Bitcoin has crossed $6,000 USD for the first time
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Huge mistake.
Obviously don't put your life savings in bitcoin, anyone who does is not making an intelligent choice. But if you have money to spare that your willing to lose, I wouldn't consider it a horrible investment.
while I don't think it will ever fully replace fiat currencies, it will - and already is - acting as a secondary money/value exchange, so there is NO downside to getting in. None.
Well except the part about possibly losing everything you put in...
Fractional reserve banking oesn't create coins or notes, it creates credit (or bank money). These credit (IOUs) are liabilities of the bank that are denominated in central bank money (central bank liabilities). When a bank makes a loan this does not in any way affect the central banks balance sheet -there are no changes in the liability side of its balance sheet.
When the loan is withdrawn, this still won't cause a change in the liabilities of the central bank. Other than what bank owns what liability at the central bank. (But even this isn't necessary. It depends on what type of payment the customer made with the loan and what payment system it was cleared through: if it went through a gross settlement system or a multilateral net system,etc.).
The supply of central bank money is dependent on how central banks implement monetary policy. Everywhere in the world (and what has probably always been the case) central banks will supply as much of central bank money as is demanded from the banking system.
Fractional reserve banking will when the bank credit is denominated in Bitcoin doesn't create more Bitcoin, it just creates more claims in Bitcoin. The supply of Bitcoin is independent from this.
for instance, coinbase only allows for a certain set amount of money in/out per week - and its actually quite low comparatively. $15-25k i think? maybe someone has seen more?
Sold almost all of it at $200 to $400. Felt like a complete baller. Who else has made 50x to 100x their money in a couple years? Who else takes a credit card cash advance and is right about it?
Sold some more at $6k CAD, overall I've cashed 250x my investment and still have some, but right now it's worth 2000x my original buy price and it's a bit batty to look at the current price. Could have bought a really, really nice house in Toronto if I'd just held on until today.
But you know, 2000x is, on a log graph, not that far from 250x. So unless bitcoin goes to $50k or $500k a coin I'm not going to be a touch sour.
Edit:
Also, this reminds me. I should go through my comment history and find people like tptacek that were very confident that bitcoin couldn't be securable:
https://news.ycombinator.com/item?id=2607706
It was a pain in the butt, but I secured bitcoin just fine. Bitcoin is one of those thing where you can go through what you said 10 years later and say "What did I say there? Yep that was right, nope that bit was a bit off, yep it wasn't banned by x, nope that person was wrong that it'd get shutdown within the year."
So much of what we arguable is unknowable, like generics in Go or whether mutable state is a good thing for certain programming applications. But the nice thing about investing is you get to find out how right you were.
And you're only really, truly right after the gains are realized.
Our company would pay a premium to get into a solid, pegged-to-USD coin. At least 5% if not more. Or even a coin that's pegged to an ETF. Of course we cannot satisfy KYC laws so it'd need to be a freely traded token, really.
I really hate the "hodlrs" and the complete lack of focus on how this is supposed to work for real businesses that use it as a means to an end, and not an end by itself.
I see this a lot talking about the 2x chain. People sometimes discuss it in terms of what's better for the BTC price. Why is that a goal at all? Other than the obvious reason of making current users richer?
Is Ripple pegged to USD? I do not want anything complicated, just a coin or token that has a 1:1 ratio with USD. Charge me 5% or 10% to buy them or 5% on cash out.
2x was made by businesses for businesses. It is supposed to solve the high fees and long confirmation times (at least on the short term) which are crippling businesses.
Hopefully it will stabilize.
A peggable USD coin with a decentralized exchange for BTC would be most valuable.
No one has shown proof of being able to withdraw from Tether.
That's why a Tether that is done properly would be very valuable indeed.
Say you're Tim Draper and you're sitting on 30K (bought at $600 from the US Gov in 2014 [1]). Would it be possible to offload them for $180M or is the order book too thin?
[1]: https://en.wikipedia.org/wiki/Tim_Draper#Bitcoin_auction
This level of deflation is as bad as too much inflation, though the problems it creates are different. Why would anyone actually use Bitcoin if simply sitting on it will yield a greater return than investing it in anything? So far it seems more deflationary than gold. If this keeps happening won't this actually crowd out the currency application and lead to Bitcoin becoming nothing more than a speculative bubble?
It's hard to determine but I'd love to see some data on Bitcoin use vs. its price in USD/EUR.
Also, new assets and specially new asset classes are predictably going to have high volatility at first, until the market knows what to make out of it and finds the right value for it. In relative terms, bitcoin is still a pretty new asset, specially since new people are coming into the market every month.
I think it'd be reasonable to say that this has largely already happened. Beyond the volatility, it's terribly impractical to use as an actual currency due to the transaction fees these days.
Lose your wallet password and your money is gone.
Fat finger an address sending it to the wrong account and its gone.
Bug in someone's code and the coins get stolen in a hack: gone.
[0] https://bitcoin.stackexchange.com/questions/32353/how-do-i-c...
[1] https://github.com/bitcoin/bips/blob/master/bip-0173.mediawi...
Gold would have become the standard around the world if governments had not used coercion to prevent it from becoming so, and instead replacing it with fiat currency (which they can control and benefit from).
If Bitcoin, or another cryptocurrency, replaces fiat, it’s value will be worth several orders of magnitude of what it’s worth today, which is why many people are holding it instead of spending it at the moment.
However, people will not simply “horde” Bitcoin forever in anticipation of its price going up any more than people currently spend every single fiat dollar/euro/yen they have for fear of it going down in value due to inflation.
You may ask, “but why WOULDN’T they hold it instead of spend it if they anticipate the value increasing each year?” The answer is because people HAVE to live in the here and now, they have to pay for things like food, rent, entertainment, cars, fuel, etc. So they can’t get around having to spend some amount of money to live.
But sound money (money with low to no inflation) does cause people to spend LESS money than fiat currency because there’s a much larger opportunity cost.
TIPS. JGBis. Linkers. Come on man, this makes you sound like a crank.
Gold was the standard. It didn't work out very well.
The gold standard you’re talking about was far from a market gold standard, banks and governments colluded so banks could print more paper money than there was gold in storage.
What specifically do you think “didn’t work out very well”?
Also, Bitcoin IS inflationary, there will continue to be more Bitcoin creates until sometime around year 2140 when the 21 Million supply cap is reached. It’s just not nearly as inflationary as fiat currencies, which have no cap and no one knows how much more will be created from year to year.
Also you are wrong about Bitcoin being inflationary. An expanding money supply is not enough to make a currency inflationary. The rate of the increase in the money supply needs to outpace growth in the economy. That isn't happening with Bitcoin. The obvious proof of this fact is the increase in the value of Bitcoin.
There are two phenomena we’re talking about here — an increase in the supply of money and the decrease in the purchasing power of money. The term inflation is broadly used to apply to both of these but they’re different which is where part of the hang up is.
In any case, the supply of Bitcoin will continue to increase until it hits 21m coins in approximately 2140, but if it becomes the world’s dominant currency, its purchasing power will continue to increase.
Why should spending and investing be encouraged, can you think of any downsides to encouraging this?
There are certainly some situations when you want to encourage saving over spending and investing. However I would argue it is not an ideal stable state. It is more difficult for an economy to grow when people don't circulate money through spending and don't increase future productivity through investing.
The benefit of a central bank that can control the money supply is that you can adjust these things on the fly depending on what is happening in the economy. Bitcoin cannot adjust the money supply in reaction to the economy.
Increasing the money supply ultimately leads to a decrease in purchasing power, which is stealing from savers.
If the market (individuals cooperating with one another voluntarily) valued a continuously inflated currency, then fiat currency will win and crypto will fail. I suspect the market values a fixed or slow-increase-in-the-money-supply version of money like gold as they demonstrated with their money preferences before governments used coercion to stop it, one of the biggest reasons crypto is so popular is because people can’t use gold as money, but governments can’t effectively stop people from using crypto.
[0] https://en.m.wikipedia.org/wiki/Austrian_business_cycle_theo...
Nonesense. The general population is cash-poor, and is largely in debt. Inflation makes their debts easier to pay off.
Most of the wealth the general population owns is not in their bank account, but in their partially-owned house, their car, and their education. Deflation does not increase the relative value of any of them.
So if China shutting down exchanges, the CFTC coming out and claiming tokens used in ICO's fall under its jurisdiction, confusing regulations everywhere, and huge recent gains can't stop it, I'm not sure what will.
As a side note, if there are any Bloomberg engineers around, come on VCCY<GO> is really awful.
Put some time into it, its not like virtual currencies are going away any time soon.
Not a big deal most people don't understand that industry. The point I was going for is that CTA's, more than anyone else, love good momentum stories as they are the original trend followers.
It's interesting that despite bitcoin being deflationary by design, you can just fork the chain and do quantitative easing that way.
Pretty much all the cited benefits of cryptocurrencies are disappearing in implementation, unfortunately.
Thats 80% of all coins. Yeah, your fork can kind of start from scratch, act like the 16.6m coins that came before never happened, that most of them will be dead forever, and start mining from there and treating all the new coins mined (of the remaining 4.4m let) as the monetary base. But then you get any momentum and suddenly "dead" money is flooding the market from legacy wallets. Wallets that didn't contribute to the growth of the fork, that didn't harden the blockchains integrity on the fork, that simply installed a program and had a fortune ready to go with no effort and no commitment to that currency at all.
There is already the problem that vast amounts of bitcoins blockchain hasn't moved in years. Millions of coins that are being treated as dead that could come back to life at any time. But there is no way to know what wallets are actually gone - dat files lost, passwords forgotten, etc - and which ones are just waiting to cash out.
Fundamentally the problem is there are two groups of people here - futurists that want to overturn fiat, and investors that want to make (fiat) money. It is why we have not seen a cryptocurrency that can behave like real money yet - the closest we have gotten was dogecoin, which started as a joke and was completely abandoned by its original developers and left to rot.
To make a cash replacement, it would need enough minting of coins to cause inflation enough to keep people from stockpiling coins. But who wants to mine your cryptocurrency or hold it early on in its life if its depreciating in value from its own algorithms? The whole point of why people adopt early into cryptocurrencies is that if they blow up they just made millions from trivial amounts of effort by just being there first. Classic pyramid scheme.
But all crypto today has to be a pyramid scheme to get the adoption to start having momentum to operate as it is intended. Without the gamble of making a fortune how many people would have early on started bitcoin startups or invested in mining? If the promise was that a coin worth a dollar today would be worth a dollar ten years from now because the blockchain itself would generate enough coins to peg the exchange rate, the only first mover advantage you get is in how much less electricity it costs to mine early on assuming the coin takes off and becomes popular.
That can still be an incentive. It is still a gamble of course, but it is also an incentive. The problem is when you are one of those investor types with some large cash in a small neighborhood shopping for your next get rich quick scheme the humble coin trying to push the future is a lot less interesting than the pyramid scheme promising ludicrous returns if it can get enough fools to buy into it.
I did find a few references to it, only on searching, and most seem to think it's a scam.
https://www.reddit.com/r/btc/comments/734i6s/as_it_turns_out...
My heart kind of started racing as I looked through it. The backup was of a mining program I was using, and it had the address that I was mining to. Looked up the address, it has 13.3 BTC in it!
I started unpacking the whole archive to find the wallet, only to learn that I didn't backup the wallet.dat. I don't know why I didn't, probably some combination of it being worth like $30 at the time + not knowing exactly where the private key was stored.
But it brings the total amount of bitcoin i've lost over the years up to 23.3...
Here's why. Bitcoin's thesis is that it possesses inherent value because it will become a medium of exchange i.e. people will trade in bitcoin, thereby using it as a store of value, and making it valuable. And yet, that hasn't happened yet. While it's hard to estimate the velocity of money for something like Bitcoin, and the "Bitcoin days destroyed" metric isn't accurate either, it is quite clear that as Bitcoin as a store of wealth rises rapidly in value, its utility as a currency correspondingly drops in value; thereby invalidating the central thesis on which the question of its value rests.
Here are rough estimations for the velocity of money for BTC;
http://charts.woobull.com/bitcoin-velocity/
https://charts.bitcoin.com/chart/velocity
Even if these are filled with inaccuracies, the general trend seems to be quite clear. People use BTC as an asset not a currency. And as such, the idea that it's a savvy investment belies the fact that it's value as an asset is entirely psychological in nature and completely ungrounded from actual metrics like fiat currency (though again fiat currency does run on trust, but the difference is that it's a marker of exchange thereby measuring the economy and its productivity gives an estimate of its value).
Further, even if it was a valid currency, then what we're witnessing over here is hyperdeflation in action, and it is fundamentally irrational to expect it to continue.
The reasoning for the above points is quite straightforward and simple. The magic of money and capitalism isn't that you can hoard gold and get rich. No, it's that you can make money. It's the idea that value can be created and destroyed through the economic actions of human beings, and that money as a concept serves as a measure of wealth as opposed to wealth. It's why we moved away from the gold standard - it was fundamentally irrational and in the long run, would have caused the exact phenomena we're seeing with BTC.
If you really think that somehow as a store of value BTC is going to become some significant fraction of human wealth, then go ahead buy this. But if you give it any rational thought whatsoever, then you'll see clearly that this is the tulip mania in action and that timing your actions to beat the market is even more irrational.
So no I don't regret passing up on buying BTC, precisely because it was and is a lottery ticket and I'm not in the business of buying lottery tickets no matter how well conceived they may be.
Right now, the most rational thing to do is to bet for it to fail. And then figure out how to time that bet. Because the farther it rises, the harder it will fall.
Good luck.
Dude, this is nonsense. Everyone regrets passing up on buying BTC because it's currently worth $6k because you can sell it right now for that money. Anything else is complex rationalization to make yourself feel better.
My life isn't a lottery ticket.
I made what I believed was a rational risk assessment at the time (back when MtGox was spinning up... Not exactly the most credible days for BTC) and decided to avoid the hype.
Could I use the money now? Sure. It's money.
But I don't regret the decision now because I was acting on the information I had.
Heck, even now, it's possible for someone to buy BTC and for it to crash. Should those people regret their decision even if, in their estimation, it's rational now?
To be blunt: if you spend any time regretting these types of things you're a gambler, not an investor, and will find yourself tricked into trying to time markets. And that will eventually bite you in the ass.
As for me, the same reasoning that kept me out of the market then keeps me out now: I don't believe in the fundamentals and I'm not a gambler. Full stop.
For those who do, the should buy and hold for the long term to realize the most gains.
But "it's worth a lot more now than it was 10 years ago" is not fundamentals. It's just the irrational assumption that past performance predicts future behaviour.
Bitcoin is a replacement precisely for M2 (base money + deposits), because with a fractional reserve deposits are as much usable as a medium of exchange, as the base.
There's still a good chance you'll be wrong. Don't gamble what you cannot lose.
In case of the former, nobody knows. In case of the latter... You probably shouldn't do it, unless you want to speculate.
I think of money as simply a distribution mechanism for the world's resources - a unit of currency can be thought of like a share; a right to allocate a portion of resources represented by that share. With the dollar, you can be diluted to infinity, with bitcoin, you cannot. With any fiat, it only has value because everyone else says it does. ETH is interesting because it is more than just currency, but it remains to be seen how valuable the ability to run decentralized apps will become.
That's true of bitcoin, but not bitcoin forks. You can just fork the chain and there's your dilution / inflation e.g. Ethereum classic, Bitcoin Cash, both of those are taking value away from the Bitcoin and deflating the currency futher.
This is not investment advice, but _IF_ (and that's a big if) some of these coins (mainly Bitcoin and Ethereum) successfully achieve some of their goals, today's price will be extremely cheap. If not, it will probably be expensive. Do your own research and then decide whether you think they can.
Edit: /S If a bubble forms and people's finances get hurt, that'll have very negative effect on the credibility of SV and tech sadly.
well, not really
Don't get me wrong, blockchain tech is really amazing. But whether it has an actual use in the real world is very much TBD.
Or they could be worth nothing?
I think blockchain as an idea is more valuable than Bitcoin as an idea. But that's me.
Your argument reminds me of a classic eBay seller problem: you can price your rare collectables however you want, but if no one is buying, they are worthless
the difference between fiat and bitcoin is that bitcoin cannot be arbitrarily manipulated by the state.
there is a fairly large, latent inflationary pressure on the dollar in the form of the national debt that has no credible prospect of reversing. the dollar has been a historical safe haven, but there is a reason that china is trying madly to diversify its foreign currency reserves.
There is a large, guaranteed demand for fiat, in the form of taxes. Everyone you transact with, at the end of the year, pays taxes.
There is no large demand for bitcoin as a currency. There is demand for bitcoin as a store of value. It's economy is largely speculative.
Why? I can start my own blockchain tomorrow, and so can anyone else. If people perceive bitcoin distribution as being fundamentally unfair, they can just stop using it and switch to the some other crypto currency.