71–80 of 85 posts
At the end of the article the guy says: “What really defines the price is its reputation and expectations for the future.” But isn't that true of any currency? Isn't that why a green piece of paper with Benjamin Franklin's face on it is worth anything at all, just because we believe in the US government's stability?
Price drop was most likely caused by cascading margin calls. As exchanges add more sophisticated features (such as trading on margin) amateurs continue to suffer and learn expensive lessons. Many Bitcoin advocates will heave at the idea of any form of regulation, Bitcoin unfortunately appears to be most attractive to libertarians. Yet their fellow advocates are suffering all around them for it. As an example, any lev…
Earlier quoted context omitted.
> In this scenario, we don't care about what the price is. You don't, but you rely on people who do on both ends, which means that the long-term viability in the use case you are interested in is dependent on the viability of Bitcoin to people who do care about the price, even if the people using it for your use case do not directly care about that.
Maybe. We are getting into something which is a bit complex here. And I'm assuming neither one of us are experts. People who are interested in holding Bitcoin probably aren't people I'm going to be interacting with. If you are holding, you aren't selling. My use case will help Bitcoin by creating demand, and helping liquidity. I'm buying and then turning around and selling. I using up available liquidity and then sel…
Sure they are.
> If you are holding, you aren't selling.
But if you are interested in holding, you are likely buying. And remittance use case requires you to interact with both a seller and a buyer.
> I using up available liquidity and then selling to create more liquidity.
Which is basically a net zero impact, but sure.
> That liquidity also helps other people looking to do the same as me. You then have a pool of Bitcoin which is basically just zipping between people who aren't affected by price.
Except that if you want those transactions to get processed, you need miners, who are interested in price, since they get paid in bitcoins (mining new blocks and/or transaction fees; over time moving from the former as the main reward to the latter.)
Price drop was most likely caused by cascading margin calls. As exchanges add more sophisticated features (such as trading on margin) amateurs continue to suffer and learn expensive lessons. Many Bitcoin advocates will heave at the idea of any form of regulation, Bitcoin unfortunately appears to be most attractive to libertarians. Yet their fellow advocates are suffering all around them for it. As an example, any lev…
Can't wait till they allow derivatives!
Leverage is a powerful but dangerous thing, but it is needed for legitimate business use, such as hedging held BTC. I agree that there needs to be a big warning on the box. We're working on a series of articles explaining margin trading to the layperson as well as an interactive introduction, but above all, investors need to take responsibility and be aware of what they are doing when they put their money on the line.
Price drop was most likely caused by cascading margin calls. As exchanges add more sophisticated features (such as trading on margin) amateurs continue to suffer and learn expensive lessons. Many Bitcoin advocates will heave at the idea of any form of regulation, Bitcoin unfortunately appears to be most attractive to libertarians. Yet their fellow advocates are suffering all around them for it. As an example, any lev…
Part of the issue is that most exchanges will liquidate your entire position in the event of a margin call, rather than simply liquidating enough to bring you back above maintenance margin.
Earlier quoted context omitted.
Assuming every bit coin created still exists is a mistake. Nakamoto might still be in possession of roughly one million bitcoins. But if they where lost then it's a 6.0B commodity. It might just qualify as part of the S&P 500, but that's not really a major hurdle. PS: If bitcoin wants to be a stable currency it may be well served by invalidating any wallet without transactions for a long enough period of time aka 10…
Suggesting "invalidating wallets" indicates a lack of understanding about the underlying system. Wallets are an abstraction; they do not exist in the Bitcoin protocol. And why should we work to make the Bitcoin market easier to analyze? Our first priority should be to have a strong long-term (well over 10 years) store of value.
It might be a wording mistake rather than a lack of understanding, but I see your point. If you think about it though, it's technically easy to do and maybe a good thing too. Since you can see any transaction ever done, you can easily lookup the last transaction done by any address with value (valueless addresses can be discarded from memory anyway). If that transaction is more than, let's say, 50 years ago, you could say that it can be discarded from memory too (no longer included in the block chain to preserve space).
People may want to store coins for over 10 years in cold storage (hot storage would simply be able to do a transaction to itself every few years) so maybe that's too short, but 50 years seems like a reasonable time. Looking at the future of Bitcoin (and I mean 100+ years), even though storage will get cheaper and cheaper, it might be smart to discard really old addresses.
Of course this is all just an idea, I'm not saying it really surely would be a great thing to do. It's just that it's possible and not just a dumb remark from Retric.
Earlier quoted context omitted.
Just as a heads up, you will still need to care about price for volatility risk reasons. Hedging bitcoin volatility risk is a major concern for its adoption.
Bitcoin has a lot of utility outside of just holding. I didn't specifically say I would be holding. Rather, I would be using it for money transfer.
Earlier quoted context omitted.
The bitcoin market is worthwhile $6.3B at the current time so its value is not that negligible and might have an economical impact. NB: I'm saying that "it may have" not that "it has".
Assuming every bit coin created still exists is a mistake. Nakamoto might still be in possession of roughly one million bitcoins. But if they where lost then it's a 6.0B commodity. It might just qualify as part of the S&P 500, but that's not really a major hurdle. PS: If bitcoin wants to be a stable currency it may be well served by invalidating any wallet without transactions for a long enough period of time aka 10…
Why is it difficult?
No one "invalidates" US paper currency that hasn't traded for 10 years. A certain amount of US currency has been burned up in fires or lost to washing machines, yet no one seems concerned. Instead, they use surveys and other forms of statistical analysis to determine the amount in circulation, rather than relying on the US Mint's records of what was ever printed. The same would work for Bitcoin.
Awesome, my bot got me some while they were cheep :)
Earlier quoted context omitted.
It was almost certainly caused by microstructure of the Bitcoin market: at least two exchanges allowed people to buy Bitcoins on margin, and published widely distributed statistics of how much aggregate margin was outstanding on a day to day basis. It did not take much Excel modeling to figure out the approximate price points for Bitcoin where the exchanges' published margin requirements would trigger cascading margi…
> published widely distributed statistics of how much aggregate margin was outstanding on a day to day basis. Do you have a link? I didn't find those stats after a cursory look at the Bitfinex and BTCE sites.