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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

#231

Post by conanbatt »

human wrote: post #214
conanbatt wrote: post #160

Earlier quoted context omitted.

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 ma…

> 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.

Thats the inelastic demand I'm talking about: if bitcion finds a use case where it shines above all else, even if it is something like sending money overseas, the demand will be inelastic and with diminishing supply its price will tend to be infinite.

> 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.

So can money and so can land...this is a Zeno's paradox reasoning.

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

That's not true for land because the value of land is determined by the difference in fertility between lands which is something bitcoin doesnt have as each is the same as any other. But lets assume that is true for the purpose of argument: BTC does not have immediate transactional capacity, that is the limit of use. So if you want to have your operation happen you need to pay for it to happen. And moving more btc is cheaper than moving less btc. So yes, smaller amounts of btc are less useful than bigger BTC.

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

Its a theoretical concept, much like saying that if there wer eonly 1 cup of water its value would be infinite.

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

#232

Post by conanbatt »

monktastic1 wrote: post #151
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…

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

I disagree vehemently to this proposition. I have never agreed or voted to get those regulations in place. They are not voluntary. But anyone falling for tether today is making an individual decision.

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

#233

Post by freeone3000 »

oil7abibi wrote: post #222
theptip wrote: post #172

Earlier quoted context omitted.

To answer your direct question, Tether is sold as a fully-backed instrument, so there's major (potentially billions of dollars of) fraud if it's not fully backed. That's an issue because consumers aren't getting what they paid for, i.e. the underlying risk profile is different from what they thought the were buying. The big difference with Tether is that in traditional banking, fractional reserves are legal, and regu…

So if Tether was FDIC backed, then you’d technically be OK with this situation?

If Tether was FDIC backed, it'd essentially be a bank with weird procedures for putting money in and getting money out.

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

#234

Post by rst »

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…

"Of course maybe they're not actually crooks and they do have the money."

Well then, an audit by competent third parties, inspecting where they got their funds, how much they actually have on hand, and whether it covers all potential liabilities (including calls on the supposedly dollar-backed tethers) would go a long way to clearing up the matter.

Bitfinex announced an audit with great fanfare early last year. They disclosed last weekend that their relationship with the auditor had "dissolved". Funny, that.

https://www.coindesk.com/tether-confirms-relationship-audito...

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

#235

Post by conanbatt »

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.

I disagree. If the state wants to offer some certification of regulation and an exchange is willing to go through that process to capture consumers, let them be.

Thats not bitfinex nor tether. Let people choose. If the SEC had its way, bitfinex would have not existed and millions of people wouldn't have been served.

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

#236

Post by qudat »

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…

> It looks to me like a great way to transfer currency and facilitate exchange of goods

> because intrinsically it has no 'real' value

You have answered your own question. The value is the technology. It has a real-world use.

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

#237

Post by s73ver_ »

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…

I fail to see the need for such "experimentation" considering that this has all happened before, and those lessons were learned.

That, and generally those who advocate that something should "take a hit" are usually not the ones who are going to be harmed by it.

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

#238

Post by conanbatt »

ttul wrote: post #163
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…

The SEC has instilled a level of trust in the financial markets that has enabled humanity’s most spectacular century. Why is that a problem?

Or in spite of it.

This is a startup website, where thousands of software engineers get paid in lottery tickets that are not regulated, because they cannot sell the lottery tickets (THAT is regulated).

There has been nominally more money coming in to ICO's which are terrible investments than startups in the bay area. Thats how bad SEC regulations are: all that money could have gone to way more promising ventures, but it cant because it is blocked.

There is no problem if you want that level of protection, but rich people dont have it and profit from not having it. You go pay your poor mans tax and let the people that don't want to pay it roam free.

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

#239

Post by s73ver_ »

conanbatt wrote: post #232
monktastic1 wrote: post #151

Earlier quoted context omitted.

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

I disagree vehemently to this proposition. I have never agreed or voted to get those regulations in place. They are not voluntary. But anyone falling for tether today is making an individual decision.

Just because you personally weren't consulted on those regulations doesn't mean that they weren't come to by people who were democratically elected. And you agreed to abide by the laws of a jurisdiction by living there. Otherwise, what's to stop you from saying, "I never agreed not to kill people"?

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

#240

Post by freeone3000 »

conanbatt wrote: post #231
human wrote: post #214

Earlier quoted context omitted.

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 ma…

> 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. Thats the inelastic demand I'm talking about: if bitcion finds a use case where it shines above all else, even if it is something like sending money overseas, the demand will be inelastic and with…

Sending money overseas with bitcoin doesn't exhaust the supply of bitcoin. The bitcoin isn't consumed - it's converted from useful money to bitcoin at one end, and bitcoin to useful money at the other. While a limited supply of bitcoin would limit the throughput, the ledger calculation already does that, and at a much lower rate. So it's not as if any utility immediately lends bitcoin value.
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