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Bitcoin could become ‘worthless’, Bank of England warns

theguardian.com

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Re: Bitcoin could become ‘worthless’, Bank of England warns

#51

Post by kergonath »

imaginator wrote: post #17
zwirbl wrote: post #9

Earlier quoted context omitted.

This is often repeated, but it always ignores that there are state-level actors (often called a "state") propping up currencies, often supported by central banks. In this regard Bitcoin is definitely not "like any other currency". This is by no means exhaustive, there are a myriad of differences

Zimbabwe has entered the room. Also had a central bank before the last round of hyperinflation/reset. One could argue that the lack of a central bank is a feature. What other differences would would you imagine distinguish bitcoin from central bank currencies?

“One state is doing terribly” (or even a handful of them, before someone mentions the Weimar republic) really is not equivalent to “it is impossible for a state to do it well”.

Re: Bitcoin could become ‘worthless’, Bank of England warns

#52

Post by croon »

jack_pp wrote: post #27
croon wrote: post #19

Earlier quoted context omitted.

> I do think bitcoin is a bit more like Gold, although Gold has real uses so that is still a bit of a rough comparison. I agree with everything except that last part is understated. Bitcoin is like gold with the only difference that gold has functional uses, whereas Bitcoin is entirely replaceable and can be forked and duplicated.

That's like saying the $ or any other currency is entirely replaceable. What bitcoin has over any other cryptocurrency is the massive mining power behind it, making it the most secure. https://braiins.com/blog/how-much-would-it-cost-to-51-attack... So if you create another cryptocurrency which could use the same ASICS as bitcoin and you convince a lot of miners to switch then maybe.. it could be replaced but that is…

> That's like saying the $ or any other currency is entirely replaceable.

No it's not. That's just another reduction missing the point.

If the dollar was to be replaced, a new currency would be issued, there would be a period of trade-in for old currency, all systems of governance, regulation, etc would recognize it and issues could be handled.

Gold would still be used for everything from electronics to satellite coating to who-knows-what.

In the case of Bitcoin it would just disappear. You're arguing it's hard to replace because of its participants, which may be true, but is far less likely than the participants in the dollar.

Some businesses dependent on it and a lot of individual participants would lose their value in their wallets, and that's it. Believing in Bitcoin is betting on that being enough to prop it up. Gamble accordingly.

Re: Bitcoin could become ‘worthless’, Bank of England warns

#53

Post by rjbwork »

bwb wrote: post #38
rjbwork wrote: post #15

Earlier quoted context omitted.

Don't forget that whole pesky "have to pay taxes to the state in their chosen currency under threat of the state monopoly on violence" thing. It is somewhat touched on in your first sentence, but at the end of the day, if you want to engage in productive economic activity in a particular jurisdiction, you must render what is Caesar's unto Caesar - and Caesar demands his preferred fiat.

Taxes are good, they pay for civilization and the platform we all operate within :) I know people hate hearing that, but it is the truth. I am frustrated with how high they are on some things, bad spending, etc. But at the end of the day look around at what we have built as a civilization. That is from the collective pooling of money to build the entire system.

I tend to agree. I sometimes fantasize that it were otherwise, but I don't think it's really possible to maintain a society of any size or sophistication without a state to do a lot of the fundamental things that keep things moving.

Re: Bitcoin could become ‘worthless’, Bank of England warns

#54

Post by klodolph »

vorhemus wrote: post #37

I see Bitcoin closer to the art market then to gold or a currency. There is de facto no universal rule for pricing a work of art other than what someone is willing to pay for it at auctions. As long as everyone assumes that artworks will be sold more expensive in the future and no one sells below the purchase price, the prices will rise - provided that the interest in it remains upright.

Obviously not everyone assumes that Bitcoin will be more valuable in the future.

Re: Bitcoin could become ‘worthless’, Bank of England warns

#55

Post by KptMarchewa »

dave_sullivan wrote: post #43
KptMarchewa wrote: post #28

Earlier quoted context omitted.

Let them hold all the way to zero.

If bitcoin keeps dropping 50% every week for the next 5 years, it still won't be zero. And every 50% drop, someone's thinking "Now could I double my money?" I dunno, there are feedback mechanisms that could keep this thing alive for a long time. And if not BTC then certainly some crypto based on the concepts.

>someone's thinking "Now could I double my money?"

You could always try to find the bigger fool unless you block the conversion between crypto and real money.

Anyway, this kind of schemes always come crashing down. There will be not a lot of people willing to catch a falling knife after some point.

Re: Bitcoin could become ‘worthless’, Bank of England warns

#56

Post by ghiculescu »

vorhemus wrote: post #37

I see Bitcoin closer to the art market then to gold or a currency. There is de facto no universal rule for pricing a work of art other than what someone is willing to pay for it at auctions. As long as everyone assumes that artworks will be sold more expensive in the future and no one sells below the purchase price, the prices will rise - provided that the interest in it remains upright.

I’ve heard this metaphor lots and find it super confusing. The price of art is still based on something - some art looks nice, or was made by someone famous.

Re: Bitcoin could become ‘worthless’, Bank of England warns

#57

Post by jack_pp »

mattbrewsbytes wrote: post #40
donatj wrote: post #6

Bitcoin just like any other currency, is worth exactly what people think it is worth. The entire financial system is basically a collective delusion of sorts. Any currency can become worthless as faith in it drops out.

I would counter that Bitcoin is not a currency. A currency is used as a medium to exchange goods/services so you don't have to take goats down to the market to purchase seed. It operates more like a stock than a currency and can be moved by any person/firm/entity that has a few billion dollars. I would venture a guess that the number of individuals using bitcoin to purchase goods/services is less than a couple percen…

It is a currency, a fairly new one that hasn't gained mass adoption yet, with many problems (tx cost and tx/s limits) but people can and do use it to buy stuff. My energy provider in Romania lets me pay my bills with bitcoin.

That's like saying any new social media website you create isn't really a social media website because it has only 10 users.

Re: Bitcoin could become ‘worthless’, Bank of England warns

#58

Post by md_ »

ghiculescu wrote: post #56
vorhemus wrote: post #37

I see Bitcoin closer to the art market then to gold or a currency. There is de facto no universal rule for pricing a work of art other than what someone is willing to pay for it at auctions. As long as everyone assumes that artworks will be sold more expensive in the future and no one sells below the purchase price, the prices will rise - provided that the interest in it remains upright.

I’ve heard this metaphor lots and find it super confusing. The price of art is still based on something - some art looks nice, or was made by someone famous.

Hmm, I don't fully buy the metaphor (since BTC are fungible), but I do think it exhibits collector economics.

I'm in many ways an art fan, but art pricing is totally irrational:

1. Prints cost substantially less than paintings since they're less limited

2. Prints price based on lots of intangibles (how limited the series is, what series it was, what the artist's role was in it, etc)

3. Fundamentally, I don't think buyers get that much more pleasure from an original than from a print or authorized reproduction

4. Many buyers loan their purchases to a museum (which has tax advantages) or keep them in free ports or similar, where they can't visit them in person

The really high end market (i.e. million dollar+ art market) is really clearly speculative a lot of the time. Or the pleasure is "I like owning this", not "I like looking at this', which is itself hard to sever from the speculative value.

Re: Bitcoin could become ‘worthless’, Bank of England warns

#59

Post by klodolph »

dave_sullivan wrote: post #43
KptMarchewa wrote: post #28

Earlier quoted context omitted.

Let them hold all the way to zero.

If bitcoin keeps dropping 50% every week for the next 5 years, it still won't be zero. And every 50% drop, someone's thinking "Now could I double my money?" I dunno, there are feedback mechanisms that could keep this thing alive for a long time. And if not BTC then certainly some crypto based on the concepts.

If you owned the entire US, some $270 trillion in assets, and your position decreased in value 50% each week, after one year, you’d have just enough left to play one game at the nickel arcade… but not two.

At some point you have to round something to zero.

Re: Bitcoin could become ‘worthless’, Bank of England warns

#60

Post by Balero »

ghiculescu wrote: post #56
vorhemus wrote: post #37

I see Bitcoin closer to the art market then to gold or a currency. There is de facto no universal rule for pricing a work of art other than what someone is willing to pay for it at auctions. As long as everyone assumes that artworks will be sold more expensive in the future and no one sells below the purchase price, the prices will rise - provided that the interest in it remains upright.

I’ve heard this metaphor lots and find it super confusing. The price of art is still based on something - some art looks nice, or was made by someone famous.

I can get an exact copy of a piece of artwork, say the Mona Lisa, for like $20. It will look identical, maybe another $50 for a nice frame. What you are seeing is identical.

The art market is not buying and selling pieces of artwork. It is for obfuscating money. Where the money came from, where and who the money is going to, how much is owed to or hidden from governments.

Art is expensive because it makes it easier to obfuscate large amounts of money.

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