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Bitcoin dropping after BTC China said it is closing

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Re: Bitcoin dropping after BTC China said it is closing

#151
post #147

Earlier quoted context omitted.

the issue is at some point you need to be able to convert btc to dollars. and if that avenue is completely closed, value of btc will drop.

But that's not the long term plan. The way the community is pushing is out with fiat. If that's the case then the government is going to still want taxes....The way I see it they're either going to lose revenue due to the new market or facilitate cryptos to be converted for payments of taxes and all things electronic....If Bitcoin is THE success it claims to want to be.

that plan doesn't seem realistic or possible. US dollar is not going away. BTC will have to co-exist with it and be easily convertible into it.

Re: Bitcoin dropping after BTC China said it is closing

#152

Earlier quoted context omitted.

There are other Chinese exchanges. If they announce something similar, Bitcoin will drop even further.

And it is pretty likely they do so. In my opinion China is issuing their own e-currency pretty soon, so they don't really want any competitors. We are living in very interesting times.

Why would China need an e-currency? If you're in China you can already buy things online using the good-old yuan. What value would another currency add?

Re: Bitcoin dropping after BTC China said it is closing

#153
post #10
post #6

Earlier quoted context omitted.

In cryptocurrency world 10% daily change is considered normal. The markets were extremely volatile in the past and as years pass by they become more stable. We are not there yet but I believe in the future as the market cap increases and more people get involved the price will stabilize more and such changes will be considered a crash. Also do not forget the people that had money in BTCC exchange. I suppose many of t…

Tesla is considered an infamously overvalued stock, and even Elon Musk has publicly questioned the price in the past. It has had the highest number of shorts for any stock. Despite making 1/100th as many cars as the big manufacturers, it has a market cap higher than Ford and GM. That is not exactly a great comparison. A normal blue chip won't fluctuate more than ten percent in a month, let alone in a day. But currenc…

I believe Tesla's value has everything to do with what people believe Tesla will be worth in the future, simply because confidence in Musk is so high. I think there's this unspoken expectation that Tesla enters the Pantheon of Large Auto Manufacturers.

Re: Bitcoin dropping after BTC China said it is closing

#154
What I don't understand is that bitcoin is always referenced in value to USD, but there isn't enough fluid USD in the exchanges to match what the bitcoin network is theoretically worth. How do they decide what Bitcoin is worth, if the money that it's worth isn't actually around?

Also what happens when a big holder of BTC decides to cash out? Wouldn't it become similar to a typical bank run, collapsing the exchanges (and thus the market)?

Re: Bitcoin dropping after BTC China said it is closing

#155
post #10

Earlier quoted context omitted.

Tesla is considered an infamously overvalued stock, and even Elon Musk has publicly questioned the price in the past. It has had the highest number of shorts for any stock. Despite making 1/100th as many cars as the big manufacturers, it has a market cap higher than Ford and GM. That is not exactly a great comparison. A normal blue chip won't fluctuate more than ten percent in a month, let alone in a day. But currenc…

I believe Tesla's value has everything to do with what people believe Tesla will be worth in the future, simply because confidence in Musk is so high. I think there's this unspoken expectation that Tesla enters the Pantheon of Large Auto Manufacturers.

From a value investing standpoint, it is overvalued, but obviously tech stocks play by different rules. However, even for a tech stock, TSLA is very high priced.

I wish them the best, and I truly hope they succeed, but it doesn't change the fact that the speculative value is super high compared to their asset value.

That explains why it can swing wildly in price while Ford generally won't.

Re: Bitcoin dropping after BTC China said it is closing

#156
post #154

What I don't understand is that bitcoin is always referenced in value to USD, but there isn't enough fluid USD in the exchanges to match what the bitcoin network is theoretically worth. How do they decide what Bitcoin is worth, if the money that it's worth isn't actually around? Also what happens when a big holder of BTC decides to cash out? Wouldn't it become similar to a typical bank run, collapsing the exchanges (…

There is no actual "worth" of all Bitcoins as a whole, whether in regard to USD nor in regard to anything else. The only thing that exists is the last price at which a non-zero amount of Bitcoins - usually only a tiny, tiny fraction of all coins, today usually not even a whole coin - has changed hands. This price, taken for every exchange, is then usually averaged to get a "market value" of one Bitcoin.

The "market cap" is then just a number calculated by taking this average and multiplying it with all Bitcoins in existence. Of course, the value would collapse instantly, if just a fraction of these is put up for sale for current market price. Actually you can witness this happening right now (try www.cryptowat.ch and just pick a Bitcoin exchange and watch how the price moves...mostly downward right now...because there's so much selling going on).

In case of Bitcoin it is even more severe, as it is rather well-known that only a fraction of the 16.5 million coins in existence is even accessible and an even smaller fraction of that is actually circulating. There are multiple millions of coins buried on wallets to which the private keys have been long forgotten. Or at least "most likely", because there's no way to prove whether a particular wallet is just inactive, but someone still has the key, or whether the knowledge about the key has been lost forever, and with it any access to the coins on it. I heard about estimates of only 8 million coins being actually accessible and in some kind of regular or irregular circulation...

Re: Bitcoin dropping after BTC China said it is closing

#157
post #144

Earlier quoted context omitted.

I should give up on this, but I keep hearing this argument about tax collection. You can make an argument that fixed dollar amount taxes (almost like property taxes) drive direct demand for the currency. I need to pay $100, so I need to get that $100 -- if it costs me all my horses and gold to get it, then I have to buy it. You can even argue historically (in a manner analogous to the "Mises Regression Theorem") that…

The US federal government financed itself for the 19th century using land sales, tariffs, and little else. Selling land, for USD, and USD only, is certainly one way that it made USD valuable. Property taxes are very much the same kind of thing, as you mention. In effect, it makes landowners into tenants to the extent that the land is taxed. The government, being defined as the entity with sovereignty over a given reg…

Like I said, you can make a historical argument. Though tariffs were usually based on the value of the goods, so my argument applies there, and land sales (as far as I'm aware) were done by auction, so do not represent net demand for dollars. Not to mention that for most of the 19th century we had some form of hybrid metal backing for the currency.

But in modern times, ~90% of government revenue [1] is from taxes that are relative to income, and thus create no net demand for USD. I don't know when this became the case (at least the 60s), but I suspect for a very long time. The federal government, as far as I'm aware, has no property taxes; those are at the local or municipal level. And there, they are based on the assessed value of the property, so if dollars are expensive, then the taxes are lower, and if dollars are cheap, then the taxes are higher. Because the liquidity is required, you could argue that there's some marginal effect, but given that equity is easily converted to debt at scale, I'm dubious that that would ever be a factor.

In my opinion, fiat money is the closest that we've been able to come to "good" money in a sense -- easily transactable, scarce, fungible, hard to counterfeit, easy to validate. The value derives from these characteristics. The "scarce" aspect is the one that bothers me the most, because it doesn't have the same guarantees about scarcity as something like gold (although it excels at the other points). The notion that money is "backed" by anything is and always has been a red herring in my mind; in almost every case, disconnects between the thing that explicitly "backed" a currency and the currency itself have had little to no medium-term effect on the value of the currency, because the currency typically "inherits" the scarcity aspects of its backing. To what extent cryptocurrencies can succeed is still up in the air, but I remain very optimistic.

[1] https://www.cbo.gov/about/products/budget-economic-data

Re: Bitcoin dropping after BTC China said it is closing

#158

Earlier quoted context omitted.

"This is good for bitcoin"

Price goes down? Cheap coins! Price goes up? To the moon! A government accepts bitcoins? It's the future! A government doesn't accept bitcoins? They're scared, it means we're winning!

Price goes down? bitcoin is dead!

Price goes up? e-tulip, don't you see?

A government accepts bitcoins? Fools!

A government doesn't accept bitcoins? Of course! Why should they?

Just a counterpoint, the truth is probably in the middle.

Re: Bitcoin dropping after BTC China said it is closing

#159
post #131

Earlier quoted context omitted.

the high savings rate in China is a myth from 2004. In 2017, people poured all their savings into their kids/other relatives real estate purchases (which itself is a bubble). And the young people have credit card debts and no savings.

Real estate investments are a store of wealth, ie a savings product. Real estate investments are one of the few vehicles to store wealth other than relatively basic accounts that are available to a broad swath of consumers.

Yes, tell that to Greek citizens that were buying houses for 300k and now their value is less than 100k for the same house. Real estate is not a store of wealth, this has been proven many times in the past in several countries. I agree though that the prices on real estate are more stable than any cryptocurrency.

Re: Bitcoin dropping after BTC China said it is closing

#160

Earlier quoted context omitted.

And it is pretty likely they do so. In my opinion China is issuing their own e-currency pretty soon, so they don't really want any competitors. We are living in very interesting times.

Why would China need an e-currency? If you're in China you can already buy things online using the good-old yuan. What value would another currency add?

Completely control on the people spending it. Government will be able to put taxes on the people and no one will be able to hide their earnings. Also I suppose it would be much cheaper than circulating paper money.
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