Bitcoin & Other Cryptocurrencies

uair01

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Note: I find this fascinating stuff, so please don't start a flame war and get this thread locked.

https://blog.dshr.org/2021/01/the-bitcoin-price.html?m=1

There seems to be a lot of discussion going on now about Bitcoin value. I learn a lot of economics from it:

Secondly, she takes aim at the circulating BTC supply:
Another problem is that although 18.6m bitcoins have indeed been mined, far fewer can actually be said to be “in circulation” in any meaningful way.

For a start, it is estimated that about 20 per cent of bitcoins have been lost in various ways, never to be recovered. Then there are the so-called “whales” that hold most of the bitcoin, whose dominance of the market has risen in recent months. The top 2.8 per cent of bitcoin addresses now control 95 per cent of the supply (including many that haven’t moved any bitcoin for the past half-decade), and more than 63 per cent of the bitcoin supply hasn’t been moved for the past year, according to recent estimates.
The small circulating supply means that BTC liquidity is an illusion:
the idea that you can get out of your bitcoin position at any time and the market will stay intact is frankly a nonsense. And that’s why the bitcoin religion’s “HODL” mantra is so important to be upheld, of course.

Because if people start to sell, bad things might happen! And they sometimes do. The excellent crypto critic Trolly McTrollface (not his real name, if you’re curious) pointed out on Twitter that on Saturday a sale of just 150 bitcoin resulted in a 10 per cent drop in the price.
 

Stormkhan

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So, basically, the value of bitcoin is artificial and relies on support, as against currencies that are related to a physical property? If you have gold bullion then you 'have' that value in currency? And bitcoin etc. are based on hypothetical, not corporeal, value. The bitcoin billionaires are billionaires because they say they are, and everyone believes them?
Neat.
Sounds like a trustworthy and stable means of economy.
 

Analogue Boy

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Why didn’t he write down the password and keep it in a bank safe deposit box?
 

XBergMann

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So, basically, the value of bitcoin is artificial and relies on support, as against currencies that are related to a physical property? If you have gold bullion then you 'have' that value in currency? And bitcoin etc. are based on hypothetical, not corporeal, value. The bitcoin billionaires are billionaires because they say they are, and everyone believes them?
Neat.
Sounds like a trustworthy and stable means of economy.
Currencies are not related to physical property at all that all stopped with the suspension of the gold standard. Currencies can be created out of thin air by a central bank employee adjusting the money supply.

All financial instruments rely on support including stocks, bonds and even baseball cards. Someone paid $5.2mn for a single baseball card recently.

Supply and demand just like the price of meat in Billingsgate market goes up and down.
 

marhawkman

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Currencies are not related to physical property at all that all stopped with the suspension of the gold standard. Currencies can be created out of thin air by a central bank employee adjusting the money supply.

All financial instruments rely on support including stocks, bonds and even baseball cards. Someone paid $5.2mn for a single baseball card recently.

Supply and demand just like the price of meat in Billingsgate market goes up and down.
Yeah modern "currency" is little more than a number on a spread sheet. In the old days currency was always things that had intrinsic values. Gold coins could be melted to make jewelry or something. "official" tender was about weights and measures. 2 one-once gold coins are worth the same as one 2 ounce coin.. since people only cared about gold weight.

But for people who don't want to weigh every coin every time it's spent, then came the idea of minted coinage with stamped weights. But then comes fraudulent coinage that looks the same but actually has less gold in it....

Then came a period with coinage with official "values" where the value(such as 1$) stamped on the coin had little to do with the actual value of the coin. Which eventually lead to the modern system where there's no intrinsic value whatsoever.
 

Ascalon

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I was recently speaking to a person who was head of innovation and digital for a major bank, and he said that much to chagrin of his traditional industry colleagues, he describes banks today as a fund with a database.

If you really want to see the future of finance and money, don't get too bogged down in cryptocurrencies, look more at the implementation of blockchain, the distributed ledge technology (DLT) behind the currencies, that is where the real promise lies.

For instance, it will facilitate the likes of digital programmable money. So, let's take these COVID stimulus plans. Let's say a government wants to stimulate the hospitality industry specifically as part of pandemic recovery. It releases a DPM amount to each eligible citizen that must be spent in certain types of outlets only, with all tax being automatically paid directly at point of sale, and time limited specifically.

Another example of DLT application is digital art work. An artists creates a digital art piece that has a blockchain token. Every time that art piece changes hands, the artists can collect a royalty, via the token, giving them a lifelong relationship with the art work, which would not have been possible before.

But healthcare, supply chain assurance, artisan producer protection etc, are all areas that can be improved by blockchain and DLT.

IMHO, that is where the real benefit to society is going to come from, and not the currencies themselves.

Watch this space.
 

Stormkhan

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The biggest hurdle - and this isn't "party politics" - in developing something like DLT is that the populace (the average citizen) and even politicians don't often understand it.
Technology experts and scientists and engineers can understand it all, but the government is filled mainly with politicians (not experts). They catch on to terms like "APPs", "algorithms" and "data" without actually understanding a) what they are and b) the context in which they can be applied or used. They got the job by being a politician, not by actual experience or expertise in technology; they pay people to do that.

Hypothetical example:
The government are currently 'probing' the possibility to make the public happy by forcing social media to self-regulate.
"If someone puts up a 'hate' post or a lie, can't you make a program to find it and block it?"
"Do you know how many posts are put up each day? In an hour? By the minute?"
"Er. No. but computer programs are fast, aint they?"
"And then you have to try to simulate contextual placing."
"What?"
"We have to teach the program to understand the word 'dyke' meaning 'water ditch' and 'dyke' meaning 'lesbian'*. It has to understand context. See?"
"Er. no. Can't you make an APP for that then?"
"ARRRRGH!"

* Actual example of a You Tube content creator who decided to change his real name because the YT algorithms de-monetised every damn video he put up. And, yeah - everyone asked what about Dick Van ...
 

Ascalon

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The biggest hurdle - and this isn't "party politics" - in developing something like DLT is that the populace (the average citizen) and even politicians don't often understand it.
Technology experts and scientists and engineers can understand it all, but the government is filled mainly with politicians (not experts). They catch on to terms like "APPs", "algorithms" and "data" without actually understanding a) what they are and b) the context in which they can be applied or used. They got the job by being a politician, not by actual experience or expertise in technology; they pay people to do that.

Hypothetical example:
The government are currently 'probing' the possibility to make the public happy by forcing social media to self-regulate.
"If someone puts up a 'hate' post or a lie, can't you make a program to find it and block it?"
"Do you know how many posts are put up each day? In an hour? By the minute?"
"Er. No. but computer programs are fast, aint they?"
"And then you have to try to simulate contextual placing."
"What?"
"We have to teach the program to understand the word 'dyke' meaning 'water ditch' and 'dyke' meaning 'lesbian'*. It has to understand context. See?"
"Er. no. Can't you make an APP for that then?"
"ARRRRGH!"


* Actual example of a You Tube content creator who decided to change his real name because the YT algorithms de-monetised every damn video he put up. And, yeah - everyone asked what about Dick Van ...
Now, this I just do not buy.

Having spoken to various social media platform developers in a professional capacity, the argument that it is somehow technically unfeasible, or impractical to monitor content as it is upload is, frankly, bullshit.

Why?

Because the platforms are able to monetise it as it goes up, direct audiences to it and rank it for value, ergo they can determine its suitability and act accordingly.

The simple fact is that it is not in their interests, currently, to do so, and so they won't. They are not necessarily making a conscious decision to host or disseminate the horrible stuff, but saying that it is not possible, practical or feasible to do it is to misunderstand how the platforms already work.
 

Stormkhan

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Fair point. I bow to superior knowledge as I'm not overly experienced in the field. :)
Said hypothetical example was just that. You have successfully argued against the example but not the situation: politicians (not experts) come up with proposals and announcements then hand it to the 'boffins' to make their proposals true. They declare a "truth" then wait for (and put pressure on) actual experts to grant their wishes - possible or not.
I maintain that your suggestion that using DLT in the UK economics under current pandemic conditions is both sensible and possible. It just won't happen because the actual folks in charge are more concerned with 'short term' political pressures and have little or no ability to appreciate the concept.
 

Min Bannister

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Meanwhile Elon Musk has just caused a rush for Doge.

https://www.bbc.co.uk/news/business-55939854

Dogecoin, a cryptocurrency which started off as a joke, has jumped in value by 50% after inventor Elon Musk dubbed it "the people's crypto".
Cryptocurrencies such as Dogecoin and Bitcoin are generated by computers. Their supposed value comes from the finite number that can be computed.
Dogecoin uses a Shiba Inu dog as its mascot and is based on a meme featuring the animal.
The currency has risen more than 800% in the year so far.
After reaching a high of $0.058 (4.2 pence), each dogecoin is currently changing hands for about $0.046, suggesting a total value for all 128bn coins of about $5.89bn.
I guess it might be there when the silver runs out for this Reddit army that is buying up stuff.
 

Min Bannister

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And now Tesla has bought 1.5 billion dollars worth of Bitcoin. :omg:

https://www.bbc.co.uk/news/business-55939972

Elon Musk's car firm Tesla has said it bought about $1.5bn (£1.1bn) of the cryptocurrency Bitcoin in January and expects to start accepting it as payment in future.
The news caused the price of Bitcoin to jump 14% to $43,968, a record high.
Tesla said it was trying to maximise returns on cash that is not being used in day-to-day running of the company.
 

Stormkhan

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Which is all about not the currency but market manipulation.
Look at all the spam and Yahoo adverts to sell you on the idea that we can all become multimillionaires by "investing" in cryptocurrency.
 

Mythopoeika

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Which is all about not the currency but market manipulation.
Look at all the spam and Yahoo adverts to sell you on the idea that we can all become multimillionaires by "investing" in cryptocurrency.
It's a house of cards that will come crashing down at some point.
 

Stormkhan

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But we hear from those "entrepreneurs" in whose interests maintain the cards. Like the South Sea Bubble, The 20's Wall Street Crash, The Dot Com Revolution, all the time the façade is maintained they make money. As soon as there's a yell of "Eeek! The jig is up!", finances get messy. And it aint the rich financiers who get dumped in the doo-doo.
The appeal is "You TOO can be so rich that when the shit hits the fan, you won't care!"
 
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