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Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

nytimes.com

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Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#91

Post by ggggtez »

craigc wrote: post #56
thisisit wrote: post #46

Earlier quoted context omitted.

> The math regarding Bitcoin’s price increase is actually pretty sound, and I encourage anyone who disagrees to read this article: https://medium.com/the-crypto-times/why-is-everyone-investin... . The article doesn't prove the math is sound except quote some people about price prediction and talk about how pricey bitcoin will get because population, gold market size etc. And then it also misses why people don't inves…

> I am sure many said something similar about housing prices in 2005. The difference is that the housing prices were clearly in a bubble and banks were intentionally packaging subprime mortgages that they knew were bad and selling them as a low risk investment. This is much much different than Bitcoin. I would argue that Bitcoin is the only asset class that is not currently in a bubble. > The article doesn't prove th…

>The difference is that the housing prices were clearly in a bubble

The above article shows that Bitcoin was at the very least, in a bubble last year, and may still be one.

>and banks were intentionally packaging subprime mortgages that they knew were bad and selling them as a low risk investment.

And nearly every coin has an ICO which is a "sure thing". Everyone is selling their coin like it's a low risk investment.

>This is much much different than Bitcoin.

How?

>I would argue that Bitcoin is the only asset class that is not currently in a bubble.

So, you're living in denial then?

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#92

Post by GuB-42 »

ceejayoz wrote: post #33
kgwgk wrote: post #28

Today Matt Levine talks about this paper in his daily column: https://www.bloomberg.com/view/articles/2018-06-13/judge-rul... "of these two explanations— 1) Bitcoin’s rapid and sustained rise is due to the fact that it satisfies a real economic need in an elegant way, and people have responded to that; or 2) Bitcoin’s rapid and sustained rise is due to a magical fountain of fake dollars that everyone just decided to…

> Creating billions of dollars’ worth of value with a ridiculous perpetual-motion fake-dollar-printing machine is a real innovation. That's silly. Ponzi-style schemes have been around since at least the late 1800s.

If anything, Bitcoin is closer to the even older Tulip-mania than to a Ponzi scheme.

A Ponzi scheme is a specific kind of fraud based on the promise of an unreasonably high return on investment which is actually payed by late adopters. Bitcoin doesn't make promises and it doesn't have a cover story to hide the source of the money. It may be a bubble, but it is not a Ponzi scheme.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#93

Post by zerostar07 »

rayuela wrote: post #76
paulpauper wrote: post #73

It's worth noting, SSRN is not peer reviewed, but the NYTimes by omitting this important fact, one can mistake this paper for having the same credibility and soundness as a peer-reviewed paper. Anyone can submit to SSRN. The editorial standards are almost non-existent.

Yeah it's like you omitting the fact that it was published by two reputable finance professors who's research specializes in financial market manipulation.

Which is a major reason why peer review exists, to prevent authoritative people pushing their agenda.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#94

Post by ceejayoz »

Jtsummers wrote: post #65
Nursie wrote: post #43

Earlier quoted context omitted.

> IF current cryptocurrency owners are storing value in Tether so they they don't lose money, then more Tether's should be printed. Why ? Tether is supposed to be printed when (and only when) new dollars are given directly to them. If cryptocurrency owners want to store value in tethers, they must buy existing tethers with their cryptocurrency. That's how this is supposed to work. If more tethers are printed to fulfi…

From the Tether FAQ: > The Tether Platform is fully reserved when the sum of all tethers in circulation is less than or equal to the balance of fiat currency held in our reserve. That is to say, they offer no guarantee that 100% of USDT in circulation are backed by USD at any given moment.

On the home page at https://tether.to/, it states:

> Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#95

Post by sethrin »

spiorf wrote: post #79
Donzo wrote: post #74

Earlier quoted context omitted.

Real US Dollars have a very large arsenal with unimaginable destructive powers propping up their value. The dollars may be fake but the man with the gun who is standing behind them is very real.

This is the internet, and those weapons can't fire down here. Try, instead, to delete a two week old transaction from the bitcoin blockchain. You will find that even with military-sized funding, you can't. That's what is backing up bitcoin's value

Why is that valuable?

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#96

Post by Retric »

spiorf wrote: post #79
Donzo wrote: post #74

Earlier quoted context omitted.

Real US Dollars have a very large arsenal with unimaginable destructive powers propping up their value. The dollars may be fake but the man with the gun who is standing behind them is very real.

This is the internet, and those weapons can't fire down here. Try, instead, to delete a two week old transaction from the bitcoin blockchain. You will find that even with military-sized funding, you can't. That's what is backing up bitcoin's value

I can't exactly delete a physical transaction with real money, so that provides zero new benefit.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#97

Post by zaroth »

Jtsummers wrote: post #65
Nursie wrote: post #43

Earlier quoted context omitted.

> IF current cryptocurrency owners are storing value in Tether so they they don't lose money, then more Tether's should be printed. Why ? Tether is supposed to be printed when (and only when) new dollars are given directly to them. If cryptocurrency owners want to store value in tethers, they must buy existing tethers with their cryptocurrency. That's how this is supposed to work. If more tethers are printed to fulfi…

From the Tether FAQ: > The Tether Platform is fully reserved when the sum of all tethers in circulation is less than or equal to the balance of fiat currency held in our reserve. That is to say, they offer no guarantee that 100% of USDT in circulation are backed by USD at any given moment.

Not that I would trust them, but literally the next sentence;

Through our Transparency [1] page, anyone can view both of these numbers in near real-time.

[1] - https://wallet.tether.to/transparency

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#98

Post by ceejayoz »

craigc wrote: post #90
jandrese wrote: post #83

Earlier quoted context omitted.

The extraordinary claim that people pumped billions of real US dollars into an upstart exchange with no proper accounting.

Ahhhh. Okay that makes more sense. Although at the time they did have accounting and audits. The last audit was September 2017, I believe.

No, Tether never completed an audit. Their auditor fired them. Their claimed "frequent professional audits" on the home page encompasses precisely zero completed audits.

https://www.coindesk.com/tether-confirms-relationship-audito...

> Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame. As Tether is the first company in the space to undergo this process and pursue this level of transparency, there is no precedent set to guide the process nor any benchmark against which to measure its success.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#99

Post by sanderjd »

craigc wrote: post #56
thisisit wrote: post #46

Earlier quoted context omitted.

> The math regarding Bitcoin’s price increase is actually pretty sound, and I encourage anyone who disagrees to read this article: https://medium.com/the-crypto-times/why-is-everyone-investin... . The article doesn't prove the math is sound except quote some people about price prediction and talk about how pricey bitcoin will get because population, gold market size etc. And then it also misses why people don't inves…

> I am sure many said something similar about housing prices in 2005. The difference is that the housing prices were clearly in a bubble and banks were intentionally packaging subprime mortgages that they knew were bad and selling them as a low risk investment. This is much much different than Bitcoin. I would argue that Bitcoin is the only asset class that is not currently in a bubble. > The article doesn't prove th…

> The difference is that the housing prices were clearly in a bubble and banks were intentionally packaging subprime mortgages that they knew were bad and selling them as a low risk investment.

That's exactly what Bitcoin looks like to me. Places like Goldman Sachs are getting involved in selling Bitcoin derivatives. These are akin to subprime mortgage derivatives; the bankers know their current value is inflated with respect to their fundamental value, but for the time being people clearly want to buy them, so they can make lots of money selling them. Once they are making money selling them, it behooves them to downplay the risk. They can point at a BTC graph, talk about it is the future, draw a line up and to the right, and make it seem like a no-brainer.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#100

Post by briatx »

paulpauper wrote: post #64
cstejerean wrote: post #55

Earlier quoted context omitted.

Which evidence? Because around December when they were printing about a billion dollars worth of tether there was zero evidence it was backed by anything other than wishful thinking. Maybe that’s changed?

https://tether.to/wp-content/uploads/2017/09/Final-Tether-Co...

This report:

1. Is not an audit to be used for assurance purposes. The disclaimer at the top states that it "should not be used or relied on by any other party."

2. Is rather old now.

3. Was conducted by a firm that no longer conducts business with Tether, probably because Tether would not comply with information requests needed to conduct an actual audit, which is not as difficult as Tether makes it sound here: https://www.coindesk.com/tether-confirms-relationship-audito...

Or in other words, it isn't proof of anything, and the fact that Tether has not been able to produce an actual audit for assurance purposes in all this time, speaks volumes.

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