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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

#31

Post by tehlike »

nerdponx wrote: post #9

Fortunately, USD balances on GDAX are FDIC insured for US citizens [0]. I accept that I might not be able to cash out of cryptos in an emergency, due to liquidity or transaction times or something else, but I sure as hell will be able to get out any USD I might have in GDAX, which is a big confidence boost to me. They claim that all crypto deposits are "fully insured" as well, by a "syndicate of insurers through Lloy…

Black-swan events sounds less rare in digital world.

I am also doubting if FDIC insurance is for the full amount, or the 250K that's often cited for banks.

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

#32

Post by Edmond »

patrickg_zill wrote: post #25
Edmond wrote: post #18

Earlier quoted context omitted.

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/201…

Of course the problem is that major parts of your argument apply to the Federal Reserve system also, as well as nearly all other fiat currencies such as the Euro, Pound, Yuan etc. So exchanging fiat Euros for fiat Bitcoin means what, exactly?

No it doesn't apply to them. This is a popular argument from libertarians but unfortunately it is a purely ideological argument that has no basis in reality.

The aforementioned currencies are backed by the value of their issuer's economies, those economies are real.

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

#33

Post by physguy1123 »

rlpb wrote: post #23

> The delays — ten minutes to over an hour — and fees add enough friction to generate the spread between exchanges, even if you assume everyone’s using trading bots as quickly as possible. Can an arbitrager not simply hold both BTC and cash on multiple exchanges at once? When a price difference swings one way, sell on one exchange and buy on the other, without worrying about transferring anything between exchanges. W…

This isn't done, as evidenced by the very different prices on each exchange. It's considered unwise to keep bitcoins on the exchange, and certain exchanges have a 'trustworthiness' premium that they charge. Presumably there's not enough capital willing to take this risk to move the markets.

People might start taking advantage of the futures market to go short btc, so exchange exposure is only limited to the time it takes to immediately move coin off exchange. Time will tell if that allows enough capital to arb the difference.

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

#35

Post by dragonwriter »

patrickg_zill wrote: post #25
Edmond wrote: post #18

Earlier quoted context omitted.

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/201…

Of course the problem is that major parts of your argument apply to the Federal Reserve system also, as well as nearly all other fiat currencies such as the Euro, Pound, Yuan etc. So exchanging fiat Euros for fiat Bitcoin means what, exactly?

Bitcoin is not fiat; a fist currency is one whose value is based on its backing by a government (“fiat” specifically refers to the authoritative dictate of the State giving the currency value.)

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

#36

Post by patrickg_zill »

Edmond wrote: post #32
patrickg_zill wrote: post #25

Earlier quoted context omitted.

Of course the problem is that major parts of your argument apply to the Federal Reserve system also, as well as nearly all other fiat currencies such as the Euro, Pound, Yuan etc. So exchanging fiat Euros for fiat Bitcoin means what, exactly?

No it doesn't apply to them. This is a popular argument from libertarians but unfortunately it is a purely ideological argument that has no basis in reality. The aforementioned currencies are backed by the value of their issuer's economies, those economies are real.

Establish the means by which my having a million dollars' worth of bills in my hand, can get at the value of the USA economy.

If I can buy an item from Amazon or Overstock.com via Bitcoin or via Yen or via USD, explain how there is an actual difference.

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

#37

Post by hndamien »

Jasper_ wrote: post #8
hndamien wrote: post #3

Earlier quoted context omitted.

I'm not sure if it is an illusion of safety, because the infrastructure around Bitcoin (which itself seems safe) is remarkably better now than it was 5 or 6 years ago. This is nothing like how wild it was then, so in comparison, it seems like it is almost regulated.

Says who? Most of the popular exchanges don't trade in USD, they trade in Tethers, which only have a promise, not a basic audit, that they are backed by actual USD.

Everybody knows Tethers are worthless, and "backed" by a flimsy promise that they are not backed by anything. I would say that this is remarkably transparent that the Emporer has no clothes. Compared to Mt Gox, which I suspected was insolvent from their actions only while the world kept on believing. This is a major improvement.

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

#39

Post by DennisP »

davidgerard wrote: post #12
DennisP wrote: post #11

Earlier quoted context omitted.

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.

Then it sounds like your argument should just be "this is too risky for more than a tiny investment unless you're very secure," which I agree with.

Where I part ways is in your claim that the price is somehow illusory and it's impossible to cash out. Until recently I worked for a company that was mostly paid in crypto, and had no trouble selling it off, moving the money into a bank, and meeting payroll.

Crypto is new and the market infrastructure is immature; that means there's more risk, and also more return, just like the early days of other new asset classes that have arisen over the past century. William Bernstein wrote about this in his recent Investing for Adults series.

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

#40

Post by scott00 »

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…

Crypto market cap doesn't mean the same thing as the market cap of a stock, but that doesn't mean it's meaningless. It approximates the total amount of wealth currently held in the form of a particular crypto, which is interesting to know in comparison to more traditional asset classes (stocks, bonds, gold, etc) as well as to other cryptos. If you also have some knowledge or an assumption about the velocity of money in the crypto, it also gives you an indication as to the total amount of commerce that can be facilitated by the crypto at its current valuation.
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