David McWilliams: "Bitcoin Betrayal"?

[tecate]

This time will be no different from previous bubbles, pyramid schemes and scams.

What 'scam', 'pyramid' or 'bubble' proceeds along to another boom and bust cycle directly - and then another and another, one after the other?

Same with dot.com. There were serious online discussions about why a company which added .com to their name should go up in value. There were serious discussions about how a share split doubled the value of the company. The only difference now is that it's taking the market longer to recognise that bitcoin is a bag of hot air. And that seems to be because it's younger people doing the speculating and taking their advice from anonymous people online.

Many people got burned during the dot com boom bust - but you've always focused on that aspect of it - and never seem to recognise the incredible innovation that stemmed from it. Amazon, Google, Facebook, etc were there. Amazon went through 35-50% corrections every year for 12 years.
On the claim that everyone pro Bitcoin is "taking their advice from anonymous people online" that goes back to the point I made earlier. Those with a bias towards believing that Bitcoin is pointless seem to buy in to the most extreme negatives surrounding Bitcoin. Are there clowns on youtube presenting as experts on crypto? All day long. They're being outed within crypto circles - but newcomers may be oblivious to the fact. Beyond those clowns there are incredibly intelligent people involved in crypto that are an excellent source of information on the subject.

 

[Duke of Marmalade]

I've no idea what you're going on with here.

Oh I think you have. You talk about the magic of real time transmission of "value" blah, blah, blah. There is nothing particularly magic about transferring ownership of digital entries on a ledger which are utterly worthless.

The Duke is now relying on information from his comrades at the Chinese Communist Party. Do you want to have a look back and what they said about the internet back in the day? Do you want to refresh yourself as regards how they tried to block out the internet - and how the internet developed despite them?

Boy could I have bet my house, or even my bitcoin on that one. I quote Nobel Prize winners and you wax on about a fax machine blunder by one of their members.
I mention a well respected Professor who was incidentally introduced to me by you and you call him a "nutty" professor.
I cite the views of the leaders of the most successful (in relative economic terms) country on the planet and you play the yellow peril card.
Shoot the messenger is one of your preferred tactics.

 

[tecate]

Oh I think you have. You talk about the magic of real time transmission of "value" blah, blah, blah. There is nothing particularly magic about transferring ownership of digital entries on a ledger which are utterly worthless

Ah, there's no innovation here. I see. So according to the point the other poster made, we need something that's scarce that also provides some utility. I've given the example of peer to peer digital money and a mechanism for international settlement. You say any old digital ledger can do that. Fine. Send me value right now digitally by a means that is scarce Duke. In fact, as a demonstration, I'll offer to send bitcoin to anyone reading this that takes 5 minutes to install the Muun wallet. One cent worth of value can be sent from anyone anywhere - regardless of jurisdiction/geographical location to another - with practically no fees and no interference.

Boy could I have bet my house, or even my bitcoin on that one. I quote Nobel Prize winners and you wax on about a fax machine blunder by one of their members.

I do so with purpose. It's an incredibly important point. Paul 'fax machine' Krugman piped up about technology - a field he has no notion of - with that statement. He had no right to do so - but because these academic alchemists are put on a pedestal by the likes of you, he did. Bitcoin is technological first and a financial innovation second. He had no idea what he was talking about then - just like he has no idea what he's spouting out about Bitcoin now.

This is the guy that said during the pandemic that the money printing wouldn't lead to inflation!

I mention a well respected Professor who was incidentally introduced to me by you and you call him a "nutty" professor.

Respected by who? You? Debate at times here centered on that guys views - and you'll recall youtube clips of ranting from him where he was literally unstable. That's the origin story for the 'nutty' professor. He's earnt the title. I've said it many times - his views are not objective in any way, shape or form with regard to Bitcoin. He's been proven wrong on the subject since $13/BTC. Professor fax machine outscores him here - he's been wrong on Bitcoin since $7/BTC.

I cite the views of the leaders of the most successful (in relative economic terms) country on the planet and play the yellow peril card.
Shoot the messenger is one of your preferred tactics.

Leaders? Are you out of your mind!? What company has either of them built? They're academics. As regards the 'shoot the messenger' charge, you have relied on them simply because they're 'nobels'. You've literally deferred any views you have onto them. You've said that you'd have to trust the likes of them (central bankers) and you will change your mind only when they change theirs. So it's in no way a case of 'shoot the messenger'. It's a case of challenging peoples views - which is healthy.

 

[joe sod]

Today, young people talk about their parents generation who bought a 3-bed semi for 20k that's now worth 500k. They're hoping that in 50 years young people will complain about how our generation were able to buy bitcoin for "only" 20k and amass great wealth as it went over 500k per coin.

I wonder is it the case that in the past a significant proportion of economic activity and labour was involved in constructing Houses not just in Ireland but internationally.

At the same time Ireland had a low and stagnant population around 3.5 million .

During the boom of the early 2000s a substantial part of our economic activity was involved in the construction industry, the immigrants that came from Eastern Europe were by and large employed by that industry aswell so we could build 80k Houses per year at the peak.
Working in construction then was attractive because the salaries relative to other careers were attractive and you were also taxed less on those salaries no USC.
Another factor never mentioned is the WFH phenomenon, that also makes construction work a whole lot less attractive even for construction professionals and engineers ,better to get a job where you don't have to be at a mucky site at 7am in the morning but can roll out of bed and login to a laptop for 9am

 

[Paul O Mahoney]

What 'scam', 'pyramid' or 'bubble' proceeds along to another boom and bust cycle directly - and then another and another, one after the other?


Many people got burned during the dot com boom bust - but you've always focused on that aspect of it - and never seem to recognise the incredible innovation that stemmed from it. Amazon, Google, Facebook, etc were there. Amazon went through 35-50% corrections every year for 12 years.
On the claim that everyone pro Bitcoin is "taking their advice form anonymous people online" that goes back to the point I made earlier. Those with a bias towards believing that Bitcoin is pointless seem to buy in to the most extreme negatives surrounding Bitcoin. Are there clowns on youtube presenting as experts on crypto? All day long. They're being outed within crypto circles - but newcomers may be oblivious to the fact. Beyond those clowns there are incredibly intelligent people involved in crypto that are an excellent source of information on the subject.

Now you are really getting silly, none of the companies you mentioned above were a cause of the .com boom and bust.

The boom was purely a bubble and the technology web1.0 if even that.

What spawned out that era, was the simple lesson that " hype, is never a good investment " the difference though between the .com boom and bitcoin at least the various website domains still had some value and customers that were swept up by many now longstanding companies like Yahoo.

Facebook and its cohort weren't even ideas in 1999 to 2001 as the technology wasn't developed until 2005 and even then it wasn't perfect.


Google the same, writing algorithms on paper is one thing getting a computer to run it is a completely different scenario.

I feel you are running out of road in your defense of Bitcoin and are now resorting to frankly misleading information and many untruths.

 

[tecate]

I feel you are running out of road in your defense of Bitcoin and are now resorting to frankly misleading information and many untruths.

I feel that you have missed the point entirely, Paul. I never said that Google/Amazon etc were 'responsible' for that boom/bust - just as I wouldn't suggest that Bitcoin is in this instance we have right now. Human nature is responsible for it. While some people are getting carried away on the markets end of this, others are working away diligently on the technology itself.

Secondly, the point I was making is that within both of those hype cycles lies incredible innovation. That exists in spite of people getting out ahead of their skis.

Facebook and its cohort weren't even ideas in 1999 to 2001 as the technology wasn't developed until 2005 and even then it wasn't perfect.
Google the same, writing algorithms on paper is one thing getting a computer to run it is a completely different scenario.

You're right about Facebook - so lets take that out of the example I provided (albeit that I would argue that the base technology to facilitate it was being put in place by others during the dot com boom/bust. The earliest web-enabled social networks date back to 1995). Amazon and Google were right there in that time.

The point you make about Google makes another point for me. Time and time again, we've had folks here complain that we shouldn't look at how Bitcoin/crypto can be developed - we should only look at what it does right in this moment. It took years to develop internet technologies - in fact, they're still developing.
My original point stands that there was incredible innovation at the heart of the dot com boom/bust even if it was incomplete technology. Crypto is incomplete - there's an ocean of work to be done on this. However, that doesn't take away from the fact that the base level technology isn't already there. It's not the technology's fault that people react like this -> "most people overestimate what can be achieved in one year and underestimate what can be achieved in ten".

 

[Rasputin]

Beyond those clowns there are incredibly intelligent people involved in crypto that are an excellent source of information on the subject.

And they could well be the ones on the positive side of the transfer of wealth when all this unravels, while the majority of the less incredibly intelligent people will be on the other side, crying.
It's like a game of musical chairs and they are the ones who control the music, and as always, there will be a small group rubbing their hands with glee, and a massive group rubbing their eyes in regret.

 

[Paul O Mahoney]

I feel that you have missed the point entirely, Paul. I never said that Google/Amazon etc were 'responsible' for that boom/bust - just as I wouldn't suggest that Bitcoin is in this instance we have right now. Human nature is responsible for it. While some people are getting carried away on the markets end of this, others are working away diligently on the technology itself.

Secondly, the point I was making is that within both of those hype cycles lies incredible innovation. That exists in spite of people getting out ahead of their skis.


You're right about Facebook - so lets take that out of the example I provided (albeit that I would argue that the base technology to facilitate it was being put in place by others during the dot com boom/bust. The earliest web-enabled social networks date back to 1995). Amazon and Google were right there in that time.

The point you make about Google makes another point for me. Time and time again, we've had folks here complain that we shouldn't look at how Bitcoin/crypto can be developed - we should only look at what it does right in this moment. It took years to develop internet technologies - in fact, they're still developing.
My original point stands that there was incredible innovation at the heart of the dot com boom/bust even if it was incomplete technology. Crypto is incomplete - there's an ocean of work to be done on this. However, that doesn't take away from the fact that the base level technology isn't already there. It's not the technology's fault that people react like this -> "most people overestimate what can be achieved in one year and underestimate what can be achieved in ten".

Ok I found it difficult to understand what you said above, so, I'll pose one question to try and get to the nub and I don't want an essay in answer.

Is "Bitcoin " and other cryptocurrencies real " innovation " given that mankind has recorded financial and other transactions since the dawn of time?, and what differentiates it from the normal proven ways of doing commerce?


Perhaps 2 questions rolled up into 1 unit like Bitcoin

 

[tecate]

And they could well be the ones on the positive side of the transfer of wealth when all this unravels, while the majority of the less incredibly intelligent people will be on the other side, crying.
It's like a game of musical chairs and they are the ones who control the music, and as always, there will be a small group rubbing their hands with glee, and a massive group rubbing their eyes in regret.

You're suggesting that the 'incredibly intelligent' people I'm referring to have bad intentions. That's not who I'm referring to - I'm referring to really credible people in the space who actually contribute - whether it's in building out the technology or some other aspect.
There may well be smart scammers around also - but I would also say that I believe in personal responsibility. If someone is going to make a financial decision, they have to take responsibility for it. If they've done so on the basis of what a youtube shill or clown has suggested to them, that is their decision. What you describe is relevant to any financial decision in any market - it is not in any way exclusive to crypto (albeit that there are much more opportunities for scammers in an industry that's nascent and poorly understood).

Ok I found it difficult to understand what you said above, so, I'll pose one question to try and get to the nub and I don't want an essay in answer.

Is "Bitcoin " and other cryptocurrencies real " innovation " given that mankind has recorded financial and other transactions since the dawn of time?, and what differentiates it from the normal proven ways of doing commerce?


Perhaps 2 questions rolled up into 1 unit like Bitcoin

Of course it's an innovation. If you don't see the difference between it and fiat money and/or transfers via fiat money, then you've misunderstood the basis of what it offers. On your second question, the ability to transfer value on a peer to peer basis with NO intermediary and no censorship. Allied with that, its a finite asset - which is entirely different than the means of exchange used in commerce today.

 

[Paul O Mahoney]

You're suggesting that the 'incredibly intelligent' people I'm referring to have bad intentions. That's not who I'm referring to - I'm referring to really credible people in the space who actually contribute - whether it's in building out the technology or some other aspect.
There may well be smart scammers around also - but I would also say that I believe in personal responsibility. If someone is going to make a financial decision, they have to take responsibility for it. If they've done so on the basis of what a youtube shill or clown has suggested to them, that is there decision. What you describe is relevant to any financial decision in any market - it is not in any way exclusive to crypto (albeit that there are much more opportunities for scammers in an industry that's nascent and poorly understood).


Of course it's an innovation. If you don't see the difference between it and fiat money and/or transfers via fiat money, then you've misunderstood the basis of what it offers. On your second question, the ability to transfer value on a peer to peer basis with NO intermediary and no censorship. Allied with that, its a finite asset - which is entirely different than the means of exchange used in commerce today.

"Its a finite asset " Really I thought they were " mined", continually digitally, and were not " physical " and all transactions were reecorded on" ledgers" that were open.

Even the terminology used, is archaic and has been around "since commerce began."

"Peer to Peer" transactions are the essence of commerce and has been in existence , " since commerce began " .

Bitcoin is only a digital version of what humans have been doing for millions of years , yes millions.

It's not innovative in anyway is not a " disruptive innovation " in the slightest sense, it builds on what has been going on and has rebranded itself, so much so, that if it disappears tomorrow commerce won't skip a beat.

Reading your rebuttals not just on this thread but others, its easy to appreciate your passion for "this game changer" and while our present financial system is full of flaws, including FIAT leverage etc like Bitcoin, but it works on a day to day second by second basis and people like that certainty .


The "black tulip" will never be created as the tulips dna can't create it, we know this now because of scientific innovation over centuries of speculation.

Will Bitcoin be subject to such scientific scrutiny? I doubt it and I fear archeologists won't find any evidence of its existence either.

Perhaps there is a place for Bitcoin and other cryptocurrencies but that need hasn't been proven and I doubt it ever will in my lifetime or my children's.

Sometimes innovation needs to stop and ask itself if this will be embraced and sometimes it does but in the vast majority of cases it lies at the end of a ravine...........

And I can assure you Bitcoin won't change the ills of the world either.

 

[Rasputin]

Of course it's an innovation. If you don't see the difference between it and fiat money and/or transfers via fiat money, then you've misunderstood the basis of what it offers. On your second question, the ability to transfer value on a peer to peer basis with NO intermediary and no censorship. Allied with that, its a finite asset - which is entirely different than the means of exchange used in commerce today.

Blockchain might well be innovation, Bitcoin isn't. Could there be uses for blockchain technology in the future, yes, possibly, could there be uses for Bitcoin, I can't see any to be honest.
I'm happy to have a regulated intermediary involved in all my financial transactions, and I'm also more than happy to have the currency I use supported by a sovereign. I;ve never felt the victim of financial censorship - I like certain rules, regulations and restrictions for the money I use - it keeps it stable. If digital currency is the way forward, surely central banks will just develop their own over time, and why on earth would anyone rather use bitcoin which isn't backed by anything and could be worth half tomorrow - unless of course, its for nefarious reasons.

 

[Brendan Burgess]

Allied with that, its a finite asset

tecate - will you stop saying that?

It's completely misleading.

There is nothing finite about cryptocurrencies.

I can create one tomorrow and limit it to 20. That doesn't make it worth anything.

There is an infinite amount of crypto.

Brendan

p.s. it's not an asset either.

 

[tecate]

"Its a finite asset " Really I thought they were " mined", continually digitally, and were not " physical " and all transactions were reecorded on" ledgers" that were open.

They're mined with a transparent supply schedule that continually reduces every four years - with new supply coming to an end in 2140. That's set out clearly in the programmed rules of the cryptocurrency. There will never be more than 21 million Bitcoin.

Even the terminology used, is archaic and has been around "since commerce began."

So what?

"Peer to Peer" transactions are the essence of commerce and has been in existence , " since commerce began " .

Bitcoin is only a digital version of what humans have been doing for millions of years , yes millions.

It's "ONLY" a digital version? I can't help you if you don't see the significance Paul.

It's not innovative in anyway is not a " disruptive innovation " in the slightest sense, it builds on what has been going on and has rebranded itself, so much so, that if it disappears tomorrow commerce won't skip a beat.

What was achieved in solving the double spend problem is highly regarded in cryptography as a breakthrough. Of course it builds on whats gone on before - things evolve. That's how innovation works. As regards it disappearing tomorrow and commerce not missing a beat - absolutely....just like the internet had it disappeared in 1995.

Reading your rebuttals not just on this thread but others, its easy to appreciate your passion for "this game changer" and while our present financial system is full of flaws, including FIAT leverage etc like Bitcoin, but it works on a day to day second by second basis and people like that certainty .

Those flaws can be improved upon...and that doesn't necessarily mean going to extremes and opting for one over another. Choice has never been a bad thing for society. Whilst flawed, you're talking about a mature system that has been afforded decades to evolve. The internet wasn't such an innovation in peoples lives in 1995.

The "black tulip" will never be created as the tulips dna can't create it, we know this now because of scientific innovation over centuries of speculation.

Will Bitcoin be subject to such scientific scrutiny? I doubt it and I fear archeologists won't find any evidence of its existence either.

I have no earthly idea what your point is with this. Feel free to explain it if you wish.

Perhaps there is a place for Bitcoin and other cryptocurrencies but that need hasn't been proven and I doubt it ever will in my lifetime or my children's.

Sometimes innovation needs to stop and ask itself if this will be embraced and sometimes it does but in the vast majority of cases it lies at the end of a ravine...........

And I can assure you Bitcoin won't change the ills of the world either.

I have not seen anyone claim that Bitcoin will 'change the ills of the world' over the course of 5 years of discussion here.

Blockchain might well be innovation, Bitcoin isn't. Could there be uses for blockchain technology in the future, yes, possibly, could there be uses for Bitcoin, I can't see any to be honest.
I'm happy to have a regulated intermediary involved in all my financial transactions, and I'm also more than happy to have the currency I use supported by a sovereign. I;ve never felt the victim of financial censorship - I like certain rules, regulations and restrictions for the money I use - it keeps it stable. If digital currency is the way forward, surely central banks will just develop their own over time, and why on earth would anyone rather use bitcoin which isn't backed by anything and could be worth half tomorrow - unless of course, its for nefarious reasons.

So Bitcoin doesn't add value to you personally and so you now assume that everyone on the planet must have the same circumstances. That in no way is the case. You like rules and regulations - is it possible to have regulations that are just plain wrong? Is that ever possible? I'm not averse to regulation - but just in case anyone thinks regulation can only be good, that couldn't possibly be true. There are any amount of examples of bad regulation relative to money and finance that are not in the interest of the ordinary joe.
You've never felt the victim of financial censorship. That's great for you. That doesn't mean that it's not going on in the world right this second.
Digital currency is where this is headed and yes, we will have Central Bank Digital Currencies (CBDCs) but they are not in any way the same thing as Bitcoin.
Always the nefarious jibe yet multiple peer reviewed studies over the past few years have all shown Bitcoin to have less illicit use than fiat currency.

tecate - will you stop saying that?

It's completely misleading.

There is nothing finite about cryptocurrencies.

I can create one tomorrow and limit it to 20. That doesn't make it worth anything.

There is an infinite amount of crypto.

Brendan

p.s. it's not an asset either.

In no way will I stop saying that Brendan - because it's the truth. You cannot recreate Bitcoin with the very same security model. You could use the very same source code and it wouldn't match it because it wouldn't have the network security to keep it online. It would last all of five minutes. You're also conflating other digital assets with Bitcoin - which betrays a total lack of understanding as regards what they involve. They are not the same.
It's amazing that you're digging up this wayward FUD right now - I haven't heard that claim here since a few years ago already. I'll say the same now as i said then - spin up BurgessCoin or MarmaladeCoin - and come back and explain to us why nobody uses them - OR - if the point of the exercise is to demonstrate that Bitcoin isn't in any way unique, you can come along and explain why your new currencies have been ignored entirely.

 

[Brendan Burgess]

You're also conflating other digital assets with Bitcoin - which betrays a total lack of understanding as regards what they involve. They are not the same.

tecate - and your toe nails are different from mine. But they are both worthless.

There are many cryptos which have survived longer than 5 minutes so there is an infinite supply of crypto.

Brendan

 

[tecate]

There are many cryptos which have survived longer than 5 minutes so there is an infinite supply of crypto.

You've flagrantly ignored what I pointed out to you. If you don't employ the exact same consensus model and programed-in rules, then any other crypto is not the same as Bitcoin. But you're free to use the same source code. Use it Brendan and your cryptocurrency will be taken offline in 10 seconds flat (maybe not 10 seconds flat because it would actually have to garner some value before anyone would care about going to that effort).

A secondary point for you. Lets say you're a facebook or google engineer. You know precisely how their technology works - to a T. You go away and create Facebook2 or Google2. In terms of technology - they're clones - but no more. No further technological advantage has been achieved. Are they now the same Brendan? Will you now value Facebook / Google and Facebook2 / Google 2 as equal?

In the event that you say they're not the same, can you let me know why they're not the same?

 

[DazedInPontoon]

There are external factors that make this time different, at least in terms of the price. The price decrease in the last 6 months is broadly following the stock market, albeit more extreme given it is a riskier / less developed market. My view the price crash is this is split into two components

I agree with you there, and this could be the first time bitcoin has been in existence in a recession if that's where we end up from the interest rate hikes this year. The macro situation in general seems to be a bit different than any time before.

1. (A) Excess liquidity - In the last two years we have seen a huge amount of money printed (US Stimulus etc) and this money pumped into Crypto / Stock market driving large price increases. Creating overinflated asset prices, economy turns (inflation, higher rates) forcing asset prices back down
2. (B) Systemic Weakness in Crypto Market: celsius, UST etc, this is similar to the Global Financial crisis, when the liquidity squeeze happened it acted like a domino knocking down institutions until they were bailed out. We are seeing this in Crypto, and it caused downward pressure. The next cycle will solve these issues much like Trad Fi resolved.

If I guess that part A = $20k, then I can see BTC going back to $40k, but the peaks of $60k will need to be met by other driving factors as that excess liquidity in the market has gone.

Also agree in general with that, but I see also a third component:
3. (C) People going to cash until things settle down. This is people who were not forced sellers because of A or B but are selling because they think they'll be able to buy back lower. What's interesting about this though is that cash is not a great place to be either at the moment with inflation so high, so there's a reasonable motive for people to get back into what they want to own sooner rather than later. Wouldn't surprise me if a catalyst like a change in the inflation trend and/or the Fed relaxing on the hikes sees a sharp end to the downturn. Things seem to move quicker these days. Of course things can go the other way too, especially if there are more blow-ups like Celsius and UST on the verge of happening.

I don't have enough information to estimate how much of the price action is due to either A, B or C.

 

[Duke of Marmalade]

Bitcoin is utterly worthless. I'm annoyed with myself that the Chinese government beat me to the perfect description. And they weren't just name calling; they explained that all it is is a bunch of digital code.
Back on topic, I think some preliminary research should be commissioned by the Central Bank/Department of Finance/Department for Social Protection to see if there is any substance in David's claim that under 35s see bitcoin as the "asset of choice" and chose it as an "alternative" to a house. As explained earlier, if there is any truth in this startling claim it has implications not only for the welfare of the upcoming generation but for the very macro financial position of Ireland Inc.

 

[tecate]

Bitcoin is utterly worthless. I'm annoyed with myself that the Chinese government beat me to the perfect description. And they weren't just name calling; they explained that all it is is a bunch of digital code.

I just called the CCP for you in Beijing. The CCP Ard Fheis is on on the 25th August and they'd be delighted if you'd attend. They said based on what I described, you scored high on their social profiling system and something about like minds and similar views, etc.

 

[Duke of Marmalade]

I just called the CCP for you in Beijing. The CCP Ard Fheis is on on the 25th August and they'd be delighted if you'd attend. They said based on what I described, you scored high on their social profiling system and something about like minds and similar views, etc.

Jayz, give me time to finish my posts

 

[Duke of Marmalade]

I want to labour this point, though I do not believe David's wild assertion that bitcoin is the asset of choice for under 35s. But if it was in any way true it has serious implications.
The under 35s are the generation entering the prime of their savings life. If this is true it will not be long before bitcoin is the asset of choice for Ireland inc.'s savings if it is not already so. This is not good at all. It may be the only hope for El Salvadorians and their celebrity seeking leader to go all in on a bet on bitcoin. But we are one of the wealthiest nations on earth. We could see in 20 years time that the upcoming generation had thrown it all away on an utterly worthless bunch of digital code.
But I do take comfort that panic is not setting in in official circles. It shows that nobody takes David seriously.
@tecate would you have any concerns if bitcoin was the asset of choice for Ireland's upcoming generation's savings? Though I think you are on record as being "5% of portfolio" guy. A 5% hit to the nation's savings would not be total disaster.