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Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

davidgerard.co.uk

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Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#11

Post by DennisP »

baddox wrote: post #5

Don’t all of the complaints about exchange rate and market cap apply to virtually any other item that is traded? Spread exists in forex and stock markets. Market cap is extremely commonly cited for stock markets. Sure, the effects may be stronger in Bitcoin due to its higher volatility, lower volume, etc., but that should be the author’s argument, instead of “if you don’t know the basic Finance 101 definitions of som…

Well he does argue that the infrastructure isn't as advanced and regulation isn't as mature. But you could say the same about equities in emerging markets.

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#12

Post by davidgerard »

DennisP wrote: post #11
baddox wrote: post #5

Don’t all of the complaints about exchange rate and market cap apply to virtually any other item that is traded? Spread exists in forex and stock markets. Market cap is extremely commonly cited for stock markets. Sure, the effects may be stronger in Bitcoin due to its higher volatility, lower volume, etc., but that should be the author’s argument, instead of “if you don’t know the basic Finance 101 definitions of som…

Well he does argue that the infrastructure isn't as advanced and regulation isn't as mature. But you could say the same about equities in emerging markets.

They're not being pitched to suburban mums and dads in the tabloids.

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#13

Post by davidgerard »

bagacrap wrote: post #4

Why is the fact that arbitrage is harder with btc a disadvantage? And the fact that the "price" reflects recent sales rather than future sales seems, well, obvious, and identical to other securities/commodities.

It makes the price stupidly volatile, and the thin per-exchange order books make it much more manipulable.

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#14

Post by andr »

What the article dances around is the Efficient Market Hypothesis, which, in short, claims that there is one true price for every financial asset. No market is truly efficient, but some are more efficient than others. Low spreads and lack of arbitrage opportunities (the ability to buy an asset on one exchange and immediately sell it on another for a profit) are signs of a more efficient market.

Bitcoin, clearly, is far from an efficient market. Everybody knows that. A lot of people are profiting from that, although there is a significant risk involved from the shoddy state of most exchanges.

As a nitpick, smart order routing is not something stock and futures exchanges give you, it's a layer you can buy or build on top of the available exchanges.

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#15

Post by davidgerard »

(author here) I originally submitted this with just the second part of the title, 'cos Part 1 doesn't deliver on "why you can't cash out". I expect two or three more parts, that answer the question: KYC/AML, oddly-convenient ineptitude, and hoo boy Tethers.

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#17

Post by twelve40 »

davidgerard wrote: post #10
baddox wrote: post #5

Don’t all of the complaints about exchange rate and market cap apply to virtually any other item that is traded? Spread exists in forex and stock markets. Market cap is extremely commonly cited for stock markets. Sure, the effects may be stronger in Bitcoin due to its higher volatility, lower volume, etc., but that should be the author’s argument, instead of “if you don’t know the basic Finance 101 definitions of som…

(author here) This is targeted to the general public, who do actually need Finance 101, because they really don't know what they're getting lured into by the mindlessly positive articles and headlines in the mainstream press. Mostly written by people who don't understand either. I actually consider it seriously unethical to market cryptos as an investment to retail investors - they just do not understand the insane l…

But at the end of the day, how is it different from the current equities market? (aside from immature tools and imperfect infrastructure that is just shaping up). Stock market can tank 50% like it did in 2009 (together with the real estate market) and your average investor will be screwed just the same. Even tech and fundamental analysis gurus cannot explain the endless bull market we're on, how is getting lured into stock market with positive press today is any different than BTC? Currently both are different forms of gambling imho.

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#18

Post by Edmond »

davidgerard wrote: post #10
baddox wrote: post #5

Don’t all of the complaints about exchange rate and market cap apply to virtually any other item that is traded? Spread exists in forex and stock markets. Market cap is extremely commonly cited for stock markets. Sure, the effects may be stronger in Bitcoin due to its higher volatility, lower volume, etc., but that should be the author’s argument, instead of “if you don’t know the basic Finance 101 definitions of som…

(author here) This is targeted to the general public, who do actually need Finance 101, because they really don't know what they're getting lured into by the mindlessly positive articles and headlines in the mainstream press. Mostly written by people who don't understand either. I actually consider it seriously unethical to market cryptos as an investment to retail investors - they just do not understand the insane l…

There is only one word suitable for describing bitcoin: scam

The vested interest has been very successful in obscuring this basic fact, usually by conflating it with a bunch of other unrelated matters (decentralized infrastructure, fee-less money transfer, easy international trade...etc)

I penned a tongue-in-cheek layman description of bitcoin that alludes to the basic scaminess of it: http://blog.codesolvent.com/2017/12/the-bitcoin-scam-needs-t...

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