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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

#211

Post by deevolution »

josu wrote: post #193
tomkarlo wrote: post #159

Earlier quoted context omitted.

Is the supply really "limited"? Sure, there's finite number of "coins" that can be generated. But unlike physical objects, there's not really any special property of that unit. Also, you can just generate a new currency of more units and similar utility (as has happened many times recently.) Objects in the real world have utility that's directly linked to their unit value. That's not necessarily true for Bitcoin... i…

I'd say that an analogy with diamonds works: There is an infinite supply of lab-made-diamonds, however they are not fungible with real diamonds. Them being substitute goods, lab-made-diamonds may have negatively impacted the price, but real diamonds are still considered scarce.

This analogy isnt complete though because it doesnt take into account network health. Its easy to make a cryptocurrency, but hard to build a network large enough to defend against various attacks. There are many, man coins out there suseptible to double spending - bitcoin is the most secure, and this security adds some value in itself.

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

#212

Post by ethbro »

SilasX wrote: post #155
ethbro wrote: post #146

Earlier quoted context omitted.

"smidge over 1%" It's not easy, but it's not impossible (to parent's bombastic assertion). I believe the Manhattan project spent something like 0.55% of the US military budget (against ~2013USD$900b yearly budgets, which seemed the peak in 1942-45). http://www.dictionary.com/browse/smidge

Because it had hard-won political approval; a bitcoin attack would face similar barriers. And I know what smidge means, I was expressing ire at your attempt to sound folksy.

Fwiw, I'm actually pretty folksy.

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

#213

Post by samastur »

pshin45 wrote: post #167
RIMR wrote: post #160

Earlier quoted context omitted.

Seriously, the way people talk about it you would think that a third of the world's energy supply was getting pumped into NVidia cards. The global average energy consumption is 110,000TWh. Every cryptocurrency in circulation collectively uses about 55TWh, or 0.05% of the world's energy usage.

Indeed, as I mentioned in a sibling comment, to put those numbers in context, Bitcoin consumes as much power globally as a single large power plant, and roughly 10% of the world's data centers [1]. To be sure, it's the growth rate of that consumption that is more concerning. But at the same time, there are lots of reasons to believe that Bitcoin's electricity consumption will naturally moderate and flatten over time.…

1% chance of changing the world for the better says nothing unless you also specify how much better.

Local bakery makes world a bit better, but not really worth if you needed a whole power plant to run it (intentionally ridiculously extreme for demonstration purposes).

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

#214

Post by hluska »

craigc wrote: post #27

I am fully prepared to receive negative points for this comment, but I do not believe there is anything new here. This narrative has been pushed by the media for almost a year now. The article even claims: > This method is not conclusive, but it has helped government authorities and academics spot suspicious activity in the past. I haven’t read the entire 66 page report yet, but assume for a second that the relations…

Good comment, I just have one picky edit (attached to a story I enjoy). You wrote, "during a bull market, when the price started to decline."

It's the opposite. Bull markets are when price starts to increase. Bear markets are when price starts to decline.

Years ago, I had an amazing macroeconomics professor named Alex Kelly. Dr. Kelly was an amazing educator with an incredible sense of humour, a penchant for telling the truth as he saw it, and genuine glee when he'd see students start to understand his material.

I'll never forget the class where Dr. Kelly stood up, did his impression of a bear standing on his hind legs, growling and pushing down the market. Then showing the converse, snorting like a bull and pushing up the market.

Afterwards, he did his usual shrug, reached into his pocket to fish out his everpresent Rolaids, quipped "now if anyone gets that wrong on the midterm..." and shook his head menacingly.

Dr. Kelly could flat out teach and I quote him to this day.

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

#215

Post by joshuahedlund »

joosters wrote: post #136
GuB-42 wrote: post #92

Earlier quoted context omitted.

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.

The South Sea bubble is by far a better comparison. It even had ICOs (sort of) and token trading!

See "Memoirs of Extraordinary Popular Delusions and the Madness of Crowds" (public domain on Gutenburg[0]) for both of these and more!

[0]http://www.gutenberg.org/ebooks/24518

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

#216

Post by ComradeTaco »

scj wrote: post #194
ComradeTaco wrote: post #124

Earlier quoted context omitted.

Bitcoin could go the way of any number of other cyptos; back to zero. In any case, nobody uses Bitcoin as a currency because it's logistically harder for 99.9% of people, and nobody uses it as a store of value because its insanely volitale. Bitcoin is really just a speculative asset.

I haven't used Bitcoin, and from what I've read I have two questions about it being a currency: If I attempted to buy an ice cream cone with Bitcoin, will the money be transferred before the ice cream melts? What costs more, the transaction fees or the ice cream cone?

> If I attempted to buy an ice cream cone with Bitcoin, will the money be transferred before the ice cream melts?

It will not.

>What costs more, the transaction fees or the ice cream cone?

There have been times where the average transaction cost was about $20. It's hovering around $0.80 cents now, to the best of my knowledge. So it depends on the market.

I belief that the current strategy is to convince others that bitcoin is a great transaction medium for everything under the sun (i.e. ice cream) and then cash out in dirty fiat once the price reaches a target so you can buy Lambos full of ice cream. It's really not a sincere attempt to create a currency as it is to masssively enrich early adopters by encouraging use by normal people.

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

#217

Post by cup-of-tea »

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 what modern banking is. 95% of money in use is created by the private banks themselves.

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

#220

Post by joe_the_user »

john_moscow wrote: post #122
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…

I'd say there's a simpler explanation. Bitcoin has a limited predictable supply, so its price is mostly a function of the demand. And demand correlates with expectations, that typically follow the hype cycle [0]. I'm not sure how much someone managed to single-handedly manipulate the price, but the plain old human psychology, FOMO and the positive feedback loop for media writing about bitcoin demand definitely played…

Why can't it be both? (Hype cycle and manipulation).

Indeed, any theory of manipulation has to involve a managed hype cycle.

If a small number of people and organizations controlled both bitcoin supply and bitcoin trading and had the ability generate tether, they could "prime the pump" of the hype cycle to get attention and a rise in price. They'd then cash out money from the folks who put dollars into bitcoin. But once the hype cycle turned, they could slow down trading in bitcoin, slow down the cashing-out of tether, and print new tether so that a bust wouldn't be evident in the price, and so that an actual mass exodus from bitcoin into real dollars wouldn't be possible.

Thus bitcoin prices could be sustained at an apparently high level, with even a few upward bumps, for a while.

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