So where are we with Bitcoin after 4 months of discussion?

[Brendan Burgess]

It will probably cost you a lot of money trying to win arguments about terminology rather than looking at what is actually happening and what will happen in the future.

Let's try to use some neutral terminology.

1) People are paying $7,500 today for one Bitcoin.
2) There is absolutely no basis for this price whatsoever
3) At some stage in the future, the people who are paying $7,500 today will not be able to sell them for anything more than cents, if they can sell them at all.
4)They will lose $7,500 or so per Bitcoin purchased today if they still own them.

You may redefine the meaning of worth or value to mean price. I suppose that is your choice. But it's dangerous. It would be more helpful if you were able to distinguish between price and value.

Brendan

 

[Brendan Burgess]

No one has provided any analysis or calculations to show when BTC's pricing entered bubble country.

[I've lost track of the number of times that I've asked this question. This question was always conveniently ignored until today. Today's answer from Brendan did not illuminate a whole lot.]

elacs - I don't answer every question asked, because some of them are of no relevance whatsoever.

One of the issues with bubbles is that they are often not identifiable during the bubble phase.

Take the Irish property bubble. It went from fairly valued to overvalued to bubble. But it was always worth something. I don't think that you can say what day it went from overvaluation to bubble.

Bitcoin is different. Bitcoin was never worth anything. So it didn't go from being fairly valued to overvalued to bubble.

But let me stress again. Look at what is happening in reality. You are in danger of winning arguments about terminology but losing a lot of money by ignoring what is happening in reality.

Let me repeat:

1) People are paying $7,500 today for one Bitcoin.
2) There is absolutely no basis for this price whatsoever- I would call this a bubble. Someone else might call it "overvalued".
3) At some stage in the future, the people who are paying $7,500 today will not be able to sell them for anything more than cents, if they can sell them at all.
4)They will lose $7,500 or so per Bitcoin purchased today if they still own them. They will get no satisfaction from saying "Brendan may well have been right that it was overvalued but he was wrong in calling it a "bubble"."

In a similar vein, If Bitcoin settles down at 50 cents for a long-time. It might even be pegged to the dollar. You will great pleasure from saying that I was proved wrong because I said it was worth "nothing". But you will have lost a lot of money.

Brendan

 

[elacsaplau]

So - are you saying - yes or no please - that it's price was in bubble territory at $10. It's a straight question.

 

[Brendan Burgess]

It's a meaningless question of language and of absolutely no implication.

It was overvalued at $10.

Brendan

 

[elacsaplau]

Why am I not surprised that I wouldn't get a straight answer?

 

[demoivre]

Where we are is even more threads on Bitcoin which must be an AAM record. I'm here a long time and I've never seen so many different threads on the same topic, most of which are/have gone around in circles.

 

[Brendan Burgess]

Hi elacs

You must have missed this post.

https://www.askaboutmoney.com/threa...nths-of-discussion.207613/page-4#post-1560685

I tried to explain it to you. But it's a long one and not really capable of answering in one word or one date.

Brendan

 

[newtothis]

It will probably cost you a lot of money trying to win arguments about terminology rather than looking at what is actually happening and what will happen in the future.

Nope - unlike you, I haven't spent anything on speculating on the value of Bitcoin, and have no intention of doing so, so I've nothing to gain or loose. I've already made the point I've no idea what will happen in the future, and don't see much point in speculating, given I've nothing to loose or gain.

Let's try to use some neutral terminology.

1) People are paying $7,500 today for one Bitcoin.

If you say so: I've no interest in how much they're paying, certainly not enough to bother to look it up.

2) There is absolutely no basis for this price whatsoever

Yes there is: assuming the figure is acurate, it's the price it's being bought and sold at by real people with real cash. Same as the basis for believing the cost of a pint is whatever it is: it's what real people are paying real cash for it.

3) At some stage in the future, the people who are paying $7,500 today will not be able to sell them for anything more than cents, if they can sell them at all.

In your opinion: clearly not in the opinion of many others.

4)They will lose $7,500 or so per Bitcoin purchased today if they still own them.

In your opinion......

You may redefine the meaning of worth or value to mean price.

No I didn't! I literally quoted the accepted definition from a dictionary: it's you who doesn't seem to understand what they mean. I've asked a couple of times what you think they mean, but you haven't bothered to reply.

I suppose that is your choice. But it's dangerous.

How is it dangerours to use words according to their accepted meaning? I'd say it's dangerous, or at best confusing, to choose your own meaning: how on earth are people expected to communicate if they make up their own meanings? I guess that's the meaning of "alternative facts"!

It would be more helpful if you were able to distinguish between price and value.

I am able; it's you who seem to have the difficulty in understanding what they mean: maybe you could explain to us what you think they mean, because using their conventional meanings your statements make no sense. How can something of no value sell for $7,500?​

 

[ant dee]

Trump decides to peg Bitcoin to the dollar.

 

[elacsaplau]

Brendan,

In post 45, you correctly pointed out that there may come a point where shorting BTC would be a bad bet - i.e. an unfavourable bet or as I described it at the outset of this debate an asymmetric bet not in your favour.

The corollary of this is that there may also a point where holding (or going long) BTC would be a good bet - i.e. a favourable bet or asymmetric bet in one's favour.

This price or inflection point changes over time and it is not an exact science.

My point at the outset of this debate was that for many years I thought the odds, in holding BTC and based on its evolving price, were in my favour. You didn't acknowledge this a few months ago and I could never understand why. Do you acknowledge this now - it's a simple corollary of what you have said yourself?

 

[Gus1970]

Let me try another metaphor for the point I was trying to make. Imagine someone invented a technology for transferring grains of sand instantly all over the World, the grain of sand being the "asset". That would be a truly amazing technology and one could see a future where it might be able to "beam me up Scottie". But as it stands it delivers an asset that is worthless.

How can that be worthless if i can organise a beach party in my backyard the moment that the sun shines? Supply is higher in sand available, but certainly not worthless

 

[Duke of Marmalade]

How can that be worthless if i can organise a beach party in my backyard the moment that the sun shines? Supply is higher in sand available, but certainly not worthless

You would need a Canon lawyer to post in these parts. So a grain of sand is not worthless. Can I for the sake of saving my finger tips from typing have it understood that when in future I say "worthless" I mean "next to worthless".

 

[TheBigShort]

You would need a Canon lawyer to post in these parts. So a grain of sand is not worthless. Can I for the sake of saving my finger tips from typing have it understood that when in future I say "worthless" I mean "next to worthless".

The grain of sand is worthless, or next to worthless, because there is an abundant supply beyond any reasonable, or even irrational demand for it.
If it were scarce, sun holiday resorts would compete over it and in turn a market would set with buyers and sellers jacking up the price.
And considering the technology behind your invention, think of the value of not having sand in your ham sandwhiches at the beach anymore!

 

[Brendan Burgess]

In post 45, you correctly pointed out that there may come a point where shorting BTC would be a bad bet - i.e. an unfavourable bet or as I described it at the outset of this debate an asymmetric bet not in your favour.

The corollary of this is that there may also a point where holding (or going long) BTC would be a good bet - i.e. a favourable bet or asymmetric bet in one's favour.

Hi elacs - here is post 45

Let's say Bitcoin had hit $40,000 but had since dropped to $4.

I think that it's worth nothing, so in theory, I should short sell at $4 and collect my money when it goes to zero.

But it could stage a recovery. My maximum profit would be $4 and my potential loss would be $40,000.

The corollary of this is that there may also a point where holding (or going long) BTC would be a good bet

I am not sure that this follows. Genuinely, I don't know. So it's a very good question.

I have sold Bitcoin short at $14,500

I am minded to close out at $3,000 and pocket the winnings of $11,500.

I could hold out until it falls to $1,000 and increase my winnings to $13,500

Let's assume I do this.

Then let's assume Bitcoin falls to $4.

Should I take a punt buying 1,000 coins at $4?

I would expect to lose that bet as I expect that Bitcoin will fall to zero.

But might it be worth betting on a dead cat bounce?

I just don't know.

It's one thing exploiting the madness of crowds selling at $14,500 when you know it's worth nothing.

It's quite another thing buying something you know is worth nothing on the grounds that the crowd might be mad enough again to push it back up to $100.

Brendan

 

[elacsaplau]

I am not sure that this follows. Genuinely, I don't know.

Well, I actually accept that the corollary isn't quite water-tight but it's almost there. It satisfies me because, compared with the expected volatility of BTC, it's definitely close enough.

Have a think about it. You are now a dab hand at Betfair - so let's use it for a simple example. Take a two horse race, if I back an outcome at 3.0 or lay the opposite outcome at 1.5, is there any material difference especially when what is being bet on is so explosive?

 

[Duke of Marmalade]

The bit that still has me scratching my head is the relevance of the unit. $10,000 sounds an awful lot for one bitcoin. But in fact it is only 1% of 1 cent for one satoshi. If the exchanges were quoting in satoshi rather than bitcoin would it look so overpriced?

What really matters I suppose is the total market cap of bitcoin. This is around $160 billion. Are we really expected to believe that "miners" solving brain dead hash puzzles have added the same value to the human race as, say, 10 million new cars?

 

[TheBigShort]

I dont see it as adding value as much as reducing the value of fiat currency to the equivalent amount of $160bn.

 

[ant dee]

Technically, there is only one unit of account in the code and that is a satoshi. Its just that the wallets, exchanges and block explorers decide to aggregate and display them as Bitcoin

 

[Brendan Burgess]

Well, I actually accept that the corollary isn't quite water-tight but it's almost there.

Not sure that it is.

But let's say there is a horse on Betfair at 1,000/1. So I can bet €100 on it or lay €100.

Even if I think it has virtually no chance of winning, I would not make either bet although presumably one of them is good odds.

So I can sell Bitcoin at $4 or buy one at $4. There is something attractive about buying something at $4 even if it's worth nothing, because Greater Fools had once put a price of $20,000 on it. It would be very risky short selling it, even if it's worth nothing.

It's not the same as, say, Ryanair shares. Say I can go long or short at €17. I could go short and face the possibility that they rise to €170, but that would be a slow process and I would have time to get out.

I would have sold Bitcoin short at $1,000 had I known about it. But I would have lost my bet, because I would probably have set the stop loss at $2,000. If I sold it short at $4, I would probably have to set the stop loss at $8. So it would be a coin toss.

I don't know if we have any other models to go by. A worthless item rising from $1,000 to $20,000 over the course of a year. When it crashes towards zero, will it just grind to a halt, or will there be plenty of people buying it at $4 or $40 because of the hope value?

Brendan

 

[tecate]

What the hell happened here over the weekend! - you've all certainly been busy!

I note that you are now adopting the tecate (another early morning poster) line that the community is not seeking to overturn the existing order. In your case that would appear to be resignation to reality for it seems to me that if crypto did per chance blow the central banking conspiracy out of the water you would be in Shortie Paradise.

I don't know how many times you have to be told this but there are very few people that believe that Bitcoin / Crypto is going to replace FIAT in its entirety. I would suggest that of those that do, they are pretty new to the space and don't have a full understanding of it. However, you continue on with your assumption.
Bitcoin/Crypto does some things well - and FIAT has it's own merits. Therefore, Crypto will canabalise what are today certain lucrative revenue streams of the banks or those allied to them. As regards the 'resignation' remark, I'd have to have changed my position for this to be relevant...that's not the case. I view myself as a pragmatist.

As a small example of the assumptions you are making, I am NOT an 'early morning poster'. It may appear that way - but that's not the case. Sometimes folks draw the wrong conclusions...the other recent example being the accusation that me and BigShort were the same poster!

One more for the moment. Bitcoin is not a technology. Blockchain is a technology.

Someone has already corrected you on this - but I'll reinforce the point. You cannot distinguish between Bitcoin and the Bitcoin blockchain. They are one and the same thing - and yes, it is a technological advancement.
Can technology be copied ? Sure. You have been invited countless times to setup Marmalade coin - see how that fares as I can assure you that the argument that Bitcoin is not finite because we can have 1500 odd coins is nonsense. Any without merit (of which there are a shed load) will eventually disappear. Those that do have merit will carry out - but they may have a completely different application to bitcoin. Those that have merit and wish to supercede bitcoin may well do so...or again, if they don't, they will fall by the wayside. Bottom line - having loads of crypto's does not dilute the finite resource that is bitcoin.
You could use the same analogy with FIAT. If you started a new FIAT tomorrow, does it dilute the strength of the USD or Euro?

But tecate has also been helpful. Whilst he clearly is more part of the religious wing of the community than fp, nonetheless he knows his onions. Amateur followers should take note of tecate's warnings on Tether and take special note that he is not holding bitcoin at the moment.

Firstly, I'm a pragmatist. I'm NEVER religious about anything....perish the thought! Otherwise, thank you for suggesting that I 'know my onions'....however, regrettably I am only scratching the surface in my knowledge of crypto generally...I either have not got the understanding or can't keep up as the space is moving at such a rate of noughts.
You are right to say that I do have concerns around Tether. It's one thing that I disagree with Negotiator on. Market cap includes BTC that has been lost (of which we don't know how much but it considered to be sizeable), that which is being HODL'ed and generally not in circulation. My concern is that the injection of btc via Tether affects the liquidity of BTC i.e. the money that is ACTUALLY being swirled around. I hope I'm wrong but it seems that way to me.
Furthermore, whichever point of view is relevant in that respect, it will not mean the end of the btc project. It may burn investors once it is finally outed (if ever?...as I can't see the mechanism for that right now). But you're quite right - I simply don't feel comfortable holding one btc until that issue is somehow dealt with.