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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

#291

Post by DennisP »

joe_the_user wrote: post #283
RachelF wrote: post #250

Earlier quoted context omitted.

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.

I've been reading up lately on how fiat money systems work, and it doesn't seem to me that boots and guns really help. Certainly there have been countries with plenty of soldiers who failed to maintain the value of their currency.

You have to pay taxes in the local currency, but if the currency crashes you just have to pay a higher nominal amount of taxes.

You can outlaw competing currencies, but you can only do that in your own country, and it doesn't necessarily keep your official currency from going down the toilet.

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

#292

Post by bduerst »

copenja wrote: post #285
achompas wrote: post #238

Earlier quoted context omitted.

> 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 numbe…

The apples:apples comparison would be a total of amount of currency converted into Bitcoin.

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

#293

Post by notahacker »

pshin45 wrote: post #255
samastur wrote: post #213

Earlier quoted context omitted.

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).

> unless you also specify how much better. That is impossible for anyone to say with any certainty, because the future impact of new technologies are, by their nature, impossible to predict. The oft-cited statistic is that 2 billion adults worldwide are still completely “unbanked” and don’t even have a basic checking or savings account. One percent of 2 billion is 20 million people (roughly the population of a mid-si…

A global decentralized currency like Bitcoin could eventually allow what happened with a global decentralized currency like Bitcoin to happen to the 2 billion unbanked too. I'm not convinced that foisting 50% weekly price swings, MtGox-calibre ecosystem security and Bitfinex-style creative accounting upon poorly educated people who rely on those savings to not die is a net positive for society.

Aside from the obvious downsides, Bitcoin doesn't even do any of the good bits of m-Pesa (local currency denominations, works on dumbphone, instant transactions, intuitive because it's basically mobile credit, loans and repayments)

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

#294

Post by DennisP »

tomkarlo wrote: post #159
john_moscow wrote: post #122

Earlier quoted context omitted.

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…

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…

> Objects in the real world have utility that's directly linked to their unit value.

But that's not true of money...whether it's official fiat money, many local currencies, or even gold, which has some utility but not near enough to support its total value.

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

#295

Post by pshin45 »

notahacker wrote: post #288
pshin45 wrote: post #167

Earlier quoted context omitted.

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…

> so big that 1.3 million people were displaced to build it.

The fact that China built a large hydroelectric power plant (Three Gorges Dam) that displaced a lot of people, shouldn't be an argument against Bitcoin. There are ways to provide electricity for Bitcoin mining that are green and don't displace people.

> safeguard the proceeds of wealthy hackers' speculation

The people who get richest from the stock market are those who are already wealthier to begin with. Are you against the stock market and securities in general?

> nor ever will provide as much utility to the world as, say, Ireland.

Apples to oranges comparisons aside, a better comparison would be Bitcoin eventually becoming a popular alternative for gold investment, and/or an alternative to Western Union.

Gold mining causes direct physical destruction of landscapes and ecosystems [1]. I think Bitcoin mining largely displacing gold mining is a good thing.

Western Union charges as much as $95 to send $1,000 [2], and their customers are generally poorer working-class people. M-Pesa in Kenya has already demonstrated that mobile money services can lift hundreds of thousands of people out of poverty [3]. The Bitcoin protocol doesn't have a corporate profit motive and can become a cheaper and more globally scalable version of Western Union or M-Pesa.

[1] https://www.brilliantearth.com/gold-mining-environment/

[2] https://www.nerdwallet.com/blog/banking/western-union-review...

[3] https://news.mit.edu/2016/mobile-money-kenyans-out-poverty-1...

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

#296

Post by notahacker »

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!

Someone really needs to do a "For carrying-on an undertaking of great advantage but no-one to know what it is!" ICO

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

#297

Post by ethn »

Ridiculously terrible analysis. The obvious assessment is that when people use their tether to buy coins, thereby leaving exchanges, the price goes up as there is more demand. This generally occurs when investors believe they can get an asset for a steal, such as when the Bitcoin price goes down.

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

#299

Post by arisAlexis »

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…

usdt is a usd peg system with no fake money. did you ever read the technical details?

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

#300

Post by arisAlexis »

GuB-42 wrote: post #92
ceejayoz wrote: post #33

Earlier quoted context omitted.

> 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.

could you explain how tulips had a technological innovation? i can't understand how people can even bring it up as a legit comparison
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