Bitcoin in a hyperbolic bubble

Status
Not open for further replies.

Duke of Marmalade

Registered User
Messages
3,792
@WolfeTone These are predictions from folk who know a lot more than you or I
“Wolfie Tone said:
As much as I do understand it, it is that as the block reward has halved that the nodes/miners require more processing power to validate the blocks and earn the rewards. Or in short, it hardens the network against hacking, fraud, centralised control,
I think you should refresh your understanding. The processing power is driven by the incentive to mine new coins. Halving the incentive could in no way of itself attract more processing power.
 
Last edited:

WolfeTone

Registered User
Messages
1,084

Duke, you do yourself a disservice. I'm of the view that you could indeed know more than I or most people. I'm open to the view that BTC could return to zero, that it is a wholly manipulated market, that it is unsustainable etc, etc.
All I can work off is the information put in front of me and make as much sense of it as possible and then make as much an informed decision based on that information. You have kindly provided me with an article of bitcoin sceptics that, on the face of it, if this was the only information available to me I would have sold out my stock of bitcoin before the end of this sentence. But it is not the only information I have. Nevertheless, it would foolish of me to totally discount the sceptic views without at least a minimum of consideration.

Forgive me for being a little bit skeptical of an article that is clearly loaded to push the skeptic view. Nevertheless;

- Nicholas Weaver. A researcher at (in?) computer science, Berkley. Nicholas following BTC since 2011! Has declared that "this is the year the music stops". A full on believer that bitcoin is a ponzi scheme, he believes that it is Tether that is sucking the last of the dollars and the end is nigh!
Forgive me for being skeptical of the ponzi scheme view considering it all began with the purchase of two pizzas for 10,000 BTC and having crashed several times over the last decade, Weaver, and everyone else, is short on explaining how BTC is the first ponzi scheme that has prevailed despite numerous price crashes and predictions of returning to zero. Maybe its a ponzi "this time is different" scheme?

- Jorge Stolfi. I like Jorgi from the get-go. "he knows too well that anything can happen". Which kind of disputes Weavers view above? Either the music is going to stop this year, or anything can happen...which one of these people who know a lot more than me is correct? If Weaver is correct then Stolfi is wrong to suggest anything can happen, if Stolfi is correct then Weaver is wrong to suggest that this is the year the music will stop.

- Frances Coppola. Frances is angry. And she ought to be, she has had to endure the bitcoin trolls on social media for daring to suggest that bitcoin is not scarce. She hopes it crashes and burns, she just doesn't know when, but her anger appears to prompt her to think it will be around, eh, June.:rolleyes:

- David Gerard Well, he wrote a book about FB Libra coin (whatever happened to that?). David is pretty sure bitcoiners are about to get a dose of real-world regulatory compliance. Bring it on David!, BRING IT ON!! :p
Although he then goes on to admit "...these guys are just amazing in their ability to dodge the blade....", which kind of dilutes his overall message of the power of regulatory authority.

- Nouriel Roubini I do agree with Nouriel on one thing. The CB digital money will not be cryptocurrency as we understand it today. He is explicit in his online interview. CB digital money will be centralised, permissioned and private - the exact opposite of bitcoin. Roubini claims it will destroy the crypto market. It may take out a lot of the s1coins but I cannot see it destroying crypto. More so, with individuals now having personalised digital accounts with central banks, the need for retail commercial banks and other payment processors becomes questionable. This is touched on here in this AAM thread

Will the banks survive the current changed economic climate


- The author (I cannot find her name) Her heart is in the right place for sure. She wants to protect the retail investors who are being duped. But I do find her position somewhat contradictory. She advises the reader, me, to sell my holding or get at least my initial investment back. But in order to sell, there needs to be a buyer - what is her advice for prospective buyers of my bitcoin?

All in all, it is useful to get the skeptical view of bitcoin. It assists in overindulging the bitcoin euphoria which I believe is just the polar end of the views expressed in the article.
Im of the view that the truth lies somewhere in-between. Meaning, my BTC holding is valuable, but not life-changing. But I would still be very much inclined to think that the BTC story has a long, long way to go.
 

Duke of Marmalade

Registered User
Messages
3,792
@WolfeTone It was refreshing for me to read the skeptics. My conviction that crypto is 100% irrational is confirmed. And yet!? I shorted btc in early 2018 at 14,000 and got out a few weeks later at 8,000 for a not life changing profit. I haven't dabbled since and I am not tempted now for the reasons reflected in the quotes supplied by Brendan in #33. It seems it will need a major denouement like the exposure of Tether to stop this irrationality any time soon.
 

tecate

Registered User
Messages
1,880
@WolfeTone It was refreshing for me to read the skeptics. My conviction that crypto is 100% irrational is confirmed.
Tonight's homework.

I shorted btc in early 2018 at 14,000 and got out a few weeks later at 8,000 for a not life changing profit. I haven't dabbled since and I am not tempted now for the reasons reflected in the quotes supplied by Brendan in #33.
Hat's off to you Dukey. I have no doubt whatsoever but that you are risk averse and fiscally conservative. I mean, the strength of your conviction couldn't even extend to the price of a couple of pints.
 
Last edited:

WolfeTone

Registered User
Messages
1,084
Are there any respected economists making the case for bitcoin?

Apologies, I didnt realise earlier that I was responding in the bitcoin pension thread.

Veldes/Ammos v Roubini/Krugman

All respected economists in their own right. Roubini and Krugman obviously carry higher stature in their respective fields but specifically when it comes to bitcoin, Veldes and Ammos offer much greater insight. In particular Dr Ammos.
 

Duke of Marmalade

Registered User
Messages
3,792
@WolfeTone
I tracked that Ammous fellow down. This is what Quickpenguin says about his book "The Bitcoin Standard".
Quickpengiuin said:
Unfortunately, there are some notable bad points.
  • Saifedean Ammous is an academic, which shows itself in his writing. He could have easily cut 50 pages from this book with some moderate editing (especially in the middle of the book).
  • Saifedean Ammous has an obvious dislike for Keynes and Keynesian economics. The venom spills from the page, which really distracts from the argument he was attempting to make. It just wasn’t needed.
  • At one point, Saifedean Ammous rants about how art has been tainted by Keynesian policies, which encourage high time preference (i.e. short-terminism). It’s an absolutely absurd section and something that should have never made the final cut.
  • Saifedean Ammous argues that Bitcoin (BTC) could be an international settlement currency in the future. It’s an interesting idea, but I would have liked to have seen a fleshed-out exploration of this possible future.

I particularly draw attention to the last point. The idea that EU contributions to the budget or US arms sales to Saudi Arabia could be paid in bitcoin is for the birds. So no, I am not impressed by the witnesses for the defence.
 
Last edited:

WolfeTone

Registered User
Messages
1,084
I particularly draw attention to the last point. The idea that EU contributions to the budget or US arms sales to Saudi Arabia could be paid in bitcoin is for the birds. So yes I am unimpressed by the witnesses for the defence.

Hold your horses there Duke!

The question was, "are there are respected economists making the case for bitcoin?".

I have produced two economists who, to all intents and purposes are respected in their field of work, and who make the case, or a case, for bitcoin.
I can add Alexander Puutio, lawyer and economist, to that list also.

The question you asked has been answered. It is Yes.

As I feared, the goalposts have shifted somewhat from economists making the case for bitcoin to, "quick penguin" book reviews! And only the bad parts of the review to boot!

I had a look at the entire book "review".

"Despite my disappointment, I did enjoy (and benefit from) reading The Bitcoin Standard... And if you do decide to pick it up, then give yourself permission to skim chapters 4 through 7". :oops:
 

Duke of Marmalade

Registered User
Messages
3,792
@WolfeTone You have done what was asked, fair play.
But! And I am not trying to score cheap points here.
You have managed to persuade me even more that there is no substantial school of economic thought which supports bitcoin. There are those who are impressed by the technology, there are those who are prepared to ignore its fatal flaw - it has no intrinsic/fundamental/utility value. But the vehemence with which the likes of Professor Roubini denounce it as 100% irrational (not to mention a raft of Nobels) remains totally persuasive.
 

WolfeTone

Registered User
Messages
1,084
that there is no substantial school of economic thought which supports bitcoin.

( shall we will pretend the quickpenguin book 'review' never happened? :D)

You have moved the goalposts and now ask for a "substantial school of economic thought" which supports bitcoin.

You don't ask for much do you?

Anyway, see how we go...

I would suggest that there is no school of economic thought that does not support bitcoin.
In fact, I would argue that the entire sphere of mainstream economic thought is wholly behind bitcoin. More precisely, the technology that it is built on.

The only contention is the value of the concepts associated with bitcoin and the price attributable to that value.

In simple terms, economists study human behaviour toward desirable goods and services that are scarce (or in these times of abundance, that have limited availability).
This induces a concept of value, which as humans we communicate to each other through a monetary system, namely price.

Critically, all schools of economic theory originate from the study of past human behaviour and experience relative to scarce goods and services, with the intent to anticipate and predict future human behaviour and potential consequences thereafter.

So I want to put to all the economists, and all the economic schools, and all the Nobel medal winners, and all their proponents, a very simple question of economics based on past historical recorded behaviour and experience.

Q: In 2009, two Papa John's Pizza were traded for 10,000 BTC, who received the greater value in monetary terms? The pizza recipient or the BTC recipient?
And which economic school of thought substantially supports your view?
 

Duke of Marmalade

Registered User
Messages
3,792
Sorry theo, I don't know where you are going with that. I think of Keynesianism vs Monetarism. Heavy debate in the economic profession. If bitcoin had any validity I would expect a similar style debate as to whether this was the future of money.
 
Last edited:

WolfeTone

Registered User
Messages
1,084
@Duke of Marmalade Bitcoin is technology. First and foremost that is what it is.
What value, in monetary terms, is derived from bitcoin and the price attributable to that value is the economic side. Keynesian, Monetarism, Austrian, Classical, Marxism etc are all abstract political concepts of how economies, the resources within, should be run to greatest efficiency. They provide the theoretical basis why their way is the best way. Those agreeing certain generalities on a broad basis form a 'school of economic thought'.

Economists are not technologists, they are not physicists, biologists, carpenters, civil engineers, administrators, computer programmers, hairdressers, chefs etc, etc.
A chef is better placed to know if a new recipe, or a certain restaurant ambience will likely serve as additional value to a business than an economist.
A hairdresser is better placed to know if a new hairstyle or coloring product will likely serve as additional value to a business than an economist.
An administrator is better placed to know if a new process or procedure will likely serve as additional value to a business than an economist.
Etc, etc.

All an economist will tell you is, that if a new product, good or service, does provides utility and is more resource efficient than the old product, good or service then, in theory, it will add value. That value typically reflected in monetary terms.
But we all already know that. We do not need an economic school of thought to come to that conclusion.

So the argument is not that bitcoin is not technology, it is, but rather what utility it provides and the value of that utility. And then how the value of that utility is reflected in a monetary price. This is where the argument rages.
Roubini proclaims it has no utility, that is his entitlement. I disagree. But I will try not to open another round of what is already said and instead try to communicate what I think is a (very distant) threat to bitcoin - interest rates.

I consider bitcoin to be a hard form of money and fiat to be a softer form of money. The lower the interest rate, the softer the fiat currency. If interest rates rise, it signifies a reduction in supply of currency. Money then becomes more expensive to borrow, and the holder can extract a rental payment in savings. The higher the interest rate, the harder the currency. The big problem however with monetary policy as I see it, is that other than the knights of the high central bank table, no-one, gets to decide how this currency is managed.
The monetary policy of some 400million (?) people in the EU is ultimately dictated by handful of decision-makers!
Now if we assume that their decisions are construed from a rigid set of policy dictats, and that those policies are not easily convertible into new rules and policies, then that adds strength to the value of the currency they manage. But that is not the case, not at all. Policies are changed, bailouts are granted, stimuli injected, pension funds raided, savings confiscated, currency printed, interest rates reduced, etc - all done in the name of preserving the value of the currency. It remains to be seen how successful the policy management will be. I have little confidence.

In my economic school of thought, interest rates are an economic force. They are not something to be unilaterally decided upon by small cabals of bankers. But that is our monetary system, we have artificially set interest rates by central banks, and we have real interest rates set by the economy in the round. By businesses and individuals engaging in trade, price discovery, supply, demand etc - this os what forms the real interest rate.

So bitcoin provides utility, to me, by providing a space to transfer soft digital fiat form money, into hard digital crypto form money. It is verifiable, the network is hard, the rules even harder to change, etc. I have bought it, sold it, transferred it, even invested some and received a return in btc.
So that is its utility to date, for me, not Roubini.
Roubini needs to be called out when he says it has no utility and no use case. This is factually incorrect.

The price attributable to avail of one full unit of that hard verifiable digital space is around $34,000. It is my belief, that the greater utility use of this space then the closer it will become to being a widespread mainstream medium of exchange, but I think that is a long way off yet.
 

Duke of Marmalade

Registered User
Messages
3,792
@Duke of Marmalade Bitcoin is technology. First and foremost that is what it is.
What value, in monetary terms, is derived from bitcoin and the price attributable to that value is the economic side. Keynesian, Monetarism, Austrian, Classical, Marxism etc are all abstract political concepts of how economies, the resources within, should be run to greatest efficiency. They provide the theoretical basis why their way is the best way. Those agreeing certain generalities on a broad basis form a 'school of economic thought'.

Economists are not technologists, they are not physicists, biologists, carpenters, civil engineers, administrators, computer programmers, hairdressers, chefs etc, etc.
A chef is better placed to know if a new recipe, or a certain restaurant ambience will likely serve as additional value to a business than an economist.
A hairdresser is better placed to know if a new hairstyle or coloring product will likely serve as additional value to a business than an economist.
An administrator is better placed to know if a new process or procedure will likely serve as additional value to a business than an economist.
Etc, etc.
Not sure what to make of that but I take it that it seems to imply that a Professor of Economics has no more authority to comment on bitcoin than, say, a carpenter. Let's agree to disagree on that one.
Roubini proclaims it has no utility, that is his entitlement. I disagree.
I agree with the professor, so let's again agree to disagree.
I consider bitcoin to be a hard form of money and fiat to be a softer form of money.
I agree with the professor that bitcoin is not a currency. Let's agree to disagree.
The lower the interest rate, the softer the fiat currency. If interest rates rise, it signifies a reduction in supply of currency. Money then becomes more expensive to borrow, and the holder can extract a rental payment in savings. The higher the interest rate, the harder the currency.
I'm a bit rusty on monetary dynamics. The Russian rouble has a current interest rate in excess of 6%, the euro interest rate is negative. I'll take your word for it that the rouble is a harder currency than the euro.
The big problem however with monetary policy as I see it, is that other than the knights of the high central bank table, no-one, gets to decide how this currency is managed.
Money is the life blood of our economy. I have no problem leaving its management to experts subject of course to general guidelines. Just as I would have no problem leaving public health policy to the experts.
But that is not the case, not at all. Policies are changed, bailouts are granted, stimuli injected, pension funds raided, savings confiscated, currency printed, interest rates reduced, etc - all done in the name of preserving the value of the currency.
Yes we live in a very complex society. The UK/EU FTA runs to 1,300 pages. The idea that our economy would run more efficiently if we just had a fixed money supply and no monetary management is nigh eve in the extreme.
It remains to be seen how successful the policy management will be. I have little confidence.
I have my doubts also but do not see any insurance in the wildly speculative crypto space.

So bitcoin provides utility
Let's agree to disagree.
Roubini needs to be called out when he says it has no utility and no use case. This is factually incorrect.
John Kelleher, an ardent bitcoin supporter, states that the only utility that bitcoin can possibly acquire is as a medium of exchange. I think you have conceded that bitcoin has made no progress in this respect, as in this quote:

...the closer it will become to being a widespread mainstream medium of exchange, but I think that is a long way off yet.
 

WolfeTone

Registered User
Messages
1,084
I take it that it seems to imply that a Professor of Economics has no more authority to comment on bitcoin than, say, a carpenter.

It says, that a Professor of Economics is no more qualified to identify what increases value in a hairdressing salon than a professional hairdresser is.
Meaning, an economist is no more qualified to comment on bitcoin as a technology than say, a computer programmer, a financier, a physicist, a hedge fund manager, etc

It is your apparent devotion to the economic profession (but only those economists that agree your view) when it comes to bitcoin that I find a peculiarity.
I don't discount their insights, but limiting your understanding of bitcoin to economists who appear not to have an understanding, or have been repeatedly wrong in their predictions of bitcoin, is self-defeating, imo.
 

Duke of Marmalade

Registered User
Messages
3,792
@WolfeTone First of all congrats on achieving $34.5k, and I mean that. Someone from Mars reading our postings over the last while and seeing the bitcoin trajectory would mark it as a 10-0 win for yourself.
I am not actually a big fan of the dismal science, their predictions make astrologists look respectable. It's just that bitcoin cultists seemed to be a mixture of nerds fascinated by the crypto puzzles and BigShort worldview folk who saw this as the demise of capitalism. The dog that wasn't barking were the mainstream economists. If mainstream economists were hailing it as a major breakthrough for humanity I would take notice.
 

WolfeTone

Registered User
Messages
1,084
Milken Institute panel discussion from 2018.

Two crypto entrepreneurs, a US government official, and Roubini. Well worth a watch.

Cryptocurrencies: Irrational Exuberance or Brave New World

The strange take from it is that I actually understand Roubini's talk more than the entrepreneurs. A lot of what the entrepreneurs are saying goes over my head, albeit I broadly understand the concepts they are highlighting (I think!).
I cannot but conclude that the entrepreneurs are speaking of concepts that Roubini is not grasping at all. The confidence and vision of future internet technologies from people who are very experienced in the field is clearly evident.

Another take is the US Treasury Dept guy. He chimes very much with my view that it is unlikely that there will be moves by US government to crush bitcoin. Not in a democratic free-market society there will not be. They are completely open to learning and understanding bitcoin and for allowing innovation to flourish - it is afterall, the United States of America, not North Korea.

CryptoCrime, terrorism, illicit money laundering, failed ICO's, failed businesses, are all addressed here.

@Duke of Marmalade it is the guys with the insights into the technologies that I lean to in this field and not economists.
 
Last edited:

WolfeTone

Registered User
Messages
1,084
That is hilarious.

It strongly suggests that there is nothing at all in what the entrepreneurs are saying.

I was speaking to my 13yr old about what was happening in Washington. He couldn't understand why people were blaming Trump because he was still the President.
I was talking about democratic mandates, rule of law, separation of powers etc. Most of it went over his head but I sensed he grasped there was more to what I was saying. He just doesn't get it yet.

Roubini is talking in a language that sounds dated, eg. 'glorified excel spreadsheets' to describe blockchain.
The technologists and entrepreneurs that are creating, innovating and investing are clearly intelligent people. They may speak a language that I cannot fully grasp but it is clear they certainly understand one another.
And they are innovating and investing their time and resources in an area where bitcoin is central to everything they are doing.

If an economist equates, communication+intelligence +experience +innovation = BOHA, then I for one, would tend not to give much time for his views. But each to their own I suppose.
 
Status
Not open for further replies.
Top