when the mania crashed.  There is still a market for tulips, it's just a rational market now.

Having said that, bitcoin's swoon today isn't really much different, in magnitude, then what it's had several times this year alone.  The bubble could go on for quite a long time, and reach new highs as well.  That doesn't mean it's not a bubble.  It just means there's enough disagreement about that to keep it going, at least for now.
Title: Re: Is it too late [bitcoin]?
Post by: aspiringnomad on December 22, 2017, 04:19:43 PM
Exactly... you just said invested. I can invest in playing slot machines too. And when I am up I can say this was a worthwhile investment, but we all know its just gambling.

Bitcoin and others are supposed to be a currency, which needs to be stable, which they are far from. So people are not buying them to use as a currency, especially since any place that does accept them also legally has to accept their local country's currency as well, which they will already have. They are buying them because they see the value going up and don't want to be left out. That is speculation. Its essentially gambling.

Its going to be fun coming back to this thread in a few years when all this implodes, and there are tons of people who will be left crying, the congressional hearings that follow, and eventually these random currencies become sanctioned by governments. Much like the way the US prevents banks and credit card companies from dealing directly with online casinos. Yes, you can get money into and out of them, but it is a pain in the ass and time consuming. I don't doubt something similar will happen with Bitcoin and others.

do you think this downturn in bitcoin's price is fundamentally different than the downturns in 2011, 2013, or 2014?  or are cryptocurrencies categorically not able to survive long-term for some particular reason?

For cryptocurrencies to survive as currencies, rather than just vessels for the human speculative impulse, then their value relative to the price of goods needs to remain relatively stable. For that, supply will need to fluctuate to adapt to fluctuating demand. Bitcoin fundamentally can't do that, so IMO, it's already obsolete as a currency. But I don't think it's a stretch at all to think that some other current or future cryptocurrency might eventually be adopted and widely used as a currency - perhaps with a monetary policy administered by some decentralized algorithm, though I have no idea how that might work.
Title: Re: Is it too late [bitcoin]?
Post by: libertarian4321 on December 22, 2017, 04:21:19 PM
It really is the dot-com bust all over again.

https://www.marketwatch.com/story/long-island-iced-teas-stock-rockets-nearly-500-after-changing-name-to-long-blockchain-2017-12-21?siteid=yhoof2&yptr=yahoo

OMFG

I just read that too.

What's a good name for the impending bust? The dotcom era led to the dotbomb. The bitcoin era has a...bitless crash?

Reminds me of the late 90s, when essentially every company that built a web site, became a ".com play" people worked themselves into a lather to buy it.  Didn't matter if the company made a profit or even had significant sales.  Just needed a .com web site.

Even quaint, mundane little companies.  I still remember sometime in 1999? almost falling out of my chair when some analyst called "Vermont Teddy Bear" an internet play because they added a web site, with the resulting ridiculous price surge.
Title: Re: Is it too late [bitcoin]?
Post by: libertarian4321 on December 22, 2017, 04:32:41 PM
Exactly... you just said invested. I can invest in playing slot machines too. And when I am up I can say this was a worthwhile investment, but we all know its just gambling.

Bitcoin and others are supposed to be a currency, which needs to be stable, which they are far from. So people are not buying them to use as a currency, especially since any place that does accept them also legally has to accept their local country's currency as well, which they will already have. They are buying them because they see the value going up and don't want to be left out. That is speculation. Its essentially gambling.

Its going to be fun coming back to this thread in a few years when all this implodes, and there are tons of people who will be left crying, the congressional hearings that follow, and eventually these random currencies become sanctioned by governments. Much like the way the US prevents banks and credit card companies from dealing directly with online casinos. Yes, you can get money into and out of them, but it is a pain in the ass and time consuming. I don't doubt something similar will happen with Bitcoin and others.

I still haven't been able to find a single store in San Antonio, a city of 1.3 Million people, that accepts Bitcoin.  One of the malls has a Bitcoin ATM, but none of the stores in the mall takes Bitcoin.

I also found a Bitcoin ATM at a Quickie Mart type store in SA.  I asked if I could pay for my gas, coffee, and chips with Bitcoin.  They said "no, we don't accept Bitcoin, we just have the machine for people who want to buy Bitcoin (apparently, they take an 8-10% commission on each Bitcoin purchase)."

Bitcoin is about as much "currency" as a truck load full of anvils.  Sure, you might be able to find someone, somewhere who will take that anvil (or Bitcoin) in exchange for a product or service, but it's kinda hard to do so.  Not exactly "currency."
Title: Re: Is it too late [bitcoin]?
Post by: aboatguy on December 22, 2017, 07:31:39 PM
In my honest opinion it is safer to run around olongapo with no condoms than to trust bitcoin as a long term investment.

Happy Holidays, No  Hell no fuck that, Merry Christmas!

Mike   
Title: Re: Is it too late [bitcoin]?
Post by: MaaS on December 22, 2017, 09:24:45 PM
It really is the dot-com bust all over again.

https://www.marketwatch.com/story/long-island-iced-teas-stock-rockets-nearly-500-after-changing-name-to-long-blockchain-2017-12-21?siteid=yhoof2&yptr=yahoo

OMFG

I just read that too.

What's a good name for the impending bust? The dotcom era led to the dotbomb. The bitcoin era has a...bitless crash?

The bitshit, clearly :D
Title: Re: Is it too late [bitcoin]?
Post by: PDXTabs on December 23, 2017, 10:13:33 AM
I still haven't been able to find a single store in San Antonio, a city of 1.3 Million people, that accepts Bitcoin.  One of the malls has a Bitcoin ATM, but none of the stores in the mall takes Bitcoin.

...

Bitcoin is about as much "currency" as a truck load full of anvils.  Sure, you might be able to find someone, somewhere who will take that anvil (or Bitcoin) in exchange for a product or service, but it's kinda hard to do so.  Not exactly "currency."

How many local stores have you found that accept gold bullion? Does that make it a bad inflation hedge?

I don't invest in BTC, but I have used it for half a dozen online transactions.
Title: Re: Is it too late [bitcoin]?
Post by: GuitarStv on December 23, 2017, 10:57:26 AM
How many local stores have you found that accept gold bullion? Does that make it a bad inflation hedge?

To answer your first question . . . about as many as I've found that accept bitcoin.

To answer your second . . . No.  It's a bad inflation hedge, bad low interest rate hedge, bad tail risk hedge, AND a bad replacement for currency (https://www.cfapubs.org/doi/pdf/10.2469/faj.v69.n4.1 (https://www.cfapubs.org/doi/pdf/10.2469/faj.v69.n4.1)).
Title: Re: Is it too late [bitcoin]?
Post by: PDXTabs on December 23, 2017, 12:29:15 PM
To answer your second . . . No.  It's a bad inflation hedge, bad low interest rate hedge, bad tail risk hedge, AND a bad replacement for currency (https://www.cfapubs.org/doi/pdf/10.2469/faj.v69.n4.1 (https://www.cfapubs.org/doi/pdf/10.2469/faj.v69.n4.1)).

Sure, absolutely. I don't invest in gold because I live in a developed nation with a trustworthy fed. Not all of my friends and family can say the same.
Title: Re: Is it too late [bitcoin]?
Post by: theolympians on December 23, 2017, 01:12:35 PM
Bitcoin scares me. It just seems to be currency speculation without the stability of a currency. The time to buy was a few years ago when it was cheap. It will have to make even more extraordinary gains to make more modest growth.

"Everyone" at my work is talking about it. Their main argument for doing so is "it just keeps going up!" Many have bought small amounts of bitcoin and other so-called crypto-currencies. That tells me if you were a huge investor it is getting close to the time to dump it. Stupid money is being fed into it.   

I don't have a dime into it, though I wish when it was around a penny each! LOL
Title: Re: Is it too late [bitcoin]?
Post by: theolympians on December 23, 2017, 01:17:14 PM
One serious question: Is anyone paying capital gains tax, or any applicable tax (when you convert bitcoin back into dollars? I never have traded any currency and don't know what would apply.
Title: Re: Is it too late [bitcoin]?
Post by: PDXTabs on December 23, 2017, 03:11:46 PM
One serious question: Is anyone paying capital gains tax, or any applicable tax (when you convert bitcoin back into dollars? I never have traded any currency and don't know what would apply.

I haven't realized any capital gains on cryptocurrency, but I absolutely do plan to pay capital gains tax when I do.
Title: Re: Is it too late [bitcoin]?
Post by: Lews Therin on December 23, 2017, 04:20:02 PM
One serious question: Is anyone paying capital gains tax, or any applicable tax (when you convert bitcoin back into dollars? I never have traded any currency and don't know what would apply.

CRA (Canada tax agency) has a FAQ that talks about Bitcoin. I'm guessing there must be some sort of guideline in most countries... it's been in existence long enough that people want to tax it :D
Title: Re: Is it too late [bitcoin]?
Post by: sol on December 23, 2017, 04:57:31 PM
I read one report that said on any given day, approximately 30% of all bitcoin trades involve North Korean money laundering.  It's a way for them to avoid UN sanctions on their financial markets.

Just saying.  Sometimes operating outside the traditional financial sector isn't quite the moral high ground that some people wish it could be.  Are you comfortable supporting a terrorist state, if it could make you money?
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 23, 2017, 05:08:38 PM
Hey sol, do you happen to have a link to that report handy? Would be curious to read a bit more about how that statistic was estimated.
Title: Re: Is it too late [bitcoin]?
Post by: sol on December 23, 2017, 05:29:23 PM
Hey sol, do you happen to have a link to that report handy? Would be curious to read a bit more about how that statistic was estimated.

I don't remember where I read it, but google can probably point you in the right direction.

https://www.google.com/search?q=bitcoin+in+north+korea
Title: Re: Is it too late [bitcoin]?
Post by: thenextguy on December 24, 2017, 10:36:19 AM
I read one report that said on any given day, approximately 30% of all bitcoin trades involve North Korean money laundering.  It's a way for them to avoid UN sanctions on their financial markets.

Just saying.  Sometimes operating outside the traditional financial sector isn't quite the moral high ground that some people wish it could be.  Are you comfortable supporting a terrorist state, if it could make you money?

What a load of crap! Of course, there would be no bitcoin without the internet, so I guess everyone on this forum is supporting terrorists!
Title: Re: Is it too late [bitcoin]?
Post by: sol on December 24, 2017, 11:22:15 AM
What a load of crap! Of course, there would be no bitcoin without the internet, so I guess everyone on this forum is supporting terrorists!

I think the specifics were not that North Korea was just buying and holding 30% of the bitcoins in the world, but that they were hosting the tumblers that anonymize bitcoin purchases to make them untraceable.  The tumblers execute thousands (millions?) of tiny bitcoin transactions in order to obscure the blockchain histories.  They're a necessary step if you want it to be truly anonymous.  https://www.bloomberg.com/news/articles/2017-12-14/north-korea-s-bitcoin-play

North Korea also likes bitcoin for investment purposes, because it's one of the very few things they are allowed to legally export for profit.  They have large coal reserves, and so lots of cheap power, but there are sanctions on exporting raw coal.  There are no sanctions on burning your coal to run bitcoin mines and then selling the bitcoins anonymously.  http://money.cnn.com/2017/12/12/technology/north-korea-bitcoin-hoard/index.html

We also know that several of North Korea's global ransomware attacks demanded payment in bitcoin.  How else would North Korean hackers get paid for unencrypting your files, if the're not allowed to use regular banks?  It sounds like they mostly made immediate conversions from bitcoin to other crypto currencies, again as a way of anonymizing their crimes.  https://www.wsj.com/articles/its-official-north-korea-is-behind-wannacry-1513642537

And North Korea is clearly responsible for several of the major bitcoin heists from the exchanges, especially the ones in South Korea.  http://fortune.com/2017/12/22/north-korea-bitcoin-heist/

So no, I don't think it's quite as simple as "using the internet supports bitcoin terrorists."  North Korea is a terrorist state, that is super involved in bitcoin because it allows them to skirt sanctions.  I think this is probably the single biggest threat to the bitcoin "industry", that the UN may decide to sanction and restrict it because it's a tool used primarily by terrorists and criminals.  https://www.express.co.uk/news/world/895564/North-Korea-news-World-War-3-latest-bitcoin-price-Kim-Jong-un-nuclear-Donald-Trump

The global financial system may by universally corrupt, but it does have some benefits.  One of those benefits is that the world's financial powers can use it to restrict rogue states that threaten us with nuclear weapons.  Bitcoin's founders may have had high ideals about subverting a corrupt system, but there is definitely a reason why bitcoin's primary uses have been in black markets and it's NOT because criminals love their digital freedom.


Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 24, 2017, 12:00:53 PM
What a load of crap! Of course, there would be no bitcoin without the internet, so I guess everyone on this forum is supporting terrorists!

I think the specifics were not that North Korea was just buying and holding 30% of the bitcoins in the world, but that they were hosting the tumblers that anonymize bitcoin purchases to make them untraceable.  The tumblers execute thousands (millions?) of tiny bitcoin transactions in order to obscure the blockchain histories.  They're a necessary step if you want it to be truly anonymous.  https://www.bloomberg.com/news/articles/2017-12-14/north-korea-s-bitcoin-play

Thanks for posting a link sol, but having read through it I didn't see any reference to evidence that bitcoin tumbers being hosted in North Korea, although it sounded like maybe they might sometimes be used by North Koreans (which seems plausible). Did I miss something?

If folks genuinely want to be anonymous, generally they are going to use a currency like Monero or ZCash. The coins you receive back from a bitcoin tumbling service may not be linked to your own misdeeds, but they are pretty darn certain to be linked to SOMEONE's misdeeds. Also with the current spike in transaction fees (we're now on the 3rd day over $50/transaction), it would surprise me a lot if bitcoin tumbling was still economically viable.
Title: Re: Is it too late [bitcoin]?
Post by: sol on December 24, 2017, 12:39:09 PM
Thanks for posting a link sol, but having read through it I didn't see any reference to evidence that bitcoin tumbers being hosted in North Korea,

I haven't been able to relocate the source where I read the 30% number, sorry. 
Title: Re: Is it too late [bitcoin]?
Post by: KTG on December 25, 2017, 10:00:35 PM
Here we go:

Israel is the latest country to signal a crackdown on cryptocurrencies

Israel's stock market regulator has proposed bans on stock exchange listings for firms based on cryptocurrencies such as bitcoin.

Read more: https://www.cnbc.com/2017/12/25/israel-may-ban-bitcoin-cryptocurrency-companies-from-tel-aviv-listing.html




Title: Re: Is it too late [bitcoin]?
Post by: Padonak on December 26, 2017, 03:43:32 PM
In my honest opinion it is safer to run around olongapo with no condoms than to trust bitcoin as a long term investment.

Happy Holidays, No  Hell no fuck that, Merry Christmas!

Mike

I had to google it to understand the reference. But why did you pick olongapo of all places, not say Manila or Cebu?
Title: Re: Is it too late [bitcoin]?
Post by: sol on December 26, 2017, 03:53:29 PM
I had to google it to understand the reference. But why did you pick olongapo of all places, not say Manila or Cebu?

Personal experience?
Title: Re: Is it too late [bitcoin]?
Post by: Padonak on December 26, 2017, 03:57:49 PM
I had to google it to understand the reference. But why did you pick olongapo of all places, not say Manila or Cebu?

Personal experience?

Are you assuming my gender?
Title: Re: Is it too late [bitcoin]?
Post by: sol on December 26, 2017, 04:00:51 PM
I had to google it to understand the reference. But why did you pick olongapo of all places, not say Manila or Cebu?

Personal experience?

Are you assuming my gender?

I can't possibly see how.  Did I use a gendered pronoun?
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 26, 2017, 04:08:53 PM
I am guessing sol meant "personal experience?" as speculation about why aboatguy used Olongapo in their original post on Dec. 22nd and not more widely known cities like Manila.

I am guessing Podanak read the same "personal experience?" as a question by sol about whether Podanak had traveled to Manila or Cebu as a customer in the sex trade (which, if conforming to gender stereotypes would imply that Podanak was male).

If these guesses are correct, hopefully that helps clear things up. If the guesses are incorrect, please disregard and carry on.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 26, 2017, 08:45:31 PM
I am guessing sol meant "personal experience?" as speculation about why aboatguy used Olongapo in their original post on Dec. 22nd and not more widely known cities like Manila.

I am guessing Podanak read the same "personal experience?" as a question by sol about whether Podanak had traveled to Manila or Cebu as a customer in the sex trade (which, if conforming to gender stereotypes would imply that Podanak was male).

If these guesses are correct, hopefully that helps clear things up. If the guesses are incorrect, please disregard and carry on.

This is the problem of having different frames of reference and also presuming; one feels accused or persecuted when there's no such intent, etc.

Regarding 'Olongapo', he could simply have read about it somewhere and liked the word.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 26, 2017, 09:04:57 PM
I read one report that said on any given day, approximately 30% of all bitcoin trades involve North Korean money laundering.  It's a way for them to avoid UN sanctions on their financial markets.

Just saying.  Sometimes operating outside the traditional financial sector isn't quite the moral high ground that some people wish it could be.  Are you comfortable supporting a terrorist state, if it could make you money?

I found two articles discussing this:
https://www.thecipherbrief.com/article/tech/terror-finance-age-bitcoin
https://www.foreignaffairs.com/articles/2017-04-21/are-terrorists-using-cryptocurrencies

Both articles basically say it's inconclusive that crypto is being used to effectively finance terrorism:

"Part of the reason virtual currency has yet to become a foundation of terrorism financing is that conventional payment methods, such as cash, remain effective. Most terrorist funding presently occurs through an informal cash-based money transfer mechanism known as hawala networks. Cash is liquid, easily exchangeable, anonymous, and does not require the technical infrastructure missing in many places terrorists operate, particularly northern Nigeria, Yemen, and the Horn of Africa."

Cryptocurrency is a technology, and that it can be used as money is secondary. Economies that adopt it will have a competitive advantage over economies that don't. There are costs, insecurities, and inefficiencies in not be being able to effectively prove land deed or that an accounting record has been tampered with or value exchanges, etc; this where blockchain tech can redress those issues.
 
I won't deny that crypto can be used by bad actors for malicious purposes (terrorism, dark markets, human trafficking, etc). However, it's not clearcut to say that if you support crypto, you support terrorism. If you can say this about crypto, why can't you say this about guns, cash, science, the internet, or any tech?

I make a clear distinction between tools and how people use them. It's an issue of policy and enforcement, and not outright banning because of malicious use.
Title: Re: Is it too late [bitcoin]?
Post by: Indexer on December 26, 2017, 09:37:37 PM
Here we go:

Israel is the latest country to signal a crackdown on cryptocurrencies

Israel's stock market regulator has proposed bans on stock exchange listings for firms based on cryptocurrencies such as bitcoin.

Read more: https://www.cnbc.com/2017/12/25/israel-may-ban-bitcoin-cryptocurrency-companies-from-tel-aviv-listing.html

Quote from the article: "Shares of Blockchain, which on Sunday changed its name from Natural Resources, have soared some 5,000 percent in the past few months since it announced it would shift its focus from mining for gold and iron to mining cryptocurrencies."

What?  I assume the company executives know that specialization in mining gold doesn't translate to mining bitcoin, but do their investors know that?

Let's pretend for a second this was their real strategy, which I doubt. What do they do with their existing mining equipment, mining employees, land rights, assets, debts, etc.? That is all worthless mining bitcoins. Are they going to sell it all and buy server farms? How long will that take? Are they going to lay off the existing workforce? What will the severance and/or unemployment benefit costs be? How long will the layoffs take? Do they have any crypto experts now? Will they hire more? What will that cost? How long will it take to hire the new employees? How long will it take for the crypto side of the business to reach profitability? Will the new cash flows cover existing debts? Speaking of debts, how much new debt will the company have to take on to finance all of this? How will this new business compete with existing crypto companies who already have experts, server farms, and who don't have all of this additional baggage? This all sounds incredibly risky, time consuming, and less viable than their existing business. Anyone thinking about this rationally wouldn't drive the stock price up 5,000%, they would be driving it down while insisting on leadership changes.

Conclusion: it's irrational exuberance
Title: Re: Is it too late [bitcoin]?
Post by: sol on December 26, 2017, 10:38:59 PM
Both articles basically say it's inconclusive that crypto is being used to effectively finance terrorism:

That's probably fair, in broad terms.  I haven't heard of ISIS going all in on bitcoin.

But North Korea totally is.  I don't think they're doing it for the traditional reasons that terrorist networks need to raise money, like paying for desert training centers and paying off the families of suicide bombers.  They're doing it because it operates outside the traditional financial sector, which is currently allied against them.  And isn't that kind of the point of crypto currencies, to operate outside the traditional financial sector?  My understanding is that is exactly why they were created in the first place.  It seems almost tailor-made for places like North Korea that need to circumvent traditional banking.

Bitcoin has been a hugely profitable investment for some people, as lavish press coverage has brought in thousands and thousands of new investors to be the greater fool.  We've seen this story play out before, when an asset class gets too popular and prices spike beyond all reasonable expectations of profitability.  Dotcoms did it.  Iceland's currency did it.  Tulip bulbs did it.  I'm not saying bitcoin is trash, because I rather like the idea, personally.  I'm just saying that the market price of bitcoin, and the firms associated with it, has become totally disconnected from the normal rules of economics by the explosive interest from get-rich-quick public investors.  Just like with tulip bulbs.

And that sort of cash cow, however fleeting and/or technologically savvy it may be, is always going to attract organized crime and rouge nations looking to make a quick buck.  It sounds like North Korea is trying to cash in.  Maybe they're failing at it, I don't know, but they're certainly trying.  They've stolen a bunch of bitcoins, and they've run spearfishing campaigns to steal more, and they've ransomed a bunch with the WannaCry attack, and now they're mining them and actively developing exploits to steal more in the future.  Their stolen bitcoins are mostly traded for other digital currencies, and then into cash they can use to finance a regime that is currently under economic sanctions and unable to raise funding in other ways.  I suspect it's a tiny fraction of their total national revenue, but it's not zero and if you've bought or sold bitcoins before then it sounds like there's a very real chance that you've transacted with North Korea.

And like I said before, that's why I think bitcoin is a risky investment.  Not because the price is crazy volatile, or because I think it's insecure (though it has proven to be both of those things), but because I think it is potentially threatened by the international banking system locking it down, or at least making it much harder to exchange for normal money, because of it's historical involvement with places like North Korea (and with child porn, murder for hire, drug running, etc).  I think that's the real threat to bitcoin.  Civilized society might try to say no thank you, and then it won't matter how good your blockchain is.  If they make it too hard to convert it into groceries, it's just another online gaming megasword item, invaluable to the right gamers but worthless to the rest of us.
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 27, 2017, 09:35:32 AM
Civilized society might try to say no thank you, and then it won't matter how good your blockchain is.  If they make it too hard to convert it into groceries, it's just another online gaming megasword item, invaluable to the right gamers but worthless to the rest of us.

One does not cause the other. It may help to make it easier for the other to process. Do we then outlaw a thing because it makes easier for another thing to be done? Is outlawing the right solution? Is there a disproportionate use of bad vs good, or is it the opposite? What usefulness or benefits will be given up and is it worth it?

These are the questions society will have to figure out.
Title: Re: Is it too late [bitcoin]?
Post by: YttriumNitrate on December 27, 2017, 01:26:10 PM
It's in full mania mode now, so the end game (collapse) is likely near.
Don't forget the old saying that the market can stay irrational longer than you can stay solvent.


My typical gauge for determining if a correction/collapse is coming is to watch and see if the particular investment is discussed on Christmas day at the gathering of my extended family.* If bitcoin is not discussed two weeks from now, then my prediction is that bitcoin is good until 2019.

**I purposefully won't be bringing up the topic to see if someone else does.
Update from YttriumNitrate Family Christmas 2017: Bitcoin was mentioned on Christmas day (not by me). If I had any bitcoin, I'd be selling now.
Title: Re: Is it too late [bitcoin]?
Post by: ChpBstrd on December 27, 2017, 01:41:43 PM
After this bubble, we will read back over this thread. What will we think?

I predict the discussion will seem remarkably detailed, when simple bubble pattern-recognition was all there ever was to talk about.

The various technical-yet-vague justifications will seem fascinating, but catastrophically misapplied. The fact that many of the people who lost their life savings on the cryptocurrency fad also lived through the housing and dot-com bubbles will seem like a puzzle.
Title: Re: Is it too late [bitcoin]?
Post by: sol on December 27, 2017, 02:07:27 PM
Just to pile on, after my posts above, Richard Spencer has declared bitcoin "the currency of the alt right."  Yea, no thanks.

After Nazis literally marched in Charlottesville, American extremist groups started pushing digital currencies as a way to avoid government control.  They didn't like having their social media accounts suspended, and bitcoins can't be taken away from them.  It's all part of their protest.  They helped fuel the demand that has inflated the prices so much.  Thanks, hate groups!

14.88 bitcoins were semianonymously donated to the Nazi website dailystormer after it went offline.  1488 is a reference to a nazi slogan.  Nazis love bitcoin!

And why shouldn't they?  It lets them, like North Korea, avoid restrictions placed on them by traditional financial institutions.  It's like digital gold.  I seem to recall the Nazis were very fond of hoarding literal gold, too, for identical reasons.

Is this the price we must pay for freedom?  Sometimes I wonder how many crypto enthusiasts have thought through the consequences of these things.  Somehow, I doubt satashi nakamoto was trying to help out the Nazis.
Title: Re: Is it too late [bitcoin]?
Post by: BattlaP on December 27, 2017, 02:32:24 PM
But sol, Nazis also use the US dollar! Surely you aren’t in favour of removing the US dollar?? /s
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 27, 2017, 02:57:04 PM
But sol, Nazis also use the US dollar! Surely you aren’t in favour of removing the US dollar?? /s
That's not really a comparable example.

There are federal banking controls on reporting cash transactions to the government which don't exist for crypto currencies.  The lack of these controls make crypto transactions much more attractive for cloaking illicit activities.
 
Federal Banking Rules on Withdrawing Large Sums of Cash
https://finance.zacks.com/federal-banking-rules-withdrawing-large-sums-cash-1696.html

Quote
A 1970 anti-money-laundering law known as the Bank Secrecy Act spells out the rules for large cash withdrawals. In general, banks must report any transaction involving at least $10,000 in cash. That includes not only withdrawals but also deposits, currency exchanges (such as swapping dollars for euros or Japanese yen) and the purchase of traveler's checks. The law also requires banks to check identification on any transaction that would trigger a report. In other words, even if your bank doesn't usually ask for ID with withdrawals, it must do so for withdrawals over $10,000.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 27, 2017, 05:50:03 PM
I saw the white supremacist article and wondered if it would show up in this thread.

To have a meaningful debate we'd need to know two things: 1) how significant are the negative uses as a proportion of the total use of the technology* and 2) how large is the benefit for negative actors of using the technology relative to their next best option.**

Since we don't have good data on either of these things with regard to cryptocurrencies and either north korea or white supremacists, any discussion is going to boil down to us having different assumptions about what the most likely "real" answer is for #1 and #2 above. Doesn't seem like a particularly fruitful topic for discussion to me.

*Roads are used in the commission of almost every bank robbery, yet bank robberies make up a tiny fraction of the uses of roads, so banning roads to cut down on bank robberies would be silly. In contrast, KTW ammunition ("cop killer bullets") are used in only a small fraction of total crimes, yet a large fraction of the total civilian use cases for KTW ammunition were criminal, resulting in a federal ban.

**If you want to inject heroin, and you don't have access to a needle, the next best alternative is ... I'm honestly not sure, I don't know much about heroin, but I'm pretty sure it's a lot less effective than a needle, so there are lots of efforts (rightly or wrongly) to control access to IV needles. Because the next best alternative is an awful lot worse.

In contrast, if you want to smoke pot, and you don't have access to proper rolling paper, you could substitute a piece of newspaper, and probably make a joint which worked about as well (again I don't have experience). So laws to control access to cigarette paper isn't a great way to control marijuana use. Because the next best alternative is only a bit more inconvenient than the thing you would ban.
Title: Re: Is it too late [bitcoin]?
Post by: phil22 on December 27, 2017, 05:58:00 PM
Just to pile on, after my posts above, Richard Spencer has declared bitcoin "the currency of the alt right."  Yea, no thanks.

...

And why shouldn't they?  It lets them, like North Korea, avoid restrictions placed on them by traditional financial institutions.  It's like digital gold.  I seem to recall the Nazis were very fond of hoarding literal gold, too, for identical reasons.

Is this the price we must pay for freedom?  Sometimes I wonder how many crypto enthusiasts have thought through the consequences of these things.  Somehow, I doubt satashi nakamoto was trying to help out the Nazis.

"free as in liberty" decentralized currencies have been invented.  "it's too late" -- they can't be uninvented and they can't be killed by banning them.  bad people will use them, and good people will use them.  yes, that's the price we pay for freedom.

how does bitcoin help the nazi cause?  and if it did, what's the problem?  nazis are free to gather and say whatever they want.  if you're against the free movement of money, are you also against the first amendment?

do you sit in the comfort of an American home paid for with freely-open global investment options as you disparage anything that helps prospective investors in China looking for a way to get some of their money out of China?  are you against corruption-resistant smartphone-based banking for the billions of unbanked people around the world?

do you trust governments to be in charge of currencies for the long term?  governments which can be headed by people like Putin, Erdogan, Trump, Assad, Kim, Maduro, and Mugabe?  governments that fiddle with inflation however they want, get into trillions of dollars of debt, and use taxpayer money to fund unpopular wars, corrupt government contracts, pet pork barrel projects, and copious amounts of golf?  i'm not against taxation or governments in general, but they have proven time and again that they are terrible with managing money on a good day, and criminally corrupt on a bad day.

if you're against the free movement of money then you're probably against libertarianism in general.  that's a valid position but i'm surprised to see it so often on this board.  financial independence is only possible because of freedom and privacy we enjoy with our careers, our investments, and our money.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 27, 2017, 06:33:54 PM
Banning roads would have far-reaching detrimental effects outweighing whatever harm they might prevent in the success of bank robberies. A dubious assumption, since bank robberies are as old as banking.

Likewise, banning IV needles would also have far-reaching detrimental effects.

Banning cigarette rolling paper would at least have negative economic consequences for companies, employees, and taxing authorities that profit from their legitimate use, and would likewise be pretty useless in discouraging marijuana consumption.

I'm not necessarily advocating banning crypto currencies because of neo-Nazi or NK exploitation.  My point is, that even if they were banned, what far-reaching detrimental effects would that ban have?  In my life, personally, that would be a giant ZERO effect.  There is nothing in my life that I need that I cannot get easily without using that technology at all, or ever.

Conversely, I use roads every day.  And IV needles have, upon various occasions, saved my life.  If cryptos disappeared tomorrow, I wouldn't even notice it.  For bad actors, it helps solve an obvious problem.  For the vast majority of hard-working honest folks, it really is nothing more than a novelty.

Having said all that, I do have libertarian leanings, and I wouldn't support a ban of crypto currencies any more than I would support outlawing casinos.  People that want to roll the dice should be allowed to own dice.
Title: Re: Is it too late [bitcoin]?
Post by: KTG on December 28, 2017, 05:37:34 AM
Oh another government stepping up:

Bitcoin drops 11% as South Korea moves to regulate cryptocurrency trading

Bitcoin fell on Thursday, marking the latest gyration following a major sell-off at the end of last week.

Read more: https://www.cnbc.com/2017/12/28/bitcoin-drops-11-percent-as-south-korea-moves-to-regulate-cryptocurrency-trading.html
Title: Re: Is it too late [bitcoin]?
Post by: shadow on December 28, 2017, 11:43:49 AM
There is nothing in my life that I need that I cannot get easily without using that technology at all, or ever.

Crypto is fledgling tech. You're also never fully cognizant of what you're missing until it exists (like the modern internet). 
Title: Re: Is it too late [bitcoin]?
Post by: Nate79 on December 28, 2017, 11:50:03 AM
I'm waiting for the US govt to come down hard on crypto currency thru the N. Korea angle and the sanctions.

Sent from my SAMSUNG-SM-G930A using Tapatalk

Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 28, 2017, 12:33:02 PM
There is nothing in my life that I need that I cannot get easily without using that technology at all, or ever.

Crypto is fledgling tech. You're also never fully cognizant of what you're missing until it exists (like the modern internet).

Yup. So the North Korea/white supremacist debate just boils down to whether the person posting thinks there are significant benefits (existing or potential) to the technology, which is the same debate people have been having for pages and pages on this thread already.
Title: Re: Is it too late [bitcoin]?
Post by: sol on December 28, 2017, 12:55:01 PM
debate just boils down to whether the person posting thinks there are significant benefits (existing or potential) to the technology

I still don't see any. 

Bitcoins are just digital objects.  They don't have any value on their own, they serve no useful purpose.  Credit cards and paypal are both easier ways to buy things online, and they work more seamlessly with our existing financial structures.

Most objects have SOME intrinsic value.  If you buy a ton of oranges or pork bellies, you can eat them.  If you buy a building you can live in it or rent it out.  Bitcoins don't appear to have any intrinsic value at all, since they can't do anything.  The only thing they are good for is selling to someone who values them more highly than you do, which is the same thing good old US dollars are already good for.  Except dollars are much more widely available and accepted, hold their value better, are more anonymous, are easier to exchange into other formats, can be converted into a physical form for offline transactions, and are easier to manipulate for economic policy reasons.

The ONLY added utility that I can see bitcoin providing is that they can be easily traded outside of the banking restrictions of the kind we place on organized crime, rogue states, and terrorist networks.  After being traded they can be converted back into real money, which is deliberately more difficult to trade if you are a criminal or rogue state or terrorist.  So their great advantage is that they subvert the existing power structure, but for most of us the existing power structure is working just great, thanks. 

The blockchain idea is cool.  Conceptually, I like it.  But I don't see any reason for all of the hype, like there is literally NO chance bitcoins are ever going to supplant normal money in the global economy (for a variety of reasons). I can see some nation states using similar technology (not bitcoin) to back their currency, but the national currencies will still exist and bitcoin will not exist in any meaningful way.  I mean tulip bulbs still exist too, but not as an investment.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 28, 2017, 01:05:27 PM
Yup. And given that you hold that point of view (that there is no potential societal value to the technology of cryptocurrencies*), it makes complete sense to me that you'd feel things like the use of bitcoin by undesirable actors (north koreans and white supremacists) is enough to condemn the technology.

*Which is a separate debate from "the current price of bitcoin at this particular point in time is the result of a bubble" debate. I think pretty much everyone on this thread is on the same side of that second debate.
Title: Re: Is it too late [bitcoin]?
Post by: sol on December 28, 2017, 01:13:11 PM
Yup. And given that you hold that point of view (that there is no potential societal value to the technology of cryptocurrencies*), it makes complete sense to me that you'd feel things like the use of bitcoin by undesirable actors (north koreans and white supremacists) is enough to condemn the technology.

Let's slow up a second, there.  I don't "condemn" the technology.  I like the technology.  It's just a useless and overhyped technology with no long term role in our society, like fidget spinners and the Macarena.  Whether or not "undesirable actors" also use bitcoin is totally secondary to my opinion about its utility.  It was a scam long before any of that happened.

I can see a long term use for blockchain technology.  I see zero long term use for bitcoin, other than as a historical artifact for niche collectors interested in the "first" example of the technology, like dudes who collect Model T cars.  Bitcoin will be easily surpassed by superior examples of digital currencies, because it was poorly designed to be a global currency in a global economy, just like the Model T was poorly designed compared to modern cars.  Except you can't polish a bitcoin and put it in a museum.
Title: Re: Is it too late [bitcoin]?
Post by: BattlaP on December 28, 2017, 02:29:29 PM
But sol, Nazis also use the US dollar! Surely you aren’t in favour of removing the US dollar?? /s
That's not really a comparable example.

There are federal banking controls on reporting cash transactions to the government which don't exist for crypto currencies.  The lack of these controls make crypto transactions much more attractive for cloaking illicit activities.
 
Federal Banking Rules on Withdrawing Large Sums of Cash
https://finance.zacks.com/federal-banking-rules-withdrawing-large-sums-cash-1696.html

Quote
A 1970 anti-money-laundering law known as the Bank Secrecy Act spells out the rules for large cash withdrawals. In general, banks must report any transaction involving at least $10,000 in cash. That includes not only withdrawals but also deposits, currency exchanges (such as swapping dollars for euros or Japanese yen) and the purchase of traveler's checks. The law also requires banks to check identification on any transaction that would trigger a report. In other words, even if your bank doesn't usually ask for ID with withdrawals, it must do so for withdrawals over $10,000.

Just for your own internet education, ‘/s’ is a sarcasm tag.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 28, 2017, 02:36:28 PM
[
Just for your own internet education, ‘/s’ is a sarcasm tag.

Ah, sorry about that. My internet school practiced a more explicit tag.

<SARCASM>
Guess I'm just an old HTML fogy.
</SARCASM>

;)
Title: Re: Is it too late [bitcoin]?
Post by: zoltani on December 28, 2017, 04:47:31 PM
Just to pile on, after my posts above, Richard Spencer has declared bitcoin "the currency of the alt right."  Yea, no thanks.

After Nazis literally marched in Charlottesville, American extremist groups started pushing digital currencies as a way to avoid government control.  They didn't like having their social media accounts suspended, and bitcoins can't be taken away from them.  It's all part of their protest.  They helped fuel the demand that has inflated the prices so much.  Thanks, hate groups!

14.88 bitcoins were semianonymously donated to the Nazi website dailystormer after it went offline.  1488 is a reference to a nazi slogan.  Nazis love bitcoin!

And why shouldn't they?  It lets them, like North Korea, avoid restrictions placed on them by traditional financial institutions.  It's like digital gold.  I seem to recall the Nazis were very fond of hoarding literal gold, too, for identical reasons.

Is this the price we must pay for freedom?  Sometimes I wonder how many crypto enthusiasts have thought through the consequences of these things.  Somehow, I doubt satashi nakamoto was trying to help out the Nazis.


This kind of reminds me of the early 2000s commercials that claimed if you smoke pot you fund terrorism. Take a behavior that you (government) don't agree with and tie it to nefarious activities to shame people into the behavior you desire. Good show, i say.
Title: Re: Is it too late [bitcoin]?
Post by: sol on December 28, 2017, 05:07:47 PM
This kind of reminds me of the early 2000s commercials that claimed if you smoke pot you fund terrorism.

Nah, trading bitcoins and smoking pot aren't necessarily good for you, but neither are they evil because of terrorism.  They're just bad for you.

In this case, the analogy between bitcoin and opium is probably more apt, since terrorists have historically grown and processed opium explicitly to fund terrorist activities.  Is it the only way terrorism is funded?  Certainly not, but it is one way.

I make the same argument about oil, btw. 
Title: Re: Is it too late [bitcoin]?
Post by: phil22 on December 28, 2017, 05:12:08 PM
Yup. And given that you hold that point of view (that there is no potential societal value to the technology of cryptocurrencies*), it makes complete sense to me that you'd feel things like the use of bitcoin by undesirable actors (north koreans and white supremacists) is enough to condemn the technology.

Let's slow up a second, there.  I don't "condemn" the technology.  I like the technology.  It's just a useless and overhyped technology with no long term role in our society, like fidget spinners and the Macarena.

you "don't condemn it" but "it's just a useless technology"?  what?

Whether or not "undesirable actors" also use bitcoin is totally secondary to my opinion about its utility.  It was a scam long before any of that happened.

how to you define "scam"?  it's abundantly clear that it's a highly volatile and speculative market without government oversight.

I can see a long term use for blockchain technology.  I see zero long term use for bitcoin, other than as a historical artifact for niche collectors interested in the "first" example of the technology, like dudes who collect Model T cars.

i assume by "bitcoin" you mean "cryptocurrencies" here.  what's the long-term use for blockchain without a built-in incentive mechanism for participants?

Bitcoin will be easily surpassed by superior examples of digital currencies, because it was poorly designed to be a global currency in a global economy, just like the Model T was poorly designed compared to modern cars.  Except you can't polish a bitcoin and put it in a museum.

i agree that bitcoin isn't performing well at a technical level for the last year or two years.  and as you know there are thousands of competing cryptocurrencies.  there's a good chance one or more of them will take bitcoin's place sooner or later.  but bitcoin isn't a stagnant thing.  it's like the "toyota camry".  it can be (and has been) tweaked and upgraded over time.  there's also a good chance that some upgraded fork of a fork of bitcoin will still be around decades from now.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 28, 2017, 05:17:00 PM
Bitcoin will be easily surpassed by superior examples of digital currencies, because it was poorly designed to be a global currency in a global economy, just like the Model T was poorly designed compared to modern cars.  Except you can't polish a bitcoin and put it in a museum.

i agree that bitcoin isn't performing well at a technical level for the last year or two years.  and as you know there are thousands of competing cryptocurrencies.  there's a good chance one or more of them will take bitcoin's place sooner or later.  but bitcoin isn't a stagnant thing.  it's like the "toyota camry".  it can be (and has been) tweaked and upgraded over time.  there's also a good chance that some upgraded fork of a fork of bitcoin will still be around decades from now.

Yup, I can agree with this statement as well. Average transaction fees for bitcoin have been greater than $30 since the 19th, merchants and payment processors are starting to either reverse course on adopting the currency or at least adopt several other cryptocurrencies in parallel (and yes in theory the lightening network is going to fix that, but right now it doesn't exist in any widely adopted form).

So if your definition of "the technology" is bitcoin specifically and not cryptocurrencies generally, then please do carry on, nothing to see here.
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 28, 2017, 05:25:05 PM
This kind of reminds me of the early 2000s commercials that claimed if you smoke pot you fund terrorism.

Nah, trading bitcoins and smoking pot aren't necessarily good for you, but neither are they evil because of terrorism.  They're just bad for you.

In this case, the analogy between bitcoin and opium is probably more apt, since terrorists have historically grown and processed opium explicitly to fund terrorist activities.  Is it the only way terrorism is funded?  Certainly not, but it is one way.

I make the same argument about oil, btw.
I guess my libertarian stripes are going to show clearly here.

There are many very safe ways of ingesting pot besides smoking it.  Smoking just about anything is a crap-shoot, health wise, because combustion creates thousands of chemicals, randomly, that didn't ever exist in the original material.

In a supposedly free society, where there is mass appeal for a relatively harmless product (especially harmless as compared with alcohol), outlawing that substance is downright anti-American, in my humble opinion.

So the government outlaws it anyway.  Then the only source to satisfy that demand comes from a criminal enterprise.  Then, to top it all off, the government rhetoric is that the customer is funding a criminal (or terrorist) enterprise.

Wait a minute.  Didn't the government just drive that highly lucrative business opportunity straight into the eager (non-tax-paying) hands of the criminals?  Talk about shooting yourself in the foot.

</RANT>

Title: Re: Is it too late [bitcoin]?
Post by: sol on December 28, 2017, 05:27:09 PM
you "don't condemn it" but "it's just a useless technology"?  what?

Exactly.  Just like fidget spinners.  They're not evil.  I don't hate them, or want them destroyed.  They're just silly and useless and a passing fad.

Quote
how to you define "scam"?  it's abundantly clear that it's a highly volatile and speculative market without government oversight.

In this case, I define the scam as "an artificially created new product with no intrinsic value, vastly overhyped by paid media exposure to pump the price up, and then sold for a profit to greater fools."  Just like all of those .com companies that didn't actually have an internet business model, and only used the .com label to draw investors and cash out.  Did you see that the Long Island Ice Tea company spiked their stock price by announcing they were considering investing in blockchain technology?  No relevance, no expertise, no plan.  Just a press release and a quick $20 million payday.  That's a scam.

Quote
I can see a long term use for blockchain technology.  I see zero long term use for bitcoin, other than as a historical artifact for niche collectors interested in the "first" example of the technology, like dudes who collect Model T cars.

i assume by "bitcoin" you mean "cryptocurrencies" here. 

No, I explicitly meant bitcoin.  The language was precise.  Other cryptocurrencies may find utility someday, but bitcoin will not.  Bitcoin will be worthless in a few years, except to novelty collectors.  Which is why the current price of bitcoin is stupid. 

If you like the idea of decentralized online transfers of digital objects that can then be converted into real money, that's all well and good.  It's a fine technology for preventing counterfeiting of abstract digital objects.  That is not a reason to buy bitcoins as a long term investment. 
Title: Re: Is it too late [bitcoin]?
Post by: phil22 on December 28, 2017, 06:30:00 PM
Quote
how to you define "scam"?  it's abundantly clear that it's a highly volatile and speculative market without government oversight.

In this case, I define the scam as "an artificially created new product with no intrinsic value, vastly overhyped by paid media exposure to pump the price up, and then sold for a profit to greater fools."  Just like all of those .com companies that didn't actually have an internet business model, and only used the .com label to draw investors and cash out.  Did you see that the Long Island Ice Tea company spiked their stock price by announcing they were considering investing in blockchain technology?  No relevance, no expertise, no plan.  Just a press release and a quick $20 million payday.  That's a scam.

first of all i agree that bitcoin is performing so terribly, on a technical level with fees and congestion, that there's a good chance it's doomed.  there's a good chance you're right and the current consensus fork will be worthless in a matter or years or even months.  time will tell.  but i think it's performed well on a technical level, and survived over the last 8-9 years, and therefore it no longer qualifies as a "fad" or "scam".

that being said -- that's an extremely wide definition for scam.  "artificial" is a non-argument.  society and everything in it is artificial.  "intrinsic value" is also a non-argument.  if "intrinsic value" isn't an oxymoron the only things that have it are food and water.  fidget spinners are very artificial and have no intrinsic value, and they enjoyed a lot of media exposure this year.  does that make fidget spinners a scam?  perhaps anything you don't like or didn't personally profit from is a scam.

i agree that the company name change was a scammy opportunistic move.  but that has nothing to do with the price people have been buying and selling bitcoin at for the past 8 years.
Title: Re: Is it too late [bitcoin]?
Post by: BattlaP on December 28, 2017, 08:48:28 PM
Quote from: phil22
"intrinsic value" is also a non-argument.  if "intrinsic value" isn't an oxymoron the only things that have it are food and water.  fidget spinners are very artificial and have no intrinsic value, and they enjoyed a lot of media exposure this year.  does that make fidget spinners a scam?  perhaps anything you don't like or didn't personally profit from is a scam.

lol no dude intrinsic value is like paying a dividend, owning assets, profits from an established customer base, etc. To turn your stupid example into something that makes sense, a business selling fidget spinners might have some intrinsic value and might be an investment worth looking at. Buying individual fidget spinners and hoping to sell them to someone else later on for a higher price would be stupid.

One of the main reasons that bitcoin can drop 30% a day is because there is no intrinsic value, nothing that people can agree has a distinct dollar value attached, therefore there is really no floor to its price. Its utility would not change if it was worth one cent or one million.
Title: Re: Is it too late [bitcoin]?
Post by: sol on December 28, 2017, 11:24:49 PM
lol no dude intrinsic value is like paying a dividend, owning assets, profits from an established customer base, etc.

Right, all investments generate profits.  When you buy stock you are buying a slice of that corporation's future quarterly cash flow.  When you buy bonds you are buying future interest payments.  When you buy real estate you are buying future (real or imputed) rents.  The generation of regular future profits is what makes them investments.

When you buy beanie babies, they produce nothing.  There is no dividend, no interest, no utility you can sell every month.  The only potential way to make money is to find some "greater fool" willing to pay a higher price for an otherwise depreciating asset. 

Bitcoin is much closer to beanie babies than it is to real estate.  It doesn't do anything.  It only has value as long as it remains popular to collect.

edited to add:  my wife made some serious money on beanie babies.  Some people still pay good money for mint condition original issue ones, even today.  That doesn't make them an investment.
Title: Re: Is it too late [bitcoin]?
Post by: KTG on December 29, 2017, 08:45:30 AM
What cracks me up about listening to people defend bitcoin or these other cryptos, is that all I hear how great the technology that involves them is. What I can't understand is how few address how many cryptos there are, how many that are no doubt being developed (and I mean, who wouldn't want to create an artificial currency, sell it all off to morons, and walk away with a profit?). Think things are confusing now? Wait a couple of years. Today its Bitcoin, tomorrow it seems it will be Ripple. Well, wait, after Ripple it will be something else. And where am I able to spend all this funny money? Can I buy gas with it? Groceries? Pay my mortgage? No? Then what the hell am I paying $1000s for them? Oh wait, Bitcoin lists some 20 companies foolish enough to deal with it. Its hysterical. I know people have made some money off trading bitcoin, but its really much like making money trading Monopoly money.

Some people bring up comparing it to gold. I don't own gold either. I figure if the sh!t hits the fan where GOLD is more important than the US dollar, then society as we know it will have collapsed and I am better off stocking up on bullets and cigarettes, but I know people have made money off that too. But gold is a natural resource and there is a finite amount on Earth. Its been sought after by just about every civilization. I have no need for it, but I can understand others that might.

I can develop a crypto currency. You can. We all can. And that's a problem.
Title: Re: Is it too late [bitcoin]?
Post by: KTG on December 29, 2017, 08:53:39 AM
I also want to add that all this is happening because the world economy is doing pretty good. I can assure you if we were in tough times, no one would be spending their hard earned and limited funds on this stuff. Cryptos are a fringe 'investment' (~ I hate calling it that), and in hard times people are going to want payment in currencies that are STABLE, and these wont be.
Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 29, 2017, 09:38:32 AM
KTG, I disagree with some of your post, but I agree with you that it will be fascinating to see how cryptocurrency prices respond during the next recession. Since bitcoin dates back to January 2009, all but the first two months of the set of "historical" cryptocurrency data coincide with a nearly nine year long bull market.
Title: Re: Is it too late [bitcoin]?
Post by: belly05 on December 29, 2017, 10:13:15 AM
I personally think Bitcoin is fascinating, and from reading around on this site it looks like I'm going to be in the minority view. I do believe its past the time to invest in bitcoin, but I'm currently investing in ripple and etherium and have been advocating to my friends and family to do the same (in small amounts)

Ripple cannot be mined so I've just purchased a few thousand dollars worth and plan to hold offline in a hardware wallet for several years (the nano ledger hardware wallet to be exact).  Maybe it has an insane run like bitcoin and I can cash out in a few years.

Etherium can be mined, I have servers already constantly running as part of a small web design business so I simply allocated any extra resources towards mining etherium.  It cost about 80/month in extra electricity to mine but so far it has a positive ROI (it generates about 2 etherium coins per month).  If you have the technical knowledge to build a mining computer I'd say go for it!  I'm happy to share the exact specifications of the mining machine I built with you in a DM if you would like.


Title: Re: Is it too late [bitcoin]?
Post by: maizeman on December 29, 2017, 10:20:30 AM
Belly, does your business already require that your servers have lots of GPUs? Or are you mining ethereum on CPUs? Or installing GPUs into existing machines to make them better at mining?

One of the startups I'm associated with has a lot of computing power that is sitting idle about 80% of the time and we've discussed whether it'd make sense to configure it to mine cryptocurrencies during downtime. I hadn't found a currency where CPU mining makes significant economic sense (we need machines with lots of CPUs and extremely large amounts of RAM, but don't do a lot of parallel computing, so the machines don't have any GPUs at all), but maybe the recent run up in prices has changed the math.
Title: Re: Is it too late [bitcoin]?
Post by: thenextguy on December 29, 2017, 10:23:41 AM
Here’s an article about the web from 1995.

http://www.newsweek.com/clifford-stoll-why-web-wont-be-nirvana-185306

It’s very interesting because the author raises some valid criticisms of the web at the time. What he was completely clueless about was that there were people working on these issues.

It’s baffling to me that people look at the current state of cryptocurrencies and think they’ll never be anything more because they have some issues that need to be addressed. There is a ridiculous amount of development going on in this space and I predict that one day many of its critics will look as equally silly as the author of that Newsweek article.
Title: Re: Is it too late [bitcoin]?
Post by: sol on December 29, 2017, 12:49:34 PM
It’s baffling to me that people look at the current state of cryptocurrencies and think they’ll never be anything more

It's not that I don't think the idea has merit, it's that I think bitcoin and the rest of these early coins will be virtually worthless.

Remember that when you pay $17k for a bitcoin, you are not investing in a blockchain technology company.  You are not betting on the successful future of crypto currencies in the global economy.  You are only betting that some other buyer in the future will pay you more than $17k for a specific bitcoin.  Just like with beanie babies.
Title: Re: Is it too late [bitcoin]?
Post by: belly05 on December 29, 2017, 01:36:07 PM
Belly, does your business already require that your servers have lots of GPUs? Or are you mining ethereum on CPUs? Or installing GPUs into existing machines to make them better at mining?

One of the startups I'm associated with has a lot of computing power that is sitting idle about 80% of the time and we've discussed whether it'd make sense to configure it to mine cryptocurrencies during downtime. I hadn't found a currency where CPU mining makes significant economic sense (we need machines with lots of CPUs and extremely large amounts of RAM, but don't do a lot of parallel computing, so the machines don't have any GPUs at all), but maybe the recent run up in prices has changed the math.

Your right on the money, we have web servers that do not require any GPU's.  This year we had it in the budget to build a new machine, when we priced out the machine it added an extra 2k to add 6 GPU's to the machine.  All the mining is done by the GPU's, all the web traffic is served with the CPU's and the machine does have a good amount of RAM as well.

We are only a few months into our test but right now the machine runs with an added electricity cost to power the GPU's of right around $82/month. We are mining in a pool right now and the machine has generated about 1.8 coins per month so far over the first few months.  With the average cost of etherium hovering around $700 per coin the machine is seemingly very profitable to run.  It definitely helps that the electricty is already a business expense and thus a write off + we had to build the machine anyway so the only "added" cost was for the GPU's.


Title: Re: Is it too late [bitcoin]?
Post by: phil22 on December 29, 2017, 04:08:24 PM
lol no dude intrinsic value is like paying a dividend, owning assets, profits from an established customer base, etc.

Right, all investments generate profits.  When you buy stock you are buying a slice of that corporation's future quarterly cash flow.  When you buy bonds you are buying future interest payments.  When you buy real estate you are buying future (real or imputed) rents.  The generation of regular future profits is what makes them investments.

When you buy beanie babies, they produce nothing.  There is no dividend, no interest, no utility you can sell every month.  The only potential way to make money is to find some "greater fool" willing to pay a higher price for an otherwise depreciating asset. 

Bitcoin is much closer to beanie babies than it is to real estate.  It doesn't do anything.  It only has value as long as it remains popular to collect.

edited to add:  my wife made some serious money on beanie babies.  Some people still pay good money for mint condition original issue ones, even today.  That doesn't make them an investment.

a share of a stock does not itself do anything.  yes, you may get dividends but that lowers the market price proportionally.  the share of stock represents partial ownership of a company that produces value.  and that share of stock is currently priced at 3x the company's book value, so 2/3 of your stock "value" is simply speculation on future earnings*.

for a unit of bitcoin to exist (not be valueless) there has to be a miners or other nodes consuming electricity and putting real work into the blockchain on which that coin exists, processing transactions.  similar to a share of stock, each unit of bitcoin doesn’t do anything** but it represents its a functioning global payment network, and that global payment network produces value.

for price/book for bitcoin, it's probably mostly speculation.  but again, bitcoins cost about as much to create as they're worth (the mining difficulty tracks the market price and mining profit tends to zero) and you can't just wave your hands to create some.

--

* see price/book at "3.0x": https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0585#tab=2

** unlike a share of stock, units of bitcoin have utility: you can freely transact units of bitcoin with others around the world using the built-in payment network
Title: Re: Is it too late [bitcoin]?
Post by: phil22 on December 29, 2017, 04:22:47 PM
What cracks me up about listening to people defend bitcoin or these other cryptos, is that all I hear how great the technology that involves them is. What I can't understand is how few address how many cryptos there are, how many that are no doubt being developed (and I mean, who wouldn't want to create an artificial currency, sell it all off to morons, and walk away with a profit?). Think things are confusing now? Wait a couple of years. Today its Bitcoin, tomorrow it seems it will be Ripple. Well, wait, after Ripple it will be something else. And where am I able to spend all this funny money? Can I buy gas with it? Groceries? Pay my mortgage? No? Then what the hell am I paying $1000s for them? Oh wait, Bitcoin lists some 20 companies foolish enough to deal with it. Its hysterical. I know people have made some money off trading bitcoin, but its really much like making money trading Monopoly money.

Some people bring up comparing it to gold. I don't own gold either. I figure if the sh!t hits the fan where GOLD is more important than the US dollar, then society as we know it will have collapsed and I am better off stocking up on bullets and cigarettes, but I know people have made money off that too. But gold is a natural resource and there is a finite amount on Earth. Its been sought after by just about every civilization. I have no need for it, but I can understand others that might.

I can develop a crypto currency. You can. We all can. And that's a problem.

how is that a problem?  have you looked at the open source software movement?  there are tons of near-clones of any kind of software imaginable.  anyone on earth can create any software at any time.  does that mean Microsoft is worthless?  anyone can create any website or blog they want, does that make websites worthless?  cryptocurrencies are only worth something if they are secure and people use them.*  people have to expend effort and money to make a cryptocurrency worth something.  yes, if you create a cryptocurrency today it'll probably be worthless, as it should be.  bitcoin or any other crypto can go poof to zero overnight if they are abandoned or proven not secure.

i agree with you that gold and cryptocurrencies will be worthless if society collapses.  but that doesn't make those useless non-correlated asset classes while society is running along normally.  (i personally think gold is about as useless as it gets so i don't own any.)

* https://forum.mrmoneymustache.com/investor-alley/official-crypto-currency-portfolios-and-discussion/msg1706244/#msg1706244
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 29, 2017, 04:47:14 PM

how is that a problem?  have you looked at the open source software movement?  there are tons of near-clones of any kind of software imaginable.  anyone on earth can create any software at any time.  does that mean Microsoft is worthless?  anyone can create any website or blog they want, does that make websites worthless?  cryptocurrencies are only worth something if they are secure and people use them.*  people have to expend effort and money to make a cryptocurrency worth something.  yes, if you create a cryptocurrency today it'll probably be worthless, as it should be.  bitcoin or any other crypto can go poof to zero overnight if they are abandoned or proven not secure.

i agree with you that gold and cryptocurrencies will be worthless if society collapses.  but that doesn't make those useless non-correlated asset classes while society is running along normally.  (i personally think gold is about as useless as it gets so i don't own any.)

* https://forum.mrmoneymustache.com/investor-alley/official-crypto-currency-portfolios-and-discussion/msg1706244/#msg1706244
Despite other alternatives, gold alloy is still the best material for dental work.

Gold powder is used in other medical treatments, such as for reducing swelling of arthritis.

Gold is one of the best materials for shielding ultraviolet rays; think satellites and astronaut face visors.

Gold is highly conductive and malleable, and never tarnishes.  Got a cell phone or computer?  Chances are there's about 50 milligrams of gold in each of them, simply because of its unique physical properties.

And of course, there's the obvious applications in jewelry and building materials, etc., for anything from modest to extravagant expressions of love or wealth.

I'm sure there's other examples; but hopefully you get my point.  It's not just an otherwise valueless metal that sits as inert bricks in a vault.  Its unique properties give it an intrinsic value that goes far beyond just a betting chip for speculators.

Bitcoin, as a payment system, is inferior, on balance, to existing systems.  Sure, that's just my opinion, and I'm sure it's debatable. 

Leaving that aside, what else can I do with a bitcoin, other than sell it to someone willing to pay a higher price than I did?

If society collapses, gold will still retain intrinsic value that will remain unexploited, but only until society rebuilds itself.  Golds unique physical properties do not depend on any specific social structure. 

Case in point: Confederates who used Confederate dollars to buy gold had an asset that was valuable long after the war was lost to the Union.  Any who held on to paper currency found that their money simply expired, valueless, six months after the war was lost.

If society collapses permanently, then yeah, it's a moot point in any case.

 

Title: Re: Is it too late [bitcoin]?
Post by: phil22 on December 29, 2017, 05:23:07 PM
Bitcoin, as a payment system, is inferior, on balance, to existing systems.  Sure, that's just my opinion, and I'm sure it's debatable. 

Leaving that aside, what else can I do with a bitcoin, other than sell it to someone willing to pay a higher price than I did?

yes of course, if you "leave aside" the main function of something you don't have much left.  if you "leave aside" transport from point A to B, what else is a car good for?

i completely agree that those of us in the US* and elsewhere have "good enough" electronic finances already.  there is not a lot of benefit to bitcoin when all you're doing is paying your credit card balance and making a Vanguard transaction every now and then.  but anyway:

- you can embed the signature of an electronic file/document in the blockchain, which proves the document existed at that time
- you can store value for escrow or trusts, for example with time-locked transactions or M-of-N-signatures-to-redeem transactions
- you can store value purely in your brain with a memorized wallet seed -- no EULA to agree to

If society collapses, gold will still retain intrinsic value that will remain unexploited, but only until society rebuilds itself.  Golds unique physical properties do not depend on any specific social structure.  If society collapses permanently, then yeah, it's a moot point in any case.

i think it's fair to say gold "may" retain some value.  not "will."  and again in that situation, food, clean water, your ability to do physical work, perhaps weapons, etc., will have value.  you'd better hope whoever you're desperately buying food from wants a few shavings of gold, and not something else.  your 10 pounds of gold or whatever won't tarnish, but it may get stolen or it may be a nice doorstop until society rebuilds.  and yes in this situation bitcoin and the internet itself would be only a memory.

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* only ~5% of people on earth live in the US
Title: Re: Is it too late [bitcoin]?
Post by: ILikeDividends on December 29, 2017, 05:44:12 PM
Bitcoin, as a payment system, is inferior, on balance, to existing systems.  Sure, that's just my opinion, and I'm sure it's debatable. 

Leaving that aside, what else can I do with a bitcoin, other than sell it to someone willing to pay a higher price than I did?

yes of course, if you "leave aside" the main function of something you don't have much left.  if you "leave aside" transport from point A to B, what else is a car good for?

i completely agree that those of us in the US* and elsewhere have "good enough" electronic finances already.  there is not a lot of benefit to bitcoin when all you're doing is paying your credit card balance and making a Vanguard transaction every now and then.  but anyway:

If the main function of bitcoin is as a payment system, then it seems you are agreeing that it has no real intrinsic value to those of us in the USA and other developed countries.

And of course, as a resident of the USA, that is the perspective I am coming from. A car will take you from point A to point B in the USA, North Korea, or Venezuela, so I think that comparison is a bit of a red herring.

If I lived in Venezuela, then of course I would have to agree that bitcoin would be the least worst choice available for protecting my wealth from government seizure.  But I don't live there, so it's an obviously inferior vehicle as a payment system for me.
 
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- you can embed the signature of an electronic file/document in the blockchain, which proves the document existed at that time
- you can store value for escrow or trusts, for example with time-locked transactions or M-of-N-signatures-to-redeem transactions
- you can store value purely in your brain with a memorized wallet seed -- no EULA to agree to

That is a hypothetical "value" that has yet to find a real-world scenario.  I would never sell my house and put it in an escrow account denominated in bitcoin, simply because I have no guarantee of getting paid in a real currency anywhere near the value of my house after closing escrow. That would seem to defeat the whole purpose of escrow.
Quote

If society collapses, gold will still retain intrinsic value that will remain unexploited, but only until society rebuilds itself.  Golds unique physical properties do not depend on any specific social structure.  If society collapses permanently, then yeah, it's a moot point in any case.

i think it's fair to say gold "may" retain some value.  not "will."  and again in that situation, food, clean water, your ability to do physical work, perhaps weapons, etc., will have value.  you'd better hope whoever you're desperately buying food from wants a few shavings of gold, and not something else.  your 10 pounds of gold or whatever won't tarnish, but it may get stolen or it may be a nice doorstop until society rebuilds.  and yes in this situation bitcoin and the internet itself would be only a memory.

There have been numerous massive societal collapses throughout history, and gold has always emerged as the same coveted asset that it was before the collapse.  History is on the side of "will" not "may."

I don't think anyone is arguing that gold is more valuable than food, clean water, or the ability to do physical work.  But if that is the point of your assertion, then of course, I would have to agree.

But in the worst possible scenario, gold would at least still exist in the physical world, and not just as a fading memory.  I would rather own something that is at least worth stealing, than own nothing anyone wants at all.  Who wouldn't?
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* only ~5% of people on earth live in the US
Title: Re: Is it too late [bitcoin]?
Post by: theolympians on December 29, 2017, 06:44:56 PM
I'm surprised more countries have not cracked down on bitcoin as it effectively undermines their currencies, the dollar included. I wonder about the intentions of the creators as well. The idea may be neat, a global currency of one value.

However, I find it a little funny a bunch of "investors" are falling over themselves to buy the next "it". I read an article on a site that said "ripple" is now the number 2 cryptocurrency....WTF? Someone posted earlier there are "thousands" or cryptos out there. I don't know about the number, but if there is a bunch what is the point. No one is using these as currencies, they are just pumping money into one or another hoping it will take off. Looks like a sucker's game to me.

Reminds me of a corny commercial I saw a while back where some huckster was hawking penny stocks, "Pump and Dump!" He actually used those words.

At some point in the future we will perhaps all be on some cryptocurrency but it will be government regulated, and not created in a basement.
Title: Re: Is it too late [bitcoin]?
Post by: WhiteTrashCash on December 29, 2017, 07:23:03 PM
I just had to talk a colleague out of blowing her life savings on Bitcoin. Probably saved her future retirement in the process. At the same time, I helped her recognize that her teenage son is probably doing illegal sales of some type on the Darkweb. Hope she can keep him out of jail. That seems to be the primary function of cryptocurrencies. Doing illegal stuff like selling guns and drugs. It's like the Wild West out there on the internet these days and lots of people are going to end up getting hurt because they lack basic common sense.
Title: Re: Is it too late [bitcoin]?
Post by: Indexer on December 29, 2017, 11:07:56 PM
Cryptos are a fringe 'investment' (~ I hate calling it that)

Then stop calling it that. People misuse the word investment to describe all sorts of stupid things. People will say a new pair of shoes are an investment. No they aren't and neither is bitcoin.

It’s baffling to me that people look at the current state of cryptocurrencies and think they’ll never be anything more

It's not that I don't think the idea has merit, it's that I think bitcoin and the rest of these early coins will be virtually worthless.

Remember that when you pay $17k for a bitcoin, you are not investing in a blockchain technology company.  You are not betting on the successful future of crypto currencies in the global economy.  You are only betting that some other buyer in the future will pay you more than $17k for a specific bitcoin.  Just like with beanie babies.

THIS!!!  Blockchain technology will likely do great things, and I see reasons to invest in it. That doesn't mean anything for Bitcoins.


lol no dude intrinsic value is like paying a dividend, owning assets, profits from an established customer base, etc.

Right, all investments generate profits....

a share of a stock does not itself do anything.  yes, you may get dividends but that lowers the market price proportionally.  the share of stock represents partial ownership of a company that produces value.  and that share of stock is currently priced at 3x the company's book value, so 2/3 of your stock "value" is simply speculation on future earnings*.

for a unit of bitcoin to exist (not be valueless) there has to be a miners or other nodes consuming electricity and putting real work into the blockchain on which that coin exists, processing transactions.  similar to a share of stock, each unit of bitcoin doesn’t do anything** but it represents its a functioning global payment network, and that global payment network produces value.

for price/book for bitcoin, it's probably mostly speculation.  but again, bitcoins cost about as much to create as they're worth (the mining difficulty tracks the market price and mining profit tends to zero) and you can't just wave your hands to create some.

This is a false equivalency.

1. Stock dividends = profits. Dividends don't make the stock price go down over time, they just make it drop when the dividend is paid. The reason the stock price goes down when a dividend is paid is because the dividend was priced in, investors knew it was coming so they drove the stock price up in anticipation of the dividend. Investors buying the stock the following day want a lower price because they missed out on the dividend. The next time there is a dividend the stock price will likely rise in advance to that dividend, unless of course the stock price moves for other reasons as well, like long term appreciation due to earnings growth. The stock represents ownership in a company and claims to profits and assets. Profitable companies normally trade higher than their book value, people want access to those profits and future profits. Yes, part of this is speculation, speculation that the company will continue to grow and be more profitable. Note, the speculation is that a company with assets and earnings will grow those assets and earnings over time. That is investing, not gambling.

2. The fact that a miner mined Bitcoin doesn't give it value. The fact that it uses stupid amounts of electricity doesn't give it value. If I use my valuable time and resources to draw "B" on a bunch of Chuckie Cheese coins that doesn't make them valuable(actual person did this and sold them as Bitcoins, made over $1 million). A Bitcoin doesn't represent the profits of blockchain technology or claims against assets or profits. That would be a stock. A Bitcoin is code that some people have decided to trade like a currency. Speculation with Bitcoin is not that assets and earnings will grow, there aren't any. Speculation with Bitcoin is that someone will be willing to pay more for a Bitcoin in the future. This is the textbook definition of the "Greater Fool Theory." This is gambling, not investing.

See the difference?

On the note of a global payment network:  in 1950 that would be cool. In 2017 there are more than enough means of transporting money and data worldwide. A current transaction prices using Bitcoin is more expensive than a bank wire.
Title: Re: Is it too late [bitcoin]?
Post by: thenextguy on December 29, 2017, 11:57:01 PM
Anyone that says cryptocurrencies aren’t investments because they don’t provide a return, well, you’re wrong.

In 2018, ETH is moving from Proof of work to proof of stake. By staking your currencies and validating payments, you will receive a return on your investment similar to dividends.

So, move on from that criticism because it is flat out objectively wrong.

And if anyone is geared up to say it’s not an investment yet because they’re not doing that now, we’ll, that’s wrong too. A stock, for example, is an investment based on future returns; it doesn’t matter if they’re paying dividends today.
Title: Re: Is it too late [bitcoin]?
Post by: powskier on December 30, 2017, 12:17:15 AM


i assume by "bitcoin" you mean "cryptocurrencies" here. 

No, I explicitly meant bitcoin.  The language was precise.  Other cryptocurrencies may find utility someday, but bitcoin will not.  Bitcoin will be worthless in a few years, except to novelty collectors.  Which is why the current price of bitcoin is stupid. 

[/quote]

I rode bitcoin up from $2.5k and sold out at $18k,  fully agree with Sol's opinion above (the second quote, messed up the edit). I also hold a small but rapidly growing portfolio of crypto after gotten back my original investment plus some profit. It's interesting to watch this "not real until I sell" money go from $4k to $20k in a month and then up to $35 k in a few days ( thanks Ripple). No plans on buying bitcoin again.
Title: Re: Is it too late [bitcoin]?
Post by: marty998 on December 30, 2017, 12:21:58 AM
Anyone that says cryptocurrencies aren’t investments because they don’t provide a return, well, you’re wrong.

In 2018, ETH is moving from Proof of work to proof of stake. By staking your currencies and validating payments, you will receive a return on your investment similar to dividends.

So, move on from that criticism because it is flat out objectively wrong.

And if anyone is geared up to say it’s not an investment yet because they’re not doing that now, we’ll, that’s wrong too. A stock, for example, is an investment based on future returns; it doesn’t matter if they’re paying dividends today.

Still not buying it. I will call it a currency when it is stamped as legal tender.

And proof of stake doesn't equate to dividends either. You may receive a benefit in proportion to your holding, but you still have to actively mine the "currency".

Assuming the value of the "currency" (and I am using that term very very generously) stays stable (which it should if you want to call it a currency), then you are telling me the only way you generate a return is by doing work?

Sounds to me you have to sell your computing services to the company that created the cryptocurrency, which seems shockingly like an employee/employer relationship, where you get paid in things you hope other people place a greater value on than you...
Title: Re: Is it too late [bitcoin]?
Post by: sol on December 30, 2017, 12:23:40 AM
Anyone that says cryptocurrencies aren’t investments because they don’t provide a return, well, you’re wrong.

In 2018, ETH is moving from Proof of work to proof of stake. By staking your currencies and validating payments, you will receive a return on your investment similar to dividends.

So, move on from that criticism because it is flat out objectively wrong.

And if anyone is geared up to say it’s not an investment yet because they’re not doing that now, we’ll, that’s wrong too. A stock, for example, is an investment based on future returns; it doesn’t matter if they’re paying dividends today.

You seem confused about the definitions of all of the important words in your own post.
Title: Re: Is it too late [bitcoin]?
Post by: thenextguy on December 30, 2017, 12:28:00 AM