Worries Grow That the Price of Bitcoin Is Being Propped Up • Hacker News Board

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

#211

Post by empath75 » Thu, Feb 01, 2018, 6:11 PM UTC

sciyoshi wrote: post #149

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…

> They're literally making up money as they see fit. I'm playing devil's advocate here (I agree that the whole Tether situation is concerning), but also genuinely curious - is this any different than what banks have been doing for forever with fractional reserve? Even if Bitfinex is overcommitted and there's more USDT in circulation than they have in USD reserves, is there a problem unless a lot of people try to conv…

Other than the fact that they're committing fraud by doing so, in a bank run, the FDIC insures people's deposits.

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

#212

Post by Zamicol » Thu, Feb 01, 2018, 6:14 PM UTC

wastedhours wrote: post #136

roywiggins wrote: post #132

Earlier quoted context omitted.

If nobody wants to buy Bitcoin, it doesn't really matter what the difficulty is to the price.

But don't the same market forces come back into play? Shortened transaction times, "brand name" for speculative buyers, more attractive price. It'll burn a lot of people, but another one born every minute...

Yes. A price drop will result in hardware going offline, meaning the difficulty should drop.

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

#213

Post by [deleted] » Thu, Feb 01, 2018, 6:16 PM UTC

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…

[deleted]

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

#214

Post by human » Thu, Feb 01, 2018, 6:18 PM UTC

conanbatt wrote: post #160

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,…

I’m sorry but your point of view could not be further from the truth.

First and foremost, land has intrinsic value. You can grow food, build shelter and have access to water. If you’re very lucky there might even be oil below it. On the other hand, Bitcoin won’t help you survive very long.

Second, Bitcoins can be divided infinitely. Today I pay 1 BTC for a car. Tomorrow I pay 0.5 BTC. It really does not matter how many BTCs is the maximum.

Land, on the contrary, loses value proportionnaly as you divide it. 50% of the land means 50% of food, water, shelter, etc.

Finally, Bitcoin price will never reach infinity because there is a physical limit to the real value Earth and humans can produce.

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

#215

Post by inputcoffee » Thu, Feb 01, 2018, 6:22 PM UTC

LargeWu wrote: post #65

inputcoffee wrote: post #59

Earlier quoted context omitted.

That is an interesting question. Digital "currency" is unregulated so the question is which law is violated. If, in purchasing a tether, there is some underlying contract that says the tether is backed by a dollar, then you might claim a violation of the contract. You may have to look at the fine print. Who was the counter party? What were the terms? Who is on the hook for it? Is it an entity that is outside the US?…

If they say Tether is backed 1:1 by USD, and it's not (allegedly by a wide margin), then it's clearly fraud.

Yes, I forgot about fraud. That's the obvious one.

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

#216

Post by IronKettle » Thu, Feb 01, 2018, 6:23 PM UTC

Nursie wrote: post #152

keymone wrote: post #142

Earlier quoted context omitted.

> 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…

> The price in USDT and USDT-only exchanges could indeed rocket, but the price in real actual USD would be expected to fall.

Wait, would it?

If you were an arb wouldn't you:

1) Buy bitcoin on a different exchange (with a temporarily lower price)

2) Transfer that bitcoin to, say, bitfinex (or another USDT exchange)

3) Sell that bitcoin for, say, ETH

4) Transfer that ETH back to the first exchange

5) Profit

Though I guess that would also flood the market and tank the ETH-BTC price as well (though I guess another arb could take advantage of that discrepancy as well).

Or are you talking about exchanges that only do USDT-BTC?

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

#217

Post by Feniks » Thu, Feb 01, 2018, 6:24 PM UTC

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…

I'm not very good at these things but it always struck me as odd: SAYING that a bitcoin is worth 1$ doesn't make it magically SO.

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

#218

Post by ifdefdebug » Thu, Feb 01, 2018, 6:25 PM UTC

marcandre wrote: post #165

I'm wondering how many people are shorting USDT on Kraken? The potential downside is having to pay interest. The upside is 100% win. With enough short position, Tether will run out of funds and the price will have to crash. Disclosure: I'm short USDT.

Just tried to short sell USDT on Kraken. Response: Canceled - Insufficient Margin. This means "that the exchange's margin pool for that currency is currently used up" [1].

So this might give you an idea to start with...

[1] https://support.kraken.com/hc/en-us/articles/217696017-Insuf...

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

#219

Post by cwkoss » Thu, Feb 01, 2018, 6:27 PM UTC

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…

What is the value of the bank wire system?

Bank wires are currently Bitcoin's closest competitor, and in aspects each has advantages. The bank wire system has had a lot of technical debt built up over the years, and has left a market opportunity by being risk averse and slow to innovate.

People used to speak about paying for a cup of coffee with Bitcoin, but that isn't really a great use case for how it is designed. It has an inherent latency of about an hour and fees don't scale with price. If you want to transfer a lot of money in less than a day to someone who may not trust you, it's great. If you don't mind it being slower, have trust, or need to transfer small amounts, other systems are likely better for your use case.

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

#220

Post by naravara » Thu, Feb 01, 2018, 6:28 PM UTC

fdchn2018 wrote: post #199

nickbauman wrote: post #186

Earlier quoted context omitted.

The problems we're seeing with cryptocurrencies are utterly unsurprising if you know what money really is and how it actually works. I think people who are excited about cryptocurrencies assume that money is merely a tool to facilitate transactions between parties of people. The fundamental model of this is two people bartering goods, lol, in some sort of imagined "forest primeval" before money was invented. That mon…

Finally created an account to reply to this. There is a great thread on Reddit called - Where has all the world's money gone, explain it like I'm 5. It starts from a convenient barter system. As I was reflecting on the various ICOs I realised that the technology and the blockchain makes the old barter system very efficient. So I do believe that in fact it is a substitute for that behaviour. In fact Im convinced that…

>Where has all the world's money gone, explain it like I'm 5. It starts from a convenient barter system. As I was reflecting on the various ICOs I realised that the technology and the blockchain makes the old barter system very efficient.

There was no "old barter system" the way modern people think of it. The idea that pre-commercial economies operated on a "barter system" in the sense that people are directly exchanging goods of similar value is just a simplifying metaphor early economists made to explain how commercial transactions work.

Pre-commercial economies operate more like gift economies. It's not so much about trading objects based on their valuation, it's about doing favors for people with the expectation that they will do favors back for you. It takes strong bonds of social trust and cohesion for this to work. Everyone has to have a sense of obligation to pitch in for the community.

The bartering only comes in as a form of collateral when dealing with outsiders (people you don't trust as much). This is why the earliest form of exchanges in this way were tied to marriages (e.g. dowries, bride prices) or interactions with other political groups (e.g. treaties, armistice).

Barter doesn't actually work, it's basically just a format for giving collateral to make sure people don't welch on deals. Normal currency already solves that problem way better than trust chains based exchange does because the value is obvious and exchanged up front without having to go through any clearing-house to be validated.