Bitcoin Surges Past $400
blogs.wsj.com
blogs.wsj.com
1. However big is MMM, it's probably too small for the size of the bitcoin economy right now. Remember that if you are transacting in bitcoin, there is one party buying and the other one selling. So you are not rising the price to the moon.
2. The number of transactions has been growing again as of late. It's heating at the blockchain right now ( https://blockchain.info/charts/n-transactions ). With 1MB, bitcoin can support less than 300k transactions a day.
3. The total output volume is jumping to crazy levels ( https://blockchain.info/charts/output-volume?timespan=all&sh... ) only seen in bubbles.
4. I have a localbitcoins post. I usually get 1-2 requests per week. In the last few days, well, I really lost count.
5. Google trends is spiking: https://www.google.com/trends/explore#q=bitcoin But maybe this is happening because bitcoin price is rising, not the other way around?
6. If the price is rising fast, the supply will dry because nobody wants to sell an appreciating asset. If an asset is appreciating, it'll drive demand. Which will drive the price higher.
7. Media will start talking about it. It'll drive more people. It'll drive the price more.
8. We'll see if the new fancy infrastructure that bitcoin got is rock-solid.
9. If you don't own the keys, you don't own the bitcoins.
10. It's nice, but only if you bought the dip and sold before the crash.
That's very hard to quantify, but there might well be a feedback loop involving the media which leads to a price increase caused by MMM Global.
The following Google Trends data for South Africa and the Philippines shows a nice correlation between searches for bitcoin and MMM Global: http://www.google.com/trends/explore?hl=en-US&geo=ZA&cmpt=q&...
The thing is, transacting with bitcoin will not raise the price exponentially. BTC is already being exchanged in many millions of dollars a day.
So unless MMM turns out to be a billion-dollar ponzi scheme I don't really think it'll affect the BTC price much.
The actual transaction volume of bitcoin is not even that large. The total market cap is 6.5 billion and only because of the recent price surge.
While I don't know much about this incarnation of MMM, the original MMM ponzi scheme in the early 90s is thought to have taken in about $10bn (not adjusted for inflation).
Looks like Sergei is persistant with these pyramid schemes;
In January 2011, Mavrodi launched another pyramid scheme
called MMM-2011, asking investors to buy so-called Mavro
currency units. He frankly described it as a pyramid,
adding "It is a naked scheme, nothing more ... People
interact with each other and give each other money. For
no reason!"[13] Mavrodi said that his goal with MMM-2011
is to destroy the current financial system, which he
considers unfair, which would allow something new to take
its place. MMM-2011 was able to function openly as Ponzi
schemes and financial pyramids are not illegal under
Russian law.[14] In May 2012 he froze the operation and
announced that there would be no more payouts.[15]
In 2011 he launched a similar scheme in India, called MMM
India, again stating clearly that the vehicle is a
pyramid.[16] He has also launched MMM in China.[17] He
was reported to be trying to expand his operations into
Western Europe, Canada, and Latin America.[14] As of
September 2015 it had spread rapidly in South Africa with
a claimed 1% per day or 30% per month interest rate
scheme and warnings from both the South African and
Russian Communist Parties for people not to participate
in it.[18]
Active thread talking about Sergei's current scheme: https://www.reddit.com/r/Bitcoin/comments/3p4kuf/mmm_global_...
Much of the $1000 bubble is discussed in terms of mtgox and "willie", but the initial peak was triggered by another driver which was the first large wave of cryptolocker infections.
It goes without saying I'd stay well clear of bitcoin still though.
I've not read that before (and I was pretty active on bitcoinforums during the $1000 bubble). Got a link?
https://www.google.com/trends/explore#q=cryptolocker
Looks remarkably like the bitcoin price graph doesn't it?
http://www.reuters.com/article/2011/06/08/us-financial-bitco...
http://www.forbes.com/sites/timothylee/2013/04/11/an-illustr...
Then in a few months the 2 coins I kept were worth hundreds apiece.
Always the most important point. You need to hold your keys, and be the only person to do so (unencrypted).
As for the rest, they can be summarized into this simple advice: If you're getting in, DO NOT spend more than you can afford to lose. You'll regret going into debt more than you'll regret not making a twice as big profit.
"help staple correct horse ..."
From there, just store that seed somewhere secure and you can use that to generate your keys whenever you want, on any machine you want. Personally I keep my seed in two different safe-deposit boxes and one on (shameless plug) my own encrypted text app I made called Onions - http://onionsapp.github.io.
Hmm, really? Why? The ledger sets up its own private key as well.
So for a speculative trader, I dont e that holding keys if any more essential than physically holding goods is for physical commodities; you obviously have to account for trust/security of the entity serving as your agent/broker, but that's typical.
Now, holding the keys may be essential to realizing some of the benefits of bitcoin which drive is value to some users, but for people investing in bitcoin, that may be peripheral to the purpose.
https://en.wikipedia.org/wiki/Securities_Investor_Protection...
Not blanket protection, but enough to ask why such and such bitcoin exchange doesn't advertise their participation.
That's the point, though. You're looking at it as a speculative investment, and proceeding accordingly, which is good. The OP is admonishing people to not treat bitcoin like a standard bank account (which is all too easy to do), but rather in the same terms as you already do.
If someone steals my Schwab account contents for Schwab's servers, I can call on the government for help; and the stock market bookkeeping system has the technical ability restore my shares to me. If someone gets a copy of my wallet key, I've got no recourse unless (unlikely) someone can track down the obfuscated thief.
If someone steals your bitcoin from an exchange, you can call on the government for help, too. If the exchange itself is completely insolvent, that may not be effective recourse, and that risk is certainly greater for the kind of firms people have been dealing with in the bitcoin space, which often aren't held by their customers to the same standards that customers of similar services for commodities other than bitcoin would hold companies to.
That's my point: the lack of recourse isn't essential to bitcoin (yes, holding the keys is like holding cash, and not holding the keys is giving something up just like not holding cash is -- but we deal with other businesses with accounts denominated in national currencies without holding all the cash ourselves all the time, and have recourse available for losses.) The lack of accountability is because the firms people choose to do business with are, compared to the firms that people do other financial business with, shady fly-by-night operators.
Many times, other companies have had that happen, and there is all kinds of recourse. To the extent bitcoin companies are special, its because people participating in the bitcoin craze have been willing to entrust large amounts of value with companies that don't have the basic characteristics that would otherwise establish trustworthiness, or at least accountability.
The same features of BTC that serve as its advantage and, arguably, goal make it more difficult to offer basic protections that other fiscal infrastructures have had for decades.
Many see this capacity of the US Treasury to fabricate money from nowhere as the very sort of flaw that BTC's coin-generation process is intended to avoid, but that protection does not come without a price.
Sure, but whether that difference from "the same protection" is more or less protection depends on the number of people that $100 million is held on behalf of.
I suspect that at the moment it may be more difficult to find an insurer for a vault with that piece of paper, compared to a vault with $100m cash though :) but perhaps that'll change.
FDIC-style insurance is for when the security is breached, not if.
Bitcoin, on the other hand, is irrevocable and pseudo-anonymous. In July 2011 the owner of MyBitcoin.com web wallet allegedly walked away with 50,000 btc of customer funds. We know where those funds are. You can see them on any block explorer. But it is not possible to freeze or confiscate those funds. And we don't know what real world person or people have access to the keys controlling those funds. So what are you going to do?
MtGox went under with 850,000 btc of customer funds. Its creditors are currently fighting over the 200,000 btc that was found to still be in possession by the company. The other 650,000 btc? Who knows.
It's just a simple fact of reality. If you don't have physical control over the keys for that bitcoin, it is not your bitcoin. Some of us have learned that lesson the hard way.
That is just a limitation of the Bitcoin protocol. One could build a protocol where communities could agree to freeze (not accept) or greatly devalue those funds.
It wouldn't even have to be done in a way that was visible on the bitcoin network, they would just have to agree to not include transactions from whatever addresses.
A strong majority could probably refuse to acknowledge blocks including the blocked addresses, which would be a real freeze (rather than the hassle freeze obtained by not including the address in blocks produced by the conspiracy).
Of course, without strong consensus (and a real algorithm/protocol) such attempts will likely just result in fractured blockchains (basically the state at the moment, with many competing implementations of the same basic idea).
You'll need 100%, because if a single miner decided to include the transaction, then it is in!
If a single miner includes the transaction, a majority can just bypass that sole miner.
You do need 100% of something, but that something is just >50% of the miners.
Did you see a change in the type of customer?
A couple other points: mining is exploding as well with the global GHash rate / Difficulty accelerating. I have not calculated an exact correlation between price and compute but it could be an indicator of "real" moves in the currency.
The truest indicator is of course price-action. During last summer and into the fall, before Beijing implemented capital controls, when you observed the depth of book on orders on BW, you'd notice that the vast majority of orders were for even lots of ~0.0100BTC. This was indicative of algorithmic market making. Very few orders were above 100BTC. Now it's the exact opposite. Large orders with fast fills are common. I wish I had some real data and actual stats on the order book during the run-up ;( as I believe it would make a good indicator as to whether the current move is sustainable...
If you don't trust what csomar is saying, then you should just say that instead of saying they are lying AND doing it for X reasons. Otherwise, you are just coming across as illogical in your arguments.
I would also point out that blockchain technologies implement a particular type of trust. Bitcoin's blockchain trust delivers an identity mechanism (note I did not say it doesn't allow pseudo anonymous identity), a way to track a value for exchange between identities, and a means to deliver a standard format of information exchange comprised of contract via script, transaction with identities and op_return codes.
That you are here doubting a known trust mechanism through a biased statement, and based on its momentary exchange value to a fiat currency, makes me not trust you as well.
If the price is 314.44 they will push it to 316.88 because that is the number they like, and if they dictate that price it is like they have created their own luck. At least this is my philosophy dealing with Chinese and watching their buy patterns.
This sounds a lot like the kinds of claims that are routinely made in technical analysis for stocks. To the best of my knowledge, new claims can always be generated because humans are very good at imagining patterns in random data, but attempts afterwards to verify those theories uniformly fail. However stock brokers have found that it is very good for business to have customers who believe in technical analysis, because it is always easy to convince those customers to trade. Therefore lots of people get exposed to all sorts of technical analysis theories about "psychological support levels" and so on. But it doesn't actually work in reality.
We are not talking about a regular market.
I'm not sure what you mean by "real" here. Even if demand is created from questionable/fraudulent sources, the transactions are just as real as any others. That's not to say it's sustainable or even driven by rational behavior (it never really is). Any trend, bubble or not, is just that - a trend. There may be numerous factors driving it, and it's almost never a good idea to make trading decisions based on the trend itself (the few exceptions of traders should be very aware of the limitations and risks involved in such a strategy).
> We'll see if the new fancy infrastructure that bitcoin got is rock-solid.
Are you referring to Bitcoin XT / BIP 101? As far as I'm aware[1], the support for this is still represented by a minority, so we're not really going to see any "new fancy infrastructure" tested, at least not for a while.
To explain a bit more: If a merchant receives fraudulent credit card transactions, he/she could reasonably refer to those as "not real" because once the banks discover the fraud, they have the power to move money and effectively nullify those transactions in many cases.
In contrast, on the blockchain (and off the blockchain for most bitcoin exchanges), that kind of thing doesn't normally happen. Even in Mt Gox's case where they directly manipulated the price from the inside, the people who bought and sold on the exchange still experienced "real" price movement, and as long as they got their money/BTC out before Gox imploded (which is another matter), those transactions and price movements were every bit as real as any other. From the perspective of other exchanges at the time it didn't matter at all whether the driving force for the trend was fraud or completely legitimate behavior.
Finally, if MMM's "net effect is zero" as you say, then we wouldn't be seeing the price movement that we're seeing (and a price "boosted only by the float" is no different from a price boosted by anything else), or perhaps MMM just isn't the primary driving force in the current trend.
But the float is much smaller than the total volume of the fraud. If MMM is doing $10b of fraud a year, then it's not boosting Bitcoin's marketcap by $10b as one might naively guess ('$10b fraud drives Bitcoin price growth!' scream the headlines), it's boosting the price by much much less, by just the float (which could be more like $27m).
Note the correlation between the registration deadline date and the start of the rise.
Somehow I refuse to believe that this surge in price is natural.
There is no such thing as a "natural" price move in any tradeable product. The term has no meaning; all trading is based on some form of speculation or other forces.
So, the implication is it's what happens when you remove short term and artificial effects.
"natural price" https://en.wiktionary.org/wiki/natural_price
A price for a good or service that is equal to the cost of production.
https://www.youtube.com/results?lclk=week&search_query=mmm+g...
It's very likely a big part of the price increase, many of the local MMM sites advertise that they're bitcoin-only and all of the exchanges are extraordinarily shallow so small surges in demand really move prices.
Here's a pretty good article from a mid October predicting the huge run-up based on interest in MMM and how they reward posts to social media where people show off how much they've "made":
https://letstalkbitcoin.com/blog/post/mmm-global-republic-of...
If anyone pays for better website analytics, I bet you'd find a pretty striking increase in the MMMGlobal rankings in the past month or so that corresponds pretty strongly with bitcoin price. One more note is that the exact same price runup happened in July with Litecoin based on a different Chinese ponzi scheme:
http://www.dailytradingprofits.com/4669/was-litecoin-pumped-...
It's crazy that people are falling for this even though they reuse the MMM brand and feature Sergei Mavrodi prominently. A simple google search should tell you what you need to know about the company and the people running it. It's sad really.
Still an impressive gain looking at 30 days trend https://www.coingecko.com/en/price_charts/bitcoin/usd
However, at this point the Bitcoin price surge alone almost certainly ignited a Bitcoin speculative bubble that is self-sustaining and would continue even if MMM was shut down today. I mean look at a hockey stick graph like this, it's enough to trick people into thinking now is a good time to buy "because it's going up": http://bitcoincharts.com/charts/bitstampUSD#rg30zig6-hourztg...
This speculative bubble is taking place mostly in China right now, as all Chinese exchanges trade at a premium over American exchanges. In fact Huobi just hit 3188 CNY (503 USD): https://bitcoinwisdom.com/markets/huobi/btccny when most American exchange are at 460 USD —a 9% arbitrage opportunity!
I'm sure that helped.
Wilson thought it was "well into" the trough phase by Sep 2014, with the price around ~$400 after one mini-recovery proved illusory. It then halved again, and has taken more than a year for this latest mini recovery to take it up to the heady heights of the bottom of Wilson's "trough"...
That trough sure looks long compared with that brief late 2013 spike.... http://www.coindesk.com/price/#2010-07-18,2015-11-03,close,b...
Anyway, the up swing is impressive now and can't be dismissed as normal volatilty: https://bitcoinwisdom.com/markets/bitfinex/btcusd
There will be a big drop at some point, no one really wants to sell when it's rising like this. This sort of upward movement is exactly why a lot of people have bought Bitcoin. Trying to time the top will be hard though. I imagine a subsequent drop of ~25% would be likely.
It's fun to be back at a time of thinking about when to sell again.
Anyone know an exchange where btc can be bought simply with paypal?
PayPal T&C says virtual currency isn't allowed.
https://www.coinbase.com/global - Initial setup can be slow, as with identity verification, but once you're set up buying is relatively painless. Withdrawing can sometimes be slow, expect to wait 2 to 5 business days after purchasing before you can withdraw. Shadiness Level - Just shady enough it might work. 4.5 stars would cupcake again. (They're a YC company too, so you'd be helping, airquotes, the cause - as it were.
https://www.bitstamp.net/ - Better for trading, more like an actual exchange whereas Coinbase is much more of a broker/dealer. (Correct me if I'm wrong on that someone who would know better) Shadiness Level - Low. They're venture backed, Slovenian based, and good peoples in my experience.
https://btc-e.com/ - Great for variety of coins traded. Based on my experience I'd recommend. That being said... Shadiness Level - Moderate. Nobody really knows who runs the site, although there has been speculation. I think they're based out of Russia.
https://www.bitfinex.com/ - This would be my go to for actual trading if I wanted to make/lose a lot of money. Based in Singapore IIRC. Shadiness Level - Low from what I've heard, just low on the list because I haven't had any personal experience with them. Something about Singapore and Financial makes me think of super villains though.
https://localbitcoins.com/ - Limited by who is selling in your area, have to meet in person, cash only, and markup is usually high. (5% to 7.5% above market) Shadiness Level - hit-or-miss, ranges from awesome people to scum of the earth types. Make sure you meet in a public place.
Coinbase operates a real exchange™: https://exchange.coinbase.com/
Available to US customers in most states and a few other countries. 0% fee if you add liquidity.
Problem with all of these is that they can be reversed.
I have good experience with bitcoin.de -- although I'm currently stuck in a loop needing to verify my account (again), after they got a bit more strict with account verification.
At any rate, since I was "smart" and sold my experimental 5 btc test purchase and made thousands of percent (and 100s of USD...) - I don't really have any bitcoin to sell any more. It's kind of funny when you make back lots more than you put in, and still feel regret because the bubble kept going up (I forget when I sold, suffice to say it was way below 200 USD per coin - I think I bought at an overwhelming ~2 USD/bitcoin or something. And then forgot about it for a year or two.).
Yep. I'm pretty sure MtGox was selling identities, as my california ID got maxed out on pseudoephedrine not much longer after I was MtGox verified. It was a bit awkward when I tried to get some flu meds from the pharmacy.
It's similar to what happened with MTGox. When the price parity was over (although there was always a ~1-2% premium on MtGox price) bitcoin crashed hard and never recovered.
If Bitcoin core development suddenly stopped right now it wouldn't be very future proof. Trading volumes are irrelevant from a scaling perspective, what matters is number of transactions per second (tps). Right now Bitcoin has a really low capacity, just 7tps, way below VISA for example.
However, progress is underway on creating the Lightning Network [2], which will enable billions of transactions per day. Just 11 days ago a major requirement of the Lightning network was merged into Bitcoin core, and things are moving fairly quickly in the right direction.
[1] https://en.bitcoin.it/wiki/Scalability
[2] https://lightning.network/
I doubt anything will replace Bitcoin, further crypto-currency advances will likely be built on top of it (like the Lightning Network and sidechains). Ethereum is looking incredibly promising (has been dubbed Bitcoin 2.0), but I think it will be used primarily as a blockchain programming framework instead of as an alternative currency.
Lightning will require entirely new wallets to be created for it, and those wallets will be very complicated. It's a multi-year project at most.
The reality is that Bitcoin will fall apart if too much load is placed on it, and it's getting closer to its (entirely arbitrary) 1mb scale ceiling too fast for comfort.
What they choose to set as the minimum amount of throughput for each node is ultimately dependent on the lowest common denominator in terms of bandwidth for every node on the network. With a truly distributed network like this, you need everyone on the same page.
This is a valid criticism of bitcoin IMO. For example, there was talk about forking the network in August because of disagreements about what was reasonable to expect for the network-- Internet in China is expensive.
http://www.economist.com/news/business-and-finance/21661404-...
EDIT: Just went back to look and peek Google Trends interest in Bitcoin happens prior to peek Bitcoin price so public interest leads Bitcoin price as I suggest. Trends crash before the price does.
Do you really not think the general population's interest in bitcoin has any effect on the price?
I believe the public interest is sparked by the price - which is perhaps later adding additional additional price hikes sure - but the correlation is not public interest to price; I think it's the opposite, price to public interest.
Price drops - so will public interest.
This will go on just like previously until the bubble pops again.
It's very easy to use as a currency since it's the only way you can send value instantly around the globe with almost no cost and without any regulatory issues.
http://www.economist.com/news/leaders/21677198-technology-be...
http://www.economist.com/news/briefing/21677228-technology-b...
Since bitcoin is the reference implementation of "blockchain technology" obviously all this interest rubs off. And since bitcoin at this point is all promise without much reality behind it (like a "pre-monetization" startup), it is a great vehicle for hype driven speculation, meaning that any price increase drives further speculation, until the next hard crash.
I just don't get how people convert these specialized things that may help some companies sometimes into widespread hysteria, where every company feels like they have to go all in. Companies regularly take their basically-fine hardware offline so they can start renting the same or worse from Amazon, because then they can tell people that they're "in the cloud". I know one company that used to have all their stuff running on hardware and working pretty much fine. They switched to "the cloud" because they thought it was cool. They now pay Amazon the amount of money it'd take to re-buy all the hardware that used to run their site each and every month.
I should figure this out because if I can see one of these trends coming and time it right I could make a lot of money.
It's the first distributed, decentralized ledger that successfully operates in the presence of malicious nodes. The white paper and reference implementation represent a fundamental breakthrough in computer science (a solution to the famous and previously unsolved Byzantine Generals problem).
Bitcoin is a big deal whether you want to realize it or not.
That doesn't change the fact that in many places you'll still owe taxes, regardless if you don't cash out in a distinct step somewhere. At least as far as I understand things.
There is a chance the price could go nuts (e.g. $1 million/BTC) - it could be a serious bubble, because of the technology behind it, and the implications it could have to the world.
"It is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower." - William O'Neil
Quick plug: If you are looking for a secure wallet with good privacy for your fresh Bitcoin, Try [Coinkite Multisig](https://coinkite.com/multisig), up to m-of-15, any/all keys can be generated offline, option to escrow backup, notifications, multi-user-multisig, support, notifications, works well with Ledgers, and the list goes on!
[1] https://www.cryptocoinsnews.com/wp-content/uploads/2014/07/P...
The bubble right now is mostly a response to the MMM buzz.
Mathematically that's just not true. In objective terms not winning an extra $100 is exactly the same as losing $100.
This psychological fallacy (called 'loss aversion') is the primary reason the average player loses at poker. They're afraid of losing $100 when they might be behind but they constantly fail to extract that extra $100 value bet when they know they're likely ahead.
Actually I don't think I've ever seen a local brick & mortar business advertise their ability or willingness to accept BTC.
MtGox's high BTC rates were too close to arbitrage until it was clear you wouldn't get your money out.
can one short bitcoin in a single day?
last time I tried it was insanely slow to buy bitcoin, and then sell it...
My referral link https://www.magnr.com/?r=79019
I'm inclined to think that it demonstrates how very silly the whole thing is, that even us eggheads get snarkily dismissive, but I'm sure some will disagree...
The developers are still arguing about the 1MB blocksize limit. Currently bitcoin is limited to a theoretical maximum of 7 transactions per second (~60k transactions per day). This figure was derived assuming the smallest possible transaction size but of course real transactions are larger and the practical maximum is only about 2-3 transactions per second (~20k transactions per day). This should have been a pretty easy limit to change, it's just a #define in the code. But some core developers are against it and we're deadlocked and have been this way for at least a year.
There is an alternative client called bitcoinxt, this supports larger blocksizes but has literally no support among either the miners or chinese exchanges which are driving the rally. (See https://medium.com/@octskyward/on-block-sizes-e047bc9f830 for a summary.)
A number of DoS attacks on the bitcoin network: some based on spamming lots of fee paying transactions, some based on retransmitting slightly modified versions of existing transactions, have rendered it practically inoperable for days on end. The fee paying attack isn't terribly expensive, costing only a few tens of thousands of dollars per day, while the "malleability" attack costs literally nothing other than an internet connection. There hasn't been any significant progress on solutions for either of these problems.
The bitcoiner response to this is that you shouldn't have been affected by either of these if you used the right client or paid the right fees, but imperfect clients and fixed fees are a reality of the bitcoin ecosystem so I don't see how wishing them away changes anything.
One of bitcoin's biggest advantages was supposed to be the ability to quickly react to changing circumstances by modifying the protocol. Recent events have shown this is pretty much impossible: too many people are too heavily invested in its current form, and they want no risks and hence no change. Techniques which supposedly allow risk free changes (called sidechains) still have a long way to go before we can be convinced they work as intended. Besides they're not even fully implemented on the bitcoin testnet, let alone real bitcoin.
Overall, even if people are buying into the "blockchain" tech, it doesn't seem to me that they would be interested in bitcoin itself because of the problems I've outlined. I think the safe money is still on this being a repeat of the Willybot/Mt Gox fiasco where the exchange operator used nonexistent dollars to buy bitcoin and drive the price higher. Other people were sucked in by the uptrend and they ended up with nonexistent bitcoin/dollars which they weren't able to withdraw from the exchange.
This recent price increase will possibly be viewed as a dead cat bounce.
It is literally impossible to have a functioning decentralized blockchain without a proper reward/currency built on it to incentivize miners to mine on it.
Again, what gives value to things is that people want them, no matter what the reason.
In the case of bitcoins, people want them not to pay taxes, but because cryptocurrencies offer benefits that only them can provide, so people see value in that.
The US government income (federal, state and local taxes) was $1 trillion in 1988 [1]. I picked this year because it is hard to find up-to-date data for the next number: the amount of dollar transactions was estimated at $1.7 trillion per day in 1988 [2]; this is $620 trillion per year. So taxes represented only 0.16% of all dollar transactions. At most you can argue that 0.16% of the value of the dollar comes from its use to pay taxes, but the bulk of its value comes from the economy using 99.84% of it.
Still not convinced? Here is a thought experiment. What if for every dollar owed in taxes, the government asked to be paid instead 1 grain of rice? Would it suddenly make the dollar worthless? No! People would continue using it because many other people already use it to transact trillion of dollars every year. They know it is a liquid asset that can be exchanged for anything, and this is what gives it value.
[1] https://books.google.com/books?id=POjfDvabbpwC&pg=PA1&lpg=PA...
[2] https://books.google.com/books?id=F8DSBwAAQBAJ&pg=PA144&lpg=...
My comparison is very relevant. It means if taxes did not have to be paid in dollars, then with all else being equal there would be 0.16% fewer dollar transactions. Not a big change.
You talk about marginal tax rate, but I think you meant tax rate. (Marginal tax rate has nothing to do with our discussion). If tax rates where doubled, then taxes would account for not 0.16% but 0.32% of dollar transactions in my 1988 example. Again, not a big change. And yes in practice marginal demand of the dollar would skew this percentage somewhat, but it would still be insignificant.
You did not answer if you were convinced by my thought experiment, are you?
About your thought experiment: what you describe has actually happened many times in history, and many of these currencies had a floating exchange rate and could not be used to pay taxes, see https://en.wikipedia.org/wiki/Private_currency Turns out they had value, like Bitcoin.
I feel like it has been ages since the two of us have talked bitcoin. Hopefully you've made some cash in the recent run up. Funnily enough we're both in NZ at the moment though I'm just here in Auckland for the week before heading back to Sydney so no overlap. I'd love to revisit some of our topics from last year though to see which ones each of us were right about. I have a feeling though it's a pretty even split.
Enjoy your travels. My wife and I did our own at northandsouthnomads.com and give me a shout on my email in my profile. I did always enjoy our debates.
Bitcoin was always just an experiment to work out the kinks and get people to accept the notion of crypto-currencies. It has no long-term viability as an exchange medium, since it will be quickly superseded by institutional competitors which can provide the stability that businesses need to operate.
The next phase would be for people to buy bitcoins through USAA directly.
Banks are notorious for being "monkey see, monkey do". How quickly did Mobile Checking Deposits take off when banks starting putting these into their mobile apps? Coincidentally, it was USAA who helped develop the technology which allowed mobile deposits in the first place. Once a few banks begin to incorporate bitcoin, the rest will follow.
Bitcoin doesn't have to "replace fiat currency" to be extremely successful. The transaction float of Visa and SWIFT (both of which are vastly inferior to Bitcoin) is enough to support a higher valuation than this 'bubble'.
- There is no "Federal Reserve" type entity attempting to influence BitCoin (whether that's a good thing or not, is complicated...)
- Privacy (with the help of Zerocoin)
It's more a good thing there's this new game speculators can play; even if someone games the system, it isn't going to affect anything of value (e.g. a company producing something of value).
It's not like BitCoin is ever going to be a major currency, or a real currency, really. The distribution of it is even more skewed, and artificially so, than that of any real currency. (And no, it isn't analogous to early investors in a business.)
Wow! A VPS! Something that 99% of the population has no use for. How about paying rent, medical bills, utilities, phone bill, groceries, tuition, gas, car payment, car insurance, car maintenance, tolls, daycare, taxes... you know, the kind of things that real people actually care about.
> just like I have bought them by unsafer payment methods in the past
Bitcoin is by far the most unsafe method of payment for 99% of the population. Credit cards offer comprehensive fraud protection; bitcoin offers zero protection and zero recourse if your money is stolen or lost due to a crash/virus/hack/forgot to backup my wallet before formatting (and when this happens, the user is always blamed, duh, you should have bought a trezor!). With a credit card none of this happens, and if money is somehow stolen from your credit card, the card is quickly deactivated and the victim is fully reimbursed for any fraudulent charges.
This straight up LIE about the safety of bitcoin relative to credit cards is infuriating.
None of that shit helps me when I can't buy what I want because the merchant is in the U.S., my credit card is issued in Canada, and my shipping address is in Thailand.
I don't care about other people, I should be able to buy things online in 2015 and accept the risk of fraud my own damn self. And the merchant should (and wants to!) be capable of serving me.
If you think my situation is too crazy, then consider someone who wants to buy a $15,000 Rolex or gold bar online or place a $5,000 bet on a football game starting in 3 minutes. There are many applications for digital cash that are not being served by existing electronic payment methods.
And right there is the crux of your disconnect from the general population. The vast majority of people don't view fraud protection as a racket; it doesn't cost them anything as far as they are aware and the benefits are pretty clear, especially compared with bitcoin where permanent loss of funds because of hackers or arbitrary technical problems is a real risk.
> then consider someone who wants to buy a $15,000 Rolex or gold bar online or place a $5,000 bet on a football game starting in 3 minutes.
Ummm, those all sound like pretty unusual use-cases that the general population has no use for. I never said bitcoin was useless so you can stop proselytizing, all I said was that credit cards are clearly much safer than bitcoin if you define safe to mean "protects my money from being lost or stolen".
https://en.wikipedia.org/wiki/Currency https://en.wikipedia.org/wiki/Fiat_money
>bitcoin offers zero protection and zero recourse if your money is stolen or lost due to a crash/virus/hack/forgot to backup my wallet before formatting (and when this happens, the user is always blamed, duh, you should have bought a trezor!)
That has nothing to do with Bitcoin, but with the user habits and possibly his operating system choice. If you go out taking pictures of your credit card and posting on Twitter (as a lot of people do), don't check your account balance often (as a lot of people do) and constantly let strangers have your credit card info (as a lot of people do online) then you'd say that's an issue with credit cards? No, it's an issue with the person's habits.
>With a credit card none of this happens, and if money is somehow stolen from your credit card, the card is quickly deactivated and the victim is fully reimbursed for any fraudulent charges.
That is by design, as it avoids several issues* with money held or processed by banks or any other institution. It's a trade off, sure, but when it comes to my money I rather trust myself to keep sane habits than trust the payment processing website, the bank AND the gov. not to screw me.
* It can't be stolen nor lost if properly stored, unlike the info you must supply when purchasing with credit card (see Ashley Madison and others). Nor can you have your account frozen, like when buying with Paypal or wire transfer (if the bank or gov. find it suspicious), nor are there chargebacks in case you are a seller (if you wait the appropriate number of confirmations)...
Nah, I didn't miss it, I just don't think it matters. It's like saying "my solar powered car is as real as it gets, just yesterday I drove it down the block, it just doesn't enjoy more than a 10 mile range". Well ok... then it's not as real as it gets, it's a toy and not very practical since it can't be used to get to work, school, hospital etc.
> That has nothing to do with Bitcoin, but with the user habits and possibly his operating system choice.
In practice it has everything to do with bitcoin since permanent loss of funds is only a risk with bitcoin. Those behaviors you describe are not analogous to the problems of bitcoin. Just storing money as bitcoin puts it at risk of permanent loss. If you take out 100 credit cards and never check your balance you are still covered for every conceivable fraud scenario (and in many situations the bank will tell you that you've been a victim before you even realize it). With bitcoin you are never covered regardless of your vigilance or best practices. You can be an expert user and simply make a typo and send your money to the wrong address and then you're screwed. The general public doesn't have the time, patience, or technical skills to decide which OS is the most secure for storing money, especially when bitcoin itself doesn't actually provide any novel benefits for most people.
> It's a trade off, sure, but when it comes to my money I rather trust myself to keep sane habits than trust the payment processing website, the bank AND the gov. not to screw me.
That's your right and I'm glad bitcoin exists for you, but it's simply wrong to suggest that bitcoin is safer, it's not. If you trust yourself to keep your bitcoin secure, more power to you, but statistically speaking your money is still less safe as bitcoin than as a bank balance. It's like saying that driving your motorcycle cross country is safer than flying because you trust yourself not to crash. I'm happy that you can be your own bank and I think that it's cool as hell that this is possible because of an emergent econony based on open source software, but bitcoin is not practical, useful, and least of all safe for most people.
My specific gamble last time was that I had an information advantage that others did not regarding Bitcoin. I sold up when that no longer felt true, and when the money had become enough that I couldn't afford to lose.
My specific gamble this time is that there is a bubble, but barriers to entry to owning Bitcoin are high enough that it still has momentum. I can afford to lose my current stake, and will stay in while I continue to feel that way, and while I remain under the UK capital gains threshold.
I'd say this is absolutely false. Roulette is pure chance (and -EV at that). Trading currency/commodities is a bad idea for most people, however you can gain +EV edges with domain knowledge.
There are more holes in these economies than their respective governments has fingers to plug them in.
Flight to bitcoin is the only natural and logical progression.
Something else is going on. Gold is still at $1,120ish USD. There is no flight to safety.
1. US markets are priming for a temporary rise till approx. end of spring / mid-year 2016.
2. Gold is no longer safe bet in the light of a large scale government defaults and rather drastic domino effort that will follow.
For how long do you think Fed are going to kick the can down the road?
That makes no sense what so ever.
In case of drastic economic downturn this is a possibility along with currency devaluation.
Back then there were no bitcoin in existence. Today it is.
There's a reason why Swiss safety deposit boxes of gold exist. You gotta pull that crap out of the country. Hell, if the US Government just declared ownership of the BTC Network through subpeonas, they can effectively 51% attack it and double-spend all the BTC they want anyway.
So no, your hyperbole does not convince me.
This chart shows the price surge starting the exact same day Gemini went online: http://bitcoincharts.com/charts/bitstampUSD#rg60ztgSzm1g10zm...
I really hope this is genuine growth, but I have a sneaking suspicion it could be partially due to market manipulation by Gemini. The Winklevoss twins have a lot of money riding on this play.
I'll take my down-votes in stride.
Only the future will reveal the truth.
Volume on Gemini is miniscule, less than 1% of the chinese exchanges.
Not that I think its likely, mind you, just that "the action isn't on Gemini" isn't sufficient to rebut that the movement is related to Gemini. I think, though, that MMM still seems likely to explain more of it, and other China-specific conditions may explain more of the China-focused movement. Manipulation around Gemini, while not inconceivable, seems to be a bit more of a leap from the evidence available.
I also think it's fairly unlikely, but the data points are there.
Causation versus correlation, I know. Probably it's part coincidence / part overall good press. I just found it odd that run-up started the exact day Gemini opened.