Brendan Burgess
Founder
- Messages
- 52,122
I am not sure what it's doing but it's fun sliding those sliders around.
I suppose it forces people who want to calculate the value to make estimates.
Brendan
Why is Bitcoin "digital gold" crashing right now?
- Thread starter Brendan Burgess
- Start date
- Status
I am not sure what it's doing but it's fun sliding those sliders around.
I suppose it forces people who want to calculate the value to make estimates.
Brendan
Duke of Marmalade
Registered User
- Messages
- 4,448
1,000 as per spreadsheet, earlier post edited
I used the John Bowe technique in coming up with the model's parameters
DublinHead54
Registered User
- Messages
- 1,054
The statistics are correct but irrelevant to this situation, and not sure what point it makes in supporting you rationalizing your bitcoin short given that you can't know when it will go to 0 just that it would go to zero. I would think this important piece of information would prevent an investor from putting on a short.
I know when the big boys short in the market, they often have to close out because they can't afford the cost of keeping the short open as time goes bye. Is there not a cost to rolling a short position each day and therefore the short has a time limit where it would become unprofitable even when Bitcoin goes to 0?
Duke of Marmalade
Registered User
- Messages
- 4,448
I think the really big revelation is that all this speculation about bitcoin's ultimate destiny stands or falls on its widespread adoption as a medium of exchange. I don't see that happening and I don't think current speculators would be too convinced either. And if by some chance it really did start to gain a foothold as a medium of exchange the monetary authorities would have to clamp down on it hard. To me then its best case final resting place is dominating the black market and as it happens the tool says that 50% of that market would support the current price.
The tool asks for inputs and then gives a price. But you have been asking a more fundamental question which is "where do you get your inputs, or why should there be that level of take up?"
Can you send me a link to that John bowe technique?
Duke of Marmalade
Registered User
- Messages
- 4,448
courtesy of tecate
So you just made them figures up , you had me excited about making money shorting it .
Duke of Marmalade
Registered User
- Messages
- 4,448
The volatility could probably be modeled from historic data but the drift has to be subjective I fear.
Maybe this is the model Brendan would use for figuring out the fair price of gold?
For quite a time bitcoin's price was closely correlated to Google search trends. More recently however it appears some may have been using this to affect the price in their favour.
You just made an excel spreadsheet with random figures and ran a simulation to decide if it was value shorting ? I'm not sure if your been real or not , that probably explains why you still in debt at 40
Think you might have just undone all the good you have done with previous posts with a comment like that.
I did inset a smile but it didn't show up
Your right though I struggle with recognising sarcasm and long form debates, I have mild autistic tendencies. So I'll be closing my account as to protect my over loading brain. Sorry if offence caused Duke
No need for that. I am sure he is not that offended. Just didn't read well without the smiley thingy!
By the way, someone else tried to close their account. Check out how that went!
Duke of Marmalade
Registered User
- Messages
- 4,448
Yes I was puzzled by the comment. Thanks to Sunny for having the matter cleared up - no offence taken.
Obviously shorting bitcoin is a subjective play - as you say yourself the price is the price and who can say categorically that the price is wrong. I developed the spreadsheet back when bitcoin was at 14,500. I was mainly interested in modelling the volatility risk in taking out a short, which I think can be reasonably modeled. The trade offs looked good and so I took a modest short position and got out a couple of months later at around 8,000. I haven't dabbled since.
I must say I didn't have tecate down for a communist being a proponent of a no government "currency" such as Bitcoin.
It's Friday so a joke springs to mind......"A communist walks into a bar with Bitcoin..."
The average lifespan of a FIAT currency is 27 years. If Brendan was to qualify his statement to what you are pointing out Wolfie I.e. that ultimately everything returns to zero (very much including FIAT currencies), there might be some credibility in it.
Brendan and others started off with such thinking. That’s demonstrated by their earlier posts on Bitcoin on AAM cerca 2017/8 and price predictions of zero that have not materialised. As Bitcoin stubbornly has no intention of playing along with that script, the time element has been removed. To verify this, ask Brendan to confirm when Bitcoin will go to zero. As I outlined above, the average lifespan of a FIAT currency is 27 years - with a couple of them having kicked the bucket in the last few weeks alone.
And this is precisely what @Fella has demonstrated that he understands. Nobody here has ever suggested that you put your life savings into Bitcoin. It’s at a formative and early stage in its development and use. From an investment perspective, it is high risk. However, that risk is asymmetric - with the potential upside being far greater than any other asset at this point in time. Very few assets present with that sort of gain - and nor will Bitcoin in the longer term when it matures as an asset.
So people can say that it’s risky as hell but what @Fella gets is in sizing that investment. With a 2% allocation, if naysayers are right and Bitcoin gets wiped out, then of course it’s bad but given target inflation is 2%, it doesn’t destroy his portfolio. On the other hand, if Bitcoin keeps doing what it has been doing - being the best performing asset of the last decade, of 2019 and thus far in 2020 - then with a much much higher upside than all other assets right now, that 2% allocation is going to lift the value of his overall portfolio disproportionately. Looking at it from that perspective, it's foolhardy not to gain a certain level of exposure to the digital asset.
The article in its entirety is a good writeup in the consideration of Bitcoin. Always the penchant to cherry pick, your Dukeness. The entire article can be found here. I’d encourage people to read the whole thing - not just Dukey’s highlights!
Forgive the terrible pun but this is pure gold from his Dukeness!
The article outlines precisely why Gold can’t be used as a medium of exchange:
John Kelleher's Investopedia Article said:
The article then goes on to demonstrate precisely what gives Gold value:
John Kelleher's Investopedia Article said:
We had Brendan tell us that scarcity doesn’t matter but as Kelleher points out, it very much does! Bitcoin has designed in scarcity - and with that, it can act as a store of value. It doesn’t stop there. Bitcoin has the ability to act as a medium of exchange (unlike gold). Sure, adoption in a medium of exchange context will copper fasten its position. I’ve referred to exactly that in previous posts. However, as a store of value, there is nothing standing in its way to either be a digital form of gold or a store of value asset in its own right. It brings with it additional qualities that supplant gold. I believe in the longer run, Bitcoin will make further in-roads as a medium of exchange. Improvements in usability and the sustained and ongoing process of a reduction in volatility will see to that. However, Gold proves that there is no actual need - Bitcoin can act as a store of value just like Gold without having widespread use as a means of exchange.
That’s completely incorrect. See above - and go back and look at the characteristics of any store of value - Bitcoin scores exceptionally well in those terms.
Once again, see above. There’s no delusion here…at least not on my part. As mentioned, you cherry pick from the article. Secondly, you disprove the point you are making as Gold doesn’t act as a medium of exchange yet it is very much a store of value.
Disproven - see above.
Gold stands as the king in terms of store of value yet it’s not a medium of exchange. Does that answer your question?
FIAT has served society well - within it’s time and place. However, you’ve previously referred to ‘monetary evolution’ and digital currency is a manifestation of that. Additionally, the ‘occasional spectacular failure of FIAT’ is inaccurate - that failure is ongoing. The average lifespan of a FIAT currency is 27 years. At any given time, we have a list of mismanaged FIAT currencies. In the past few weeks alone, we have had two of them fail completely.
And that’s precisely what we’ve had with FIAT currencies since the withdrawal of the gold standard. And here’s the kicker - they very much can’t be trusted whereas preprogrammed and untamperable Bitcoin with it’s fixed supply can.
That’s a bare faced lie. From Kelleher's Investopedia article:
John Kelleher's Investopedia Article said:
And that’s only half the insight. The rest is that countries were not storing the reserves of gold that they claimed - they couldn’t be trusted to do so.
I meet plenty of Venezuelans and none of them tell me about the warm cosy feeling they get about the backing of the Bolivar with the ‘debts of economic agents’.
If the Euro was dissolved tomorrow, Ireland would return to the Punt Nua and as people’s euro’s were converted, their wealth would vapourise instantaneously as our sovereign currency would devalue against the Franc and the Deusche Mark. I’m sure in that circumstance, AAM’ers can come back here and glory at your ‘debts of economic agents’ backing then!
Within its time and place, FIAT currency has definitely served its purpose and will continue to do so. However, it’s foolish to assume that people can rely on any currency to be ‘carefully managed’. History has shown us that we can’t trust in that.
You said that FIAT money is not a store of value yet as per Kelleher's Investopedia article, it needs to be if it is to act as a decent currency:
John Kelleher's Investopedia Article said:
At best, ordinary people are being pick-pocketed through the ongoing inflation of FIAT currency. At worst, their money is taken away from them or their wealth vapourised through mismanagement.
There is…until the day that there isn’t! Remember that Bitcoin (and FIAT) is to be assessed on a global basis. We may have had relative stability currency-wise but past performance is not necessarily an indicator of future performance. Of course, that’s also if you consider the Euro almost collapsing in 2012 stability…or speculation about how it’s going to navigate its way out of the current crisis. Even if it finds its way, know that at any given time there are a list of FIAT currencies giving Bitcoin a mandate.
Nostrodamos strikes again.
One other interesting thing Dukey is that you had difficulty in getting to grips with the characteristics of a store of value. Here are Kelleher's characteristics of money:
Check out just how well Bitcoin scores against gold and FIAT in that context.
Best Articles to Understand Bitcoin
I have to say that I was impressed by Kelleher's article (and ironically, Dukey's recommendation) - it's even handed and thorough. I'm going to start recommending it to the Bitcoin-curious. My other default is Vijay Boyapati's medium article - which Dukey tried his best to critique but failed miserably.
Why Do Bitcoins Have Value - John P. Kelleher
The Bullish Case For Bitcoin - Vijay Boyapati
Last edited:
That's hilarious! So money must be smart / programmable or it's no good???
I'd also question anyone who thinks Bitcoin is easily transactable. How many companies in Ireland accept Bitcoin? Certainly none that I deal with here or abroad will accept Bitcoin, so it fails the easily transactable test for me.
I'd question the dollar only scoring a moderate for divisibility. How many times does anyone need to spend or transfer less than a cent??
- Status