Poll

What do you think the value of one Bitcoin will be in 2027?

$1 or less (basically worthless, souvenir value)
43 (40.2%)
$100 (crash at some point but reached a stable value)
9 (8.4%)
$2,500 (same as today)
4 (3.7%)
$3,500 (keeps up with inflation)
13 (12.1%)
$6,500 (10% returns annually - stock market like increases)
10 (9.3%)
$25,000 (around 25% increase per year)
15 (14%)
$100,000 or more (50%+ increase per year)
13 (12.1%)

Total Members Voted: 105

Author Topic: Deleted  (Read 10043 times)

bender

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Deleted
« on: July 27, 2017, 11:46:10 AM »
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« Last Edit: March 30, 2018, 08:20:41 AM by bender »

ketchup

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Re: Bitcoin value in 2027
« Reply #1 on: July 27, 2017, 11:51:27 AM »
My flat out guess would be either the $100 range or the $20,000 range (and not between), with no idea how likely either option is.  It'll either take off way more than it already has, or it'll crater in favor of something else.

shotgunwilly

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Re: Bitcoin value in 2027
« Reply #2 on: July 27, 2017, 12:16:23 PM »
IMO it will either be null/souvenir value, or over $100,000.  I'm leaning towards, and therefor voted, null.  Scaling and power consumption are a major problem with Bitcoin.  If they can fix this (maybe they transition to Proof of Stake instead of Proof of Work?, or computing power gets much much cheaper?) maybe it survives and grows to an amazing rate.

I think there will be better ways to implement a blockchain currency.  My guess is null.

OneCoolCat

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Re: Bitcoin value in 2027
« Reply #3 on: July 27, 2017, 12:31:31 PM »
In 10-years I think it will be around $100k.  I can't think of a scenario where it just keeps up with inflation or loses value over a 10-year period.

saijoe

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Re: Bitcoin value in 2027
« Reply #4 on: July 27, 2017, 12:34:55 PM »
I was wondering if there was an easy way to buy Bitcoin within a mutual fund.  NW is >$1M and was thinking about putting some speculative money in (maybe $20K?).  I found a website that said I could, but they wanted me to enter contact info and I bailed.  I just want the ticker symbol and buy.   

thenextguy

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Re: Bitcoin value in 2027
« Reply #5 on: July 27, 2017, 01:47:44 PM »
I was wondering if there was an easy way to buy Bitcoin within a mutual fund.  NW is >$1M and was thinking about putting some speculative money in (maybe $20K?).  I found a website that said I could, but they wanted me to enter contact info and I bailed.  I just want the ticker symbol and buy.

Nothing like that yet. The closest thing is GBTC, which is basically a trust that owns a certain amount of bitcoin. The problem is that it's currently trading in excess of the underlying value of its assets (bitcoin). So you're paying a premium for the convenience/safety of buying a single security.

thenextguy

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Re: Bitcoin value in 2027
« Reply #6 on: July 27, 2017, 01:58:42 PM »
I'm not sure what it will be, but I can't see it being worth $0. The only way that would happen is if the encryption underlying it is breached. And if that were to happen, Bitcoin price is probably the least of our worries.

frugledoc

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Re: Bitcoin value in 2027
« Reply #7 on: July 27, 2017, 03:03:37 PM »
In 10-years I think it will be around $100k.  I can't think of a scenario where it just keeps up with inflation or loses value over a 10-year period.

yay, all early adopters will be millionaires, must jump in now.

Classic, pump and dump speak.  Back when I was a naive, dumb investor speculating in junior oil and gold stocks I heard the exact same thing constantly, and often bought into it.

shotgunwilly

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Re: Bitcoin value in 2027
« Reply #8 on: July 27, 2017, 03:48:14 PM »
In 10-years I think it will be around $100k.  I can't think of a scenario where it just keeps up with inflation or loses value over a 10-year period.

yay, all early adopters will be millionaires, must jump in now.

Classic, pump and dump speak.  Back when I was a naive, dumb investor speculating in junior oil and gold stocks I heard the exact same thing constantly, and often bought into it.

There were also people that said similar things about Apple and Amazon back when they were worth a tiny fraction of what they are now.

daverobev

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Re: Bitcoin value in 2027
« Reply #9 on: July 27, 2017, 03:52:11 PM »
In 10-years I think it will be around $100k.  I can't think of a scenario where it just keeps up with inflation or loses value over a 10-year period.

yay, all early adopters will be millionaires, must jump in now.

Classic, pump and dump speak.  Back when I was a naive, dumb investor speculating in junior oil and gold stocks I heard the exact same thing constantly, and often bought into it.

There were also people that said similar things about Apple and Amazon back when they were worth a tiny fraction of what they are now.

And thousands of other companies, which are worth nothing.

JAYSLOL

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Re: Bitcoin value in 2027
« Reply #10 on: July 27, 2017, 03:55:10 PM »
I'm going to agree that it'll either be $20k+ or bust.  IMO theres a good chance it will be replaced by a newer/better crypto currency, maybe something that already exists, maybe something that doesn't yet.  That said, theres at least a small chance it will make it mainstream and stay there in the medium-term.  I'm not going to bet my future on it though, just a bit of fun-money. 

maizeman

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Re: Bitcoin value in 2027
« Reply #11 on: July 27, 2017, 03:55:20 PM »
I put down less than $1, but my actual answer is null. I think the bitcoin network will not exist. 

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.

Bitcoin may well be worth nothing in a decade, but I feel it's important to clarify that the computational effort required to validate each new block in the blockchain depends on the average hashing power currently in the network and doesn't depend at all on the length of the blockchain.

aboatguy

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Re: Bitcoin value in 2027
« Reply #12 on: July 27, 2017, 03:59:02 PM »
My guess is that bitcoin will be worth Zip, zero, zilch

shotgunwilly

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Re: Bitcoin value in 2027
« Reply #13 on: July 27, 2017, 04:06:20 PM »
In 10-years I think it will be around $100k.  I can't think of a scenario where it just keeps up with inflation or loses value over a 10-year period.

yay, all early adopters will be millionaires, must jump in now.

Classic, pump and dump speak.  Back when I was a naive, dumb investor speculating in junior oil and gold stocks I heard the exact same thing constantly, and often bought into it.

There were also people that said similar things about Apple and Amazon back when they were worth a tiny fraction of what they are now.

And thousands of other companies, which are worth nothing.

No shit? Wow.

lifeanon269

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Re: Bitcoin value in 2027
« Reply #14 on: July 27, 2017, 07:46:52 PM »
Crypto-currencies are here to stay that is a 100% certainty in my mind. The question is whether or not Bitcoin is the largest in the market or not. IMO, I don't see sentiment changing in the near future (<3 years) to the point where another currency over takes it in market cap. 10 years is not a very long period of time. Unless another crypto-currency takes its place, then I don't think Bitcoin will ever lose its value on an year to year basis. There will, however, be many crypto-currencies in existence all with healthy thriving markets.

So here's my thoughts. I pick the $25,000 option, but I actually think it will be much more than that and quite possibly closer to $100,000, but I remained conservative since I don't like to get too far ahead of myself.

I think in the next 6 months, Bitcoin will double its market capitalization to about $100 billion (today it is between $40-50 billion). This is an easy prediction to make. Bitcoin has been undervalued lately because of the scaling issues holding it back. I think the transaction rate will be increased on the Bitcoin network over the next 6 months that will bring a lot more money into it that previously was being held back. With a market cap of about $100 billion, this will put the price of Bitcoin at about $6000 each.

To get to $25,000 in 10 years, Bitcoin would need a market cap of about $450 billion. So even after just a year from now, we'd be about 20% of the way there. So growth would actually have to slow from where it is today to reach the $25,000 mark over the last 9 years. I think that is easily doable. I feel there are a lot of use-cases that Bitcoin can fill that are still barely even being touch upon. The number of people who've yet to get into Bitcoin or who haven't even heard of it shows that the market is far from being over-saturated.

Finally, every year that Bitcoin exists, trust in the network will grow. The biggest critique I hear from people about Bitcoin is that the value in Bitcoin is misplaced and speculative. But, at some point that can't be true. How many years does the network need to operate before trust reaches critical mass among people? How large of a market cap needs to be invested in Bitcoin before people realize that it isn't something to be ignored/overlooked? $100 billion, a market cap that I think will be attained this year, is no small market. That's massive and I don't think that will be a stopping point for it. That's why I believe it is here to stay and that critical mass will be reached when it comes to the trust that people are able to place in it.

$25,000 in ten years in my prediction, but that's the absolute low point of the outcomes I see.

thenextguy

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Re: Bitcoin value in 2027
« Reply #15 on: July 27, 2017, 10:27:20 PM »
So if anyone wants to learn more about Bitcoin, cryptocurrencies and blockchain technology, I recommend this series of short documentary episodes by Tech Crunch called "Trust Disrupted: Bitcoin and the Blockchain":

https://www.youtube.com/playlist?list=PLHRxVckaE8daSH4OEReWshCKWu3iIOIS-

lifeanon269

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Re: Bitcoin value in 2027
« Reply #16 on: July 28, 2017, 07:03:56 AM »
Good discussion so far.  Lifeanon, a few follow ups if you don't mind.
What factors drive the value?  Is it mainly a factor of how many people trust the network and transact in bitcoin?
At some point, the growth in value has to match inflation right?  When this happens, I think Bitcoin may be a viable currency and store of value for widespread use. 
On the topic of inflation: In a recession wouldn't the value be expected go down?
What is the endgame for Bitcoin?  Do you envision us getting paid in bitcoin and buying everything that way?  Does it become the universal transaction medium and store of value for the world, replacing all other currencies?

The factors that drive the value of Bitcoin are simply supply and demand. There isn't anything fancy about it. It is limited in supply and when there is greater demand for it, the price goes it. If you go into any exchange market (the two I use are OpenLedger and Poloniex), you can see the market forces and how the market depth of buyers and sellers drive the price one way or the other.

Since the new supply rate of Bitcoin is fixed, calculating an estimated price of Bitcoin based on the market capitalization and supply is easy. Guessing what that market capitalization will be is impossible.

The growth in Bitcoin value doesn't have much to do with inflation because of this. Inflation, by its definition, is an increase in the money supply. Bitcoin has a steady inflation rate and eventually (once all Bitcoins are mined) becomes a deflationary currency. We're so used to inflationary currency because that has been the norm for so long in centralized federal banking systems. As mustachians, a deflationary currency will encourage people to save more instead of spending so much of their money as consumerists. Here is some more information on money supply as it is related to Bitcoin: https://en.bitcoin.it/wiki/Controlled_supply

If a recession were to occur, I don't think Bitcoin would be affected much. In fact, much like gold, it will likely play out as a safe haven in such an economy. Already, it has been shown that there is almost no correlation between the business markets and the price of Bitcoin. Sure, maybe some people who's invested some of their money might pull some money out to access some of their savings in a tighter market, but that will happen to savings across the board for everyone. That's what happens during recessions. That's why having a population with a greater savings rate makes the economy more resilient during recessions. If you can access your savings, then you can weather tougher times easier. So in the event people pull some money of our Bitcoin, the price will fall a little bit and those who have some extra money (mustachians) will likely be able to pick up some extra Bitcoin on sale. This is ultimately why repeated recessions are bad for the wealth distribution ratio of a country. Recessions facilitate the move of more money from those who don't have much to those who have more of it. A deflationary currency will help with this problem.

Eventually, the market capitalization will be so large for Bitcoin that it will become much more resistant to market pullouts. When it is hundreds of billions of dollars (or even trillions), the price of it won't be impacted much when people pull some of their money out. This will lower the volatility a lot compared to what we see today. We're already seeing its volatility decrease by a lot as the market grows and people trust the network more.

What's the endgame for Bitcoin? No, I don't think we will pay for everything with Bitcoin. We won't ever be getting paid in Bitcoin. It will never replace all other currencies. It is not built or designed for that. It will be a great store of value. Think of it like becoming an extremely liquid gold vault type currency. People/businesses/countries will use it to store larger safe haven savings that can be accessed at any time. There will be other crypto-currencies that will have faster transaction rates that will be used for POS type applications. An article I read recently made a good analogy to transportation. We used planes to travel long distances between countries. We use cars to travel medium distances between cities and states. Then we use bikes to travel between neighborhoods. All forms of transportation are legitimate, but they all just serve different purposes. Bitcoin will be like our planes today. They're facilitate large transaction sums with likely higher fees and it will hold its value extremely well. When it comes to needing faster POS transactions for smaller purposes/purchases, there will be other crypto-currencies for that.

maizeman

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Re: Bitcoin value in 2027
« Reply #17 on: July 28, 2017, 07:18:57 AM »
What's the endgame for Bitcoin? No, I don't think we will pay for everything with Bitcoin. We won't ever be getting paid in Bitcoin. It will never replace all other currencies. It is not built or designed for that. It will be a great store of value. Think of it like becoming an extremely liquid gold vault type currency. People/businesses/countries will use it to store larger safe haven savings that can be accessed at any time. There will be other crypto-currencies that will have faster transaction rates that will be used for POS type applications. An article I read recently made a good analogy to transportation. We used planes to travel long distances between countries. We use cars to travel medium distances between cities and states. Then we use bikes to travel between neighborhoods. All forms of transportation are legitimate, but they all just serve different purposes. Bitcoin will be like our planes today. They're facilitate large transaction sums with likely higher fees and it will hold its value extremely well. When it comes to needing faster POS transactions for smaller purposes/purchases, there will be other crypto-currencies for that.

I've wondered about this point. In the analogy you use, cars can do some things better than airplanes, and airplanes can do some things better than cars. As you point out, bitcoin specifically has some significant limitations for things like instantaneous payments. Another would be the relatively high transaction fees at the moment (although hopefully the transaction volume fixes currently in the works will address that one).

So a wide range of other cryptocurrencies can do faster/cheaper payments better than bitcoin. What can bitcoin do better than any other currency? Or is it just the first mover advantage (and if how effect will that be over the long term if one or more other currencies become widely adopted for other niches like "credit card replacement")?

lifeanon269

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Re: Bitcoin value in 2027
« Reply #18 on: July 28, 2017, 09:11:56 AM »
I've wondered about this point. In the analogy you use, cars can do some things better than airplanes, and airplanes can do some things better than cars. As you point out, bitcoin specifically has some significant limitations for things like instantaneous payments. Another would be the relatively high transaction fees at the moment (although hopefully the transaction volume fixes currently in the works will address that one).

So a wide range of other cryptocurrencies can do faster/cheaper payments better than bitcoin. What can bitcoin do better than any other currency? Or is it just the first mover advantage (and if how effect will that be over the long term if one or more other currencies become widely adopted for other niches like "credit card replacement")?

I'm not making claim to know how everything will play out, but I thought this was a good article regarding the extremely heavy advantage that Bitcoin holds over other currencies. Rather than restate some of the good points made, I'll just link to it:

https://medium.com/@jimmysong/why-bitcoin-is-different-than-other-cryptocurrencies-e16b17d48b94

Yes, first mover advantage is important, but that isn't its only advantage. I think the biggest advantage that Bitcoin has is that it is community driven and stable (and simpler because of that). The Bitcoin of tomorrow could look different than it does today, but it will achieve those changes in a patient fashion that will add to its stability as a store of value. As was stated, many alt-coins have founders or owners and that doesn't lend itself well to becoming widely accepted by the public.

Also, the fact that crypto-currencies can be exchange for each other instantaneously benefits Bitcoin, because even if another currency comes along that does one thing a little better that Bitcoin can't do, Bitcoin will still be the medium of exchange used to acquire that one alt-coin for that one very specific task.

It will be extremely hard for another currency to replace Bitcoin by doing what Bitcoin already does extremely well. So that means it will leave alt-coins to niche markets to achieve specific tasks or innovations. Those niche markets can thrive, but they won't ever compare to Bitcoin with regards to total market value.

Even if another currency carves out the entire POS market away from Bitcoin (who knows!), I still see Bitcoin being the backbone of it because of its stability and industry support. POS coins used for daily transactions will still need a long term and secure store of value once merchants acquire those payments.

WhiteTrashCash

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Re: Bitcoin value in 2027
« Reply #19 on: July 28, 2017, 09:32:24 AM »
My 1997 Princess Diana edition Beanie Baby bear is currently selling for about $13 on eBay. Could have gotten like $1000 for it if I had sold it twenty years ago. What were we talking about again?

gp_

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Re: Bitcoin value in 2027
« Reply #20 on: July 28, 2017, 10:02:46 AM »
What were we talking about again?

a financial instrument which eliminates the middle person/party, enables a more seamless transfer of value, and can liberate the citizens of a corrupt country (ie. venezuela), etc.

what were you comparing again?
« Last Edit: July 28, 2017, 10:38:40 AM by gp_ »

maizeman

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Re: Bitcoin value in 2027
« Reply #21 on: July 28, 2017, 10:53:01 AM »
Thanks for taking the time to respond lifeanon. Reading through the article, it seems like there are essentially two arguments the author is putting forward.

The first is that any important new innovations developed in altcoins can be incorporated into the main bitcoin protocol. I'm not as confident about this given how hard it has been to get consensus on deploying fixes to the transaction per block limit problem. Once any idea or organization grows to include hundreds of thousands of people and tens of billions of dollars, there is an awful lot of institutional momentum that makes it hard to change course.

The second is "The main advantages of Bitcoin are network effect and proven security. Both are nearly insurmountable advantages" which seems to me like a restatement of the point about bitcoin having a first mover advantage. Which is not to say the first mover advantage may not prove to be insurmountable, I'm just trying to separate out network effects and technological differences.

The point about many altcoins having founders or being tied into companies is well taken, and I don't think a corporate-run altcoin is likely to ever replace bitcoin. But in order for bitcoin to win out and still be the de facto store of value in the cryptocurrency space twenty years from now, it won't have to beat the average altcoin (which at this point is probably part of an ICO for some random startup that may have a product 10 years down the road or may not). It's going to have to beat the best, most competitive altcoins, whatever they ultimately turn out to be.

lifeanon269

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Re: Bitcoin value in 2027
« Reply #22 on: July 28, 2017, 11:28:42 AM »
Ya, lots of good points and I don't have any of the answers and I think the question about other competing currencies taking over bitcoin are the same questions we all have.

I do think there are several truths that can be drawn that many would likely agree to though.

1) Crypto-currencies are here to stay.
2) While there will likely be many alternatives that become useful in their own right, I think an open decentralized community driven currency is the currency that will rule them all.
3) For the currency to be a good store of value, it must be deflationary in nature (unlike the USD).
4) Billion dollar marketplaces don't appear out of nowhere overnight.

With those facts, I think that it will be extremely difficult for another currency to supplant bitcoin. But, if another currency does, it will need to be so profoundly better than bitcoin that it is capable of moving a $100 billion+ marketplace. That's a tall order and if it does happen, it will be years in the making. Not only because of the fact that it would take a huge shift in money from one market to the other, but also because of the fact that any currency looking to take bitcoin's place would need to prove that it has the capability to last and be scrutinized and endure hardships just like Bitcoin has. It really isn't much different than how new cryptography is vetted out today. We don't use cryptography that was invented yesterday. We use cryptographic algorithms that have been tested and vetted for no less than 10-20 years. The same will likely hold true for crypto-currencies looking to seek mainstream adoption.

Bitcoin is approaching 10 years and it will be very difficult for a new currency to come along with a much shorter lifespan to attempt to prove its worth as a stable currency unless it is also given the test of time. Unfortunately time would also be against that alt-currency as well so it is a double-edged sword.

dougules

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Re: Bitcoin value in 2027
« Reply #23 on: July 28, 2017, 11:30:48 AM »
I'm not going to even begin to guess where bitcoin will go, but I would have to guess that the exchange rate (it is a currency after all) will have to stabilize out at some point if it's going to be a respectable currency.  Every time bitcoin goes way up it's essentially massive deflation.  Every time it goes way down it's essentially massive inflation.  All the most desirable currencies ($€ŁĄ) are fairly stable against each other.  Massive swings like with bitcoin are more like rubles and Zimbabwean dollars. 

maizeman

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Re: Bitcoin value in 2027
« Reply #24 on: July 28, 2017, 12:01:43 PM »
Completely agree with you on points #1 and #2.

For #3 it depends on the specific definition of deflationary used. I think a successful currency could probably still incorporate a small ongoing growth of the coin supply indefinitely. After all even if you look at gold, people continue to be able to dig more of it up out of the ground, effectively increasing the circulating supply. But I agree a currency where a person or organization is able to create new coins and add them to circulation on demand (what folks normally think of as inflationatary currencies) would have no chance to catch on.

For #4, again it depends on what we mean by overnight. Literally from one day to the next, no. In a matter of months to a year? I could potentially see it happening given the right set of circumstances. Given the design of the currency I don't think Ether is an effective substitute for bitcoin but in January who would have guessed how rapidly it would grow as a proportion of the overall value of cryptocurrencies?



(Fair disclosure, this is a repost of a chart from another bitcoin thread. Currencies selected are those which I either know are currently being used to send payments between individuals, or have the goal of capturing that market niche (so no ripple, siacoin, bitshares, steem, etc)

WhiteTrashCash

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Re: Bitcoin value in 2027
« Reply #25 on: July 28, 2017, 12:48:36 PM »
What were we talking about again?

a financial instrument which eliminates the middle person/party, enables a more seamless transfer of value, and can liberate the citizens of a corrupt country (ie. venezuela), etc.

what were you comparing again?

I was comparing it to the last time this sort of situation happened. I could have compared it to the Tulip Mania of 1636-1637, but I figured that was less likely to be familiar to the kids buying pretend money on the internet.

talltexan

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Re: Bitcoin value in 2027
« Reply #26 on: July 28, 2017, 01:21:21 PM »
What confuses me about bitcoin is:

1. It's meant to reduce transaction costs, but
2, the rapid appreciation we've seen over the past year and a half means that people should be reluctant to give it away at any price.

So how are we going to use it for transactions?

lifeanon269

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Re: Bitcoin value in 2027
« Reply #27 on: July 28, 2017, 01:22:20 PM »
Completely agree with you on points #1 and #2.

For #3 it depends on the specific definition of deflationary used. I think a successful currency could probably still incorporate a small ongoing growth of the coin supply indefinitely. After all even if you look at gold, people continue to be able to dig more of it up out of the ground, effectively increasing the circulating supply. But I agree a currency where a person or organization is able to create new coins and add them to circulation on demand (what folks normally think of as inflationatary currencies) would have no chance to catch on.

For #4, again it depends on what we mean by overnight. Literally from one day to the next, no. In a matter of months to a year? I could potentially see it happening given the right set of circumstances. Given the design of the currency I don't think Ether is an effective substitute for bitcoin but in January who would have guessed how rapidly it would grow as a proportion of the overall value of cryptocurrencies?



(Fair disclosure, this is a repost of a chart from another bitcoin thread. Currencies selected are those which I either know are currently being used to send payments between individuals, or have the goal of capturing that market niche (so no ripple, siacoin, bitshares, steem, etc)

The problem with a slow ongoing supply increase in a currency is that over time, once the currency is widely adopted and demand begins to taper, then that slow ongoing growth in the currency ends up becoming not much more different than the long term inflation that we have today that chews away at people's dollar value long term. Even just 1-2% is enough to eat away at someone's earnings. That's why in order for the currency to be a long term store of value, it needs to be deflationary. Maybe you could have the currency add supply that replaces currency that was lost, but I don't know how you'd ever estimate that and you can't have the supply fluctuate because that would lead to manipulation. It needs to be hard coded and static.

I think that chart is a little misleading because it is based on percentages in a market that has overall seen massive growth over that time period. During that same time frame, bitcoin's market capitalization about quadrupled from $12billion to about $45 billion, but you can't tell that from looking at the chart. The fact that other currencies have done the same only shows how new the market is, not how easy it would be for another currency to overtake Bitcoin in the long run.

In other words, alt-coins are effectively racing against the clock to beat bitcoin. The higher bitcoin's market cap becomes, the more difficult it would be for any alt-currency to duplicate the look of that chart. If bitcoin reaches $200 billion, it just becomes that much more difficult. Also, a market cap of $200 billion will have deeply entrenched businesses invested in such a market that will likely not want to see a competitor coin.

maizeman

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Re: Bitcoin value in 2027
« Reply #28 on: July 28, 2017, 02:18:25 PM »
The problem with a slow ongoing supply increase in a currency is that over time, once the currency is widely adopted and demand begins to taper, then that slow ongoing growth in the currency ends up becoming not much more different than the long term inflation that we have today that chews away at people's dollar value long term. Even just 1-2% is enough to eat away at someone's earnings. That's why in order for the currency to be a long term store of value, it needs to be deflationary. Maybe you could have the currency add supply that replaces currency that was lost, but I don't know how you'd ever estimate that and you can't have the supply fluctuate because that would lead to manipulation. It needs to be hard coded and static.

Well let's go back to the example of gold. Estimates suggest something like 170,000 tons of gold have been mined in the history of human civilization. In 2015, ~3,200 tons of new gold was pulled out of the earth. That's ~1.8% growth in the total gold supply per year. Does that make gold a poor store of value?

Quote
I think that chart is a little misleading because it is based on percentages in a market that has overall seen massive growth over that time period. During that same time frame, bitcoin's market capitalization about quadrupled from $12billion to about $45 billion, but you can't tell that from looking at the chart. The fact that other currencies have done the same only shows how new the market is, not how easy it would be for another currency to overtake Bitcoin in the long run.

I agree this way of visualizing the data means that people don't see the overall growth of the cryptocurrency market, but that's kind of the point. There's a fair bit of correlation in fluctuations of value across all the different cryptocurrencies. If the price of every cryptocurrency drops by 50%, or the price of every cryptocurrency triples, that doesn't have any effect, positive or negative, on the market dominance of bitcoin.

By taking the overall fluctuations in the value of cryptocurrencies out of the picture, it is easier to see how much the relative sizes of different currencies can change over different timescales, which is the more relevant piece of information if we're trying to speculate about what the minimum amount of time it would take for an altcoin to surpass bitcoin might be.

effigy98

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Re: Bitcoin value in 2027
« Reply #29 on: July 28, 2017, 04:00:28 PM »
I have limited downside on my investment (to zero) and a crazy potential upside (100k+). The other advantage is it is uncorrelated to all my other assets (stocks, bonds, cash, gold, real estate) which gives a boost to the buy low, sell high re balancing I already do. I believe the people on this board are much more technical then the general public and even here it shows how there is a great divide between people that understand the technology and possibilities and those who do not. I observed the same exact push back in investments when the internet was starting to take hold. Most did not understand it and ignored it as an investment and they REALLY missed out on a lot of opportunities (probably why parts of society have an opioid crisis because many refused to retrain and/or invest). When the general public is no longer skeptical, it is possible there will be a massive boost in bitcoin. I do not want to miss that. I personally am afraid (100x over) of missing out on the potential massive wealth transfer that may happen then my small investment going to zero. I would pretty much hate myself and probably become addicted to opiates and live in a tent on a Seattle sidewalk.

lifeanon269

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Re: Bitcoin value in 2027
« Reply #30 on: July 28, 2017, 04:20:16 PM »
Well let's go back to the example of gold. Estimates suggest something like 170,000 tons of gold have been mined in the history of human civilization. In 2015, ~3,200 tons of new gold was pulled out of the earth. That's ~1.8% growth in the total gold supply per year. Does that make gold a poor store of value?

I agree this way of visualizing the data means that people don't see the overall growth of the cryptocurrency market, but that's kind of the point. There's a fair bit of correlation in fluctuations of value across all the different cryptocurrencies. If the price of every cryptocurrency drops by 50%, or the price of every cryptocurrency triples, that doesn't have any effect, positive or negative, on the market dominance of bitcoin.

By taking the overall fluctuations in the value of cryptocurrencies out of the picture, it is easier to see how much the relative sizes of different currencies can change over different timescales, which is the more relevant piece of information if we're trying to speculate about what the minimum amount of time it would take for an altcoin to surpass bitcoin might be.

Regarding gold, true, but the demand for gold has far out paced supply. That is what has driven the price for gold up, demand not its restricted supply. I'm not disagreeing that in a market such as that, you'd have a good store of value at hand. Likewise with Bitcoin at the moment. The bitcoin supply grew by about 6.5% over the last year (far greater than gold's), but because demand has far out paced the supply growth, we've seen huge increases in price. But, none of this paints the whole picture for both gold or bitcoin. The problem is that crypto-currencies have no theorectical maximum to the number of newly "minted" coins that could be created while there only exists so much gold in the world. So the concern that I was getting at is where you'd have a point in time where demand stagnates while supply continues to grow even if it is at a slow pace. That's where you'd end up having an inflationary currency at hand. Sure, that likely wouldn't happen with crypto-currency until we're long dead, but it is something that absolutely would need to be hard-coded into the currency from the beginning to ensure that no manipulation can occur down the road. That's why bitcoin is designed the way it is.

As far as the chart goes, I disagree. Ignoring the actual values of the market caps of each currency and only focusing on the percentages paints the wrong picture. Let me explain by bringing the extremes into play using two scenarios:

Scenario #1:
 Currency A has a market capitalization of $2 million and grew 20% YTD
 Currency B has a market capitalization of $1 million and grew 50% YTD

Scenario #2:
 Currency A has a market capitalization of $2 trillion and grew by 20% YTD
 Currency B has a market capitalization of $1 trillion and grew by 50% YTD


In scenario #1, you have an extremely early market that has yet to see much investment. In this scenario it could easily be determined that currency B could have a high probability of surpassing currency A and currency A has a high chance that it might not even exist if competition from currency B stays firm. In this scenario, there is no telling where the market will go in the future and either currency could exist or not.

In scenario #2, you have a well establish market with huge amounts of investments that have taken place. The maturity of the marketplace is well establish at this point and businesses, governments and individuals have significant investments in both currencies. Even though currency B has made tremendous gains, in this scenario, the likely outcome is that both currencies A and B will likely coexist together. Currency A, even if it doesn't stay the leader, it will still continue to have an existence in the market place and at a market cap of $2 trillion, it wouldn't be going anywhere any time soon.

A chart like yours would display both scenarios the same even though the true analysis of their markets are completely different.

By using these examples at the extremes, it helps illustrate my point. The point is that the chart is misleading with regard to the current and future crypto-currency markets. We're certainly beyond scenario #1, but we're still quite a ways off from scenario #2. However, the closer and closer we get to scenario #2 and further we get from #1, the harder it will be for any other currency to not just surpass bitcoin, but to cause bitcoin to drop from the market all together. Like I said, I firmly believe there is room in the crypto-currency market for more than one currency. The point I want to make though is that as Bitcoin gets closer and closer to scenario #2, that more likely it will be here to stay regardless of what other crypto-currencies come along.
« Last Edit: July 28, 2017, 04:21:59 PM by lifeanon269 »

maizeman

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Re: Bitcoin value in 2027
« Reply #31 on: July 28, 2017, 06:19:10 PM »
In both scenario 1 and scenario 2, currency B will surpass currency A in 3 years and four months (assuming linear growth) or in 3 years and about one month (assuming exponential growth). If anything I'd have a lot more faith that a currency that could generate $500 billion in growth in a single year is likely to ultimately dominate the marketplace than a currency generating $500k in growth in a single year.

I guess I don't follow the reasoning, but that's okay. It sure will be interesting to watch and see how this all plays out over the next few years.

What causes the demand for bitcoin?  I thought that the demand curve is determined by marginal utility of a good.  Well, what is the marginal utility of an additional bitcoin these days?

Demand for currencies are determined by the total size of the currency, the total volume of transactions occurring in the currency and the velocity of money for the currency. The three month velocity of money for bitcoin is ~1.5 (the average bitcoin changes hands about 1.5 times in three months) and the bitcoin market cap is currently about $45 billion (round numbers for easier math later).

V = (P*T)/M

(Where V is the velocity of money, M is the money supply, Price is the average size of a transaction and T is the number of transactions, so P*T = transaction volume).

In this case V*M = $67.5B, which is the amount of commerce bitcoin would need each three months to support its current valuation just from use as a currency (So $270B in bitcoin payments per year.)

I don't think we're at $270B in transactions per year yet. If not, the gap in price between what is justified based on  the transaction volume of bitcoin and the current price of bitcoin is the part of the current price that is driven by speculation rather than demand.

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Re: Bitcoin value in 2027
« Reply #32 on: July 28, 2017, 07:40:39 PM »
I do think there are several truths that can be drawn that many would likely agree to though.

1) Crypto-currencies are here to stay.
2) While there will likely be many alternatives that become useful in their own right, I think an open decentralized community driven currency is the currency that will rule them all.
3) For the currency to be a good store of value, it must be deflationary in nature (unlike the USD).
4) Billion dollar marketplaces don't appear out of nowhere overnight.

1) I don't agree. Could they, sure, will they, I can't say for sure. These crypto currencies could also be replaced by a government backed alternative with the same transaction benefits. If the Fed and ECB agreed on their own system... every bank will adopt that system, and then for the sake of ease of doing business businesses will adopt that system.

2&4) Hard truth: The open decentralized community is a speck on the radar. In comparison to the world financial markets bitcoin is a grain of sand in a desert. Sure, it gets used on the black markets, it gets traded among speculators, some businesses accept it(and it normally makes up <1% of revenues), etc. It's worth billions of dollars, but trillions of dollars pass through the world financial markets. Will Morgan Stanley ever borrow billions of dollar worth of securities from Vanguard and use bitcoin as the payment or collateral? I don't see it. They will likely continue to use USD, t-bills, and repo agreements.

3) Bitcoin is the farthest thing from a stable store of value. It's extremely volatile which is not something you want in a currency. Deflation is also not something to be happy about. Deflation can be a lot worse for economies than inflation.


I need for someone to explain to me the intrinsic value of bitcoin. We like to say something is worth what someone is willing to pay for it. That's great when there are speculators driving up the price. What if they weren't there. What is the real value of bitcoin? Even without speculators a stock has ownership and voting rights, assets, revenues, maybe dividends. It is worth something to you even if there are no buyers today. Look at private company stock, it doesn't trade on the open markets, but people still invest because they want ownership. Bonds pay you income. Commodities have an intrinsic value. Even if the speculators leave the gold market. Even if gold jewelry is out of fashion. It still has uses in electronics and aerospace. The examples go on...

What is the intrinsic value of bitcoin. If there was zero speculation, why would I want to own it?

lifeanon269

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Re: Bitcoin value in 2027
« Reply #33 on: July 28, 2017, 07:45:23 PM »
In both scenario 1 and scenario 2, currency B will surpass currency A in 3 years and four months (assuming linear growth) or in 3 years and about one month (assuming exponential growth). If anything I'd have a lot more faith that a currency that could generate $500 billion in growth in a single year is likely to ultimately dominate the marketplace than a currency generating $500k in growth in a single year.

I guess I don't follow the reasoning, but that's okay. It sure will be interesting to watch and see how this all plays out over the next few years.

You're purely looking at the percentages and not looking at what the numbers mean (from a market health perspective) which is why I tried to explain it by going with two extremes. I'm not sure why you're comparing $500 billion in growth to $500k in growth. Was there a reason for that? The point of the thought experiment was that in scenario #2, even though you have the same growth percentage rates scenario #1, the big difference is you have a mature market for both currencies in scenario #2. Currency A grew by $400 billion YTD and currency B grew by $500 billion YTD. The point wasn't to extrapolate those numbers out into the future. The point I was making was that for people who invested in currency A with scenario #2, they're still probably pretty happy with their investment and they would be very happy with the way that currency turned out. No one in their right mind would ever consider calling currency A a failure at that point. However, investors of currency A in scenario #1 are probably worried and there would be a great deal of speculation going on for both currencies. If either currency failed in scenario #1, then they're probably be forgotten about 10 years later. Meanwhile, the currencies in scenario #2 would be in our history books.

This goes to show that for other currencies to have a chance at competing against Bitcoin, they're window of opportunity slips away with every passing year. It gets even worse for alt-coins when you take the current crop of alt-coins and suggest that any competitor to bitcoin in the future would likely have to already be invented today and be in the markets. The reason for this is because of Bitcoin's first to market head start with trust and capitalization. It would be extremely difficult for a new coin to gain trust in the market place first before even attempting to take market share, all the while bitcoin is increasing its market cap every day. This is what the author of the article I linked to mentioned when talking about how these markets don't play out inside bubbles. Not only do alt-currencies have to compete against time (trust and market cap race), but they're doing so against the competition of an already established bitcoin.


Demand for currencies are determined by the total size of the currency, the total volume of transactions occurring in the currency and the velocity of money for the currency. The three month velocity of money for bitcoin is ~1.5 (the average bitcoin changes hands about 1.5 times in three months) and the bitcoin market cap is currently about $45 billion (round numbers for easier math later).

V = (P*T)/M

(Where V is the velocity of money, M is the money supply, Price is the average size of a transaction and T is the number of transactions, so P*T = transaction volume).

In this case V*M = $67.5B, which is the amount of commerce bitcoin would need each three months to support its current valuation just from use as a currency (So $270B in bitcoin payments per year.)

I don't think we're at $270B in transactions per year yet. If not, the gap in price between what is justified based on  the transaction volume of bitcoin and the current price of bitcoin is the part of the current price that is driven by speculation rather than demand.

I don't think it is fair to give a valuation of bitcoin based on this formula going back an entire year however. At best, maybe you could go back 3 months. But, even then it would need a big giant asterix next to it considering the fact that since the start of the year the average block size has remained higher than 90% of its maximum 1MB size. This has greatly limited the transactions that could've taken place during this time frame. However, that shouldn't discount its future valuation so long as an increase in the transaction rate is in sight. That's why I feel it is a better demand analysis (albeit speculative) to look at what the future transaction growth of the market looks like compared to what today's is. Ultimately it isn't so much as making a guess about the future, but more about analyzing the recent trend on an ongoing basis to ensure that the currency is receiving continued transaction growth. So you could use that formula, but maybe instead of trying to use it historically, but use it on a monthly basis to analyze the trend it as taking on a month to month time frame.

Also, I just want to be clear I'm not trying to be critcal of you specifically. I'm just enjoying the critical thinking and discussion about the subject at hand. It is exciting stuff no matter how it all unfolds.
« Last Edit: July 28, 2017, 07:51:38 PM by lifeanon269 »

phil22

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Re: Bitcoin value in 2027
« Reply #34 on: July 28, 2017, 07:49:49 PM »
On the topic of inflation: In a recession wouldn't the value be expected go down?

in a recession i would expect the value of stocks and real estate to fall and bonds, bitcoin, and gold to rise.

What confuses me about bitcoin is:

1. It's meant to reduce transaction costs, but
2, the rapid appreciation we've seen over the past year and a half means that people should be reluctant to give it away at any price.

So how are we going to use it for transactions?

bitcoin is not doing well wrt transaction costs and ether is apparently taking advantage of that.  transaction costs are unfortunately affected by market forces themselves, so as more outstanding transactions pile up the transaction costs will increase.  but this means that if transaction costs are high then by definition plenty of transactions are occurring.

I was comparing it to the last time this sort of situation happened. I could have compared it to the Tulip Mania of 1636-1637, but I figured that was less likely to be familiar to the kids buying pretend money on the internet.

all money is "pretend" by definition.  you are free to short bitcoin if that's what you think is happening :)

Can someone explain why Bitcoin is better than Ether or vice versa?

they are trying to accomplish different goals.  bitcoin was an attempt to create a simple digital asset.  ethereum builds on the whole distributed ledger idea to allow fully programmable software running on a blockchain.

units of bitcoin were designed to be an (eventually) deflationary asset, and units of ether were designed to allow the computation to occur (not to be kept as value themselves).  bitcoin seems at the moment to be a safer bet for long-term value simply because of the deflationary behavior.

What causes the demand for bitcoin?

the same thing that causes demand for gold, i'd guess.

The problem is that crypto-currencies have no theorectical maximum to the number of newly "minted" coins that could be created while there only exists so much gold in the world.

a million different cryptocurrencies can (and will) be created but they won't have any physical infrastructure, miners, developers, etc., to actually make them secure and most importantly buyers to actually give them value.

there is a known limit to the amount of bitcoin that will be created.  there's only so much gold in the world but the problem is that no one knows how much or where it is.

1) I don't agree. Could they, sure, will they, I can't say for sure. These crypto currencies could also be replaced by a government backed alternative with the same transaction benefits. If the Fed and ECB agreed on their own system... every bank will adopt that system, and then for the sake of ease of doing business businesses will adopt that system.

cryptocurrencies are just software running on computers.  anyone can download and run them.  the government can do what it wants but cryptocurrencies can't be un-invented.  the cat's out of the bag.

3) Bitcoin is the farthest thing from a stable store of value. It's extremely volatile which is not something you want in a currency. Deflation is also not something to be happy about. Deflation can be a lot worse for economies than inflation.

right, deflation leads to value but not stability.  the point of point 3 was value.

What is the intrinsic value of bitcoin. If there was zero speculation, why would I want to own it?

there's no such thing as intrinsic value.  something only has value if someone is willing to pay for it.

maizeman

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Re: Bitcoin value in 2027
« Reply #35 on: July 28, 2017, 08:30:23 PM »
Lifeanon, I think we're describing the same strengths in bitcoin relative to other currencies, I'm just calling them a first mover advantage and you're calling them something else. The comic I pulled my user icon from sums this up well.

WRT whether the rate of change in the proportion of total cryptocurrency market cap accounted for bit bitcoin from month to month is a better predictor of how likely bitcoin is to lose those advantages to some other cryptocurrency or whether the absolute value bitcoin also needs to be factored in, I am afraid we will have to agree to disagree and just wait to see how it all shakes out.*

For the velocity of money calculation, I agree with you, given how much the price of bitcoin has increased in the last year, talking about annual numbers is unfair. The velocity of money for bitcoin is calculated looking back over the last 90 days, but it's actually been reasonably stable for the last year or so. So a better way to put the metric would be to say that the current price of bitcoin would be justified by the underlying demand if bitcoin is currently is doing ~$22B in payments/month. If it's not, the difference between the price justified by the underlying demand and the current price is the amount of speculation in the market. Some of that speculation may be super long term (imagining bitcoin may go to $10k or $100k/coin at some point), but some of it may be extremely short term speculation based on the belief that total transaction volume may go up a lot once the 1MB bottleneck on transactions gets resolved and transaction fees drop back down.

*But here's what the chart would look like the way you think is better to visualize the data.

« Last Edit: July 28, 2017, 08:43:01 PM by maizeman »

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Re: Bitcoin value in 2027
« Reply #36 on: July 28, 2017, 09:29:48 PM »
What causes the demand for bitcoin?

the same thing that causes demand for gold, i'd guess.

Gold is formed into jewelry because it doesn't tarnish.  It conducts and is used in an awful lot of electronics.  It's even used as a cure for arthritis.  There may be some speculation involved in the gold markets, but there is a reason for value with gold.




there's no such thing as intrinsic value.  something only has value if someone is willing to pay for it.

That's kinda a semantic argument that misses the point.  There has to be a motive to pay money for something that drives the value of something.  Usually that involves utility, not just speculation.

waltworks

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Re: Bitcoin value in 2027
« Reply #37 on: July 28, 2017, 09:53:16 PM »
I voted zero, because I don't think that it's structurally well set up to be used as a *currency* (especially due to the inherently deflationary design). It could be a gold-like store of value, though, so it's possible that it's eventually worth quite a bit. I see that as inherently unlikely too, though, because that's the sort of store of value that mostly appeals (very generally speaking) to the paranoid/old/senile watching Ron Paul tell them to buy gold during their favorite Fox show. That demographic is never going to go for fake electronic money, and the folks who might are currently too young/not senile to buy in either, outside of people like me who read too much Neal Stephenson.

TL;DR - there are not yet enough paranoid nerds out there to make it work.

I have been wrong before, but I'll stick with stocks and RE, rather than currency speculation (electronic or not).

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Re: Bitcoin value in 2027
« Reply #38 on: July 29, 2017, 07:26:58 AM »
1) I don't agree. Could they, sure, will they, I can't say for sure. These crypto currencies could also be replaced by a government backed alternative with the same transaction benefits. If the Fed and ECB agreed on their own system... every bank will adopt that system, and then for the sake of ease of doing business businesses will adopt that system.

cryptocurrencies are just software running on computers.  anyone can download and run them.  the government can do what it wants but cryptocurrencies can't be un-invented.  the cat's out of the bag.

Never said it would be un-invented. People on the black market can use it to their hearts content, but if legitimate businesses all decide to use something different then bitcoin will never achieve scale. It would always be the small, and in that scenario its value would be closer to $0 than $10k.

3) Bitcoin is the farthest thing from a stable store of value. It's extremely volatile which is not something you want in a currency. Deflation is also not something to be happy about. Deflation can be a lot worse for economies than inflation.

right, deflation leads to value but not stability.  the point of point 3 was value.

What is the intrinsic value of bitcoin. If there was zero speculation, why would I want to own it?

there's no such thing as intrinsic value.  something only has value if someone is willing to pay for it.

What you are describing is the "greater fool theory." "The greater fool theory states that the price of an object is determined not by its intrinsic value, but rather by irrational beliefs and expectations of market participants.[1] A price can be justified by a rational buyer under the belief that another party is willing to pay an even higher price." source: https://en.wikipedia.org/wiki/Greater_fool_theory

I added the bold.

Bitcoin might not have an intrinsic value, but other assets do. If I own a bond that is paying me $500/month for 30 years it has intrinsic value. Even if the market says it is only worth $1, to me it is still worth $500/month for 30 years, so I would just keep it in that case. We can argue about what the intrinsic value is, financial analysts have created many models for doing just that, but we can agree the bond is worth something to me even if no one is willing to buy it. If no one is willing to buy a bitcoin it sounds like it is worth $0.

If you buy something today with the sole intention of selling it in the future at a higher price that is speculation. If there isn't a value or if the market price grows in a way that isn't justified by the value that is how you feed into that greater fool theory which causes asset bubbles. That is why people paid the equivalent of $500k(today's price) in gold for 1 tulip bulb in the 1630s. That is why people bought tech stocks with no revenue in the 1990s. That is why people paid thousands of dollars for beanie babies. No one in their right mind today would pay those prices for flowers, websites, or stuffed animals, but people rationalized it back then.

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all money is "pretend" by definition.  you are free to short bitcoin if that's what you think is happening :)

Sure, but some currencies have more legitimacy than others.

A USD is "Legal Tender for all debts, public and private." Even if everyone decided to start using bitcoin tomorrow banks are accepting dollars, and businesses can pay back their debts to banks using dollars. Therefore, businesses have an incentive to accept my dollars so I can keep buying the things I need. My mortgage is in dollars and the bank will accept my dollars as repayment. I like having a place to live so dollars have "value" to me. If we experience massive inflation or deflation dollars might have more or less value for purchases, but they will always have a fixed value in my mind when it comes to my mortgage. Apply this logic to more than 300 million Americans plus many foreign governments and corporations and the dollar has a very cemented value. 

Currently, bitcoin has some usefulness and a whole lot of speculation. I prefer my assets operate the other way around.
« Last Edit: July 29, 2017, 07:31:44 AM by Indexer »

maizeman

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Re: Bitcoin value in 2027
« Reply #39 on: July 29, 2017, 10:03:03 AM »
Bitcoin keeps track of who has how many bitcoins and who is transferring what to whom. That's basically all it does.

Ethereum is designed as a platform that allows people to develop lots of other interesting blockchain apps on top of. To do this, it actually includes whole programming languages which can be used to write executable programs that are incorporated into its own blockchain. This lets you do cool stuff like "smart contracts" which are entered into the blockchain and will execute automatically based preprogrammed logic or triggering events. It also lets you use the ethereum network to develop and sell your own set of "tokens" that could represent services from a company you are developing, or even ownership in a company with voting rights and automatic payment of dividends to the stockholders. The to do last two options are what have made it so easy to create ICOs (initial coin offerings), although the last one would likely violate SEC rules, so I would recommend neither creating or participating in an ICO where the tokens represent ownership in a corporation if you live in the USA.

So TL;DR of the paragraph above Ethereum lets you do a lot of cool stuff bitcoin doesn't, because you can embed complex code and logic in the blockchain instead of only "address X pays $A bitcoins to address Y."

The downside of allowing the execution of complex code is that it creates a lot more potential for bugs as well as a lot more attack surface for malicious actors. The most famous example of this is what happened to the DAO. The DAO was an autonomous company  which was run entirely using code embedded into the Ethereum blockchain. No human being in charge who could overrule its decisions. People were so excited about the idea that they invested $150M in the ICO to get the company started. ...then someone found a bug that let them steal $50M of that money.

So TL;DR of this entire wall of text:

Bitcoin = Small feature set, lower risk for bugs/hacking.
Ethereum = Can do a lot cool things, higher risk of unexpected code side effects as a result.

Oh also, transactions in Ethereum take 12-18 15-18 seconds vs 10 minutes in bitcoin.
« Last Edit: July 29, 2017, 10:18:05 AM by maizeman »

phil22

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Re: Bitcoin value in 2027
« Reply #40 on: July 29, 2017, 10:11:03 AM »
What causes the demand for bitcoin?

the same thing that causes demand for gold, i'd guess.

Gold is formed into jewelry because it doesn't tarnish.  It conducts and is used in an awful lot of electronics.  It's even used as a cure for arthritis.  There may be some speculation involved in the gold markets, but there is a reason for value with gold.

gold doesn't tarnish and exists in limited quantities, making it a good store of value.  the same goes for bitcoin.  bitcoin has additional utility in that it comes with a 24/7 global payment network and a hundred dollars' worth of bitcoin is as easy to store and transport as a billion dollars' worth.  i can send bitcoin to anyone on the planet at any time, and they don't need to do anything to receive it.  i can even send money to someone's brain wallet that doesn't physically exist anywhere.  that's the utility of a unit of bitcoin.


there's no such thing as intrinsic value.  something only has value if someone is willing to pay for it.

That's kinda a semantic argument that misses the point.  There has to be a motive to pay money for something that drives the value of something.  Usually that involves utility, not just speculation.

agreed, a share of stock is backed (somewhat) by the company itself and its employees.  likewise, a unit of bitcoin is backed by the global bitcoin community: the 100% uptime 24/7 payment network, mining and internet data centers distributed over the globe, many individual developers and companies monitoring the security aspects of the protocol and building out bitcoin products like exchanges, wallets, and payment solutions.

but the value of a share of stock is heavily based on judgement, not "intrinsic value."  the judgement buyers make is that future earnings will continue and probably increase, and that the company is well-positioned among its competitors.  if a company reports earnings below expectations and the stock price falls 10% in a day, that has nothing to do with the so-called "intrinsic value" of that share.  that company has the same assets, the same employees, and the same products as the day before yet the price fell because people aren't willing to pay for the share what they were willing to pay for it yesterday.  similarly, if a company goes out of business you are not refunded the full price of the shares you own.  when you buy a share of stock you are putting faith in the future buyer to come along and buy that share for a higher price.  the same goes with bitcoin.  "intrinsic value" has little to do with either.

maizeman

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Re: Bitcoin value in 2027
« Reply #41 on: July 29, 2017, 10:56:56 AM »
Ah that's simpler:

  • The difference in the time to settle transactions (10 minutes BTC vs 15 seconds ETH).
  • Bitcoin transaction fees are currently ~$1.50/transaction, Ether transaction fees are ~$0.08/transaction at the moment.
  • Bitcoin has a cap on the total number of coins that will ever be created, Ether will continue to be generated forever.
  • Bitcoin mining happens mostly on custom hardware right now (ASICs). Ether can still be mined effectively on GPUs, and is designed to require more and more memory to mine effectively as time goes on, which acts as a deterrent against the development of custom hardware optimized for mining Ether, but also means that over time a lot of GPUs that used to be able to mine Ether lose the ability as the size of the DAG file grows.
  • The developers of Ethereum specifically don't want Ether to be considered a currency, but instead one of the moving parts necessary to make smart contracts work. As a result, they're more willing to make changes to their protocol (DAO hard fork, PoW vs PoS, changing block times and the rate at which new currency is issued) which makes it harder to forecast what Ether/Ethereum will look like five or ten years from now.

Edit: But I'm certainly not an expert on Ether/Ethereum so please other folks speak up if I've missed other fundamental differences.
« Last Edit: July 29, 2017, 11:04:10 AM by maizeman »

kenaces

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Re: Bitcoin value in 2027
« Reply #42 on: July 29, 2017, 12:38:08 PM »
I didn't vote because I really have no clue where BTC is in 10 years and I really doubt anyone does.

Does anyone agree that BTC is just another way to be long china?

Someone made argument that BTC is way to diversify because it is uncorrelated to stock market.  I don't think we really know if that is true with only 10 years of history, during which BTC has been growing at rate that even BTC bulls don't think will last another 10 years right?

phil22

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Re: Bitcoin value in 2027
« Reply #43 on: July 30, 2017, 10:06:21 PM »
i can even send money to someone's brain wallet that doesn't physically exist anywhere

Say what now?

I still haven't received any bitcoins in my brain wallet!  Please try sending again!

yes, you read that right.  and i haven't sent any bitcoin your way :)

So on the one hand, you have Berkshire Hathaway, which has an intrinsic value of lets say at least book value, or 80%, or 60%, or even 40% of book value if you are concerned.  Which serious business men would buy if it were trading for less than that.  And on the other hand, you have a bitcoin, which currently has a market value.  And underlying that is what?

correct. bitcoins are virtual assets with no intrinsic monetary value.  with that said, a bitcoin is not "free" to create/mine.  you cannot just decide to create X number of bitcoins without any more input that that.  the electricity, mining and network hardware, and internet connection for mining are not free, and in fact the value of the created bitcoins are barely more than those costs.

owning a bitcoin doesn't entitle you to that input mining cost but a higher mining cost does mean the currency is more secure and safe from attack and downtime.  so from that perspective the "intrinsic value" of a bitcoin is non-monetary: security through cryptography and mining consensus.  if you own a bitcoin you own the assurance of its security.  cryptocurrencies without a lot of mining power do not come with that intrinsic value and are worthless.

for whatever reason, people have been paying to mine or buy units of cryptocurrencies for 8 years now.  for bitcoin in 2027 it looks like the price will depend largely on the competition within the crypto space between bitcoin and rival currencies.

larmando

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Re: Bitcoin value in 2027
« Reply #44 on: August 03, 2017, 09:49:09 AM »
Note that it wouldn't be the first time in history people put work and or value in something that they think has value but turns out not to. Not saying it *will* happen, but it can.

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OneCoolCat

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Re: Bitcoin value in 2027
« Reply #45 on: August 03, 2017, 10:55:31 AM »
Note that it wouldn't be the first time in history people put work and or value in something that they think has value but turns out not to. Not saying it *will* happen, but it can.

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It wouldn't be the first time in history when people think something is overvalued and it turns out differently.

thenextguy

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Re: Bitcoin value in 2027
« Reply #46 on: August 03, 2017, 11:06:49 AM »
I didn't vote because I really have no clue where BTC is in 10 years and I really doubt anyone does.

You can still vote. Nobody is going to hold you to it in 2027.

WhiteTrashCash

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Re: Bitcoin value in 2027
« Reply #47 on: August 03, 2017, 11:10:41 AM »
Note that it wouldn't be the first time in history people put work and or value in something that they think has value but turns out not to. Not saying it *will* happen, but it can.

Sent from my Pixel using Tapatalk

It wouldn't be the first time in history when people think something is overvalued and it turns out differently.

You know what's a lot of fun? Playing slot machines at a casino. I wouldn't call that good financial advice, though.

thenextguy

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Re: Bitcoin value in 2027
« Reply #48 on: August 03, 2017, 11:30:43 AM »
What confuses me about bitcoin is:

1. It's meant to reduce transaction costs, but
2, the rapid appreciation we've seen over the past year and a half means that people should be reluctant to give it away at any price.

So how are we going to use it for transactions?

This doesn't make sense. Any funds you spend could be used to purchase Bitcoin. So the fact that Bitcoin has appreciated greatly over the last year, shouldn't preclude people from spending it. If it did, they wouldn't spend any money they have at all because it could be used to purchase Bitcoin instead.

phil22

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Re: Bitcoin value in 2027
« Reply #49 on: August 03, 2017, 06:06:28 PM »
yes there are block explorer and similar sites that have some of that data:

https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html

the table toward the top shows 63% of issued bitcoins (~10.4M bitcoin) are held in 16,539 addresses (0.1% of all addresses) with 100+ bitcoin apiece.  i suspect most of those addresses are (early) miners, current miners, and early adopters.

the slightly smaller addresses (1-100 bitcoin) account for 34% of all bitcoin and most are probably miners/speculators/hoarders/traders.

90% of addresses hold less than 0.1 bitcoin, and 59% hold less than 0.001 bitcoin, so a lot of wealth concentration is simply due to the fact that addresses are meant to be used only once and many are empty, hold change, or hold "dust."

interesting stuff to browse.