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The Bitcoin Report 2 [pdf]

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Re: The Bitcoin Report 2 [pdf]

#81

Post by maxerickson »

waterlesscloud wrote: post #62
polshaw wrote: post #33

The value of BTC just doubled from 60 to 120 in 40 minutes.. wtf is going on there? (looking at btce/USD) (disclaimer: i'm not trying to hype, I expect it will come back down again shortly, it just seems weird to change that much that quickly) Edit: yup.. back down to 80 20mins later.. can anyone tell what kind of volumes were traded in this period? ..I wonder if anyone was able to double a serious amount of money in…

Interesting statistic- Bitcoin Days Destroyed skyrocketed during this crash. http://blockchain.info/charts/bitcoin-days-destroyed BDD measures how many "old" coins are being moved around, so it seems likely that a lot of early adopters cashed out this time. Will be interesting to see what that means for the future of the BTC itself.

It provides some information about the dwell time of coins. It's hard to see through it and say much about just how old the coins trading are. It doesn't take all that many old coins to get to 50 million BDD (~ a weeks worth of 3 year old coins...)

My rough calculation is that there are more than 5 billion bitcoin days outstanding, so there is still plenty of room for a wild stampede.

Re: The Bitcoin Report 2 [pdf]

#82

Post by surrealize »

wmf wrote: post #61
surrealize wrote: post #19

Earlier quoted context omitted.

If you see it going up, why would you sell? In the deflationary spiral scenario, it'll just keep on going up, so it's in your interest to hold on.

We see people selling at $100 and $200; would we expect people to not sell at $10,000?

Sure, some people will sell, the question is whether or not the amount of selling is large enough to keep the price from spiraling upward. If you predict that there will be lots of selling, then you're assuming that people aren't (on average) responding to the incentive to hold.

Re: The Bitcoin Report 2 [pdf]

#83

Post by zenocon »

dragonwriter wrote: post #67
zenocon wrote: post #26

Earlier quoted context omitted.

Bitcoin is an infant. Hoarders will happen, sure. We'll see what happens in the long term. Gold as a fixed medium may not be practical to slice to 8 decimal places, but then again...the central authority that is in charge of deciding that never tried. They just gave up and Keynes won. Let's see what happens.

Continuing to repeat "Bitcoin is new; Bitcoin is sudividable; Keynes bad; central bank bad" isn't actually an argument as to how any new features of Bitcoin, including its subdivisability, change any of the incentives related to deflation. If you've got an argument, make it, but as far as I can see there's just conspiracy theories about the status quo and wishful thinking with no coherent basis for Bitcoin.

Sure, you can continue to try to discount the things I've already said, and tell the world none of it matters according to you, and yet here we are in an endless loop.

Re: The Bitcoin Report 2 [pdf]

#84

Post by Aqueous »

zenocon wrote: post #65
InclinedPlane wrote: post #64

Earlier quoted context omitted.

Geocities, lycos, CompuServe, Excite@Home, so many others. Those were all companies which sold at a billion dollars or many billions of dollars and have sense been shut down or are worth a tiny fraction of that amount today. And those are just examples from the last 20 years, we could go back to nearly countless examples of other speculative bubbles going back centuries.

If ever there were a textbook example of apples/oranges, this would be it.

The example is helpful, though. In each of those cases something very much better came along to replace it.

The same thing could very well happen with BitCoin. Someone mentioned forking BitCoin and tweaking the algorithm to remove the artificial ceiling of 21 million units, and replace it with an algorithm which monitors all the transactions taking pace and adjusts monetary policy in response to them, in order to produce a steady inflation rate. Such a currency might very well be more desirable than one with deflationary tendencies.

Bottom line - unless someone figures out a way to replace BitCoin with something better, I see no reason to believe BitCoin is going away anytime soon.

Re: The Bitcoin Report 2 [pdf]

#85

Post by dragonwriter »

zenocon wrote: post #83
dragonwriter wrote: post #67

Earlier quoted context omitted.

Continuing to repeat "Bitcoin is new; Bitcoin is sudividable; Keynes bad; central bank bad" isn't actually an argument as to how any new features of Bitcoin, including its subdivisability, change any of the incentives related to deflation. If you've got an argument, make it, but as far as I can see there's just conspiracy theories about the status quo and wishful thinking with no coherent basis for Bitcoin.

Sure, you can continue to try to discount the things I've already said, and tell the world none of it matters according to you, and yet here we are in an endless loop.

I am not discounting them, I am asking you to provide reasons to believe that they have some substance. I am interested in knowing whether there is any substantive reasoning behind the "but Bitcoin is new and different" response to deflation concerns, but from what I can tell from the responses of proponents of that position when asked for a rationale, it amounts to a bare article of faith, rather than a position with any rational support.

Re: The Bitcoin Report 2 [pdf]

#86

Post by dragontamer »

Aqueous wrote: post #57
InclinedPlane wrote: post #31

Earlier quoted context omitted.

Long term? People stop using bitcoin. You theorize that the boom/bust swings will diminish in intensity until eventually bitcoin becomes stable. Others theorize that the boom/bust cycles will grow in severity until eventually everyone just gives up on bitcoin. So far there's very little evidence for the stability option and a lot of evidence (and economic theory) for the speculative bubble theory. Do you have any evi…

I've very rarely seen something with a > 1 Billion market cap and millions of users simply disappear. (To use an unrelated example, even MySpace still exists :) Very simply, the more users are in Bitcoin the more vendors there will be who accept BitCoin. The more goods and services can be bought in Bitcoin during the relatively smooth periods the greater the proportion of people who like to have the currency for curr…

The Zimbabwe M1 was worth $2.4 billion in 2001, and millions of users are forced to use it. (Zimbabwe professors, teachers, etc. etc.). And of course, that entire money chain is practically worthless today.

There is no guarantee that BTC will survive. Larger currencies have fallen before it.

Re: The Bitcoin Report 2 [pdf]

#87

Post by hotpockets »

Nursie wrote: post #73
hotpockets wrote: post #55

Earlier quoted context omitted.

I don't get this argument. Bitcoin lets you do things you can't do without it. That's not zero sum, that's creating value that wasn't there before. And we are only at the beginning. Pretty much no one understands what can be done with it in the future. Smart property, oracles, etc.

Such as?

I listed two examples, not sure what you're looking for. But, this page has more: https://en.bitcoin.it/wiki/Contracts

Re: The Bitcoin Report 2 [pdf]

#88

Post by rhizome »

el_senor_duerpo wrote: post #48
rhizome wrote: post #10

Earlier quoted context omitted.

market forces will drive prices up, and people will sell as a result, fulfilling demand? I'm no economist, but I'm pretty sure this state of affairs is not guaranteed.

I am an economist, and I have no idea what that means. Sounds to me like confusion over two things: (i) the difference between "supply and demand" and the "quantity supplied" or "quantity demanded" and (ii) equilibrium. The circular logic is a tell tale sign. Price goes up, so people demand less, so price goes down, so people demand more... That's the whole point of equilibrium. Where does all of that net out.

I think they are trying to say that demand forces supply.

Re: The Bitcoin Report 2 [pdf]

#89

Post by matthew-wegner »

Nursie wrote: post #75
matthew-wegner wrote: post #58

Earlier quoted context omitted.

I think this is a hugely important distinction. The linked-to analysis seems to assume that BTC are bought with USD, sit around in a wallet, and then come back out as USD. When in fact, BTC's usefulness is its frictionless-but-secure, anonymous transactional nature. Its anonymity is even stronger if you mine coins yourself (or acquire coins directly from a miner for favors or whatever). You can probably make the case…

It's not really anonymous though, transactions are publicly recorded for all time. It's also not 100% frictionless. There are fees and though they are currently low, they are there.

I know there are transaction fees. I meant friction as--once you have BTC in a wallet, you are absolutely free to spend them as you wish. There is no way for anyone to prevent a transaction.

Bitcoin addresses are public but anonymous. But yes, you can analyze the public ledger to tie known data (publicly-posted donation addresses, etc) to try to de-anonymize someone. There are coin tumblers/mixers in place in some markets, although it's hard to tell how effective they are.

Re: The Bitcoin Report 2 [pdf]

#90

Post by el_senor_duerpo »

flyinRyan wrote: post #78
vyrotek wrote: post #7

"There is no capital nor wealth creation to speak of; only as much money as was put in. While somebody may buy a bitcoin for $1 and then sell it for $200, no value was added in this process, so it is simply a transfer of wealth. The people who profit will do so by taking from those who lose. As the deflationary feedback amplifies the desire to hoard, the exchanges will become illiquid. Eventually, buyers will give up…

>There is no capital nor wealth creation to speak of; only as much money as was put in. While somebody may buy a bitcoin for $1 and then sell it for $200, no value was added in this process, so it is simply a transfer of wealth. So like 90%+ of what the stock market does then?

Sure, lots of the stock market is arbitrage. While bubbles form in different markets, they are all eventually followed by a correction. The problem with bitcoin is that there is no fundamental asset underlying the currency. So when there's a correction, there's no sense of where the bottom is.
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