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

Post by dredmorbius » Tue, Dec 19, 2017, 1:53 AM UTC

jcranmer wrote: post #119

dredmorbius wrote: post #103

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No, it's the fact that the trading in Bitcoin is so thin. A modestly-large trade can completely swamp the markets. The NYSE sees on the order of a billion trades per day. The high over the past year is about 1.9, the low about 0.46. The dollar trade was $16 - $107 billion/day. I'm not finding transactional volume for bitcoin, but the dollar vollume has peaked at $2.5 billion, and until September, 2017, was under $500…

> Before that date, roughly, more money moves through one stock exchange in a single day than all of Bitcoin in a year. Calling the NYSE "just" one stock exchange isn't exactly a fair comparison. The NYSE is somewhere in the region of 20% of the total stock exchanges by market cap. It's twice the size of the next-largest stock exchange (NASDAQ), which is itself about twice as large as a "normal" large stock exchange…

Post by hndamien » Tue, Dec 19, 2017, 2:24 AM UTC

hndamien wrote: post #87

twelve40 wrote: post #17

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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…

I have been invested in Bitcoin since the very early days. This bull run can be explained, in fact it was predicted by many. I'd be happy to address any questions.

Post by lagadu » Tue, Dec 19, 2017, 4:23 PM UTC

syllogism wrote: post #238

lagadu wrote: post #229

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Following the same logic: what would you pay to own all of a single currency? It'd be completely worthless as nowadays they're not backed by anything.

People keep saying this, and it's totally untrue. Because of tax, there's a fixed percentage of every country's GDP that must be transacted in that country's currency. It's 100% false that "fiat currencies aren't backed by anything". If I owned all the currency of the country you reside in, you would have no choice but to trade with me. If you don't buy any currency from me, you won't be able to pay your taxes and yo…

Post by baddox » Tue, Dec 19, 2017, 6:05 PM UTC

Cakez0r wrote: post #179

arcticfox wrote: post #22

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But the stock market - in general - has ridiculously profitable and powerful entities behind it. No matter what happens to investor confidence, ownership of Apple is going to be very valuable because they generate a ridiculous amount of profit. Cryptos, on the other hand, are entirely based on investor confidence.

It's not a given that Apple will continue to generate insane profit. Apple will remain very valuable because it has tangible assets that can be sold (book value). So with a total lack of investor confidence, the price floor of Apple shares should be book value - debts. Cryptocurrencies aren't backed by tangible assets, so the price floor is 0.

Post by inimino » Wed, Dec 20, 2017, 6:26 AM UTC

log_base_login wrote: post #127

inimino wrote: post #62

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The "crypto" in bitcoin is about being able to know that the copy of the blockchain you have is indeed the "authentic", consensus blockchain. It has nothing to do with keeping anything secret, as the entire blockchain is literally as public as it is possible for data to get.

Thank you for clarifying that for me. I recall reading some article about how, when mining for bitcoin (for example), what was really being mined are progressively larger prime numbers, or scientific data, or some such data requiring lots of computation. Isn't there something of real value being mined? If not, what is being done when people _mine_ bitcoins?