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The Bubbly Bitcoin Thread -- Merged Threads

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1 hour ago, UberMonkeySmallAndChunky said:

Yeah i also fear the pull back, wondering if we need to go up to something like $7k, $7.5k or $8k to have room for a nasty crash to like $5k. 

These little "wobbles" are of no consequence in the long term scheme of things. You wont last long in crypto/bitcoin if you get emotionally invested in this short term noise.

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3 minutes ago, UberMonkeySmallAndChunky said:

Yeah i also fear the pull back, wondering if we need to go up to something like $7k, $7.5k or $8k to have room for a nasty crash to like $5k. 

Be amazed if we don’t get another retest of the 200wma somewhere under $4k

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17 minutes ago, UberMonkeySmallAndChunky said:

Bitcoin is very good at sucking you in to checking charts. Hodl and find something else productive to do is my solution.

 

I missed the last 2014/15 bear market and the start of then 2016 bull market by losing interest after I packed up mining in 2014 and just hodled. 

Suddenly noticed again in March 2017 when Bitcoin overtook the price of gold. Now I have Blockfolio its kinda hard to not know what’s going on!

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On ‎09‎/‎05‎/‎2019 at 12:41, scottbeard said:

No, you couldn't! That's a fundamental misunderstanding of what a fiat currency is.

A fiat currency is issued by a government, rather than backed by an actual item.

For example, sterling is a fiat currency. Something is only "£1" if the government tells you it is.  They can mint, print and digitally invent as many £1s as they want any day they like.  Similarly they can at a moment's notice tell you that something isn't £1 any more (think of old notes/coins etc).

Bitcoin, like gold, is not a fiat currency - and saying it can be "adopted as fiat" makes no sense.  It can be adopted as the preferred currency of a group of people or countries, but that's not the same thing at all.  No government can suddenly create or remove bitcoin/gold, nor tell you that something is bitcoin/gold that yesterday wasn't.

I was confusing fiat money with paper money. Paper money predates government fiat money (it was issued by goldsmiths first and I think also private banks before governments issued fiat money).

Bitcoin, like fiat money and other paper money, is not backed by anything. It is valued because it is limited and it set itself up as a digital gold and the demand that arose for this creates an expectation of continued demand (it's value is likely to remain volatile, but it is likely people will continue to place a value on it for a very long time for this reason).

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4 minutes ago, Kosmin said:

I was confusing fiat money with paper money. Paper money predates government fiat money (it was issued by goldsmiths first and I think also private banks before governments issued fiat money).

Bitcoin, like fiat money and other paper money, is not backed by anything.

I think you're still getting confused?

As you say, goldsmiths issued paper money - but it WAS backed by something; the gold!  You could exchange your paper notes for gold.  In fact, you could exchange US Dollar paper money for gold right up to the 1970s.

You could - I guess - have paper money based upon Bitcoin in the same way.  Then the paper money would be backed by Bitcoin.

But to say that Bitcoin itself isn't "backed" by anything is weird - because it's a thing in its own right, just like Gold is.

There is no intrinsic VALUE of a Bitcoin; its value is only what people place on it.  But that's not the same as whether it's "backed" by something.

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5 minutes ago, scottbeard said:

I think you're still getting confused?

As you say, goldsmiths issued paper money - but it WAS backed by something; the gold! 

Goldsmiths issued paper money backed by gold, same as governments. They were not backed 100% by money though. Where do you think governments got the idea from?!!! Goldsmiths realised that not everyone wanted their gold back at that same time, so they issued more gold tokens than the gold they held. I'm really surprised if you heard of goldsmiths issuing paper money but didn't know they issued money in excess of their gold. I'm also surprised if you think governments just issued paper money straight away with no link to gold. Furthermore how many countries have no gold reserves? I think most countries back their currency with at least some gold.

 

13 minutes ago, scottbeard said:

You could - I guess - have paper money based upon Bitcoin in the same way.  Then the paper money would be backed by Bitcoin.

But to say that Bitcoin itself isn't "backed" by anything is weird - because it's a thing in its own right, just like Gold is.

Bitcoin is not a thing in its own right, just like gold. It's only a thing insofar as it is a store of wealth or means of exchange. The sense in which gold is a thing is it has alternative uses, so even though it's not used as a means of exchange, people still demand it. Even if it loses it's value as a store of wealth and safe haven asset I reckon people will still place a value on it as jewellery. This is absolutely untrue of bitcoin. Ironically it's actually more true of paper. Some people actually collect expired banknotes - I know someone who has some old notes (10 shillings, £1, stuff like that and he bought them after they expired, he didn't just find them, so he did place value on them as historical artifacts). When banknotes become worthless (as in Weimar Germany or Zimbabwe) a stack of banknotes might serve other uses - maybe you could write notes on them for example.

 

21 minutes ago, scottbeard said:

There is no intrinsic VALUE of a Bitcoin; its value is only what people place on it.  But that's not the same as whether it's "backed" by something.

In all the discussion about money, people have always stressed money as either being backed by nothing or by an asset which has an intrinsic value. It is clear therefore that bitcoin falls into the former category. There is an expectation that people will continue to place a value on bitcoin, just as there is an expectation that the fiat currencies will remain twintopt (either the government ceasing to collect taxes or allow you to pay taxes in other currencies or assets are incredibly unlikely), but neither are backed by any asset with intrinsic value.

 

 

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10 minutes ago, Kosmin said:

I'm really surprised if you heard of goldsmiths issuing paper money but didn't know they issued money in excess of their gold.

Bitcoin is not a thing in its own right, just like gold.

For clarity, I did know that goldsmiths issued notes in excess of the gold - I'd still describe that as "backed by gold" as the notes could be exchanged for gold, as long as not everyone turned up at once.  Maybe that's just a terminology point between "backed" vs "fully backed"?

Bitcoin is totally a thing in its own right, it just doesn't have as many uses as gold does.

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5 minutes ago, scottbeard said:

For clarity, I did know that goldsmiths issued notes in excess of the gold - I'd still describe that as "backed by gold" as the notes could be exchanged for gold, as long as not everyone turned up at once.  Maybe that's just a terminology point between "backed" vs "fully backed"?

Bitcoin is totally a thing in its own right, it just doesn't have as many uses as gold does.

But Bitcoin is still the best performing asset class in 2019, if you guys just stopped worrying about it and invested in it near the bottom in January you could have doubled your investment now valued in fiat. Hey ho.

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2 minutes ago, markyh said:

But Bitcoin is still the best performing asset class in 2019, if you guys just stopped worrying about it and invested in it near the bottom in January you could have doubled your investment now valued in fiat. Hey ho.

Mark - I did indeed invest a little bit in Bitcoin earlier in the year which has done very nicely (£900 invested is now about £1,500).  I'm actually trying to convince that other chap of the merits of it - but perhaps I should stop if my posts are so unclear you've thought I'm arguing the opposite? :O

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28 minutes ago, Kosmin said:

Furthermore how many countries have no gold reserves? I think most countries back their currency with at least some gold.

This isn't what I think of as "backed by gold" though - certainly most countries have some gold reserves but how is the existence of a few gold bars in the Bank of England of any value to the holder of a £10 note, when the £10 note can't be exchanged for the gold? 

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20 minutes ago, scottbeard said:

Bitcoin is totally a thing in its own right, it just doesn't have as many uses as gold does.

What other uses does bitcoin have? If bitcoin has any uses aside from a means of exchange or store of value then you may have a point, but if it doesn't then it cannot have intrinsic value.

Or if you just mean it exists, then so do banknotes - they are also "things" in their own right.

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11 minutes ago, scottbeard said:

This isn't what I think of as "backed by gold" though - certainly most countries have some gold reserves but how is the existence of a few gold bars in the Bank of England of any value to the holder of a £10 note, when the £10 note can't be exchanged for the gold? 

Why do you think they hold gold reserves?

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1 minute ago, Kosmin said:

What other uses does bitcoin have? If bitcoin has any uses aside from a means of exchange or store of value then you may have a point, but if it doesn't then it cannot have intrinsic value.

Bitcoin does not have any uses other than as a means of exchange or as a store of value.

Bitcoin does not have an intrinsic value.

I never said that it did, and I don't see why it matters that it doesn't.

All I said is - it is a "thing" in its own right.  It is durable, fungible, divisible and limited in supply - so it meets the definition of money.  That's all it needs to do.

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Just now, Kosmin said:

Why do you think they hold gold reserves?

As a hangover from the days when the currency WAS backed by gold.

What's your point here?

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1 minute ago, scottbeard said:

Bitcoin does not have any uses other than as a means of exchange or as a store of value.

Bitcoin does not have an intrinsic value.

I never said that it did, and I don't see why it matters that it doesn't.

Ok but when you claimed it's a "thing in its own right" that seemed to me like you thought it had some intrinsic value. Can you think of any thing which is not a thing in its own right? 

What I think is important is that for bitcoin to persist as valuable people must believe in its value and this is fundamentally different to both precious metals or money which is backed by them and by fiat money which is only twintopt and hence backed by state force if you don't use it to pay your taxes.

 

5 minutes ago, scottbeard said:

All I said is - it is a "thing" in its own right.  It is durable, fungible, divisible and limited in supply - so it meets the definition of money.  That's all it needs to do.

Those are some of the characteristics of money. But its not widely accepted as a medium of exchange, which is why many people (probably a majority) dispute that its money. It's also worth noting that the value hasn't been stable and a decade isn't a very long time, so many also question whether it can be considered a store of value yet.

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7 minutes ago, scottbeard said:

As a hangover from the days when the currency WAS backed by gold.

What's your point here?

I'm genuinely interested to know why you think they still do. Might we also say that some of demand for fiat currencies is a hangover from the days when the currency was CONVERTIBLE TO GOLD (I'm not sure it's correct to say it isn't still backed by gold, given the prevalence of gold reserves STILL)?

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Just now, Kosmin said:

I'm genuinely interested to know why you think they still do. Might we also say that some of demand for fiat currencies is a hangover from the days when the currency was CONVERTIBLE TO GOLD (I'm not sure it's correct to say it isn't still backed by gold, given the prevalence of gold reserves STILL)?

Yes, a hangover from the days of "convertible" currency is a better way to describe it.

I still fundamentally disagree that in any way shape or form modern fiat currencies are "backed" by gold.  Gold reserves are simply too small relative to the amount of those fiat currencies in existence to offer any kind of comfort to an investor.  The size of the UK economy gives me great comfort in holding GBP.  The few gold bars in the BoE give me no comfort at all.

Being as honest as I can, I suspect that the main reasons for still holding physical gold are:

- It's a decent thing to have a bit of in the event of some complete and utter disaster scenario

- Some investors (not me!) might take some comfort from the existence of gold reserves - I guess they do perceive that the gold somehow backs the currency (even though it doesn't really, and if the country's economy were to fail the gold reserves wouldn't help).

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16 minutes ago, scottbeard said:

Bitcoin does not have an intrinsic value.

I never said that it did, and I don't see why it matters that it doesn't.

All I said is - it is a "thing" in its own right.  It is durable, fungible, divisible and limited in supply - so it meets the definition of money.  That's all it needs to do.

Just returning to this for a moment, those characteristics (durability, fungibility and limited supply) are the characteristics of a commodity money. But in the past a commodity money must always be a commodity first (I won't rehash the argument here - read Menger "On the origins of money" and Mises "Theory of Money and Credit" (the section on the regression theorem)).

Bitcoin could conceivably become money, or at least a replacement for gold (I think it could become a store of value to rival gold, but I can't see the mechanism by which it would become a medium of exchange - in short it's too volatile for people to use it to set prices, particularly for long term obligations - e.g. would you agree if your boos wanted to pay you one bitcoin per month, or would you agree to pay your staff one bitcoin per month? It would be incredibly risky, so I just can't see it replacing our current stable arrangements). But the problem with IT NOT BEING BACKED BY ANYTHING is that demand could be split between bitcoin and other cryptos. In fact this has happened. Bitcoin has first mover advantage, so it may well retain the primary position, but it's not obvious it will. Someone (maybe Peter Schiff, or some other goldbug) when bitcoin was splitting and different factions were arguing about it said: "The last time I checked there was only one gold." That is why it matters whether bitcoin has intrinsic value, or at least why it may matter.

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6 minutes ago, scottbeard said:

Being as honest as I can, I suspect that the main reasons for still holding physical gold are:

- It's a decent thing to have a bit of in the event of some complete and utter disaster scenario

I think you might be right, but can you explain why it might be useful in a disaster?

 

8 minutes ago, scottbeard said:

- Some investors (not me!) might take some comfort from the existence of gold reserves - I guess they do perceive that the gold somehow backs the currency (even though it doesn't really, and if the country's economy were to fail the gold reserves wouldn't help).

Are you saying that governments/central banks hold gold to provide comfort to investors who aren't as clever as you?!

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27 minutes ago, Kosmin said:

I think you might be right, but can you explain why it might be useful in a disaster?

Are you saying that governments/central banks hold gold to provide comfort to investors who aren't as clever as you?!

I've played along for a while, but I think I've had enough of discussing this subject now.

I shall leave this thread to others.

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2 hours ago, scottbeard said:

Mark - I did indeed invest a little bit in Bitcoin earlier in the year which has done very nicely (£900 invested is now about £1,500).  I'm actually trying to convince that other chap of the merits of it - but perhaps I should stop if my posts are so unclear you've thought I'm arguing the opposite? :O

You're doing no such thing. You're asserting that bitcoin is money despite not having all of the characteristics of either commodity money or fiat money.

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29 minutes ago, Kosmin said:

You're doing no such thing. You're asserting that bitcoin is money despite not having all of the characteristics of either commodity money or fiat money.

True, but at least he will be able to afford a spot in the citadel in a few years now he has around 0.25 btcish 😉

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8 minutes ago, markyh said:

True, but at least he will be able to afford a spot in the citadel in a few years now he has around 0.25 btcish 😉

Let's assume conservatively, that bitcoin goes to $4m in a "few years" - he'll only have $1m in bitcoin wealth. A very large proportion of people who are either middle class or middle aged have assets of $1m through a combination of owning a modest home, having a moderate pension, and having invested elsewhere. Bitcoin would have to soar much higher for nocoiners to truly be left behind.

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29 minutes ago, markyh said:

True, but at least he will be able to afford a spot in the citadel in a few years now he has around 0.25 btcish 😉

LoL 

What if the USB stick breaks :lol:

I admire you man only a millionaire could absorb a 80k paper loss and still think they made the right choice. 

Balls bigger than trump fair play.

 

 

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  • 225 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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