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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

#281

Post by tomkarlo »

cecilpl2 wrote: post #260
mr_spothawk wrote: post #171

Earlier quoted context omitted.

while the supply of digital coins is infinite (you could fork btc, or any other chain, or create different coins that could then be forked) the supply of Bitcoins is finite & knowable. this is a component of the argument by "maximalists" who suggest that alternate coins/tokens are bullshit by design, and anybody who thinks they aren't is necessarily in favor of inflationary money. > Objects in the real world have uti…

Bigger diamonds are more desirable than larger diamonds, not because of the price, but because they look better and are sparklier and harder to lose and all sorts of other real-world metrics. If I want $1000 of bitcoin, I don't care whether that value is in 1 BTC, 100BTC, or 0.0001BTC. They are otherwise identical to me. Therefore, the fact that the total of all bitcoins in circulation can't exceed 23 million is irre…

What he said above: unless you have a long or short position, you don't care whether you get a full unit or some fraction thereof.

There are some elements of behavior economics that counter this - people like to buy lower-priced coins and stocks because they get "more" of them, from a unit perspective. But rationally, there's no reason to consider 1 BTC @ $10 any different from 0.1 BTC @ $100, hence the number of "units" seems potentially irrelevant.

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

#282

Post by lend000 »

This all rests on the assumption that Tethers are not backed by dollars as they are supposed to be. If they are backed, it is just a form of liquidity which is in no way manipulating the market, just creating ease of capital transfer between exchanges.

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

#283

Post by joe_the_user »

RachelF wrote: post #250
joe_the_user wrote: post #210

Earlier quoted context omitted.

Creating billions of dollars’ worth of value with a ridiculous perpetual-motion fake-dollar-printing machine is a real innovation. Creating money by printing is not a new thing. Making people believe that the money you've created with whatever hocus-pocus is real and that investment X will just spew money indefinitely is not at all a new thing. It is one very standard old thing. That by itself doesn't prove bitcoin i…

Indeed, a cynic would say Bitfinex were just copying the Fed's QE. Creating tether out of nothing to buy bitcoin is similar to the Fed creating dollars by QE to prop up asset prices.

Indeed, though states have boots and guns on the ground to a last resort backup the value of their currency (including protecting against competition).

So I'd pick "Fed-coin" as the last one to go down.

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

#284

Post by CryptoPunk »

Semirhage wrote: post #277
CryptoPunk wrote: post #274

Earlier quoted context omitted.

>>If I attempted to buy an ice cream cone with Bitcoin, will the money be transferred before the ice cream melts? The transfer is instant. To get a guarantee of settlement takes 6 confirmation, or about one hour, which is much quicker than the 6 weeks it takes for a credit card transaction to become irreversible. Unless you're purchasing something like a house, you don't need the payment to settle to complete the pur…

The long irreversible period of a credit charge is not a technical limitation, it’s a feature.

It's a feature that creates certain limitations in utility, as this article from Elaine Ou elaborates on:

https://elaineou.com/2016/08/01/the-value-of-settlement-fina...

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

#285

Post by copenja »

achompas wrote: post #238
joe_the_user wrote: post #210

Earlier quoted context omitted.

Creating billions of dollars’ worth of value with a ridiculous perpetual-motion fake-dollar-printing machine is a real innovation. Creating money by printing is not a new thing. Making people believe that the money you've created with whatever hocus-pocus is real and that investment X will just spew money indefinitely is not at all a new thing. It is one very standard old thing. That by itself doesn't prove bitcoin i…

> Making people believe that the money you've created with whatever hocus-pocus is real and that investment X will just spew money indefinitely is not at all a new thing. Across so many people, and at BTC's market cap though? I think that's unprecedented. Penny stocks or pyramid schemes, sure, but they never affect this many people or hit 12-digit valuations. (By the way, fiat money doesn't count as an example becaus…

That's an interesting question. Bernie Madoff’s Ponzi scheme is estimated to have lost clients $65 billion. The Bitcoin market cap is nearly double at $107 billion.

But Bernie Madoff's $65 billion is all real dollars paid into the scheme. Bitcoin market cap doesn't track the amount of the money that has been paid into the current Bitcoin market. It simply estimates the current market price, then multiplies that number by the total of number of Bitcoins.

So the amount currently paid into the current Bitcoin market is going to be much, much lower. Experts estimate that nearly 30% of current bitcoins are 'lost' forever in non-recoverable wallets. Also, the gal who bought 1000 bitcoin at 5 dollars hasn't re-paid another $6 million into the system. But, if Bitcoin crashed to zero today, would you also need to account for dollars lost by investors who built mining stations and gear?

I guess we will never know. But, I think it is fair to say that the Madoff scheme is in the same ballpark of Bitcoin.

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

#287

Post by ChuckMcM »

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…

While I love Matt's column and read it often I think there is a third possibility. "Real" (as in do it for their day job) foreign exchange traders looked at it and said, "Gee, there are all these tricks we get slapped for if we trying them on manipulating exchange rates, but these noobs either don't know about them or don't care, let's see how high we can push this thing..."

Watching the BitCoin saga from Mt Gox to today has often felt like watching a financial crimes historical reenactment society having an annual get together.

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

#288

Post by notahacker »

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.…

To put the "single large power plant" whose output exceeds Bitcoin usage in context, it's one so big that 1.3 million people were displaced to build it...

If one wanted to help lower income populations, it could be difficult to conceive a solution less likely to help them than bidding up energy prices to safeguard the proceeds of wealthy hackers' speculation. I'm going to go out on a limb and say that Bitcoin neither provides nor ever will provide as much utility to the world as, say, Ireland.

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

#289

Post by outworlder »

kaoD wrote: post #227
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.

And yet it isn't providing value to 0.05% of the world's population. Even if it did, the energy would go up (exponenially?) I'm not sure the tradeoff is worth it.

When I am playing a game, my computer's power consumption increases by a lot. I am using more energy and ultimately generating more entropy in the universe. Is it worth it?

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

#290

Post by pimmen »

lend000 wrote: post #282

This all rests on the assumption that Tethers are not backed by dollars as they are supposed to be. If they are backed, it is just a form of liquidity which is in no way manipulating the market, just creating ease of capital transfer between exchanges.

They have not completed any audits, and that astronomical dollar value backing up Tether is an extraordinary claim lacking extraordinary evidence. So, I would say it rests on the assumption that Tether is lying and have something to hide, backed by the fact that they haven't completed an audit.

The alternative, that this is not market manipulation, rests on blindly trusting that Tether is backed up by the dollars they claim.

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