Merged Bitcoin - Part 3

wareyin said:
Except the fact that tulip mania and bitcoin are both bubbles? And the fact that a bunch of people bought Tulips for vastly more than they were worth in the hopes of selling them for even more to the next person who came along, just like bitcoin? And the fact that both bubbles have burst, causing people who spent money on worthless things on the advice of those who make claims like "if you hold bitcoin long enough you are guaranteed to make money" to actually lose money?
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A single bubble vs a decade long series of price cycles? Chalk and cheese.

I know you are too emotionally invested in this analogy to see the facts but you have been proven wrong on every count.
 
The Don said:
I simply don't understand it, but Bitcoin (and to a lesser extent other
cryptocurrencies) seem to have significant resilience in their value.
It could all be a bubble and/or a scam but if it is, it does seem to
be a persistent one.

Perhaps there are enough actual uses for Bitcoin to allow its value
to be supported. Some of those uses may not be strictly legal, but
other do appear to be so.

Despite risking missing out on huge returns by going long (or short
depending on your view) on Bitcoin, I'm not willing to risk my hard-earned
because I simply do not understand the market at all. Others might say that
the stock market is exactly the same and that I'm fooling myself by thinking
that the value of some (many ? most ?) stocks is underpinned by sound
financial reasoning.
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Actual uses of bitcoin do not support its price - only speculation does.

Suppose a bitcoin will do in a transaction. You purchase a bitcoin,
transfer it to a business to buy an item, the business which needs
money to pay its expenses, sells the bitcoin back into the market
place. The purchase of the bitcoin shrinks the supply of bitcoins
and raises its price a little bit or a few hours, then when the bitcoin
gets sold again the price falls back down and the supply increases
a little bit.

A speculator, who buys a bitcoin will often hold on to it for much longer,
years at a time. This will reduce the supply of bitcoins causing the price
to rise. As long as speculators have the funds to keep buying the price
will go up.

Inflation, on the other hand, has steadly eaten away at free cash.
I suspect in the next year or two some 20% of the world's firms
will collapse, because they cannot meet their expenses. If this
ripples into the general economy, some speculators will need
money, and they have only one place to go.

But again, I cannot psychically read speculators minds, so how
deep or how long the drop in the price of bitcoin I cannot predict.
 
Solitaire said:
Actual uses of bitcoin do not support its price - only speculation does.

Suppose a bitcoin will do in a transaction. You purchase a bitcoin,
transfer it to a business to buy an item, the business which needs
money to pay its expenses, sells the bitcoin back into the market
place. The purchase of the bitcoin shrinks the supply of bitcoins
and raises its price a little bit or a few hours, then when the bitcoin
gets sold again the price falls back down and the supply increases
a little bit.

A speculator, who buys a bitcoin will often hold on to it for much longer,
years at a time. This will reduce the supply of bitcoins causing the price
to rise. As long as speculators have the funds to keep buying the price
will go up.

Inflation, on the other hand, has steadly eaten away at free cash.
I suspect in the next year or two some 20% of the world's firms
will collapse, because they cannot meet their expenses. If this
ripples into the general economy, some speculators will need
money, and they have only one place to go.

But again, I cannot psychically read speculators minds, so how
deep or how long the drop in the price of bitcoin I cannot predict.
Click to expand...

This assumes there is a finite supply of PhantomCash bitcoins.
But there isn't.
My, extremely limited, understanding is, bitcoins can be created out of thin air if you have the computing power to create, harvest, mine, conger, 'blockchains', whatever the **** those are. Yeah, it's Christmas time, who else spoke of manufacturing chains? Some Dickens character, if I recall... Ended well for them too.
So, there is, for all intents, an unlimited supply of bitcoins available.
Brings this fictional exchange to mind...

Douglas Adams said:
“If," ["the management consultant"] said tersely, “we could for a moment move on to the subject of fiscal policy. . .”
“Fiscal policy!" whooped Ford Prefect. “Fiscal policy!"
The management consultant gave him a look that only a lungfish could have copied.
“Fiscal policy. . .” he repeated, “that is what I said.”
“How can you have money,” demanded Ford, “if none of you actually produces anything? It doesn't grow on trees you know.”
“If you would allow me to continue.. .”
Ford nodded dejectedly.
“Thank you. Since we decided a few weeks ago to adopt the leaf as legal tender, we have, of course, all become immensely rich.”
Ford stared in disbelief at the crowd who were murmuring appreciatively at this and greedily fingering the wads of leaves with which their track suits were stuffed.
“But we have also,” continued the management consultant, “run into a small inflation problem on account of the high level of leaf availability, which means that, I gather, the current going rate has something like three deciduous forests buying one ship’s peanut."
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https://www.goodreads.com/quotes/685739-if-the-management-consultant-said-tersely-we-could-for-a
 
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Dr.Sid said:
The amount is bitcoin itself is capped, and we are nearing the cap.
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Not really.

From your link...
The total number of bitcoins issued is not expected to reach 21 million. That's because the Bitcoin network uses bit-shift operators—arithmetic operators that round some decimal points down to the closest smallest integer...

With the number of new bitcoins issued per block decreasing by half approximately every four years, the final bitcoin is not expected to be generated until the year 2140.
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All that really happens is that they become more and more expensive to mine, driving the 'value' up. That's the genius behind it. The 'cap' sounds like a good thing to libertarian types, but in fact it is a pyramid scheme with the potential for virtually unlimited growth (at least until all the money in the World is sucked into it). 2140 is a long way off. Bitcoin will implode when speculators loose interest in it, long before the last one is mined.

But you are right in the sense that new cryptos can be created any day. Convince people to invest into random new crypto is not that easy though.
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And getting harder all the time. Eventually crypto will die like all other fads - the only question is when? You will know the end is near when 'Satoshi Nakamoto' starts cashing out.
 
Mike! said:
I have a strong urge to trademark the name, "PhantomCash" for some reason.
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If that is because bitcoin only exists in computers then you might consider that this is also true for most of fiat currency. Only a small fraction of fiat money exists in the form of notes and coins.
 
Mike! said:
This assumes there is a finite supply of PhantomCash bitcoins. But there isn't.

My, extremely limited, understanding is, bitcoins can be created out of
thin air if you have the computing power to create, harvest, mine, conger,
'blockchains', whatever the **** those are. Yeah, it's Christmas time, who
else spoke of manufacturing chains? Some Dickens character, if I recall...
Ended well for them too.

So, there is, for all intents, an unlimited supply of bitcoins available.
Brings this fictional exchange to mind...
Click to expand...


Actually, the supply of Bitcoins has a limit.
But the number of cryptocurrencies have no limit,
as anyone can start their own cryptocurrency.


Think of it this way. A guy purchases a large ledger with many long pages
and he holds a contest, inviting artists to producing drawings of a cat. The
guy judges the pictures and then writes down the twenty five names of the
artists with the best cat drawings. The next day it'll be horse drawings and
the names get written on the next page and so on for the next fifteen years.

The twist, the artist can sell their slot in the ledger for money or other item.
For a small fee the guy crosses out the the name of the artist on the line and
writes down the name of the purchaser. The purchaser can, in future, sell that
slot to someone else and the process repeats itself. (Note: the purchaser does
not get the drawings. Those get burned at the end of the day to contribute to
global warming.)


Similarly, a block of data, about one megabyte, gets sent to bitcoin miners
they mathematically hash it with a similarly sized random number and output
another file that gets sent back and judged. Actually miners try many millions
of random numbers very quickly in an attempt to get the best fit.) A judging
algorithm will look at each block and find the one with the greatest leading
zeros, or ones, or any particular pattern and then award the bitcoin to the
miner with the best fit. (Again no useful work like contributing to the
knowledge of mankind occurs.)

Early adopters, interested in the novelty of cryptocurrency payed miners
and ledger keepers for rights to own a bitcoin early on. And this activity
attracted speculators, who drove the price up, and via a feedback loop
drew in even more speculators. And that's how we got where we are today.


Dr.Sid said:
Just join into bigger farms ..
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Well, it costs money to hash bitcoins, you need energy, internet connections,
hardware, personnel, space. If you don't get a big enough return, you either
don't mine bitcoin or you go broke.
 
What we really need is curecancercoin where instead of mining by finding hashes with multiple leading zeros coins are won by solving protein folding or other medically useful tasks.
 
a_unique_person said:
Of the rate of coins being issued drops then it becomes a lottery for the miners and much more risky as an investment.
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No, it is still one block every 10 minutes. The question is whether you get enough bitcoins from a block to justify the expenditure on energy and computing equipment.
 
psionl0 said:
No, it is still one block every 10 minutes. The question is whether you get enough bitcoins from a block to justify the expenditure on energy and computing equipment.
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Fortunately, it's self adjusting. At least for people trading BTC. Not so much for the miners because they often have highly leveraged operations and can't pay their debts if too leveraged while the price is low. But that's a problem for miners, not hodlers. And investors in miners understand the leverage risk/reward and take the risks knowingly. They are also, because of the enormous amounts of capital involved, the group most incented, in a traditional investment sense, in doing what they can to expand BTC's market.

Michael Saylor recently said he considered crypto coins, outside of BTC, as worth zero in large part because the money spent mining (proof of work) is real. OTOH, given his ownership of just BTC, one might suspect a bias.
 
Shark Tank's KEVIN O'LEARY says, FTX Paid him $15 Million to be a FTX Spokesmen on CNBC Live today. (Dec 8, 2022)



More or less; "I'm sorry. I'm a idiot. I was taken. We all screwed up."

All money he lost was only his own. He did not invest anyone else's.

Worth a listen, IMHO. He sees that because of the use of blockchain the FTX fraud will be uncovered. He's still a very strong believer in the technology.

"FTX collapse does not change the potential for what crypto can be."
 
marting said:
Michael Saylor recently said he considered crypto coins, outside of BTC, as worth zero in large part because the money spent mining (proof of work) is real. OTOH, given his ownership of just BTC, one might suspect a bias.
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More likely ignorance. Most people would realize that the price of bitcoin depends on the market and not on how difficult it is to mine. The mining difficulty is a function of the bitcoin price and not the other way around.
 
Bitcoin will get much easier to mine.
The price is in structural collapse like the whole hoaxy mac hoax face
 
psionl0 said:
When you can explain how a country like El Salvador using bitcoin as a currency doesn't constitute a "legitimate" use of bitcoin or what relationship a 400 year old fad that lasted only a few months has to do with bitcoin then we may be able to move beyond the one liners.
Click to expand...

Is Bitcoin better for El Salvador's purposes than just using USD?
 
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