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Worries Grow That the Price of Bitcoin Is Being Propped Up

nytimes.com

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Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#151

Post by monktastic1 »

conanbatt wrote: post #131
simias wrote: post #84

The somewhat ironic part is that one of the core concepts of Bitcoin is that you can't counterfeit it. You can mathematically prove how many coins you own, if somebody sends you 3 BTC then once it's been validated on the blockchain you know that the money is now yours, they can't have lied, it can't bounce like a cheque Except this Bitfinex thing shows that while an amount of bitcoin can't be manipulated or counterfe…

The most interesting thought to me right now is how the situation will develop if or bitfinex/tether crashes the market hard. I am not a fan of the SEC getting involved. Taking crypto as an experiment, I think it is better for the market to take a hit and then find organic solutions. If the SEC gets involved and busts bitfinex/tether, the community loses the opportunity to become 'unbailable'. Yes , people will lose…

You could say that humanity has repeatedly and organically come to a solution broadly known as government and regulation.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#152

Post by Nursie »

keymone wrote: post #142
simias wrote: post #84

The somewhat ironic part is that one of the core concepts of Bitcoin is that you can't counterfeit it. You can mathematically prove how many coins you own, if somebody sends you 3 BTC then once it's been validated on the blockchain you know that the money is now yours, they can't have lied, it can't bounce like a cheque Except this Bitfinex thing shows that while an amount of bitcoin can't be manipulated or counterfe…

> if Bitfinex is lying about their dollar reserves this might be one of the simplest and most efficient scams of all time i get what you're saying, but doesn't this mean that value of USDT is fake rather than value of BTC? in the end it's those that hold USDT will run to sell it either for USD or BTC, which would push BTC price even higher? now that would be ironic!

>> i get what you're saying, but doesn't this mean that value of USDT is fake rather than value of BTC?

If two billion tokens which people have taken to be as good as USD have entered the market, they will have inflated the price of BTC and other coins

>> in the end it's those that hold USDT will run to sell it either for USD or BTC, which would push BTC price even higher? now that would be ironic!

The price in USDT and USDT-only exchanges could indeed rocket, but the price in real actual USD would be expected to fall. I don't think that's ironic ... ?

--edit-- I seem to be rate limited at the moment so I am going to reply to the post below, here.

Why do you think, in a situation where tether fails, that the BTC/ETH price on bitfinex would change?

The price of BTC in tethers may rocket, but the price of ETH in tethers also would rocket, as nobody would want tether. The price of ETH in BTC is unlikely to move much.

There's no arb opportunity I can see.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#153

Post by stinkytaco »

kadenshep wrote: post #140
conanbatt wrote: post #131

Earlier quoted context omitted.

The most interesting thought to me right now is how the situation will develop if or bitfinex/tether crashes the market hard. I am not a fan of the SEC getting involved. Taking crypto as an experiment, I think it is better for the market to take a hit and then find organic solutions. If the SEC gets involved and busts bitfinex/tether, the community loses the opportunity to become 'unbailable'. Yes , people will lose…

>and then find organic solutions. I don't understand this perspective. You have a proven, verifiable, simple solution right in front of you. Then you ignore it with some skimpy platitude to dive right into economic mythology. Regulation is the correct solution.

> Regulation is the correct solution.

I once read (here, perhaps) that Bitcoin is a long demonstration in how regulation comes to exist.

I think many in the Bitcoin community conflate "regulation" with "monetary policy". They assume if bitcoin is treated like money, with laws that protect people from fraud, that must somehow lead to restrictive monetary policy, which the community tends to abhor.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#154

Post by nopinsight »

I don’t think the price dynamics looks great for Bitcoin, even if one wishes to think of it as a long-term investment. Since a lot of, perhaps most, people buy it for speculation but the price has gone sideways for a number of reasons. If it stays sideways for a while and then it drops, some speculators will start to panic which might cause further drops.

Also, some people who made handsome profits from early speculation have got out, and new money who might have less faith came in. These people are likely more sensitive to bad news.

Maintaining the prices or increasing it a bit might be possible but to get it to rise stratospherically like last year is unlikely because of the amount of money required to balance with those who cash out for other coins and other investments.

This is unless there is a huge change in regulatory landscape and popular mindset—-that is, Bitcoin becomes widely thought of as a good long-term store of value—which are unlikely.

The analysis above is mostly about Bitcoin, although it will likely have side effects on most other cryptocurrencies as well.

That is, the upside for a well diversified crypto portfolio is limited now (Feb 2018), almost certainly much less upside in percentage terms than in 2017. Although one could beat the market by picking the right horses, as in other markets.

... and the downside could be quite an abyss.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#155

Post by buttcoinslol »

ceejayoz wrote: post #17
JohnJamesRambo wrote: post #5

If you haven't already, I recommend getting out of Bitcoin and into Ethereum immediately. There is a transfer of dominance rapidly happening. Market Cap Bitcoin $158,149,902,894 Ethereum $106,632,442,880

What mechanisms in Ethereum protect it from this sort of market manipulation?

None whatsoever.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#156

Post by cocktailpeanuts »

simias wrote: post #84

The somewhat ironic part is that one of the core concepts of Bitcoin is that you can't counterfeit it. You can mathematically prove how many coins you own, if somebody sends you 3 BTC then once it's been validated on the blockchain you know that the money is now yours, they can't have lied, it can't bounce like a cheque Except this Bitfinex thing shows that while an amount of bitcoin can't be manipulated or counterfe…

> Except this Bitfinex thing shows that while an amount of bitcoin can't be manipulated or counterfeited, their actual value is relatively easy to influence.

This is because the only usage Bitcoin has left is a lottery ticket. Bitcoin used to actually have utility value (payment) but now with that gone, it is easy to manipulate the price because its value is built on people's perception only.

If Bitcoin was still being used to send money across borders, to buy things with super low transaction cost, send money without censorship-which by the way used to be why a lot of people saw value in it in the first place--it wouldn't be so easy to manipulate the value because any fool can see that there obviously is value in there.

Bitcoin losing utility has singlehandedly created the scam market we're seeing right now. People who want to make money choose the most efficient way to make money. And if they can see that they could make more money by building productive things on top of Bitcoin instead of building their own scam coin or scam scheme to manipulate the idiots who fall for it, they would probably rather work on those instead. But that's not the case, which is why we are where we are.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#157

Post by JulianMorrison »

Bitcoin is a system where you can have reasonably strong trust in the ledger and absolutely no trust in any other part of the market at all. It's a demonstration in practise that pure unregulated trade in the digital equivalent of used unmarked bills leads to a broken market where literally everything is a scam, crime pays, and meaningful business cannot be transacted.

Its value is being propped up beyond this technical tinkering, by poorly informed optimism, ideological dreamers and a lot of people hoping to make hay while the sun shines, sometimes by knifing you first. It is going to bust all the way down to $0 and probably get internationally banned as an attractive nuisance.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#158

Post by stinkytaco »

kelvin0 wrote: post #130

My question is: what is the value of a Bitcoin? It looks to me like a great way to transfer currency and facilitate exchange of goods, but not much more than that. So 'investing' in this digital currency itself does not make much sense to me, because intrinsically it has no 'real' value. I might be misinformed about the subject, in which case I would gladly like to be shown my error. For example, why don't I invest i…

Currency is a tool that exists to facilitate economic transactions and though it's value varies depending on the confidence people have in it, your first point is true. I would say the only difference with Bitcoin is that it's fixed and fundamentally deflationary.

There are people who invest in Yuan, Pounds and Dollars. Forex trading is a real thing and I expect it's often dabbled in by the same people that invest in Bitcoin. Though not as unstable as Bitcoin, it's still a gamble, a bigger gamble that most investment given that the only real payout is, as you say, imaginary (as opposed to the possibility of dividends that a stock might give you).

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#159

Post by theptip »

stinkytaco wrote: post #153
kadenshep wrote: post #140

Earlier quoted context omitted.

>and then find organic solutions. I don't understand this perspective. You have a proven, verifiable, simple solution right in front of you. Then you ignore it with some skimpy platitude to dive right into economic mythology. Regulation is the correct solution.

> Regulation is the correct solution. I once read (here, perhaps) that Bitcoin is a long demonstration in how regulation comes to exist. I think many in the Bitcoin community conflate "regulation" with "monetary policy". They assume if bitcoin is treated like money, with laws that protect people from fraud, that must somehow lead to restrictive monetary policy, which the community tends to abhor.

> Bitcoin is a long demonstration in how regulation comes to exist.

Or perhaps a short demonstration, given that BTC appears to be recapitulating the entire history of currency in a few years?

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#160

Post by conanbatt »

kelvin0 wrote: post #130

My question is: what is the value of a Bitcoin? It looks to me like a great way to transfer currency and facilitate exchange of goods, but not much more than that. So 'investing' in this digital currency itself does not make much sense to me, because intrinsically it has no 'real' value. I might be misinformed about the subject, in which case I would gladly like to be shown my error. For example, why don't I invest i…

I like to compare Bitcoin to Land. When people migrated over to america, land was basically worthless: there was too much of it and too few people.

As the more fertile and better located land was taken, prices started to rise. As land supply is inelastic, the price can only tend to go up as long as the demographics expand.

Bitcoin has a limited amount and even more has a diminishing supply (as coins get lost, stolen, broken). Its use case is less valuable than land but its supply way more limited.

The only thing bitcoin needs to increase price is inelastic demand. IF there is just a single use case that uses bitcoin everyday, its price will tend to infinity.

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