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Bitcoin Bubble Makes Dot-Com Look Rational

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Re: Bitcoin Bubble Makes Dot-Com Look Rational

#101

Post by charlesdm »

leereeves wrote: post #79
charlesdm wrote: post #39

Earlier quoted context omitted.

Yes, maybe it will become digital gold. If it were true digital gold, it would have a similar valuation closer to gold, i.e. $8tn (a 60 fold increase of its current value).

A whole lot of the world's gold is held by governments. For BTC to reach similar valuations, it would need governments to buy it. Why would they?

Pension funds will be buying next year.

I don't know whether governments will buy Bitcoin, but I wouldn't consider it unlikely that some country decides to use crypto as a replacement to their fiat currency -- either the government of a developed nation does it, or the people just decide that their local money isn't worth the paper it's printed on, and decide to use some sort of cryptocurrency.

I know this sounds crazy, and I would've called it a ridiculous notion if someone told me this 5 years ago, but I don't consider it too unlikely anymore. It has grown on me.

Due to quantitative easing, money just isn't worth much anymore and asset prices have gone up a lot across the board. Just look at the recent acquisition of a painting by Leonardo da Vinci: $450m. That could not have happened 20 years ago.

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#102

Post by dmichulke »

charlesdm wrote: post #38

I don't get this. The dot-com bubble ran up to $6.7tn in market cap, in 2000, before crashing down to $1.7tn. The crypto space, which seems to be shaping into an entirely new asset class, has a $300bn valuation. That's less than the value of Facebook. The only reason why people are shouting bubble is because people were able to get in from the start, when these coins were 10 cents on the dollar. But when Facebook IPO…

> I don't get this. The dot-com bubble ran up to $6.7tn in market cap, in 2000, before crashing down to $1.7tn.

And there you have my coarse investment target (probably adjusted for inflation or M2) around which I'll exit

I built a site to calculate how far we are away from that target and what any portfolio would be worth by then (cryptoport.net)

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#103

Post by dmichulke »

muzani wrote: post #84
beaconstudios wrote: post #54

Earlier quoted context omitted.

also the fact that 99% of bitcoin's value is tied up in financial speculation rather than real world use cases, and the remaining 1% is drug dealing.

Not sure about everyone else, but I use it for international transactions. It saves me on the conversion rates and whatever banking issues.

Agreed, e.g., try to get R$ out of Brazil

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#104

Post by dmichulke »

csomar wrote: post #85
dmichulke wrote: post #81

Earlier quoted context omitted.

You are deflecting to a problem of definition ;) Yes, you have the same amount but no it doesn't purchase as much as it did one year ago. Units of accounting only make sense within a context of other units of account. A dollar by itself is just a piece of paper if you cannot buy an amount of wheat, water or square meters with it. And by that measure the dollar is losing value vs a bitcoin.

So? You just repeated what I said. My original comment was debunking the Bloomberg article. When you hold 1 Stock, at the end of the year you get a dividend. You divide the dividend by the stock to get the P/E ratio. That's not the same with USD or BTC. Its value fluctuates but it generates no income on its own.

I think I misunderstood the intention for your first comment, probably by interpreting it in the context of another comment that was nearby but not related at all. Sorry

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#105

Post by purvis »

charlesdm wrote: post #61
beaconstudios wrote: post #54

Earlier quoted context omitted.

also the fact that 99% of bitcoin's value is tied up in financial speculation rather than real world use cases, and the remaining 1% is drug dealing.

Gold has close to no use cases (80%+ is store of wealth) and seems to be doing fine at an $8tn global market cap. Of the potential 21m Bitcoin in existence, 4m are assumed to have been permanently lose. 16m have been mined. That leaves 1m coins left to be acquired in the future.

I get what you're saying, but your math is a bit misleading. As far as I know, the missing 4m are a subset of the 16m already mined. That still leaves ~5m to be acquired in the future, albeit rather slowly.

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#106

Post by charlesdm »

pc86 wrote: post #94
charlesdm wrote: post #61

Earlier quoted context omitted.

Gold has close to no use cases (80%+ is store of wealth) and seems to be doing fine at an $8tn global market cap. Of the potential 21m Bitcoin in existence, 4m are assumed to have been permanently lose. 16m have been mined. That leaves 1m coins left to be acquired in the future.

Is there a timeframe for how long it will take for those 1m coins to be mined? Is it equally likely that the price craters or skyrockets once that happens?

I think the price will skyrocket anyway, because there is a limited supply. In a way, I believe it could be like an epic short squeeze. You have people wanting to buy in (retail + institutional money is coming in) over the next few years.

If you take the example of oil -- once the price of a barrel goes over a certain threshold price, you'll go and explore new wells that were previously not profitable. And you will eventually get more supply after a while. That's just not the case with Bitcoin (and probably Ethereum after next year).

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#107

Post by madshiva »

0bsidian wrote: post #18

The idea that you can value bitcoin via P/E, utilizing mining fees as the "E" is incorrect. It's akin to valuing gold through P/E, by utilising the cost of extraction as the "E". This is obviously wrong because holding gold doesn't entitle the bearer to a portion of those mining costs, same with Bitcoin. The reality is that gold cannot be objectively valued because it doesn't have an objective value (beyond its indus…

"As a society, we collectively agree that gold is worth something because we agree that it is worth something." No, like you say, gold have industrial use, usage of the product imply the value of the product. Gold are a rare metal, this is where gold worth something...

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#108

Post by leereeves »

charlesdm wrote: post #101
leereeves wrote: post #79

Earlier quoted context omitted.

A whole lot of the world's gold is held by governments. For BTC to reach similar valuations, it would need governments to buy it. Why would they?

Pension funds will be buying next year. I don't know whether governments will buy Bitcoin, but I wouldn't consider it unlikely that some country decides to use crypto as a replacement to their fiat currency -- either the government of a developed nation does it, or the people just decide that their local money isn't worth the paper it's printed on, and decide to use some sort of cryptocurrency. I know this sounds cra…

Would a country whose currency isn't worth the paper it's printed on have the infrastructure to use BTC? Would they be able to afford the transaction fees?

BTC would really need the support of a developed government, but those governments aren't eager to give up control of their currency.

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#109

Post by charlesdm »

dmichulke wrote: post #102
charlesdm wrote: post #38

I don't get this. The dot-com bubble ran up to $6.7tn in market cap, in 2000, before crashing down to $1.7tn. The crypto space, which seems to be shaping into an entirely new asset class, has a $300bn valuation. That's less than the value of Facebook. The only reason why people are shouting bubble is because people were able to get in from the start, when these coins were 10 cents on the dollar. But when Facebook IPO…

> I don't get this. The dot-com bubble ran up to $6.7tn in market cap, in 2000, before crashing down to $1.7tn. And there you have my coarse investment target (probably adjusted for inflation or M2) around which I'll exit I built a site to calculate how far we are away from that target and what any portfolio would be worth by then (cryptoport.net)

Same here, actually. Probably a bit sooner even.

Re: Bitcoin Bubble Makes Dot-Com Look Rational

#110

Post by charlesdm »

leereeves wrote: post #108
charlesdm wrote: post #101

Earlier quoted context omitted.

Pension funds will be buying next year. I don't know whether governments will buy Bitcoin, but I wouldn't consider it unlikely that some country decides to use crypto as a replacement to their fiat currency -- either the government of a developed nation does it, or the people just decide that their local money isn't worth the paper it's printed on, and decide to use some sort of cryptocurrency. I know this sounds cra…

Would a country whose currency isn't worth the paper it's printed on have the infrastructure to use BTC? Would they be able to afford the transaction fees? BTC would really need the support of a developed government, but those governments aren't eager to give up control of their currency.

Not saying it will be Bitcoin. It could be Ethereum, or some other crypto with (very) low transaction fees.

I don't think Bitcoin is a currency anyway.

Building a crypto banking service that can be controlled through a phone (e.g. in Africa) should have tremendous value given the very high inflation in some countries there.

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