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dgul

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Everything posted by dgul

  1. The demand for crypto that's pushing up the price is the assumption that it'll be used for some/many/all transactions in the future. That's $14 trillion in the USA per day, so if there are only 21 million Bitcoins, and 90% of Bitcoins are tied up, and there are 10 transactions per Bitcoin per day (=velocity) then that makes each Bitcoin worth $700,000 (not really, but that is sort-of the maths)*. It might be nice to buy Bitcoins as a speculative punt that the future looks like the above, but there is no point in the Bitcoins ultimately being used to store value. You might use them a bit like this, but once they're fully utilised the value isn't going to go up particularly (it will slightly due to coin wastage, and it will broadly follow global GDP if it is used globally). So there isn't any need for anyone to actually hold £500k in Bitcoin. Now, those pensioners. They don't really have much money in the bank. Sure, they've got a bit. But their monthly income comes (from government or from) shares they have in companies that sell real things to real people that they need or from loans they've made to companies (bonds) that get rolled over occasionally. Their income pretty-much moves with the UK and world economy -- there isn't such a thing as Bitcoins taking over from £s so they're left with nothing (well an income of £20k pa, which, due to Bitcoin related devaluation of all currencies will only buy a pea). They'll just get the income they get now relative to workers, just in Bitcon (in that particular view of the future). The transfer of wealth that Bitcoin will bring is from normal people working to people who've stockpiled Bitcoins early. This is only a few millennials. It is quite a few strange groups in China / Korea. [* and, of course, that is why TPTB won't allow Bitcoin to succeed. It takes too much power away from them.]
  2. Bitcoin isn't designed for this. Eth is. You can put whatever data you want on the blockchain. Recently it's been running at about 10Eth / mb. I think it might be a bit higher at the moment -- maybe 20 Eth. [obviously most people don't store big data on the blockchain -- you'd normally store the hash of a file on the blockchain] [data is free to read. This is obvious when you think about it, but best to make it explicit] [It has been often said that the data storage cost is disconnected from the Eth price -- so as the price (in $s) goes up, the storage cost (in Eth) goes down, resulting in the $ data price being stable. In practice, the price is going up significantly, just not as fast as the Eth.] [You can store stuff other than raw data on the blockchain, such as computations. This is what makes Eth (sort-of) useful for smart-contracts, etc]
  3. If it was true that builders would take Bitcoin as a currency for a house purchase, that would be a cheap way to short bitcoin -- pay the 5% deposit (or whatever) and fix the price in Bitcoin, then string out the buying process for as long a time as possible (which, in house buying, can be a long time) hoping for the price to go down a fair whack. If it didn't, then you're only out by your deposit (ie, the worst-case loss is 5% (or whatever) of the bet, rather than the potentially massive losses if shorting Bitcoin properly), but if it does go down the gains could be substantial.. [not making a point here about Bitcoin crashing, just a way to make use of the volatility.] But, there will be no doubt that the transaction will be priced in £s and the actual transfer on the day of sale priced at that day's Bitcoin exchange rate. Well, if they're not doing that they're stupid and deserve to be fleeced by people taking on the opportunity.
  4. Yup, you can do that. And HMRC will calculate the £ equivalent for the transaction and tax the transaction accordingly. There is plenty of precedent on this. All transactions* priced at £ equivalent for tax purposes. Doesn't matter if it is £s, $s, gold, postage stamps, pokemon cards, a painting that you like, someone famous's poo -- it really doesn't matter. If there isn't an accepted price for the day in question then HMRC will just work out a reasonable price for the transaction and charge you tax based on that. You don't like it? Tough*. You should have valued it properly and declared the transaction in £ equivalent, just like loads of people do every day. [This goes as far as 'giving something away' -- if it is of 'value' then the HMRC will just say the transaction had a value equal to what they say it 'should have been' and tax on that.] [* HMRC are notorious for selecting 'quite high' valuations when it is left up to them. That is why people declare non-monetary transactions to HMRC rather than just try it on -- they declare at £ equivalent but choose a 'lowest reasonable' value for the asset transferred. If you don't do that you'll find HMRC won't be generous with values when they find out that £20k appeared in your account from that strange crypto exchange in Bulgaria.]
  5. Volume is still drifting upwards, and from a firm base. The reason for the sideways trading must then be that more people are trying to get out now, rather than holding on and forcing buyers to offer a higher price.
  6. Well, all countries are the same. Doesn't matter if you 'price' the transaction in £, $, gold, works of art, boats, other property, promise of future work effort, whatever. If you don't declare it in local currency terms (or if they think you've priced it incorrectly), the government of your country of residence will do their own conversion of the trade into local currency equivalent and tax accordingly.
  7. Well, that sort of thing might be a sensible play, but in that example you might be better off just selling and rebuying the Bitcoin. There are two circumstances where you'd play with the futures while holding physical: You really feel that it would go down, but it would take some time to get you Bitcoin out of cold-storage, so you short the future while you sort out the physical. The costs associated with moving in and out are large, so you make the bet on the futures market; if it turns out evens you've just got the futures costs to pay (this isn't necessarily the case at the moment, but it is a potential reason for hedging physical with futures).
  8. All transactions will be priced at £ equivalent, and taxes charged accordingly.
  9. If this is in any way widespread the whole concept of a futures contract on Bitcoin may be holed below the waterline. As I pointed out earlier the ability to sell short is if not the modus operandi a big point of having a futures market. Added to that is that there are of course plenty of risks in being long Bitcoin at current levels. Are market prices supposed to bring a balance between the risk of buying and selling?" This is the second result when you google "bitcoin futures short position": https://www.bloomberg.com/news/articles/2017-12-12/bitcoin-short-shortage-keeps-crypto-futures-wobbling-above-spot ..and so, while I'm undoubtedly still being dim, I'm none the wiser as to how anyone could- at this point in time- profit from shorting bitcoin. That doesn't make sense. You can't have a one sided futures position. Anyway, the Cboe contracts definitely have a short position. That said, I have heard that brokers are being very lopsided when it comes to the margins they demand. It is 50% of contract value for a long (ie, they ask for $9k today for every Bitcoin you promise to buy at $18k. That would cover the price going down to $9k. If it went down further they'd have to chase you for the money (or maybe they'd just sell the contract to someone else and take the $9k). I've seen short margins at $40k per Bitcoin -- that is, you might be betting on Bitcoin going down, but they're worried that it'll go up to $50k+ before Jan. note, this isn't them predicting that it will, more that they're saying 'we don't take a position on this, so you have to prepare for worst-case'.
  10. The way we all look at these things is that the people who think it will go down take the short. The people who think it'll go up take the long. The detail is a bit more nuanced (but amounts to the same thing) The futures price is a bet on the price at a certain point in the future. In the case of the Cboe futures the 'first' contract to get there is for 17th Jan 18 (at 4pm, Chicago time). The deal is, you have to promise to either buy or sell the thing at the price on that final day. Most futures end up actually being settled by cash instead, but the mechanisms of that sort of cash settlement is a bit more complex. Some futures are settled explicitly using the cash price at the end point. The Bitcoin futures are like this. So, you get a load of people saying that on 4pm 17th Jan they'll either buy or sell a load of Bitcoins. Only it is cash settled, which means that everyone will actually get/pay the profit/loss that they'd have made if they did get Bitcoins and immediately sold them, or had to buy Bitcoins to give to the exchange. So, if I said I'd buy 100 Bitcoins at $10k and some guy called Doug said he'd sell 100 Bitcoins at that price, then instead of Doug having to sell to the exchange 100 Bitcoins @ $10k, and then they sell the 100 Bitcoins to for $10k -- if Bitcoin was at $15k, Doug would give 100*(15k-10k)=$500,000 to the exchange (this is his loss if he had to buy 100 bitcoins at $15k and then immediately sell them to the exchange for $10k), and the exchange would give $500,000 to me (which is how much extra it would cost me to buy 100 Bitcoins at the $10k I'd bet at, if they actually cost $15k). This process seems convoluted, but actually makes sense if you think about where these sort of markets came from. You'd have a large farmer (say) saying they'd sell some wheat when the harvest came in, but that they'd like to set the price in stone early. The 'buyer' would promise to buy it at a price, the farmer would promise to sell it. So, what about the price of the contract. This is set by a sort of auction process. I might have a pile of Bitcoins that I want to sell, but not for less than $20k. I can then put it on something like a bulletin board saying I'll sell at $20k if anyone wants to take the other side of the deal'. Anther guy might think that he'd buy, but not above $10k. Obviously, us two aren't going to meet in the middle, but in reality the prices are much closer together, usually around the actual price of the thing on that day, but not necessarily. So, eventually you get a pair of matched contracts that say 'okay, you promise to buy at that price, I'll promise to sell'. Note that each contract is 1 Bitcoin -- so if my 'promise to buy' is for 100 Bitcoins it might be that there are loads of different people on the other side of the trade. The important point of the pricing is that there's always a promise to buy matching a promise to sell. If there aren't enough promises to buy then the futures price will go down until there is. Similarly, if there aren't enough promises to sell then the price will go up. But, at each point where a futures contract is made, the promises to buy and promises to sell will balance. Is that it? Not quite. The contracts are freely tradeable. I can sell my promise to someone else. So, halfway between here and the point where the futures contract is settled, I can make a deal with someone else to take over my promise. Say I said I'd promise to buy at $10k and the price is now $15k, but I have a sneaking suspicion that it'll be lower when the contract is settled, but I've found someone that believes it'll be much higher on the contract settlement date. I can negotiate with that other person that they pay me $5k per coin now and take over the promise. Everyone's happy, right? Anyway, there tends to be loads of such exchanges mid-contract, and that is kind-of what moves the price when people see the trades moving the price about. So, eventually the settlement time comes. The bell rings and everyone nets out their positions. If you've promised to sell/buy and you got the bet wrong, you've got to pay up. Can't pay? Well, you have to. To reduce the risk of people not being able to pay up, brokers (the people you actually buy these things from) will demand that you leave a % of your promise with them, just to make it easier for you to pay up when you make a stonking loss -- so the point of 'paying up' is just that amount you left with them either getting bigger (yea!) or smaller (boo!). With physical settlement the settlement process can lead to problems. The famous example is the Hunt Brothers in the 1970s. They'd bought up all the actual physical silver around, but no-one seemed to know (well, know the risks, anyway). Then, when it came for the futures contract to be settled, no-one would sell the silver to the people that had promised (were legally mandated) to buy. The Hunt Brothers could dictate the price, and, knowing that a load a people had no choice but to buy, they put the price up. Crypto people are a bit cross that this doesn't apply to the Bitcoin futures, but, frankly, if they were settled with physical then there'd be too much scope for people mucking about on the settlement date. Anyway. That's the futures market. Oh, and my guess as to a price crash by end Jan? It is all about the first contract reaching settlement.
  11. How do you think futures contracts actually work? Do you think that the issuer is taking a gamble on the other side of the contract? If the contract is long, then Cboe is fundamentally short (ie, if it goes up they have to pay out real money)? No. All futures are balanced. For every contract betting on a higher price there is a short betting on a lower price. The issuer doesn't take any real gamble on the future price. The issuer makes money on the transaction fee. Brokers make money on the spread, that is, a small difference in pricing comparing buying a long with a short from them. The current future price reflects the demand asymmetry -- the price moves until the long/short demand becomes symmetric.
  12. There's a vast number of lost coins -- apparently 30-40% of all Bitcoin are lost. I don't really think that it is a fundamental limitation of the technology. That person's behaviour seems a bit like 'I got some of these 'pound notes' and put them in an envelope, but left it on the train. Is there any way to get them back?' But sometimes I wonder if the idiot masses are really ready for crypto... [on a more sober note, I've heard reports of people committing suicide over Bitcoin. For now limited to reasons of coins lost ages ago, and of selling a fair number at $600 (or whatever). I fear that if it crashes there'll be more.]
  13. Actually, it is even simpler than that. Apparently, if Nakamoto sells a single Satoshi from his blocks people would notice immediately and see it as a sign to sell. Anyway, if any single player did flood the market with 5% of the stock of bitcoins it would absolutely crash the price. That is part of the problem of the whales -- they can't exit that fast as the market is still relatively small. But, anyway, why would they crash the price? It would be absolutely crazy. Unless, I suppose, they also had a decent (matching) amount short the Bitcoin futures. That only came online a few days ago. [BTW -- I don't believe that Nakamoto will ever sell, let along sell to crash the market. But I do believe that some large mining consortia might. I also think that the finance industry is very happy to crash anything for a bit of money.]
  14. They'll just gang together, ban your form of money and make their own in competition.
  15. Bitcoin to fiat is in deflation, not inflation; as Bitcoin gets higher the cost of buying fiat is going down. If you believe in an inflation/deflation paradigm, we're in super-hyperdeflation in Bitcoin.
  16. I made it to 30 mins. It is just continous dogma. They talk about how great blockchain is -- I agree, but Bitcoin isn't anything more than a use of blockchain. They talk about currency and how old-fashioned currency is bad -- maybe, but you don't know that Bitcoin will 'win' (and that there are good reasons why it won't). They talk about the ledger and how fundamentally important it is, even though the only way Bitcoin will make it to Visa levels of transaction is to use LN, which doesn't have the benefit of a ledger. They talk about proof-of-work coupled with internet protocol, but this doesn't need crypto and can quite happily exist just as an isloated pow,. I feel like I'm listening to an evangelist talking about the Kingdom of Heaven. Maybe there is great wisdom in the next 90 mins, but it wasn't a good enough start for me.
  17. So as you mine you sell into £? Or are you doing two things -- mining and then betting the proceeds on a speculative punt on Bitcoin. If you're doing the former then you've done well and I congratulate you. But if the latter -- all your gains are speculation. It is a great return when you cash out. It would be the same as me saying that I work as a barman and I've been paid £1000 a day because at the end of each day I buy Bitcoin. You really shouldn't conflate the mining effort with the speculative part. But -- and this is the problem I've got with Bitcoin discussions -- if you're fully committed to crypto, then there is no such thing as cashing out (in your mind). Bitcoin is the new cash, and all that 'pound stuff' is just ancient history. This is the dangerous dogma that I talk about. See, if it works out, it works out, but if it doesn't then all that effort isn't actually £50 a day.
  18. Because there is currently no other point in buying and selling (well, beyond just to entering, then, eventually selling-up), and particularly there's currently no other point in moving cryptos between variants. At the point where crypto becomes mainstream, moving crypto between variants would just be a hassle, and people would migrate towards the least-hassle option.
  19. When you exchange pounds for crypto right now, where does your money go? Who does it favour?
  20. Sure. I'd get that*. But I'd also see the reverse -- that most people (at least in a geographic area) would gravitate to a single crypto. BTW your reason for the multiple crypto is the worst possible one -- just because it would enable you to speculate with lower fees. There are reasons for having multiple crypto, but surely the end-point is an equilibrium where there is no time or cross-currency arbitrage to take advantage of. [*well, I actually think it would be pointless -- in that it makes life more difficult for people, not easier -- but I'd accept that it might be the situation, at least for a while.]
  21. I don't think it is that. It is an interesting debate. Sometimes it is difficult, though. There is such dogma in some -- that there is only one path and that it is unstoppable. The discussion feels like speaking with someone devout about religion -- you don't get anywhere by saying 'I'm content that there might be a God, but I'm not convinced in the sanctity of the particular religious texts that you keep quoting'. I'd be much more convinced by the discussion if there was a more open debate about what is likely, what is unlikely, how things might develop. I do get that at times. But in most crypto discussions it does seem to be much more revolving around a complete and utter belief in the role of crypto (and as they exist now, not the potential for new crypto to appear and take over*) at a point in time that appears to be something like now+3years. [* because if you believe that, as I do, then you'd consider the current crop as being fundamentally less valuable.]
  22. Why? There doesn't seem to be a good reason for this. It just appears to be a mechanism to match a dogmatic belief with changing facts.
  23. LN is odd. You have a flawed concept, which you then try to fix using a mechanism that takes away some advantages of the original currency ideals. Better would be to just fix the flaws. Anyway, IMO LN doesn't seem to be compatible with money laundering regulations. This isn't a good thing, when considering how Bitcoin might achieve general acceptance as a currency. [Bitcoin is bad enough, which will lead to problems down the line, but LN is very opaque from this PoV. It is possible that LN will be allowed* (from a laundering PoV) when undertaken by 'trusted parties' (=regulated parties), which you'd call banks.] [*The blockchain is nice and transparent. So TPTB could identify any end-coins that came from a non-regulated LN transaction channel and declare 'laundering'.] [of course, you might just say 'what can they do about it'; the coins are all mixed up a few transactions down the line. I'd say 'good luck with that'.]
  24. It's not particularly clear what you mean by that. I mean, I get that blockchain is broadly useful, just as banks are broadly useful, for say storing money, receiving loans, acting as intermediaries for transactions. But are you agreeing with me, in that banks are generally useful (like blockchain) but going into a bank with a bag of conch shells and arguing that they are a form of currency isn't going to get you very far? Or are you disagreeing with me, in that banks are generally useful even though there are many instances, so therefore crypto will continue to be generally useful, even though there are many instances?
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