Bitcoin in a hyperbolic bubble

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DublinHead54

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Much more wider adoption. Cannot say definitively, but a ten-fold increase in adoption seems like a good starting point.

What does much wider adoption translate into? 10 more countries accepting it as legal tender?

In your opinion does it need more adoption to become less volatile? If BTC is tiny in terms of Global finance, do you not think that limits its potential for adoption? What do you think will change to lead to 10x adoption?
 

WolfeTone

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What does much wider adoption translate into?

Hard to define, I mentioned a ten-fold increase as a starting point.
In your opinion does it need more adoption to become less volatile?

Yes, in my opinion it does.

If BTC is tiny in terms of Global finance, do you not think that limits its potential for adoption?

It may limit its potential adoption but bitcoin, as you know, is divisible to 100million satoshi's. So there is potential for everyone on the planet - with a smartphone and internet connection - to acquire some.
I don't think we are anywhere near that occuring yet.

What do you think will change to lead to 10x adoption?

I'm not sure, it may never happen...I am just open to the possibility that it could occur.
 

Duke of Marmalade

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Adoption? Adoption as what? The only adoption that can have any hope of reducing volatility is adoption as a utility and the only possible utility it can fulfil is as a medium of exchange (John Kelleher, Investopedia). To all intents its current adoption as a medium of exchange is non existent.
The current price is purely speculation about what its price will be in future - that is destined to be hopelessly volatile.
 

tecate

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Crypto will quickly go to its intrinsic value - zero
Duke of Marmalade, 21st Century
This is a tough one - the House of Voltaire vs. the House of Marmalade. I'd have to say that when I think Voltaire, I think prolific, insightful scriblings - when it comes to the House of Marmalade, all I can think of is Fruitfield. :oops: Sorry your dukeness but I'll have to go with Voltaire on this one.
Adoption? Adoption as what? The only adoption that can have any hope of reducing volatility is adoption as a utility and the only possible utility it can fulfil is as a medium of exchange (John Kelleher, Investopedia). To all intents its current adoption as a medium of exchange is non existent.
The current price is purely speculation about what its price will be in future - that is destined to be hopelessly volatile.
Ah, John makes another guest appearance. It's a shame the guy is up to his eyeballs building away in DeFi - or we could invite him on here on your behalf, Dukey. So what you're saying is that it's the wrong type of adoption? I see.
 

Duke of Marmalade

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So what you're saying is that it's the wrong type of adoption? I see.
Absolutely.
Surely you agree (a) its main adoption today is as a speculation and (b) that can only be volatile.
I think you see some adoption as a "store of value" which seems to be the case (does NOT mean I think it is a sov) and that should be a tad less volatile.
And I agreed that Voltaire was spot on, fiat money by design will eventually approach zero.
 

tecate

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Absolutely.
Surely you agree (a) its main adoption today is as a speculation and (b) that can only be volatile.
I think you see some adoption as a "store of value" which seems to be the case (does NOT mean I think it is a sov) and that should be a tad less volatile.
And I agreed that Voltaire was spot on, fiat money by design will eventually approach zero.
There's a bit of a distinction. On the nocoiner side of the discussion, people have tended to say, look! speculation - on the assumption that it's a nothing burger. Speculative interest is a huge aspect of all markets whether we see that as productive or not. My view is that sure, there has been a large speculative interest - and there continues to be on the promise of the tech. That's what that speculation is based on (and of course these are tech-based hype cycles so people can get ahead of themselves - but that doesn't mean to say that they're wrong about there being something tangible at the heart of it). Oftentimes, I've pulled people up here for passing judgement on the tech when it - and its infrastructure/regulatory framework/eco-system is still in development. Everyone wrote btc off when it comes to means of exchange and I had done so on a temporary basis i.e. I accepted that bitcoin had challenges in that respect. And yet, now we have some further adoption as a means of exchange. Where there were several barriers (transaction time, transaction cost, transaction through-put), now there's only one (volatility) - and in the case of El Salvador, they've come up with a mechanism to deal with that - whilst still making use of bitcoin the network and bitcoin as a means of exchange.
On store of value, it's still in development but it has certainly made a decent start on that. I just listened to an interview with the CIO of a gold based securities company and I was quite impressed with the development of his view (when you bear in mind he has every reason to shout it down given he's in the gold business). Go back to when we opened this chain of discussions - there's no earthly way that a guy like him would hold such a view. That's all part and parcel of the move towards greater adoption.

Otherwise, the numbers don't lie. On-chain data confirms ever increasing activity/new wallets, etc - over the course of the 4 years we've discussed this - year on year.
 
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DublinHead54

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Yes, in my opinion it does.
How did you arrive at that opinion?

It may limit its potential adoption but bitcoin, as you know, is divisible to 100million satoshi's. So there is potential for everyone on the planet - with a smartphone and internet connection - to acquire some.
I don't think we are anywhere near that occuring yet.
How do you feel about inequality in the system In that scenario? Those with thousands of BTC and those with a fraction? Do you then believe the BTC $ price needs to be much higher to make 1 sathoshi useful?
 

Duke of Marmalade

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There's a bit of a distinction. On the nocoiner side of the discussion, people have tended to say, look! speculation - on the assumption that it's a nothing burger. Speculative interest is a huge aspect of all markets whether we see that as productive or not. My view is that sure, there has been a large speculative interest - and there continues to be on the promise of the tech. That's what that speculation is based on (and of course these are tech-based hype cycles so people can get ahead of themselves - but that doesn't mean to say that they're wrong about there being something tangible at the heart of it). Oftentimes, I've pulled people up here for passing judgement on the tech when it - and its infrastructure/regulatory framework/eco-system is still in development. Everyone wrote btc off when it comes to means of exchange and I had done so on a temporary basis i.e. I accepted that bitcoin had challenges in that respect. And yet, now we have some further adoption as a means of exchange. Where there were several barriers (transaction time, transaction cost, transaction through-put), now there's only one (volatility) - and in the case of El Salvador, they've come up with a mechanism to deal with that - whilst still making use of bitcoin the network and bitcoin as a means of exchange.
On store of value, it's still in development but it has certainly made a decent start on that. I just listened to an interview with the CIO of a gold based securities company and I was quite impressed with the development of his view (when you bear in mind he has every reason to shout it down given he's in the gold business). Go back to when we opened this chain of discussions - there's no earthly way that a guy like him would hold such a view. That's all part and parcel of the move towards greater adoption.

Otherwise, the numbers don't lie. On-chain data confirms ever increasing activity/new wallets, etc - over the course of the 4 years we've discussed this - year on year.
In the volatility stakes which we are currently talking about
Speculative=Super Volatile
SoV=Volatile
MoE=Stable
 

tecate

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In the volatility stakes which we are currently talking about
Speculative=Super Volatile
SoV=Volatile
MoE=Stable

I'm not sure why you want to split it down in that way Duke - but whatever floats your boat. I have not seen anyone claim bitcoin not to be volatile - so that's accepted. Otherwise, we have gotten rid of some other previous objections - such as transaction cost, transaction time and transaction through-put. It's taken a few years to bring that about. It will take multiple years for volatility to calm down.
For those that are in to speculation, volatility is the opportunity. If everyone agreed it works right out of the gate, there would be little or no opportunity. As a store of value, sure volatility isn't ideal - but so long as people zoom out, at the end of the day it's averaging 213% increased buying power per annum.
Volatility is least welcome as a means of exchange. However, as I mentioned, El Salvador has come up with a mechanism to allow people to make use of it and its network without necessarily exposing themselves to that volatility. As someone who would like to use bitcoin on a more frequent basis, I'd like to see more of this. At the end of the day, it doesn't have to be the unit of account. For anyone in Latin America, there is resistance to visa payment - and either they won't accept that or they want to add on 4-5% surcharge. So if you're travelling to such places, bitcoin can serve a purpose. Remittances - we've discussed already. El Salvadorans can improve their lot through remittances alone via bitcoin. If their spending power goes up, their government collects more in taxes. There's an MP in Tonga trying to put together a similar proposal where remittances are responsible for 45% of GDP.
 
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WolfeTone

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How did you arrive at that opinion?

Well I am of the view that the greater the rate of participation the less likely (or more difficult it will become for) any individual, or small groups of individuals, to manipulate market prices for their own benefit. Thus provide less volatility.
That said, I'm starting to perceive that it is fiat currency that is volatile against 1 BTC

How do you feel about inequality in the system In that scenario? Those with thousands of BTC and those with a fraction?

You get what you pay for. In my opinion, bitcoin will not survive long term without a significant increase in participation from the global population, driving up the price.
A significant increase in participation by the global population will occur when large holders of bitcoin dilute some of their holdings (over time) driving down the price.
It's a slow-burner, this has a long way to go.

Do you then believe the BTC $ price needs to be much higher to make 1 sathoshi useful?

No, I think 1 satoshi is useful at any price. It is digital property.
 

DublinHead54

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Well I am of the view that the greater the rate of participation the less likely (or more difficult it will become for) any individual, or small groups of individuals, to manipulate market prices for their own benefit. Thus provide less volatility.
Are you suggesting that volatility is the result of market manipulation? That doesn't make sense, and if it were true would pose serious questions about an asset that after 10 years and some significant adoption can still be manipulated.

You get what you pay for. In my opinion, bitcoin will not survive long term without a significant increase in participation from the global population, driving up the price.
A significant increase in participation by the global population will occur when large holders of bitcoin dilute some of their holdings (over time) driving down the price.
It's a slow-burner, this has a long way to go.

To quote Tecate (directly)
On-chain data confirms ever increasing activity/new wallets, etc - over the course of the 4 years we've discussed this - year on year.
We have seen that it is not a correlation factor of 1 i.e. the price does not only go up when participation increases. Recently BTC dropped 50% from its all time high (ATH) yet participation is at an ATH. So I don't think you can say that an increase in participations will drive up the price.

Also, it seems you have contradicted yourself. In the first sentence, you say the increase in participation will drive up the price but then move on to say the increase in participation will require large holders of Bitcoin to dilute some of their holdings driving down the price. Your last sentence makes BTC sound like a ponzi scheme...early investors cashing out leaving others holding the bag.
 

Duke of Marmalade

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I'm not sure why you want to split it down in that way Duke -
We are talking about volatility. @WolfeTone correctly identifies that volatility is closely related to "adoption". I was pointing out that adoptoin takes several forms all with different volatility impacts. If adoption is merely increased speculation that spells even more volatility, indeed one might question whether speculation should even be described as adoption.
This year has to an extent been about store of value adoption by institutions. This should have been a stabilising influence but the overbearing influence of El Musk has had the opposite effect. Also it seems to me that last year's much heralded forthcoming adoption by institutions as sov or reserve asset hasn't materialised.
I would ask @WolfeTone which form of adoption was he referring to.
Wolfie said:
That said, I'm starting to perceive that it is fiat currency that is volatile against 1 BTC
Please, you're better than that. Some high priest of the cult, earlier cited by @tecate, tried that one. The volatility of a currency is measured with regard to its spending power in terms of goods and services. By design the major fiat currencies are remarkably stable in that regard at the current time whilst bitcoin most certainly isn't. Why else did Bukele guarantee retailers their bitcoin sales in $?
I hope you are not pitching to be Bukele's PR man for bitcoin:
"Go on have a punt, you have nothing to lose, it could be you.
Bitcoin isn't volatile, it is those nasty gringo dollars that are volatile"
 
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WolfeTone

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Are you suggesting that volatility is the result of market manipulation? That doesn't make sense, and if it were true would pose serious questions about an asset that after 10 years and some significant adoption can still be manipulated.

No I am not saying the volatility is the result of market manipulation, I am saying that the greater participation then the less liklihood the market prices are open to manipulation.
I am of the view that in most markets there are participants willing to manipulate prices for what they perceive to be to their advantage, or in the case of CB and government participation, for what they perceive to be to the advantage of the economy and society as a whole.
Don't you think the unprecedented levels of money printing are at a base level for the purposes of manipulating money markets?


So I don't think you can say that an increase in participations will drive up the price

You have a habit of jumping to conclusions on the expression of simple sentences. It is not a given that increased participation will drive up price. I come from the perspective that, relative to the global Internet, smartphone population, participation in bitcoin is tiny. Meaning the prospective levels of potential participation are massive, and in my view, would more than likely prompt price increase over the long term.
Your last sentence makes BTC sound like a ponzi scheme...early investors cashing out leaving others holding the bag.

You could choose to think that way and no doubt many people do. I certainly spent a period considering if bitcoin was a ponzi scheme or not.
I have come to the conclusion that it is not.
 

tecate

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We are talking about volatility. @WolfeTone correctly identifies that volatility is closely related to "adoption". I was pointing out that adoptoin takes several forms all with different volatility impacts. If adoption is merely increased speculation that spells even more volatility, indeed one might question whether speculation should even be described as adoption.
This year has to an extent been about store of value adoption by institutions. This should have been a stabilising influence but the overbearing influence of El Musk has had the opposite effect. Also it seems to me that last year's much heralded forthcoming adoption by institutions as sov or reserve asset hasn't materialised.

Ok, I think I see where you're going with that. That's fair enough - I can see a certain logic in it. But lets not get ahead of ourselves. If you zoom out on metrics like no. of active wallets or the price of bitcoin - these can be seen to go upward and to the right. Zoom in and you'll see the volatility. I'm encouraged by that progress but it's still just in the ha'penny place.

The reason I say we shouldn't get ahead of ourselves is that sure, it has edged forward in terms of adoption but it is just edging forward. The likes of Microstrategy and Telsa getting involved were the first movers in terms of corporate/institutional adoption. But they're only just the tip of the iceberg in terms of full involvement. ETFs have been rolled out this year in Canada, Brasil and elsewhere - but a bitcoin ETF still remains elusive in the US. You'll recall the Ross Steven's interview that you listened to - where he suggested that high street banks will be making btc available to customers. We had the first high street bank in Europe ( Saxo in Denmark) enable this last week.

These are just examples - in a given week these days - there's a whole host of significant developments. The reason I mention these things is that with all of this type of activity going on in the background, nobody could possibly expect anything but volatility. I think by now we've also established that there is no earthly way that bitcoin could have been pushed out and automatically find its price. Yet many people think that there's no earthly reason for its volatility but its an inevitable part of its ongoing development.

As regards retail newcomers adding to the volatility, I agree completely. This was touched on before to some extent but someone who has clown car'ed in to bitcoin solely on the basis of Elon and reversed back out on the same basis couldn't possibly have a decent understanding of what they were buying into (as in they have not thought it through whatsoever if they're relying solely on celebrity endorsement). You can say that this type of involvement is pointless. In the short term, I think its cringe-worthy. The same with people buying meme coins, etc. But over the longer term, it does serve a purpose. We've learnt from previous cycles that many people get drawn in - in hype cycles - but in the process they become familiar with bitcoin/crypto, comfortable in storing/transacting it - and they learn about the qualities and purpose that it has.

Isn't this the nature of tech-driven hype cycles? Have we not seen this before with other tech? The difference this time is that it centers on money and it has been entirely retail driven. I'm delighted that this came up with retail but there's no doubt that further institutional involvement (where they're prepared to take an approach that involves a much longer time horizon) will serve to dampen that shorter term volatility.

Outside of that, there's so much more that needs to mature. Later this year, bitcoin's first software upgrade in four years will take effect. That has implications for certain use cases relative to bitcoin going forward. Lightning Network is only just beginning to make some sort of impact (despite not being a completed project itself - its still being developed). Regulation is still all over the place and has yet to settle. All of these moving parts don't assist with taming volatility in the short term.

All of that to say that its a mixture of a maturation of the tech and its ecosystem, further movement along the adoption curve and time that will lead to decreased volatility.

"Go on have a punt, you have nothing to lose, it could be you. Bitcoin isn't volatile, it is those nasty gringo dollars that are volatile"

Thankfully, the Salvadorans are not pitching anything like that. In no way are they encouraging anyone to speculate on bitcoin. It's very clear what they want out of it - to utilise bitcoin as a tool to circumvent the unbanked issue and allow Salvadorans and their government to reclaim millions in remittance fees. Secondly, to encourage foreigners to come and spend btc in the country and invest in the country. Although merchants are required to accept bitcoin, they are under no obligation to hold it - and can convert it automatically with no slippage.
 
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Duke of Marmalade

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@tecate that all seems to make sense.
But just for clarity it was @WolfeTone who recommended that El Sals have nothing to lose and bitcoin could turn out to be a life changer, go on have a punt. Also he has had a lightbulb moment where he now sees the $ as the culprit in the volatility of the btc/$ exchange rate.
 

DublinHead54

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No I am not saying the volatility is the result of market manipulation, I am saying that the greater participation then the less liklihood the market prices are open to manipulation.
I am of the view that in most markets there are participants willing to manipulate prices for what they perceive to be to their advantage, or in the case of CB and government participation, for what they perceive to be to the advantage of the economy and society as a whole.
Don't you think the unprecedented levels of money printing are at a base level for the purposes of manipulating money markets?
Well I am of the view that the greater the rate of participation the less likely (or more difficult it will become for) any individual, or small groups of individuals, to manipulate market prices for their own benefit. Thus provide less volatility.

Wolfetone, I am responding and querying statements you make. You make the connection of volatility coming from market manipulation. If volatility is not the result of market manipulation why did you introduce the topic of market manipulation and expand on it by mentioning market manipulation of established governments when we were talking about adoption and volatility of BTC? We are currently discussing Bitcoin, its adoption and volatility not QE by central bank governments, no need to change the topic. However, don't you see the contradiction in your statement? You are suggesting Central Banks manipulate the currency yet central bank currencies have no volatility. In addition adoption of Central banks is much larger than BTC and you say those central banks are manipulating markets.....that invalidates your claim than that with an increase in adoption of BTC will lead to less manipulation......


You have a habit of jumping to conclusions on the expression of simple sentences. It is not a given that increased participation will drive up price. I come from the perspective that, relative to the global Internet, smartphone population, participation in bitcoin is tiny. Meaning the prospective levels of potential participation are massive, and in my view, would more than likely prompt price increase over the long term.

Yesterday you were quick to discount my analogy of the adoption of the smarthphone (quoted below) as not comparable. If Bitcoin adoption requires an internet connection, and a smartphone which as you point out adoption is huge, what needs to happen for adoption? However, you didn't respond to my point on your contradiction that the price will go up but for adoption large holders will sell driving the price down.
Smartphones operate on a massive infrastructure that is financed, regulated and co-ordinated by private tech companies and telecommunications regulators employing tens of thousands of people in roll-out, support and maintenance etc.
Bitcoin is an 8 page posting on a fringe tech site.
There is simply no comparison.

You could choose to think that way and no doubt many people do. I certainly spent a period considering if bitcoin was a ponzi scheme or not.
I have come to the conclusion that it is not.

My assertations of a ponzi scheme was not my own view, but based on how you were presenting your vision of adoption.

I think wolfetone, much like myself you don't know how BTC is going to play out in the future, and your attempts of rationalizing adoption are just educated guesses. That when I dig into them there is no real academic theory or examples to support it.

However, I do think it is clear that the volatility is going to remain given BTC main use case is as a store of value and not a currency.
 

WolfeTone

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But just for clarity it was @WolfeTone who recommended that El Sals have nothing to lose and bitcoin could turn out to be a life changer, go on have a punt.

Eh, just to clarify the 'clarity' I recommended no such thing.
What I did say was that for the first time poor people could claim a stake on property. Something that is denied to them in near perpetuity under the fiat system.
It was your suggestion that these poor El Salvadorians could lose everything they own. That there best bet was to stick with the status quo, to watch what meagre savings they have depreciate by a guaranteed 2%pa.

I just an advocate of having a option to opt out of such a system. Bitcoin offers that option.
 

WolfeTone

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You make the connection of volatility coming from market manipulation.

Market manipulation can lead to a volatile market. It is not a given. My view is that the greater size market, both in terms of capital investment and the numbers of investors, the harder it will be for the price to be manipulated. Its not rocket science what I am saying. I'm using money markets as an example. So vast, and wielding is the international global financial system, only entities such as CB and governments have the wherewithal to manipulate the prices as they are being manipulated.
That is not the case for bitcoin. We can see the impact that someone like Musk can have from his comments, inducing higher levels of volatility in bitcoin market than say the volatility of the Telsa market price, following his comments that it was overpriced.
Volatility does not originate solely from manipulation, or attempted manipulation. It can occur for many reasons.
 

DublinHead54

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I just an advocate of having a option to opt out of such a system. Bitcoin offers that option.

There is no such thing as a free lunch, and there are risks to El Salvadorians using BTC. Right now that is the fees (although lightning network can help), the volatility, the unbalanced ownership demographic and it being an immature asset.

Surely you can see that there is a risk involved for El Salvadorians? Even Tecate stated yesterday that BTC is only at the start of the adoption curve. He has also admitted previously that BTC needs to resolve issues. Shown below is the volatility overtime for BTC, clearly still a highly volatile asset.

1624972070312.png


Despite that, it is still your opinion that as of today EL Salvadorians should use BTC instead of Fiat which is depreciating at 2% pa? haven't you been able to live your life up until now with Fiat?
 
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