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A Prediction: Bitcoin Is Doomed to Fail

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Re: A Prediction: Bitcoin Is Doomed to Fail

#231

Post by atmosx »

At the beginning I thought so too, that BTC is doomed in the long run. But after the spike prices and a careful re-reading the only really thing that still puzzles me is the D. Ron and A. Shamir paper[1] released in 2012. If this paper holds true then a handful of early adopters holding more than 95% (the paper states 98%) of the currency, will and can bring the currency up and down overnight and their extremely powerful position in the BTC market cannot be challenged.

Bitcoin has two qualities that are unique:

1) Extremely high degree of privacy (you can put 50.000.000 USD worth of USD in a USB stick and pass through 7 airports, or print them in an A4 page encrypted with GPG, and no one will know).

2) Transaction speed: You can send money from Iceland to China (even huge amounts) very quickly (less than 1 hour), with no third party being involved.

There will be always a market to request this kind of qualities. However if any of those two qualities goes missing for whatever reason it is doomed. Another way to kill BTC would be to create another crypto-currency that have additional features and would kill BTC on the spot.

[1] http://eprint.iacr.org/2012/584.pdf

Re: A Prediction: Bitcoin Is Doomed to Fail

#232

Post by rantanplan »

dwaltrip wrote: post #190
kens wrote: post #156

My prediction is that bitcoins are midway through a short-lived bubble and then rapidly fall to approximately 0, and in a few years people will look back with the disbelief now reserved for pets.com. The hype - get in right now and get rich, or you'll miss out and kick yourself - reminds me of 1999. My in-laws were talking about bitcoins yesterday, so bitcoins are getting the attention of the public at large; I take…

There is no such thing as intrinsic value, all value is subjective, only existing if there is a conscious being that can provide a valuation. These beings have shifting, impermanent, prefecerences, and non-uniform preferences. The many factors which affect their considerations also change quite frequently: a glass of water is worth very little when I'm boating across a large pristine lake, yet it is worth an enormous…

Uhh, yes there is such a thing as intrinsic value and... you just proved it!

"a glass of water is worth very little when I'm boating across a large pristine lake"

So you're saying that when someone is offering you 1 dollar, doesn't matter much to you, if you sleep in a bed made of dollars. No way!!!

I hope you understood that water didn't lose its intrinsic value. Because you can(and want to) still drink it and it will still keep you alive. Whether you have lots of it, or none at all, your body will keep asking for its usual dosage.

Re: A Prediction: Bitcoin Is Doomed to Fail

#233

Post by aianus »

a3voices wrote: post #217
aianus wrote: post #175

Earlier quoted context omitted.

I wish there was a reputable market for shorting bitcoins. It'd be nice to earn some interest on my long position while providing the naysayers a chance to bet against it. It'd also help with the volatility.

Shorting bitcoin seems like a bad idea. http://i.imgur.com/GOYWUMo.png

It would help if, for example, you needed to have BTC on hand for your business but you wanted to hedge away your exposure to the exchange rate with the USD.

Re: A Prediction: Bitcoin Is Doomed to Fail

#234

Post by gibybo »

crististm wrote: post #188
gjm11 wrote: post #181

Earlier quoted context omitted.

I'm not convinced. It's only easy to buy a house for $100M if you have $100M you can spare for house-buying. And then you only get to choose from the rather limited range of $100M houses that are available for sale. Similarly, you only get to sell a house for $100M if you have a house that nice to sell. And then you only get to sell to the rather limited range of people willing to buy a house for $100M. But perhaps I…

The point is the liquidity of houses is less than liquidity of cash. Likewise, the liquidity of bitcoins is less than liquidity of dollars. You can easily buy bitcoins(houses) if you have the money, but the reverse is not true.

How is this true? Everywhere you can buy Bitcoins will let you sell them with roughly the same effort involved (except MtGox perhaps).

Re: A Prediction: Bitcoin Is Doomed to Fail

#235

Post by yabatopia »

GhotiFish wrote: post #127
brador wrote: post #107

Earlier quoted context omitted.

That's because Bitcoins are relatively easy to buy and very difficult to cash out into real currency. Once enough people see how hard it is to liquidate their Bitcoins back to USD the realization will follow.

?? Bitcoins are a currency, there's no need to convert them. It's just happening now because some people want into this environment.

The problem right now is that Bitcoin is not (used as) a currency. A currency facilitates the exchange of services of goods. Bitcoin now is more like a plot of land in the middle of London, or gold a few years ago. You buy bitcoins to hold and speculate, not to spend and pay your purchases with it. The resurrection of Bitcoin as as currency after the bubble will be a very interesting transition to watch and it's not 100% sure that Bitcoin will survive it.

Re: A Prediction: Bitcoin Is Doomed to Fail

#236

Post by mchusma »

I frankly just thought this was poorly written. I tried to do a tl;dr, but found it hard. Here is my best shot:

1) "currencies...increase the efficiency of barter" 2) "Barter played a tiny role in all premodern economies" 3) governments have tended to issue currencies 4) Bitcoin is inferior because it lacks "the backing of a political authority" or the ability to "raise taxes or pass laws to unwind monetary excesses" 5) private money generally has uncertain value and legal status 6) government might shut Bitcoin down 7) Bitcoin is a part of "Right Wing Money" 8) all effective money is "left money" and "state backed. The recent banking system is a part of "Right Wing Money". 9) Bitcoin is for criminals and speculators

I think there have been much more intelligent and nuanced opinions on why Bitcoin might fail, I wouldn't put this on the list.

Re: A Prediction: Bitcoin Is Doomed to Fail

#237

Post by acchow »

nmarley wrote: post #211
coldtea wrote: post #176

Earlier quoted context omitted.

> Bitcoins are a currency, there's no need to convert them Yes, unless you want to, you know, buy something...

Many businesses accept Bitcoins as payment for physical things. The last Bitcoin meetup that I went to was at a bar/grill that accepts BTC as payment. Most of the attendees paid for their drinks with Bitcoin. You don't need to convert to cash in order to buy things with Bitcoin.

How long did the transaction take?

Re: A Prediction: Bitcoin Is Doomed to Fail

#238

Post by Zigurd »

The author is mostly the blind pig bumping into aspects of bitcoin without seeing them for what they are. But in the end he stumbles across the proverbial truffle: "Bitcoin appeals because governments are not fully living up to the responsibility that comes with state-sponsored money. Bitcoin, or something like it, will thrive until the authorities do better."

And when, in the time of QE, does he expect that it will come to pass that "authorities do better?"

Re: A Prediction: Bitcoin Is Doomed to Fail

#239

Post by GhotiFish »

pathy wrote: post #180
GhotiFish wrote: post #127

Earlier quoted context omitted.

?? Bitcoins are a currency, there's no need to convert them. It's just happening now because some people want into this environment.

>there's no need to convert them. Have you tried paying your taxes in Bitcoin? The IRS (or regional equivalent) is not going to accept bitcoin any time soon and they will want you to pay taxes on, for example, profits. There is a need to convert, don't believe otherwise.

Out of curiosity, are people seriously using bitcoin stocks as a bank? Or are they just investing part of their money in bitcoin and hoping it goes somewhere? This requirement of conversion only makes sense if people are fully and completely invested. I would be shocked if there were such people at this stage.

Re: A Prediction: Bitcoin Is Doomed to Fail

#240

Post by caublestone »

mcintyre1994 wrote: post #218
caublestone wrote: post #110

At Soylent, we have been accepting Bitcoin using coinbase. The decision to do so was based on marketing and the anticipation that not many people would actually use Bitcoin and we wouldn't have a large risk exposure. To date only 130 people out of 12,000 have pre-ordered Spylent using Bitcoin. Our total risk exposure was less than 1% of total revenue. The recent rocket ship rise in a Bitcoin valuation has valued our…

Out of interest, do you know how standard it is for merchants to hold onto bitcoins after accepting them? I always figured they would be converted pretty much straight away, but with that risk/reward profile maybe others are doing something similar?

I wish I knew! From our perspective, because our total risk exposure is very minimal (again less than 1% of total revenue has come in from Bitcoin) we don't have a need to convert into cash immediately and can instead hold on to them for future use. I imagine every business does this risk assessment to determine their bitcoin conversion policy and all have different sensitivity to risk (i.e. silk road 100% bitcoin revenue > soylent 1% bitcoin revenue).
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