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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

#291

Post by zackmorris »

wcoenen wrote: post #285
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…

> if you know what money really is and how it actually works OK, I'll bite. What is money really and how does it actually work?

I would say that money is a measure of inefficiency. Say for example you hire a mechanic to fix your car. You pay the mechanic's shop for parts and labor. The cost of parts represents inefficiencies in how they're manufactured, the markups of middlemen, the high cost of raw materials from nonrecycled sources, etc etc. Labor represents your lack of knowledge about how to fix your own car, plus the time involved to fix things on your car like water pumps that (due to uninspired design) fail much earlier than they should.

In an ideal world where you drive a solar-powered car with a dozen moving parts built by robots from recycled materials, costs would fall to a fraction of what they are now. With the same automation applied across all industries, prices would fall to the point where the opportunity cost for humans to be in debt/servitude to rent-seeking financial institutions would exceed the benefit of using money in the first place.

This is basically what happened on Star Trek and is likely to happen in coming decades with Tesla, Amazon etc as humans can no longer compete with machine labor. Things will cost less but incomes will be so low that we won't be able to afford them anyway. Personally I would argue that that started happening sometime after the late 1960s and has gotten to the point where the status quo can only be propped up by every-growing absurdities on a global scale.

An oldie but goodie:

http://marshallbrain.com/manna1.htm

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

#292

Post by cwkoss »

aml183 wrote: post #252
cwkoss wrote: post #223

Earlier quoted context omitted.

I don't know. Most finance people now have access to bitcoin exposure through trusted institutions via futures. Many of these people felt a lot of FOMO at missing the boat on Bitcoin's last big jump. I think if it drops to $5k, there will be some big players taking a long position in hopes of another order of magnitude movement. Certainly could get much uglier, but I think Tethers vanishing would not be fatal. Also,…

Most, if not all, financial institutions aren't exposed to cryptocurrencies directly either through futures or the underlying currencies. Institutions are defined as endowments, sovereign wealth funds, pensions and asset management firms such as Goldman Sachs. Capital inflow into the cryptocurrency space in aggregate is still less than $10B. If the Norwegian sovereign wealth fund bought Bitcoin, their minimum purchas…

You are correct. No major institutions have publicly disclosed an investment in Bitcoin, and many are legally restricted from doing so.

However, I think that market speculators, particularly hedge funds, would strongly consider opening positions in Bitcoin below $5k in hopes of a many-fold return on investment. It is high risk, but in a diversified portfolio Bitcoin may be attractive in our current market climate where the market is so overbought.

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

#293

Post by sctb »

FiveSquared wrote: post #111
jnordwick wrote: post #103

Here a possible explanation on what Tether is doing and the economics behind why there is such an incentive behind pump and dump BTC. I think they are running a currency board pegging USDT to USD, and then using the BTC gained to push up BTC even further. Part of the idea of a currency is a stable value, that means supply and demand need to be matched. With a fixed quantity such as all the common cryptos, when demand…

Your comment is pure gold. Get it? To be serious, that was one of the best Hn comments I read in a while.

Could you please start posting civilly and substantively?

https://news.ycombinator.com/newsguidelines.html

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

#294

Post by echaozh »

cocktailpeanuts wrote: post #281
282883392 wrote: post #244

Earlier quoted context omitted.

>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 had all those things - not that long ago. You need volume to ensure stabilit…

> You need volume to ensure stability, not utility Wow you've drunk some serious kool-aid there. You need both. A huge volume of nothing is still nothing. The "you need volume for stability" argument is what pro-bitcoin people used to say when Bitcoin could actually be used as a currency. Many people would say "Bitcoin isn't a legit currency because it's so volatile", and we would say "No, that's only because there i…

Uh, could the volume here mean the volume of the actual useful transactions, rather than the volume of the currency?

Mere utility is not enough, you need huge volume of such utility to make it stable.

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

#295

Post by cocktailpeanuts »

echaozh wrote: post #294
cocktailpeanuts wrote: post #281

Earlier quoted context omitted.

> You need volume to ensure stability, not utility Wow you've drunk some serious kool-aid there. You need both. A huge volume of nothing is still nothing. The "you need volume for stability" argument is what pro-bitcoin people used to say when Bitcoin could actually be used as a currency. Many people would say "Bitcoin isn't a legit currency because it's so volatile", and we would say "No, that's only because there i…

Uh, could the volume here mean the volume of the actual useful transactions, rather than the volume of the currency? Mere utility is not enough, you need huge volume of such utility to make it stable.

The only type of transaction that exists on BTC chain today is people buying it for investment and HODL. Even that may dwindle in the coming weeks now that it's looking more like a crash.

I never said mere utility is enough. I clearly said "You need both", in response to parent saying it's not about utility but only about volume. So in summary I agree with your comment.

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

#296

Post by maratd »

zackmorris wrote: post #291
wcoenen wrote: post #285

Earlier quoted context omitted.

> if you know what money really is and how it actually works OK, I'll bite. What is money really and how does it actually work?

I would say that money is a measure of inefficiency. Say for example you hire a mechanic to fix your car. You pay the mechanic's shop for parts and labor. The cost of parts represents inefficiencies in how they're manufactured, the markups of middlemen, the high cost of raw materials from nonrecycled sources, etc etc. Labor represents your lack of knowledge about how to fix your own car, plus the time involved to fix…

Really? That’s depressing. Money can be anything you want it to be, so how about this.

Money = thank you points

You give it to people you’re thankful to, who either did something nice for you or gave you something you wanted.

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

#297

Post by hndamien »

qubex wrote: post #266
naravara wrote: post #220

Earlier quoted context omitted.

>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 exchan…

If anybody is interested by (or feels like contesting) this view of how earlier economies functioned without money and/or how money came to be, I highly recommend Debt by David Graeber (a self-declared radical activist, instigator of the Occupy Wall Street movement, and brilliant anthropologist — I had the good fortune of attending some of his letters, and he is enthralling).

Reading this made me even more bullish on crypto currencies. Every time there is a crash I listen to the audiobook.

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

#298

Post by hndamien »

Slansitartop wrote: post #248
acct1771 wrote: post #164

Earlier quoted context omitted.

Worked great in 2008.

>> You could say that humanity has repeatedly and organically come to a solution broadly known as government and regulation. > Worked great in 2008. Wasn't 2008 at least partially the result of having banking regulations withdrawn/weakened over the prior decades? If so, isn't it pretty bogus and misleading judge the effectiveness of financial regulation from that event? It's like saying airbags don't help in a crashe…

You still had a system that decided removing airbags was a good idea. Then, when getting smacked in the face, doing nothing to the people involved in removing the airbags or causing the face smacking.

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

#299

Post by conanbatt »

IntronExon wrote: post #221
celticninja wrote: post #174

Earlier quoted context omitted.

It's like people assume the current financial system is perfect and bitcoin is not. Bitcoin never pretended to be, it's still an experiment 10 years in, but its a fun expierment.

It’s fun while it’s worth a bucketload. When people start losing their shirts and dumpster loads of ASICS are being burned for cooking fires... less fun. (Some hyperbole engaged above)

There's a massive difference in crypto over fiat. In the US, if you have a debt they can take back your home, you can get harassed and taken to court.

The stakes are not that high for crypto wealth. Its unenforceability makes the stakes a lot lower for tragedy.

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

#300

Post by conanbatt »

Daishiman wrote: post #290
conanbatt wrote: post #235

Earlier quoted context omitted.

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.

History has shown that in certain matter people will, over and over again, commit systemically wrong choices. So no, in some things we're all in this ship together and as long as that's the case I want people to not collectively fuck things up.

Thats what you want. Why do you feel entitled to make other people do what you want?
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