Good Bloomberg article on what experts are saying about Bitcoin

"At some point in time, maybe at $20,000, $25,000, $30,000, somebody will say ‘Stop!’"

And every single person around the globe will just do what they are told because it is for their own good!
 
A lot of those so called experts have got a lot right and a lot wrong in their time. What I take from what you say Brendan is, someone's right or someone's wrong. Who's to tell? As for Christine Lagarde? 'Nuff said.
 
I like Mark Carneys comment

"If distributed-ledger technology could provide a more efficient way for private-sector firms to deliver payments and settle securities, why not apply it to the core of the payments system itself? The great promise of distributed ledgers for central banks is their potential to enhance resilience.” – 06/16/2016

Reading between the lines, I think what he is saying is that there would be less opportunity to manipulate or fraud anyone or anything. Be it individuals transacting with one another, or central banks printing money to 'save' their own economies.

I would be sceptical of the chances of international agreement.
Alternatively, one step closer to one world currency?
If all finance is digitised, why the need for mulitple currencies of different nations?
 
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Firefly said:
It even dispels the Shortie Syndrome..
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I didn't know Brendan wrote articles for the Guardian:rolleyes: Agree with everything in this piece (though I could have done without the cancer-pill analogy which doesn't hang together for me).

How can anybody who reads that article disagree that bitcoin is a massive irrational bubble. Unfortunately whilst we can be sure of the "if" we can only guess at the "when" it will burst.

It also shows that it is entirely appropriate that AAM has given so much attention to this matter as it is clear that many people are being lured by bubble mania into what can only end in tears.
 
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Brendan Burgess said:
But what astonishes me is that the following financial experts, who should know better, have not condemned it out of hand:
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I think that article is misleading. Many of those listed with a positive view on Bitcoin are actually backing blockchain technology, and not Bitcoin. Of the two Fidelity people listed, one says 'buyer beware' and Johnston is listed as positive, yet the source article is focused on the potential of blockchain, the only quote from Johnson that mentions Bitcoin in there states:

"If you are looking for bitcoin to beat Visa at the point-of-sale today, you are going to be disappointed," she remarked.
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The Lagarde source article is similarly focused on the future potential of cryptos. The only reference to Bitcoin:

For now, virtual currencies such as Bitcoin pose little or no challenge to the existing order of fiat currencies and central banks.
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She talks about the potential for cryptos to replace small value global transactions in place of credit card payments due to the latter's high transaction charges. With transaction fees around $30 at the moment, Bitcoin is a long way off meeting those criteria.
 
Duke of Marmalade said:
It is also shows that it is entirely appropriate that AAM has given so much attention to this matter as it is clear that many people are being lured by bubble mania into what can only end in tears.
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Only if people are idiots and are placing what they cannot afford to lose in it, and it subsequently goes bust.
I do find it interesting that these concerns really only started to emerge on AAM when the price hit €2,000 and above. I think, with the price at €11,000 now, there is an assumption that people buying into bitcoin are handing over €11,000 a pop. I'm sure there are some people, but perhaps they can afford to lose those amounts?
I don't know of any banks that are lending to 'invest' in bitcoin, so my guess is most of this money is cash in hand.

I have come to the view that bitcoin is unlikely to ever be used as a currency for dealing day-to-day. But I do think it acts as a store of value, like gold, like art, antiques etc.
 
Wollie said:
It may also be possible to hang one up on your wall, or put it on your dresser, for your grandchildren to admire sometime
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Who knows, the way digital technology is advancing and encroaching into all our lives...

Speaking of grandchildren. If I buy a work of art today, how will I know if it will increase in value or not by the time my grandchildren inherit it?
Perhaps it will be worth a lot to them, but it's market value near zero? Alternatively, they may stick it in the attic as an old-fashioned worthless item, unawares of its increasing value in the art market?

It's funny how something that isn't instantly recognisable as money has the potential to store value in one form or another, isn't it?
 
TheBigShort said:
I do find it interesting that these concerns really only started to emerge on AAM when the price hit €2,000 and above. I think, with the price at €11,000 now, there is an assumption that people buying into bitcoin are handing over €11,000 a pop. I'm sure there are some people, but perhaps they can afford to lose those amounts?
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One thing I find it really hard to get my head around is the relationship between the bitcoin unit and its price. With tulips it was easy. The obvious unit is the single bulb. With company shares the number on issue can change with all sorts of corporate actions but it remains an identifiable share in a company.

With bitcoin the number in issue and its unit representation is a totally arbitrary creation of Satoshi Nakomoto. It doesn't bear any relationship to anything. What if she had specified 21 billion instead of 21 million, would the price now be 12$ instead of 12,000$? If she had specified that only one bitcoin would be created but it could be divisible by the appropriate number of binary places, would that 1 bitcoin now be worth 200bn$? Just a thought experiment.
 
Duke of Marmalade said:
With bitcoin the number in issue and its unit representation is a totally arbitrary creation of Satoshi Nakomoto
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Isnt that the same as any company listed on stock exchanges? A nominal amount of shares is decided upon and a price attached, be it 1,000,000 shares @ €10 or 10,000,000 shares @ €1

Bank of Ireland shrunk its numbers of shares by 97% last March. Why? It had 32.36 billion shares outstanding at €0.235c each. Now those shares are €7.98 each. But effectively worth the exact same as had they left 32.36 billion shares be. Completely arbitrary.
 
Duke of Marmalade said:
One thing I find it really hard to get my head around is the relationship between the bitcoin unit and its price. With tulips it was easy. The obvious unit is the single bulb. With company shares the number on issue can change with all sorts of corporate actions but it remains an identifiable share in a company.

With bitcoin the number in issue and its unit representation is a totally arbitrary creation of Satoshi Nakomoto. It doesn't bear any relationship to anything. What if she had specified 21 billion instead of 21 million, would the price now be 12$ instead of 12,000$?
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Just like with company shares the amount of bitcoin you have relative to the total supply remains constant and identifiable regardless of the unit chosen to measure. Gold units are arbitrary too, you can use tons, ounces, kilograms, grams etc, different ones are used depending on the context. The real consequence of units is practicality, this is of less relevance to things that are digital than physical as divisibility and reassembly is trivial, but there are still other impacts and I'm strongly in favour of bitcoin moving to smaller units for two reasons:

1) Readability: it's much easier to tell the difference between 10,000 and 100,000 than 0.00001 and 0.000001. We're used to dealing with large numbers more than small decimal numbers and we have commas to make them more readable.
2) Unit bias: people base a decision on whether something is cheap or expensive based on the price per unit even when the units are arbitrary. I know someone who bought Bank of Ireland shares because they were only pennies each, and there's been similar behaviour observed in cryptos. People also like to own a whole one of something, having 50000 bits feels better than having 0.05 bitcoin, even if both are the exact same amount of bitcoin. It's illogical, but it's human tendency.

Duke of Marmalade said:
If she had specified that only one bitcoin would be created but it could be divisible by the appropriate number of binary places, would that 1 bitcoin now be worth 200bn$? Just a thought experiment.
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All other things being equal, yes.
 
TheBigShort said:
Isnt that the same as any company listed on stock exchanges? A nominal amount of shares is decided upon and a price attached, be it 1,000,000 shares @ €10 or 10,000,000 shares @ €1

Bank of Ireland shrunk its numbers of shares by 97% last March. Why? It had 32.36 billion shares outstanding at €0.235c each. Now those shares are €7.98 each. But effectively worth the exact same as had they left 32.36 billion shares be. Completely arbitrary.
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B/S I covered off that point in my post. Yes the number of shares is arbitrary but the size of the company is given. So share price = value of company/ shares in issue. If Satoshi thought her bitcoins would be priced at 12,000$ I think she would have thought that inappropriate. My guess is that she saw it at a similar level to $/£/€ but then again if she genuinely was Japanese maybe she was thinking ¥.
 
Duke of Marmalade said:
B/S I covered off that point in my post. Yes the number of shares is arbitrary but the size of the company is given. So share price = value of company/ shares in issue. If Satoshi thought her bitcoins would be priced at 12,000$ I think she would have thought that inappropriate. My guess is that she saw it at a similar level to $/£/€ but then again if she genuinely was Japanese maybe she was thinking ¥.
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There's a direct Satoshi quote related to it here http://satoshi.nakamotoinstitute.org/posts/bitcointalk/46/ :

Eventually at most only 21 million coins for 6.8 billion people in the world if it really gets huge.

But don't worry, there are another 6 decimal places that aren't shown, for a total of 8 decimal places internally. It shows 1.00 but internally it's 1.00000000. If there's massive deflation in the future, the software could show more decimal places.

If it gets tiresome working with small numbers, we could change where the display shows the decimal point. Same amount of money, just different convention for where the ","'s and "."'s go. e.g. moving the decimal place 3 places would mean if you had 1.00000 before, now it shows it as 1,000.00.​
 
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