End of Bitcoins on 18th December 2017

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Comments (139)

Dec 7, 2017

This is exactly what I have been thinking. SB'd. I don't know if it will become totally worthless but the efficiency provided by institutional investors will wreck the current value. What it ultimately goes down to remains to be seen. I wouldn't be surprised if it was below 1000 when it's all over.

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Dec 15, 2017

Delete

Dec 12, 2017

You are talking about riot. I'm short small. You can't short now no borrow. I flipped 60% of my short because well these things are risky and made a few bucks.

I got small short will hopefully cover at $0-5

Array
Dec 11, 2017
DeepLearning:

This is exactly what I have been thinking. SB'd. I don't know if it will become totally worthless but the efficiency provided by institutional investors will wreck the current value.

This is what I don't understand--if Bitcoin values are "inefficient" then what should the price of a Bitcoin be? What multiple, for example, should Bitcoin trade at? "What do you mean by 'what multiple'?" you say. "What a stupid question." Exactly. Bitcoin has the same value as a fine art--a painting might have $10 in material and $50 million in value. Bitcoin has no intrinsic value so it trades at whatever people are willing to buy it for.

The "inefficiencies" I see in Bitcoin are the fact that different trading platforms could have price points for Bitcoin that are $1,000 or more different from one another. If the instutitions could find a way to bridge those gaps then the price of Bitcoin could be standardized, more or less, across platforms.

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Dec 7, 2017

I agree on certain parts in your argument. First, I don't think Bitcoin will become "worthless" when Bitcoin Futures are opened in CME and CBOE. NASDAQ is planning to have Bitcoin price ticker in 2018.

It is true that 99% of Bitcoin transactions are by individuals not institutions. If institutions lay a hand on Bitcoin exchange sites like GDAX, which the New York Stock Exchange invested in, it'll create a whole new trading game for Bitcoin volatility.

When Silk Road was using Bitcoin for payment in the dark web, it was a "fuck you" to the government so they can't track payments for illegal drugs being bought and sold. I think the recent hypes were created because people got rich off of Bitcoin, not because most of us see it as a anti-capitalist tool.

There are many famous and intelligent people both supporting and rejecting Bitcoin and cryptocurrencies. Unless the U.S. government sets up strict digital asset compliance rules, this highly unregulated market is going to thrive.

We always tend to overestimate what happens in one year while underestimating what happens in 5-10 years. I feel as though Bitcoin going to "crash" by Dec 18, 2017 is quite an overstatement.

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Dec 7, 2017

I think the point is that a lot of the current optimism in the market right now is about bitcoin being used for non-nefarious reasons. That doesn't seem like it will be happening. Online retailers have little to no incentive to accept bitcoin, especially since it is so volatile. And if it becomes less volatile? Well, then it's way less intriguing to speculators trying to make a quick buck.

Sure bitcoin will continue to thrive in the unregulated market but the current price is valuing future mainstream adoption, which I don't think is going to occur. If/when people realize this, the price will drop to the correct value.

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Dec 8, 2017

Great discussion. But with futures contracts being traded, doesn't this become a viable alternative/medium of exchange for companies? Isn't there already ways to accept bitcoin and immediately turn that into fiat USD without having to take on that volatility risk?

Why does Overstock.com accept bitcoins if there is no incentive? What if Amazon starts accepting it?

What is your opinion of the correct value? I think that is really the hardest thing to measure since there is no underlying asset or FCF asset. The utility is in the network effects that bitcoin enjoys since it was basically the first to market that is reaching wider adoption. That is not a minor point.

As far as being a medium of exchange, it's more a hedge against inflation/store of wealth as I see it, but this rapid run-up may actually be bad for it in the short term. May we crash ~50-80% in the short-term, absolutely! But is there a lot of value to Bitcoin, the technology and cryptos in general? I would argue yes.

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Dec 17, 2017

Overstock accepts bitcoin because they are re-positioning themselves as a blockchain company. They're considering selling off their core business entirely and focusing on blockchain.

Dec 17, 2017

Are all of the companies found here turning into blockchain companies?

https://steemit.com/bitcoin/@steemitguide/2017-top...
This list includes Mint, Microsoft, Zynga, Virgin, Tesla, OkCupid, Wikipedia, Square, Shopify.

And even if they are all working towards becoming blockchain style companies then that just adds to the value of the industry/sector which is what people now are investing in.

Dec 7, 2017

I agree that this supposed crash is going to be similar to when Amazon crashed in 2001, a minor blimp in an overwhelming trend upward. At the moment though, I personally think Bitcoin is a ticking time bomb, and when it goes off, a lot of investors are going to lose faith in the crypto space, at least in the short-term.

My advice is to invest in cryptos that have a real-world use case, and are actually objectively providing value. I'm not convinced there will be a crash, but I know that my money is, relatively speaking, a lot more safe in these types of cryptos, since they existed as successful companies before implementing crypto currencies to add value and innovate.

Walton, for example, is revolutionizing the supply chain logistics space, has partnerships with numerous businesses, who are going to implement their chain in order to track items, implement a cheaper and better alternative to mainstream logistic solutions, automate their retail stores, and store and track data. Similar companies in the RFID space are worth roughly $5 billion dollars, so the market cap has tons of room to grow, especially with so many subsidiary companies that have pledged to use their technology, and with the explicit support of the Chinese government.

MOD, as another example, is partnering with pharmaceutical companies to do away with expensive refrigerated trucks and employees who report data, and expensive logistic services, and using their working hardware tested by the University of Zurich, which will save the pharmaceutical industry 60% in shipping and logistics per year. MOD is using block chain technology to anonymously, more accurately, and more cheaply report data.

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Dec 7, 2017

I would suggest adding IOTA in your altcoin list. All the money in the cryptocurrency world is all-eyes-on-Bitcoin with it reaching ATH every hour. Once it corrects or drops, which it led to GDAX crashing few hours ago, people are going to panic sell Bitcoin again and move their money back into altcoins.

Bitcoin only has brand value and popularity since it's the talk of the town. But once people realize there are better coins out there, Bitcoin will drop in value .

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Dec 7, 2017

Yeah, I have to admit that it is disappointing to look at any 3-month chart, and see that we would have all been better off in terms of BTC if we just invested in BTC. But I definitely agree with you that Bitcoin just has the brand. Also, I would look into XRB. It's a completely fee-less crypto currency with nearly instant transactions, with some comparisons to IOTA.

Dec 10, 2017

you are aware IOTA doesn't actually function? like transactions don't process. try the tech first before shilling it

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Dec 8, 2017

what?! bitcoin is like amazon...you my friend have been drinking the kool-aid. amazon, while overvalued, is a consumer commerce & logistics company with real assets, real sales, real cash flows, land, facilities, technologies, etc. bitcoin is a currency, don't forget that. a currency only has value because people agree it has value (since we're off the gold standard). amazon and other equities have value because those shares of ownership are legal claims on profits, cash flows, property, dividends, etc.

don't confuse this for a stock, it is not. that doesn't mean bitcoin will crash (I think it will, but not before it rockets to the moon and crushes short sellers), but that does mean your analogy is incorrect and misinformed.

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Dec 15, 2017

Delete

Dec 8, 2017

Ok but the USD has value more than just because "people agree it has value". The US is, well..., the US. It has real assets, real tax income, institutions, military, etc. I do not agree with the idea that simply because we are off the gold standard, currency values are solely based in widespread belief. Bitcoin, however, truly is only backed by belief.

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Dec 8, 2017
thebrofessor:

what?! bitcoin is like amazon...you my friend have been drinking the kool-aid. amazon, while overvalued, is a consumer commerce & logistics company with real assets, real sales, real cash flows, land, facilities, technologies, etc. bitcoin is a currency, don't forget that. a currency only has value because people agree it has value (since we're off the gold standard). amazon and other equities have value because those shares of ownership are legal claims on profits, cash flows, property, dividends, etc.

don't confuse this for a stock, it is not. that doesn't mean bitcoin will crash (I think it will, but not before it rockets to the moon and crushes short sellers), but that does mean your analogy is incorrect and misinformed.

Why does gold have value? Because we all agree it does....

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Dec 8, 2017

the belief in USD is bolstered by the fact that it's issued by a solid govt. other currencies that have experienced wild swings and eroded capital can show that belief in govts can evaporate (see the Lira pre-EUR). so yes, USD/BTC isn't a fair comparison, but it illustrates the point that currency has no asset backing it, as equity in a company or ownership of a bond does. there's a legal connection there.

if JNJ goes belly up and I'm an equity holder, I have a legal claim on their assets after bondholders are paid. if the US govt goes bankrupt, my dollars may very well be worthless (see zimbabwe's currency). while I think that's unlikely, think of what the USD actually represents to get my point.

bitcoin has two strikes against it, it has no claim on any asset and it's not backed by any issuing entity with value, simply myriad lines of code which mine it and enforce its scarcity. in theory, if people believe that the blockchain or mining of bitcoin is as reliable as a government, then maybe it works, but as I've said, I'm not a believer.

on gold, I'm decidedly not a gold bug, but people will point to its utility in things like metallurgy, jewelry, scarcity, and difficulty to duplicate as reasons why it has value. I consider gold just another metal, which can be usurped by other naturally occurring or manmade materials, but it has a wide following and so will probably always have some value. again, in theory, if bitcoin gets a following like gold, it's possible for it to retain some value. I don't think it will, but in theory it's possible.

my exaggeration on saying a currency only has value because we agree it does was done for emphasis that bitcoin ought to not be treated as a stock, as I believe most traders see it.

sometimes you gotta say some crazy shit for people to wake the fuck up.

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Dec 15, 2017

Delete

Dec 23, 2017
SmartThinker:

My advice is to invest in cryptos that have a real-world use case, and are actually objectively providing value. I'm not convinced there will be a crash, but I know that my money is, relatively speaking, a lot more safe in these types of cryptos, since they existed as successful companies before implementing crypto currencies to add value and innovate.

Ethereum and IOTA being great examples of this

Dec 7, 2017

If you guys are so confident, why not put your money where your mouth is and short it once the futures exchanges go live?

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Best Response
Dec 7, 2017
computerized:

If you guys are so confident, why not put your money where your mouth is and short it once the futures exchanges go live?

Because 18 year olds can't get approved for margin, and/or don't have the initial margin to trade futures.

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Dec 8, 2017

Ok. I've just borrowed some BTC from my co-worker.

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Dec 15, 2017

Delete

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Dec 8, 2017

bitcoin can't be depreciated, physically seized, is portable, divisible, decentralized. Chaos in Venezuela and Zimbabwe saw bitcoin trading in their local exchanges at a huge premium to international market, as citizens were scrambling for a store of value accessible digitally.
It's digital gold with tech upside. Hard to tell applications in future of advertising (due to portability and divisibility), internet of things, virtual reality, etc. Upside is spec for sure.
bitcoin is not without its downsides - energy wastefulness, susceptible to security issues in event of quantum computers, transaction fees...but these are tech problems that can be solved...a lot of developers are incentivized to innovate (and altcoins have been created to solve for these issues).
I would say the mining infrastructure and developer capital working to keep the system going also has some tangible value. How do you put a value on thousands of developers working on applications? Huge warehouses of mining farms used to process transactions (i.e. mine for bitcoin)
private blockchains will have use cases for sure but good analogy is public internet vs private intranet. Think of a company intranet...not many contributors building applications and infrastructure...so it sucks and is clunky. Now contrast that with public internet that has the market of developers working to add applications...same situation will exist with public vs. private blockchains...you cant beat an incentivized free market of contributors...

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Dec 8, 2017

The FBI seized 144k bitcoins from Ross Ulbricht. I'm not sure what the difference between seized and physically seized is though... Either way it's gone and out of the owner's possession.

Dec 8, 2017
Global_IU_11:

The FBI seized 144k bitcoins from Ross Ulbricht. I'm not sure what the difference between seized and physically seized is though... Either way it's gone and out of the owner's possession.

I was curious too. How can they seize it or track it? If you hide the only key in existence...what recourse is there?

https://www.google.com/amp/s/www.coindesk.com/bulg...

If the glove don't fit, you must acquit!

Dec 8, 2017

When they caught Ross Ulbricht he was logged into his computer and all his passwords/keys were available.

Bitcoin is totally transparent, you can watch transactions move from one wallet to another. There are ways to try and obfuscate those transactions (tumblers, swapping coins through an exchange, etc.) but that is far from 100% effective.

Dec 8, 2017

that's true. I guess point is you can have massive wealth but secure it without help from a third party who will take physical possession of it. Which isn't all that useful for people in Western society with rule of law and trusted 3rd parties. But that's not the case for many regions in the world.

You can also track BTC transactions fairly well, its not great for criminals (despite all the claims you hear from mainstream media that it is just used for crime). There are better crypto like monero for concealing transactions.

Dec 8, 2017
Sergioaguero:

I'm confident, just not certain.

I am not uncertain

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Dec 15, 2017

Delete

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Dec 15, 2017

Delete

Dec 8, 2017
computerized:

If you guys are so confident, why not put your money where your mouth is and short it once the futures exchanges go live?

The market can stay irrational longer than you can stay solvent.

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Dec 11, 2017
More Leverage:
computerized:

If you guys are so confident, why not put your money where your mouth is and short it once the futures exchanges go live?

The market can stay irrational longer than you can stay solvent.

Exactly. This was the whole premise of The Big Short--Christian Bale's character (Michael Burry) was right about the housing market's inflated value but his timing was (at least somewhat) off and he kept getting crushed by margin calls.

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Dec 17, 2017

There is a difference between not seeing the long term intrinsic value for an asset and day trading/market timing when you think an ultimate decline may occur.

It's also an incredibly volatile asset that you shouldn't be trading as a substantial portion of your portfolio, one way or the other - investing isn't just about willingness to take risk, it's about ability. Having just finished business school, ability isn't that high right now haha.

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Dec 7, 2017

What about the theory that futures will actually lower the volatility of Bitcoin because it will create a way for investors to short or hedge the asset, rather than sell bitcoin they can sell futures.

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Dec 8, 2017

I'm not sure how institutional money being able to buy BTC lowers the value. The value has moved up lock step with the number of users (granted it has gotten way ahead of itself). I don't think hedge funds are invested in BTC. Maybe the hedge fund managers themselves in their PA but from a legal standpoint I don't think it is currently possible due to know your customer laws, etc. Please correct me if I am wrong.

I agree with what other people have mentioned about altcoins though. I have some IOTA and plan to buy some more because BTC has to pull back at some point. It's fucking crazy right now.

"Give me a fucking beer", Anonymous Genius

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Dec 8, 2017

big price swings come from a couple different things, both of which I think are happening to bitcoin currently:

  1. wide bid/ask spread
  2. lopsided buy/sell orders

you can have huge upside/downside vol if you have too many buyers/sellers (respectively), and it's apparent to me that basically everyone is just hitting the bid on bitcoin, driving its price higher and higher.

a wide bid/ask spread goes in tandem with lopsided supply/demand. one of the precursors to massive adoption by investors is tight spreads. people want to know if they buy something they can get out of it at roughly the same price if they get their trade off quickly. with bitcoin, you don't have this assurance. it was 16k yesterday, it was down $2400 at 6am today, and now it's back up. that is not how currency is supposed to trade.

I don't know that inst'l money entering via futures (and hopefully forwards) will lower the value, but it should narrow the spread. this is what arbitrage tries to do, take advantage of wonky spreads. if this happens, hopefully vol will calm down

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Dec 8, 2017

Good point. I definitely think with institutional money entering the space the bid/ask spread will lower and we will get some better price discovery. I just don't think it's going to crash the BTC price like most everyone in this post believes.

"Give me a fucking beer", Anonymous Genius

Dec 8, 2017

right, the vol is insane for a "currency", but isnt that just a function of a small market cap? if bitcoin gets up to a few trillion (say ~$50-100k per coin), wouldn't it be less susceptible to large buy/sell orders like other currencies?

Dec 8, 2017

sure, that's how spreads tighten. as more buyers enter the market reflecting their views either positively or negatively, spreads come in. it's the same concept as penny stocks with hardly any volume. widely traded stocks have tight spreads, thinly traded stocks have wide spreads.

take a look at the long term chart for USD/SYP (syrian pound), this will illustrate my point

http://www.xe.com/currencycharts/?from=USD&to=SYP&...
switch to GBP, it's swung between 45 pence and 85 pence, a big swing to be sure, but not nearly as wide as other currencies like those of fragile govt's or bitcoin. even JPY, one of the most messed with currencies over the past decade has only swung between 75 and 125. you can see big swings in currency, but in the main 6 ones, you won't see anything like bitcoin.

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Dec 17, 2017

Let's not forget how liquidity might come into play. If there is a big market event and Bitcoin goes to zero, liquidity is also going to be zero - everyone will be selling and noone will be buying. If Apple stock tanks you'll see institutional investors scooping shares and market maker activity going way up. That won't be the case here. Anyone in BTC or other cryptos needs to be fully prepared for the possibility that they won't be able to get out if they tank. Which is why you shouldn't leverage into an asset like this and you should consider it a highly speculative investment.

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Dec 8, 2017

Hedge funds can invest in crypto and are currently doing so. Google Pantera and Polychain.

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Dec 11, 2017

I have met people from Pantera so I am aware of them. I was talking more about global macro funds rather than specific cryptocurrency VC's/ hedge funds. I have hear Kyle Bass and other hedge fund managers talk about how they are either invested in BTC (or were) but are not investing their funds money due to limitations.

"Give me a fucking beer", Anonymous Genius

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Dec 7, 2017

Great. As long as it puts an end to people posting new threads every day to WSO saying Bitcoin hit a new high and asking what people think.

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Dec 8, 2017

Efficiency of institutional investors? Classic.

Great thread btw.

Dec 8, 2017

Bitcoin is flourishing because of the first to market fallacy. Novice crypto investors think that BTC is the one because it gets all the talk. I agree with a lot that was said on this thread, but I see Dec. 18th the end of what I would call the CC rally.

1) BTC will fall. 2) We will see a rise in alt coins that have value - i.e. Eth, XRP, Lumens, Iota, etc. 3) Digital currency will come out of the woodworks in countries with low physical cash flow 4) I will never get the returns I once got from CC's

What I don't know is, 5) Will early adopters of CC move away from CC with a huge influx of mainstream attention (I.e. central bank backed digital currency, Cross Border payment digital coins, digital currency, ICO platforms, etc.) or is this just the beginning?

Dec 8, 2017

In my view, the more 'alt coins' that arise, the more the crypto market will destroy itself. If the goal is mainstream adoption, having 1000 different alt coins is not the way to go.

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Dec 8, 2017

Agreed. I think mainstream adoption of digital coins is inevitable though. Banks are creating them for remittance payments, cutting out clearing houses and even cross border payments. Annoyed that there is a coin for everything it seems (looking at you ICO's), but ones with true value will live on.

Dec 24, 2017

I agree with this heavily. In my opinion, it won't be Bitcoin that gets truly adopted by the mainstream but other altcoins with a specific use. Bitcoin is more of an asset now, rather than a currency as it is concentrated in the hands of few and not the everyday person at this point. It hasn't been adopted to the point where it can be easily used as a currency. It doesn't help that it has a finite supply as once that happens the value will increase and it will be even more concentrated. Going back to the original point, coins such as Ethereum will live one because it can be applied in a wide variety of ways.

Dec 8, 2017

If the glove don't fit, you must acquit!

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Dec 11, 2017

LOL. This, this is an heroic post. Christ be with you.

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Dec 8, 2017

Honestly, we can postulate endlessly with these theories but nobody really knows wtf is really going to happen. Bitcoins future is more or less a coin flip...

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Dec 8, 2017

The 4% of users control 96% of the BTC is mainly driven by the fact that the largest exchanges' hot and cold wallets hold huge quantities of BTC since it is the #1 trading pair and best way to move USD/EUR/GBP/etc. into altcoins. If you exclude the top 100 wallets the distribution is more equitable.

Typical Zerohedge sensationalism.

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Dec 8, 2017

I haven't been around long enough to personally experience many bubbles, but I know from reading about past ones that every stock has it's ceiling price after which it's drastically overvalued and people want liquidity. To that effect, stocks carry potential energy just like a rock, if you throw a rock up in the air (depending on the velocity, it can go very high), but at some point in the future the price gets so high that it squeezes demand and has to come back to down to earth.

I'm not sure if the 18th will do bitcoin in, but surely at some point this (rock)etship has to come back down to earth.

"A man can convince anyone he's somebody else, but never himself."

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Dec 11, 2017

As I've said before, Bitcoin is "overvalued" the way Monet's art is "overvalued"--an asset without intrinsic economic value can be neither over- nor undervalued.

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Dec 12, 2017

That's a pretty profound quote and after longer contemplation it changed my thought process fairly significantly on this subject. You present the classic difference between subjective and objective value.

Bankers love subjective value because there is no artificial ceiling on price, it is theoretically infinite depending on how much value people see in an opportunity. With objective value, the price is based off of the intrinsic economic value (assets, comps, revenues etc.); its harder to fudge objective value and easier to define the asset as "overpriced" or "Underpriced". HOWEVER, the main problem I see with Subjective value is that the value is completely in the "eye of beholder" and can be taken away instantaneously, where objective value requires the devaluation of a broader asset classes in order to lose value.

For Monet, if the market for impressionist paintings tanks the wood frame, canvass, and oil paints will still have residual value.

Food for thought: Would futures trading begin to objectify the value of bitcoin? It presents the opportunity for the market to become more developed and bitcoin to be defined as overpriced or underpriced.

"A man can convince anyone he's somebody else, but never himself."

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Dec 12, 2017
Keyser Soze 123:

For Monet, if the market for impressionist paintings tanks the wood frame, canvass, and oil paints will still have residual value.

I don't think they would. They would basically go into the trash or their residual value would be less than the cost to sell.

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Dec 12, 2017
Dances with Dachshunds:

I don't think they would. They would basically go into the trash or their residual value would be less than the cost to sell.

I didn't think this was where the direction our conversation would go after my last comment but Okay. You my friend, have not been into an Arron Brothers recently. Vintage picture frames hold a lot of residua value!!! lol

"A man can convince anyone he's somebody else, but never himself."

Dec 12, 2017
Keyser Soze 123:
Dances with Dachshunds:

I don't think they would. They would basically go into the trash or their residual value would be less than the cost to sell.

I didn't think this was where the direction our conversation would go after my last comment but Okay. You my friend, have not been into an Arron Brothers recently. Vintage picture frames hold a lot of residua value!!! lol

When you're talking about the residual value of a picture frame vs the, say, $50 million market value of a painting then I'd argue that it is functionally no different than a cryptocurrency with regard to its valuation. Nobody at auction says to himself, "Hey, if I buy this $50 million da Vinci and it turns out to be fake at least I have a real antique frame."

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Dec 12, 2017

I was making a poor attempt at a joke. Of course no rational investor would think that way, but what I'm pointing out is that the value of bitcoin / an old blockchain (if the frenzy stops) will be nothing; synonymous to the value of an old myspace post. What we're seeing right now in the market is the blessings of subjective value, but there is also a dark reality to the flip side of the coin.

"A man can convince anyone he's somebody else, but never himself."

Dec 12, 2017

There is a slight difference between art and bitcoin. Owning a rare piece of art is an end in itself at least for a certain price-insensitive segment of the market; owning bitcoin isn't anyone's end goal, almost all demand would evaporate if it bitcoin couldn't be exchanged for fiat currency or goods.

Dec 12, 2017
jec:

There is a slight difference between art and bitcoin. Owning a rare piece of art is an end in itself at least for a certain price-insensitive segment of the market; owning bitcoin isn't anyone's end goal, almost all demand would evaporate if it bitcoin couldn't be exchanged for fiat currency or goods.

That's not really the point. The point is that you can no more state that a piece of art is overpriced than you can state that Bitcoin is overpriced. Neither has intrinsic value (other than the art's nominal scrap value); both are given value because people say they have value. There's no mathematical formula that can detect fine art mis-pricing ("Oh, oh, look, Picasso is trading over it's 5-year average! Time to short Picasso!"); there's no mathematical formula that can detect Bitcoin mis-pricing. Its value is whatever supply and demand says it is, which is true for any asset, although assets with intrinsic value generally have supply and demand that is dictated by fundamentals. Bitcoin's supply/demand dynamic, however, cannot be dictated by underlying fundamentals--because what fundamentals?

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Dec 8, 2017

I am just thinking out loud here.

The way I see it, and this could be completely wrong as I'm still getting grips with this stuff, is that the issue is Bitcoin has not intrinsic value. It is not linked to anything. It is just solely linked to supply and demand.

Fair enough the Fiat currencies are not pegged to the Gold standard but does the argument that they have no intrinsic value and that Bitcoin could replace Fiat Currencies hold up?

Firstly is it right to say that Fiat currencies have no intrinsic value?
Doing a quick search on Investopedia you have 6 things which influence a currency: Inflation, interest rates, current-account deficit, public debt, terms of trade and political stability+ economic performance.

Depending on your decision to buy or sell a fiat currency, depends on these things. Hence your decision on whether to buy or sell is rational.

A while back I read a book by Yuval Noah Harari called "A brief history of mankind" and it says that in 1500 the global production of goods and services was about $250 billion. Today it is at around $60 trillion. The book gives the reason that before the modern era, money could only represent and convert things that actually existed in the present. This made it near impossible to finance new enterprises.

There are 1170 crypto currencies on the market. Would it not be easier to start trading with goods again?
Maybe I am being very, very reductive but how is Bitcoin any different to how people bought and sold goods centuries ago where people used to trade with goods such as apples and potatoes in exchange for a cloth or meat etc... How is Bitcoin different to this? In my mind the goods have tangible value whereas bitcoins don't?

Further consider this scenario. You have a bank and a Business. The bank will readily lend a loan to the business because it can leverage up credit and it can estimate the amount it will get back with great accuracy.. The estimate is that for every $1 in a bank, banks can loan $10. But with Bitcoins how would lending work?
Imagine a world where fiat currencies have been replaced with Bitcoins. The price would be too volatile as it would go up or down depending if more people had sold or bought things. The price would be in relation to how valuable people saw it in relation to goods. Why would anyone risk having something on your balance sheet which could be worthless the next morning? The bank could lend out $100 million but only be left with $20 the net morning if everyone had traded their bitcoins for goods.
Due to the irrational nature of trading bitcoins, the whole purpose of lending would cease to exist meaning no more enterprises. Modern day growth and capitalism only exist because you can lend and be reasonably sure of how much you would get back.

There will only be a fixed amount of Bitcoins in the market, wouldn't that create a race to see who can control the most creating a more unfair society?

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Dec 8, 2017

A painting by Picasso also has no intrinsic value. Bitcoin isn't about value, it's a method of exchange. Speculators are trying to invest based on increase in exchange but that doesn't mean it will fail for it's original purpose.

Nazis used it bc Banks refused them, marijuana dealers, international travelers, countries with high inflation, etc.

The value is to access a universal unadulterated exchange. No fed bank telling you what interest rate or supply, non Chinese govt telling you how much to take to another country, no Uncle Sam requiring Swiss account data for tax avodiance.

The price will settle, who knows where, but it should stabilize and become a medium of exchange, not an investment.

If the glove don't fit, you must acquit!

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Dec 8, 2017
Sergioaguero:

4% of users own 96% of Bitcoins.

That is a false statement in the context you are writing it. It's based on exchanges, not individuals.

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Dec 8, 2017

"Look, it tells time simultaneously in Monte Carlo, Beverly Hills, London, Paris, Rome, and Gstaad." - Louis Winthorpe III

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Dec 8, 2017

Only people born in the 70-80s will get what @Lizard Brain posted here. LOL

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Dec 18, 2017

missed you bro

Dec 8, 2017

I don't see an actual argument here.

Why again is bitcoin a scam and why will its value collapse? People seem to think that throwing around the word "bubble" somehow constitutes an argument.

"Elections are a futures market for stolen property"

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Dec 8, 2017

The other thing to point is the companies behind crytpo.

What is the business model and how do they make profit from it? They are just creating cryptoC and wait for their currencies going up?

Dec 8, 2017

The big issue with BTC long term as a currency is transaction times with BTC are incredibly slow compared to other currencies. Litecoin for example is lighting fast compared to BTC. At the same time we have no idea what will happen with any of this cryptocurrency. We just have to wait for futures.

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

WSO is not your personal search function.

Dec 8, 2017

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Dec 8, 2017

Although intended to be a currency, Bitcoin is a store of value. From a technical implementation standpoint, it is not designed to a be a currency. There are other technical implementations (XRP) that closely resemble what an actual currency would look like (Not endorsing XRP as I think it's shit, but it has technical characteristics that more closely resemble what a "crypto currency" would look like (e.g. extremely low fees, inflationary)). In the future, you'll sell your BTC for a widely accepted "crypto currency" for micro-payments and everyday transactions.

2nd what @picklemonkey said about 4% control control 96% -- Bitcoin Exchanges

The futures markets that are coming out (CBOE on the 10th, CME on the 18th, NASDAQ next year) only means increased exposure for institutional and traditional investors. Approval of these future products lends credence to the SEC's future decision on a BTC ETF. This leads to improved price discovery and increased capital inflows. All of this, further cementing Bitcoin legitimacy.

Calling this the end of Bitcoin? You haven't been here long enough. I'd love to see a nice 40% correction since everyone and their dog jumped in after their 18 year old son told them to invest over Thanksgiving, but that's wishful thinking.

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Dec 9, 2017

Looks like we have the next George Soros.

Dec 9, 2017

What you fundamentally misunderstand about cryptocurrency and blockchain tech is that you cannot have blockchain without cryptocurrency. The reason why the technology works is precisely that there are incentives with the cyrptocurrency. Without incentives, miners that affirm transactions and add blocks to the blockchain would have no reason to keep the blockchain going.

TLDR, you can't have the good aspects of blockchain tech without a cryptocurrency pair with it

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Dec 9, 2017

If so, please explain all enterprise Blockchain implementations that have nothing to do with crypto currency.

What blows my mind is how confident you are in your assertion.

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Dec 9, 2017

Name one that doesn't have a cryptocurrency please.

The blockchain requires incentives... Otherwise there's no reason for miners to affirm transactions and waste time/computing power to make the blockchain work. If there is no cryptocurrency, there is no blockchain.

Dec 11, 2017

Can't you use blockchain for real estate recordation?

Dec 11, 2017

The concept of a blockchain can be used for a variety of practical business applications, but with a crucial difference: the process of affirming transactions would be centralized which really defeats the purpose of the blockchain in the first place.

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Dec 12, 2017

Wrong. You're assuming that the blockchain is used by a single business, rather than the blockchain technology being used as an anonymous decentralized network, which numerous businesses can use.

Dec 12, 2017

Let's try this again... If the blockchain is being used by anonymous decentralized network, as it should, then the nodes that confirm the veritability of transactions need to be incentivized with cryptocurrencies. Otherwise what reason do the nodes in the "anonymous decentralized network" have to waste computing power and time to add to the blockchain?

Dec 12, 2017

Have a look: https://www.ibm.com/blockchain/
Your assertion is limited to Public Blockchain implementations, notably ones that leverage the "Proof of Work" consensus algorithm.

Blockchain can be implemented with a variety of different consensus algorithms, and therefore, alter the incentivization model to secure the network.

Blockchain enables Crypto Currencies, Crypto Currencies do not enable Blockchain Networks.

Dec 12, 2017

"What blows my mind is how confident you are in your assertion."

Lmao

Dec 10, 2017

I'd always say that nobody can truly predict the future of the Bitcoin and the current cryptos. But if there's one thing for sure, the blockchain technology is valuable.

Does that mean that Bitcoin has intrinsic value (i.e. due to the blockchain technology)? Well, not quite. Let's go back to basics: gold is considered to have intrinsic value because it itself has other uses such as jewelry, electronics, and even dental filings. If you are to be technical about it, gold is valuable for it's conductivity (conducting heat and electricity), malleability (can be easily molded), and ductility (turned into wires).

I have no doubt that blockchain is here to stay because you can use it for a myriad of applications such as real estate or logistics. But worst case scenario, can you use your Bitcoins per se for anything else? The same way you can melt your gold bars and coins for other uses?

Think about it from a technical perspective. I'm not a programmer, but it seems that it's less difficult to create a new blockchain altogether for non-currency usage than converting the Bitcoin blockchain (like building a new boat vs patching up an old, hole-riddled one).

And not to mention the sheer "replicability" of the Bitcoin and the whimsicality of network effects that currently supports the Bitcoin! What do I mean?

For replicability, look at the forks, Bitcoin forking to create Bitcoin cash, and there's a second one looming. For all you know Bitcoin cash could outperform Bitcoin in the long run (if at all) because of better technical capacity. But then again, there could be BCH 2.0 and BCH 3.0 and so on. So where does it end? It's like the federal reserve introducing a new dollar the moment the current one is no longer sustainable. Like Greenback 2.0 and Greenback 3.0. Well, central banks do issue new notes but they demonetize the old ones maintaining only one form of legal tender.

As for the network effects, they might last a while, but they'll move on to a new one eventually. Remember Myspace? I was in high school when my friends were crazed over it, only to be replaced by Facebook. You might say Bitcoin has the first mover advantage, but what if there's a second mover advantage (lol)? The tech space has been known for ruthlessly out-innovating competitors (Think Nokia early 2000's vs now) so there's no guarantee Bitcoin will be the "gold standard" of crypto if at all.

And let's not forget: regulation. Just because the blockchain is decentralized doesn't mean that governments can't have some considerable influence over it. If you think about it, the internet is decentralized, but look at China and their censorship policy: the majority of social media sites that we enjoy are blocked there.

And there's another threat looming in the internet: Net neutrality. With net neutrality, all forms of data over the net are considered equal whether they're from Facebook or some shady-ass website. But without it, telecoms and data providers can charge you separately for data plans (which has already happened in other countries). So while governments might not entirely "kill" cryptos, they can definitely enforce restrictions. And who's to say central banks won't create their own (which seems oxymoronic) but Russia considered it!

Another possible fate of the cryptos is that it will simply be an efficient means of transferring money (not exchanging goods or storing value) like what we do in online banking. So the odds are stacked against Bitcoin being the new "global" currency.

So overall, I'd say we humans tend to predict in extremes, all doom and gloom vs frenzied pipe dreams.

On one camp there are those who glorify crypto as the ultimate savior from the banking system that "failed" us and on the other you have those who sneer and vilify it as some nerd's anti-capitalist fantasy toy.

But in reality, I think it's in the middle of somewhere. Will Bitcoin crash in Dec. 18? Perhaps not, a significant dip at most, nobody knows for sure. But eventually blockchain will become part of everyday life and we will look at it with no more familiarity than we do with the internet, television, and automobiles.

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Dec 10, 2017

You're all talking out of your ass. If you think this is the end of bitcoin, grow a pair and short it for more than a year. I'll even pay you your borrow costs as a donation... talk is cheap.

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Dec 10, 2017

Also, one other thing, regarding the trading of BTC futures and BTC ETF strengthening the legitimacy of Bitcoin, remember that listed internet stocks in the early 2000's were deemed legitimate since they were allowed to do IPOs. Legitimacy is one thing, subject to dips, crashes, and panic selling is another.

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Dec 10, 2017

tnx for the tip - i'll buy some when it crashes

Dec 11, 2017

How much did you buy?

Dec 11, 2017

About 7 years ago I had the chance to get in on some Bitcoins but I decided to pass. The problem was they were asking for about 10K investment and I thought that was a lot of money for such an unproven currency. My analysis was sound but sometimes I wish I had bought about 100 bucks worth of bitcoin - would be worth about $400m now! Other than that, I am still very skeptical of this currency. Gold keeps falling of a cliff but this intangible asset with no other anchor for it's value keeps soaring? Hell even MBS has something, however shit it was, backing them. I think the reason why the price is going so high now has to do with the supply as OP said and that once the market concentration evens out the price corrections on the way there will be huge. For that reason I think it's beyond risky to get into it now and hold for too long as it's too expensive and could crash anytime.

"I'm talking about liquid. Rich enough to have your own jet. Rich enough not to waste time. Fifty, a hundred million dollars, buddy. A player. Or nothing. "
-GG

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Dec 12, 2017

But to be honest, no serious investor that would have gotten in would have stayed in till now. With 10k invested you probably would have jumped ship at 100-500% of value increase. I had the exact same thing that someone told me about BTC when it was still worthless a long time ago, but if you rationally think it through it is not like you missed out considering where you would have dumped the coin.

Dec 12, 2017

This 100%

I am kicking myself since I actually tried to buy some about 5 or 6 years ago, but got frustrated with how cumbersome the process was back then, so stopped. And I remember when Mt Gox failed, was thinking to myself that I was glad I hadn't gone through with it. The reality is that I would've sold long ago too...

Dec 12, 2017
silverace:

But to be honest, no serious investor that would have gotten in would have stayed in till now. With 10k invested you probably would have jumped ship at 100-500% of value increase. I had the exact same thing that someone told me about BTC when it was still worthless a long time ago, but if you rationally think it through it is not like you missed out considering where you would have dumped the coin.

The best thing that could have happened to someone was to have put in a few hundred bucks 7 years ago and literally forget he or she even owned it, only remembering when, like, cleaning out his desk before a move. I agree that almost no one would have stayed in all the way.

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Dec 13, 2017

This. And funny enough some of those stories are the ones that make people buy bitcoin en masse right now lol.

Dec 11, 2017

You think so?

26 Broadway
where's your sense of humor?

Dec 11, 2017

1) I walk around my street and say I have this many dollars in bitcoin. Is there another street that exists somewhere where they say I have this many bitcoin in dollar? That is not meant to be a dig, I'm just not very well-versed in this topic... Am I missing a bigger picture that's in place already?

Dec 12, 2017

Still curious... where is this a local currency, can anyone answer that question?

and if the answer is none and this is an asset, 2) how does a balance sheet where this is the primary inventory for business look today?

Dec 11, 2017

First chapter of Extraordinary Popular Delusions and the Madness of the Crowds, banknotes in France and John Law.

Tech development, very few had an actual understanding of what they implied, most jumped the bandwagon because that's how the crowd psychology works.

BTC will boom to 100k then bust, the tech will remain. I'm also just posting in this thread so that I can laugh at something in 6 days.

Dec 12, 2017

Very big point. Futures that don't have deliverables require a very, very deep market. Otherwise someone long the future can push prices higher at settlement time with impunity, by "locking" profits (never having to resell a deliverable).

Dec 12, 2017

The self-executing "smart contracts" that some cryptos are touting actually strike me as interesting and could be a legitimate use case. Not for Bitcoin, but other cryptos like Ethereum or varations of Ethereum like ChainLink. I could see potential there to automate a lot of interest rate swap contracts and other swaps. Meaning, if 3 month LIBOR goes to X, the smart contract will pay out Y. If you're one of the counterparties and don't like that, well sucks to suck, the coins are leaving your wallet and going into the other party's wallet anyway.

Thoughts?

How I passed all the CFA Program exams: https://www.youtube.com/watch?v=2DUdnYkojtk&t=37s

Dec 12, 2017

Standard WSO bullshit fest

"Elections are a futures market for stolen property"

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Dec 12, 2017

Thanks for adding your indispensable knowledge to the conversation.

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Dec 12, 2017

This is my speculative view on BTC. My view is that the only way Bitcoin is a viable investment asset is when one can assume that transactions are actually going to be settled in it. Similar to how the DJIA or SP500 represent the total business activity in the US, Bitcoin--only when most crypto and probably most online transactions are settled in it--could similarly show the investment value of online transactions being completed using crypto.

So, in my view, this may never happen since the blockchain technology behind it will never be isolated to one company. The coin itself is the most popular, so it may be come the preferred coin, as things stand today. Still, I think a value many X's over DJIA would be nuts.

"Loser terrorists" & "bad hombres"

"Typical candidates are those who attended a top-tier academic institution"
-Most job applications

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Dec 13, 2017

First of all, what is wrong with the date of your article. It shows 12/11/2017 but all the comments showed starting from 12/7/2017. Which implies you wrote it on 12/7/2017 but edited 12/11/2017. So my question to you is that did you omit CBOE Launch in your crash prediction?? And why has bitcoin not crashed with CBOE Launch? I think you need to understand that bitcoin is global investment and not just United States trading it. Largest % does not come from US. All hedges funds will be plus. US is just a fraction of bitcoin market. Bitcoin may have limitations today but the developers are not sleeping. They are not committed to the ongoing development works to make it better but not announcing to the world at this time. I wont say much. But on December 18th, we will be here to continue with your prediction.

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Dec 15, 2017

Futures have been live for a week.. Bitcoin is still standing.

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Dec 15, 2017

I'm frustrated at the pricing. I want to buy more but I was waiting for the (apparently never gonna happen) price drop under $14,000. >:L

Dec 15, 2017

Why would anyone at WS risk naked selling BTC to make money if they can go long and make money with the trend?

Makes no sense.

Additionally, futures on crypto have been around for some years now.

Crypto is here to stay, don't fool yourselves thinking CME futures will crash the market

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Dec 15, 2017

bitcoin will go up forever. buy it buy buy buy. nevermind the fact it just surpassed tulips for the biggest bubble ever in history (measured by how fast it's risen in a certain time frame). just buy it here it only goes up. when my lyft driver is telling me about his investments in it and CNBC is constantly talking about it, that's definitely the time to buy. we are no where near the top....

also, as a side note responding to OP. you probably don't understand futures if you think bitcoin will end because futures can now be traded. 12/18 was incorrect date, futures went into effect Monday of this week....

twitter: @StoicTrader1

"He profits most who serves best"

"Every failure brings with it the seed of an equivalent advantage"

*Meditations 8:45

"No one is more hated than he who speaks the truth"

stoictrader.net

Dec 15, 2017

I think the big Banks are in on this and are the cause for the meteoric rise in prices. Only when enough sheep pour their money in will the banks flip sides.

Also, I don't view Bitcoin as some anti-capitalist thing at all. I mean, the current Fiat currency system is based on a central bank that can't be audited.

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Dec 15, 2017

Whatever Bitcoin (and other cryptos) believes itself to be, it's not a currency and it won't challenge fiat currency. It's an asset, not unlike fine art or classic cars (with the obvious exception that Bitcoin isn't tangible). It may, however, challenge fiat currencies in banana republics, such as Venezuela; then again, the barter system challenges fiat currencies in banana republics, so that's not such a huge accomplishment.

Dec 15, 2017

Wow, based on this thread feel even more confident being long btc here. You guys are supposed to be young... yet still missing this. Obviously when you work for a major financial institution (which I'd guess most of us do), you have a vested interest in the failure of the cryptos. But the rest of the world doesn't give a fck about your vested interest...

Fair value for BTC here is somewhere between $150k and $450k. Dollar assets are massively depreciating in btc terms. Continue to avoid at your own peril.

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Dec 15, 2017
jankynoname:

Wow, based on this thread feel even more confident being long btc here. You guys are supposed to be young... yet still missing this. Obviously when you work for a major financial institution (which I'd guess most of us do), you have a vested interest in the failure of the cryptos. But the rest of the world doesn't give a fck about your vested interest...

Fair value for BTC here is somewhere between $150k and $450k. Dollar assets are massively depreciating in btc terms. Continue to avoid at your own peril.

so delusional lmao. the fact you try to claim you know the fair value of bitcoin is hilarious. the truth is nobody knows it's fair value. the big question is when our goverment (NOT IF) intervenes, what will they do? I like the idea of cyptocurrencies and blockchain technology, but just by looking at the chart alone you would be insane to be buying here IMO. could it keep going? yes it could, but it's gone so far so fast... good luck...

twitter: @StoicTrader1

"He profits most who serves best"

"Every failure brings with it the seed of an equivalent advantage"

*Meditations 8:45

"No one is more hated than he who speaks the truth"

stoictrader.net