Private Money!

[JD]

As I type this, a single bitcoin will cost you over sixteen thousand dollars. At this point, anybody that thinks bitcoin is a fad with no actual value supporting that price is clueless.

Thought I'd responded to this earlier but I can't find it now. Anyway...

I wouldn't argue that bitcoin is a fad with no actual value, but it has attained the great majority of its price in the last couple months. I mean, the price graph is virtually asymptotic. That seems to me like an unusual phenomenon to say the least, and one that's hard to explain just in terms of "actual value".

[Warren]

As I type this, a single bitcoin will cost you over sixteen thousand dollars. At this point, anybody that thinks bitcoin is a fad with no actual value supporting that price is clueless.

Thought I'd responded to this earlier but I can't find it now. Anyway...

I wouldn't argue that bitcoin is a fad with no actual value, but it has attained the great majority of its price in the last couple months. I mean, the price graph is virtually asymptotic. That seems to me like an unusual phenomenon to say the least, and one that's hard to explain just in terms of "actual value".

True enough. Even so, the dynamics at play now weren't present a year ago when BTC was around a thousand dollars. It is an inherently useful technology, it enjoys first mover status and accompanying support, it is the defacto reserve cryptocurrency (i.e. any cryptocurrency can be traded against it).

It's not a fad, it is changing the world.

[JD]

True enough. Even so, the dynamics at play now weren't present a year ago when BTC was around a thousand dollars. It is an inherently useful technology, it enjoys first mover status and accompanying support, it is the defacto reserve cryptocurrency (i.e. any cryptocurrency can be traded against it).

But what is it that you think changed in the last year? Being an inherently useful technology, being the first mover, and being the defacto reserve cryptocurrency didn't just happen in the last few months.

[Warren]

True enough. Even so, the dynamics at play now weren't present a year ago when BTC was around a thousand dollars. It is an inherently useful technology, it enjoys first mover status and accompanying support, it is the defacto reserve cryptocurrency (i.e. any cryptocurrency can be traded against it).

But what is it that you think changed in the last year? Being an inherently useful technology, being the first mover, and being the defacto reserve cryptocurrency didn't just happen in the last few months.

Oh. Didn't you hear? It's being traded on futures markets now. CBOE yesterday and CME next week.

[JasonL]

Interview with my company's tech lab which was experimenting with blockchain and bitcoin very early ETA and many others as I listen to this. Decent high level overview.

http://www.wsj.com/podcasts/in-bitcoin- ... DCC43.html

[pistoffnick]

[JD]

Oh. Didn't you hear? It's being traded on futures markets now. CBOE yesterday and CME next week.

Sure. But is that your explanation for why the price started to go up so steeply two months ago? That's an honest question, BTW, I'm not just being snarky.

[Warren]

Oh. Didn't you hear? It's being traded on futures markets now. CBOE yesterday and CME next week.

Sure. But is that your explanation for why the price started to go up so steeply two months ago? That's an honest question, BTW, I'm not just being snarky.

Yes, I believe that's been the primary motivation over the past couple months. The implementation of SegWit back in Aug. was an earlier motivator. If there's something else pushing the price, I don't know about it.

[Mo]

Blockchain is useful technology, that does not mean that bitcoin is useful. That's similar to the mistake that happened in the internet bubble. "Oh, you think Pets.com or Broadcast.com are overpriced and stupid? The internet is clearly the future. It's a whole new economy where profits aren't needed." Well, yeah, the internet is the future, but the basic rules of economics still apply. I feel the same way about bitcoin, there's a bunch of people talking about the technology, without talking about why people choose and use currencies and what problem with current currencies bitcoin solves.

[Warren]

Blockchain is useful technology, that does not mean that bitcoin is useful. That's similar to the mistake that happened in the internet bubble. "Oh, you think Pets.com or Broadcast.com are overpriced and stupid? The internet is clearly the future. It's a whole new economy where profits aren't needed." Well, yeah, the internet is the future, but the basic rules of economics still apply. I feel the same way about bitcoin, there's a bunch of people talking about the technology, without talking about why people choose and use currencies and what problem with current currencies bitcoin solves.

Well BTC is the most supported blockchain right now by orders of magnitude. As I said, it is the reserve cryptocurrency. Its standing as best in class at this point in time is unchallenged.
I agree that another cryptocurrency could displace it. But that won't happen anytime soon. Further, BTC itself has been, and will continue to be, improved and may well hold it's position.

[Mo]

Bitcoin is a cryptocurrency, it's an application of blockchain. Very different things. It's like saying that Pointcast or Kozmo are the internet.

[Sandy]

Bitcoin is a cryptocurrency, it's an application of blockchain. Very different things. It's like saying that Pointcast or Kozmo are the internet.

To wit:

https://www.cbronline.com/news/ibm-code ... n-chatbots

[JasonL]

I don't like things where I can't find a value story I like, but this is all very new. So, for example, if the argument is the value of btc is related to skepticism of USD as reserve currency, you'd think you'd see the TIPS spread get all wacky anticipating large inflation as a corollary. You don't see it. If the trading of btc counts as evidence, the much larger volume trading of treasuries also has to count. I'm not sure how to reconcile those stories. So maybe it's not the dollar but instead a functional hedge against government shenanigans in emerging markets. Is the market that deep on something so thinly traded (compared to other currencies)? Is there a story about the future of the preferred medium of exchange? Maybe - whats the transactional volume in btc / goods as oppose to btc / fiat currency? If the use of the thing is dominated by movement in and out of fiat and very little else is being done, it sort of suggests that people view it as an asset class backed by an ability to move into fiat currencies, which also suggests it may be sensitive to liquidity crises into those currencies and that the "real value" is sort of piggy backing on fiat for the time being.

All that said, just because I don't understand the story exactly and I'm skeptical of the magnitudes of value at present, doesn't mean I'm not missing some big thing because the context has been shifted away from the stories I'm used to looking for. I'm a very curious onlooker.

[Mo]

Seems legit.

https://www.cnbc.com/2017/12/11/people- ... -borg.html

[Kolohe]

As I type this, a single bitcoin will cost you over sixteen thousand dollars. At this point, anybody that thinks bitcoin is a fad with no actual value supporting that price is clueless.

Thought I'd responded to this earlier but I can't find it now. Anyway...

I wouldn't argue that bitcoin is a fad with no actual value, but it has attained the great majority of its price in the last couple months. I mean, the price graph is virtually asymptotic. That seems to me like an unusual phenomenon to say the least, and one that's hard to explain just in terms of "actual value".

True enough. Even so, the dynamics at play now weren't present a year ago when BTC was around a thousand dollars. It is an inherently useful technology, it enjoys first mover status and accompanying support, it is the defacto reserve cryptocurrency (i.e. any cryptocurrency can be traded against it).

It's not a fad, it is changing the world.

The US Treasury yield curve is basically unchanged from the beginning of the year. (if anything, US debt is even more in demand as indictated by a 25 basis point drop in the 30 year note from January till now)

If bitcoin were changing the world, the price of US debt and that of bitcoins would see some sort of correlation.

[Warren]

As I type this, a single bitcoin will cost you over sixteen thousand dollars. At this point, anybody that thinks bitcoin is a fad with no actual value supporting that price is clueless.

Thought I'd responded to this earlier but I can't find it now. Anyway...

I wouldn't argue that bitcoin is a fad with no actual value, but it has attained the great majority of its price in the last couple months. I mean, the price graph is virtually asymptotic. That seems to me like an unusual phenomenon to say the least, and one that's hard to explain just in terms of "actual value".

True enough. Even so, the dynamics at play now weren't present a year ago when BTC was around a thousand dollars. It is an inherently useful technology, it enjoys first mover status and accompanying support, it is the defacto reserve cryptocurrency (i.e. any cryptocurrency can be traded against it).

It's not a fad, it is changing the world.

The US Treasury yield curve is basically unchanged from the beginning of the year. (if anything, US debt is even more in demand as indictated by a 25 basis point drop in the 30 year note from January till now)

If bitcoin were changing the world, the price of US debt and that of bitcoins would see some sort of correlation.

We're not even in the first inning. The hasbeen celebrity is just now stepping onto the field to sing the national anthem.

[Warren]

I haven't heard this argument from anyone else, so there might be something very wrong with it. But I've been mulling it over for the past week and I think it's sound.

Why BitCoin has real value.

So, you understand blockchain technology. You accept that it's a new thing that is going to alter the course of civilization. In the coming months blockchain is going to embed itself into every enterprise of man and machine. If you don't buy that, then never mind. If you're on board, then keep reading.

So okay, blockchain is the bomb. But while BitCoin is built on blockchain, it is not the only blockchain. Indeed there are thousands of crypto currencies, or perhaps we should call them crypto tokens. Many of them have been created to perform some specific application, many others are designed to be a tool of general utility, and many are just another alt coin. I have no idea which ones will succeed and which ones will fail. But I am certain that many will succeed. As the demand for particular tokens increases, so will their price. I have no doubt that dozens of them will be selling for a thousand times their current going rate in 2018.

But how does BitCoin stack up against these newcomers? Poorly. Bitcoin was the first and enjoys first mover status. But the lessons learned from BitCoin were put into these alt coins. Features to make them more suitable to function at whatever task they were created to perform. BitCoin will not be the crypto currency to unseat fiat currencies. It has a limited capacity to process transactions which has led to long transaction times and high fees. BitCoin will not be a store of value to replace gold. High volatility makes it unsuitable to do so. Delays, fees, and volatility also mean it won't be underpinning payment processing.

So does BitCoin do anything better than everything else? If so, will it continue to do it better against future developments?

Yes. There is one thing BitCoin does that no other crypto token can do. It is the means of exchange between all the other blockchains.

As technology develops and blockchain gets deployed wider and wider, it will create demand for blockchain tokens. As business models change and peoples activitie's change they will use different tokens. And BitCoin is the coin of the realm that all others are priced against.

In the same way you accept dollars because everyone else accepts dollars, you will buy and sell cryptos in BitCoin. All the major exchanges that offer a variety of crypto tokens, allow you to buy and sell them with BitCoin. Some allow you to buy and sell with fiat, but dealing in fiat exposes you to delays, tax, and regulatory burdens. It is to be avoided when possible. Furthermore, no new token can be introduced that enjoys the reputation and ubiquity of BitCoin. BitCoin will continue to function as the reserve crypto currency because it already is.

[Mo]

Unlike traditional currencies, the switching costs of the reserve cryptocurrency of choice is pretty low. Much cheaper than switching it in the physical world.

Also, thinking the blockchain is awesome and revolutionary does not mean that cryptocurrency is where it is going. Smart contracts and trade execution do not require a cryptocurrency.

[Warren]

Unlike traditional currencies, the switching costs of the reserve cryptocurrency of choice is pretty low. Much cheaper than switching it in the physical world.

Irrelevant. No matter the cost, there is disincentive to switch because BTC is already accepted everywhere.

Also, thinking the blockchain is awesome and revolutionary does not mean that cryptocurrency is where it is going. Smart contracts and trade execution do not require a cryptocurrency.

Good point. I cast too wide of a net. Even so, there will be many successful cc's and they will continue to be traded in BTC.

[Shem]

Unlike traditional currencies, the switching costs of the reserve cryptocurrency of choice is pretty low. Much cheaper than switching it in the physical world.

Irrelevant. No matter the cost, there is disincentive to switch because BTC is already accepted everywhere.

And Myspace was the social media of choice. Until it wasn't. And Digg was the news aggregator of choice, until one fuckup obliterated them. You can die by ease of access just as easily as you can grow by it, especially when there's no disincentive for the exchanges to refuse entrance to any legit cryptocurrency. If say, Barclays comes out with a cryptocurrency you can use at physical stores, and they maintain enough equilibrium to keep it stable, Bitcoin loses half it's cachet right there. No, Mo is right; you can't simultaneously argue something is the future because it's easy, then argue it's the future because it was first, and barriers to entry will let it keep its place. At most, only one can be true.

[Sandy]

This is why I don't buy Nick Gillespie's dodge on net neutrality: yeah, Google's attitudes toward imposing its values on everyone is a problem, but they can only go so far before their various businesses get challenged. Like Digg until Reddit, MySpace until Facebook, Yahoo until Google. You can't opt out of your local land line ISP, and mobile speeds aren't anywhere comparable yet.

I suspect if there's a government-approved cryptocurrency that lacks some of the advantages of the current market for BtC, that will become the "safe" reserve currency that others are valued in, because its value is more tied to what it can be converted to.

Given governments' control of the banks, I don't think any real cash replacement will be allowed to exist. Or it will be made so difficult to use that use of it alone gets you a lot of unwanted scrutiny.

The answer, as usual, is to reduce government involvement in everything.

[Warren]

I suspect if there's a government-approved cryptocurrency that lacks some of the advantages of the current market for BtC, that will become the "safe" reserve currency that others are valued in, because its value is more tied to what it can be converted to.

It's called Ripple and I don't want anything to do with it.

Actually none of the crypto's are "approved", but neither are they disapproved. Ripple is not a decentralized product, it's a creation of the banking system that currently exists. The idea is that banks will use it to do transactions, although as of yet none of them are. But you can't trade it directly for anything else that I know of.

[Warren]

Unlike traditional currencies, the switching costs of the reserve cryptocurrency of choice is pretty low. Much cheaper than switching it in the physical world.

Irrelevant. No matter the cost, there is disincentive to switch because BTC is already accepted everywhere.

And Myspace was the social media of choice. Until it wasn't. And Digg was the news aggregator of choice, until one fuckup obliterated them. You can die by ease of access just as easily as you can grow by it, especially when there's no disincentive for the exchanges to refuse entrance to any legit cryptocurrency. If say, Barclays comes out with a cryptocurrency you can use at physical stores, and they maintain enough equilibrium to keep it stable, Bitcoin loses half it's cachet right there. No, Mo is right; you can't simultaneously argue something is the future because it's easy, then argue it's the future because it was first, and barriers to entry will let it keep its place. At most, only one can be true.

I don't think that's comparable. But we'll see.

[Mo]

Unlike traditional currencies, the switching costs of the reserve cryptocurrency of choice is pretty low. Much cheaper than switching it in the physical world.

Irrelevant. No matter the cost, there is disincentive to switch because BTC is already accepted everywhere.

And Myspace was the social media of choice. Until it wasn't. And Digg was the news aggregator of choice, until one fuckup obliterated them. You can die by ease of access just as easily as you can grow by it, especially when there's no disincentive for the exchanges to refuse entrance to any legit cryptocurrency. If say, Barclays comes out with a cryptocurrency you can use at physical stores, and they maintain enough equilibrium to keep it stable, Bitcoin loses half it's cachet right there. No, Mo is right; you can't simultaneously argue something is the future because it's easy, then argue it's the future because it was first, and barriers to entry will let it keep its place. At most, only one can be true.

Friendster or GTFO.

[Sandy]

Friendster or GTFO.

Was that the one that got taken over by Brazilians, or was it the Google one named after the guy who first developed it, whose name I can't remember?