Bitcoins are officially donkdown

[MumblesBadly]

I just saw this 2013 article that, IMO, puts into focus what development would crush the appeal of Bitcoin: If the Chinese government could materially restrict access to Bitcoin exchanges. And based on this article, this isn't likely to happen until China manhandles Hong Kong to the point of shutting down their Bitcoin exchanges.

http://qz.com/154420/chinas-ban-on-b...anned-already/

And that would be a very controversial move by the CCP, because it has to be careful about not killing the golden goose of Hong Kong's symbol as an autonomous region with a LOT of freedom relative to the mainland that is treated lightly by the CCP. So the CCP needs to way the cost of that heavy handedness versus the benefit they perceive from materially stifling Yuan-to-Bitcoin conversion.

I mean, I knew a long time ago that you shouldnt be taken seriously ever but just wow.

Tine, San, SSB,

I realize that that particular story is old, and around the time of top of the bubble. But Bitcoin is still ridiculously overpriced per your perspectives, given that you assign relatively little value to the black market utility of Bitcoin. And that belief reminds me of something I learned when I was formally studying and researching financial market phenomena:

"When people are overconfident, they set overly narrow confidence bands. They set their high guess too low (and their low guess too high). Hence, they get surprised more frequently than they anticipated."

Shefrin (2000) page 18-19

You can find this passage here:
http://overconfidence.behaviouralfinance.net

Why do I mention this? Because I believe that you guys are overconfident about the narrowness of the range of the black market utility of Bitcoin. The $20 figure seems "fair" to you, but none of you are living in China sitting on new found wealth, and facing the risk of the government turning an eye towards your fortune. So it is hubristic to assume that what seems "fair" to you, a Westerner who takes strong government protection of property rights for granted, is "fair" for those Chinese facing that risk.

My point is that I believe you guys overconfidently believe that Bitcoin price is about 95% due to irrational "gambly". And that seems way too high a proportion giving that Bitcoin seems to just keep plugging along after several crashes. And that isn't consistent with other asset pricing bubbles, like tulips, railroad stocks, silver, Internet stocks, etc. And none of those bubbly assets had "black market utility".

Mind you, I am not saying that "Laundering" accounts for most of Bitcoin's price, but that it likely is a much greater factor on the price than you guys assume, but varies considerably over time and is indistinguishable from "gambly" trading to outsiders like us here in the West.

Alternately, if you guys are correct, and "gambly" accounts for most of Bitcoin's price, how soon should we confidently expect Bitcoin to be regularly trading below, say, twice your "fair" price? Six months? A year? Two?

Or how about under 5x? By when will Bitcoin fall below $100, and in Druff's words, "stabilize" under there? Six months? A year? Two? Five? Ten?

Seriously. Each of you -- Tine, San, and SSB -- separately PM me a time frame for when you are confident that Bitcoin price will fall and remain below $100 for one month. I will wait until all three of you have done so -- or at most a week -- before sharing in a post, as I would like each of you to independently submit one.

Thank you in advance.

[sonatine]

Didnt read a fucking word of that mess.

[Starbucks Spunk Bucket]

There is no way of knowing what a "fair price" for bitcoin is, because of so many factors. It is a waste of time speculating about this

All I know is until we start seeing some practical use in the real world, the overall vision will remain a pipe dream.

They say the price will go up due to the halving due next year, so I am just hoping the price drops before then due to some negative headline hitting the news before then, because I do buy in to the technology and the potential it has for changing the financial world.

By the way, Argentina's new president is an advocate of bitcoin, and there is a lot of innovative activity going on in that country due to the economical history it has- this can only speak well for the currency's future.

I'm thinking of buying in before someone gets their act together and starts designing some apps for practical day-to-day use of this thing, it's a matter of time.

Aside from black market purposes and gambling, the biggest benefit I see to BTC can be found in the speed and cost of the transactions: it's hard to beat transferring a really large sum of money around the world for a cost of around 1 or 2 pence at a time. Compare that to services like PayPal!

On the other hand I consider the whole anonymity aspect pretty much void at this stage.

[MumblesBadly]

There is no way of knowing what a "fair price" for bitcoin is, because of so many factors. It is a waste of time speculating about this

I agree that the "fair" price of Bitcoin in the sense we've discussed here is *very* noisy, and that is what I have been trying to tease out from our discussions. And I agree with the notion that the current trading price can't be relied upon as a indicator of tha "fair" price with any material precision. I would just hate to see anyone here bet actual money on Bitcoin's demise based on a $20 "fair" price and lose their shirt given the many factors that could be driving trading activity

All I know is until we start seeing some practical use in the real world, the overall vision will remain a pipe dream.

I don't put much value in the libertarian-utopia "vision" among folks living countries with relatively free and capital and currency markets, but China stands out as a major economy with an iron grip on traditional capital and currency market transactions, and even blockchain tech-issued stocks won't be able to breach that financial Chinese wall (because China would likely slap sanctions on Western financial institutions that allowed Chinese mainlanders to buy those issues).

They say the price will go up due to the halving due next year, so I am just hoping the price drops before then due to some negative headline hitting the news before then, because I do buy in to the technology and the potential it has for changing the financial world.

How will the price of Bitcoin affect the blockchain tech innovations coming to the financial world? They are two completely different matters now. Bitcoin could fade to the value of beanie babies and blockchain tech will still be useful for issuing and ledger-keeping of standard financial instruments.

By the way, Argentina's new president is an advocate of bitcoin, and there is a lot of innovative activity going on in that country due to the economical history it has- this can only speak well for the currency's future.

Interesting, but take with a bag of salt. Argentina's political system is horrible for managing economic stability. It could express commitment for Bitcoin for awhile, then dump it on a dime when unexpected hidden costs grow too high to be able to hide from the public/outside world. Like what happened in the 1990's when it bailed on pegging its currency to the USD.

I'm thinking of buying in before someone gets their act together and starts designing some apps for practical day-to-day use of this thing, it's a matter of time.

The folks who almost risklessly got rich in the California gold rush were the folks who sold supplies to the prospectors!!!

Aside from black market purposes and gambling, the biggest benefit I see to BTC can be found in the speed and cost of the transactions: it's hard to beat transferring a really large sum of money around the world for a cost of around 1 or 2 pence at a time. Compare that to services like PayPal!

It's important to remember that the total cost of using a market transaction is the sum of the explicit cost (fees and/or commission) *plus* the sum of the implicit cost of the bid-ask spreads for the two trades (converting money to Bitcoin, and then Bitcoin to money). With the relatively thin Bitcoin trading volume, as well as the highly volatile price, the expected percentage of the latter is still very substantial.

On the other hand I consider the whole anonymity aspect pretty much void at this stage.

Thank you for your thought-provoking comments!

[MumblesBadly]

Didnt read a fucking word of that mess.

Tine, you don't need to read it. Just PM me with a date that you feel confident that Bitcoin will fall below $100 for at least one month.

[sonatine]

By the way, Argentina's new president is an advocate of bitcoin, and there is a lot of innovative activity going on in that country due to the economical history it has- this can only speak well for the currency's future.

Uh yeah this is like the fourth failing nation to say "HMMM BITCOINS MIGHT SOLVE SOME SHIT" then they actually read up on it and find out that it would solve approximately nothing.

[lol wow]

Uh oh fatotine is gonna have to pay for his chimichurri sauce with nerd money

[MumblesBadly]

San,

Are you aware of this source for historical Bitcoin data?

https://www.quandl.com/browse?filter...exchange-rates

It was the source for this research paper on how financial freedoms affect Bitcoin price using data across a number of countries:
http://papers.ssrn.com/sol3/papers.c...act_id=2666243

The PDF file of the working paper version is here:
https://papers.ssrn.com/sol3/Data_In...m?abid=2666243

[jacosta24]

[sonatine]

Interesting article claiming that BTC will rise in 2016 based on mining becoming twice as hard, in so many words:

http://www.reuters.com/article/us-gl...0U60GM20151223

[gimmick]

Interesting article claiming that BTC will rise in 2016 based on mining becoming twice as hard, in so many words:

http://www.reuters.com/article/us-gl...0U60GM20151223

The article is a decent example of telling a lie by using almost truths.

The basis is in this almost truth that's fairly easy to accept if you don't know too much about the subject...

"But taken in isolation, the halving of the mining reward will increase the price of bitcoin by around 50 percent from where it is now, Masters reckons."

...or if your BS radar never picked up this "Daniel Masters, co-founder of Jersey-based Global Advisors' multi-million dollar bitcoin hedge fund".

The price of Btc is only mildly correlated to mining at this point. The mining part has always been the price at the end (that is now getting halved) and difficulty in getting there that has been fucktonfolded since the inception of Btc. The mining difficulty part is not mentioned in the article for a reason.

[MumblesBadly]

Interesting article claiming that BTC will rise in 2016 based on mining becoming twice as hard, in so many words:

http://www.reuters.com/article/us-gl...0U60GM20151223

The article is a decent example of telling a lie by using almost truths.

The basis is in this almost truth that's fairly easy to accept if you don't know too much about the subject...

"But taken in isolation, the halving of the mining reward will increase the price of bitcoin by around 50 percent from where it is now, Masters reckons."

...or if your BS radar never picked up this "Daniel Masters, co-founder of Jersey-based Global Advisors' multi-million dollar bitcoin hedge fund".

The price of Btc is only mildly correlated to mining at this point. The mining part has always been the price at the end (that is now getting halved) and difficulty in getting there that has been fucktonfolded since the inception of Btc. The mining difficulty part is not mentioned in the article for a reason.

Agreed that this is vapor analysis.

[MumblesBadly]

Interesting article claiming that BTC will rise in 2016 based on mining becoming twice as hard, in so many words:

http://www.reuters.com/article/us-gl...0U60GM20151223

Meant to include this in previous comment:

People already know this mining cost change will occur next year. And because it's a simple event to analyze (mining cost per Bitcoin will double) any effect on supply due to an expected mining costs should already be impounded into the price given that investors are free to buy and sell Bitcoin from each other, and Bitcoin are durable assets.

[gimmick]

Btc mining is kinda weird compared to most things in that the cost of it doesn't actually lower the amount of new Btc. It self corrects itself at some point when the whole network gets weaker by lowering the difficulty of solves. Weaker network is a slower network where if you want your transactions to come through faster you are incentivized to pay a fee to miners which might make mining more cost effective, introduce new miners because of that and once again strengthen the network.

In the transition in 2016 miners are still fucked though. To make the same that they made in 2015 half of them need to quit or fees need to go up and increase in frequency really fast or the mining rigs need to get a lot better in some aspects (solving power to electricity consumption ratio needs to change etc.).

Still though increase in the amount of Btc lowers the price (if all else is equal). If the amount of new Btc is halved the impact it has on lowering the price is lessened but it never increases the price. You need some assumption of constant increase in demand to make the price go up by just halving the amount of new coins.

I think we're going from 15 mil coins to 17,5 mil in a 4 year span and the impact of new coins keeps getting smaller every year.

I can see a bright future where one buys a bot network with Btc to mine Btc because actually using your own hardware and paying for electricity just isn't cost effective. And the circle of life is complete.

[sonatine]

Btc mining is kinda weird compared to most things in that the cost of it doesn't actually lower the amount of new Btc. It self corrects itself at some point when the whole network gets weaker by lowering the difficulty of solves. Weaker network is a slower network where if you want your transactions to come through faster you are incentivized to pay a fee to miners which might make mining more cost effective, introduce new miners because of that and once again strengthen the network.

In the transition in 2016 miners are still fucked though. To make the same that they made in 2015 half of them need to quit or fees need to go up and increase in frequency really fast or the mining rigs need to get a lot better in some aspects (solving power to electricity consumption ratio needs to change etc.).

Still though increase in the amount of Btc lowers the price (if all else is equal). If the amount of new Btc is halved the impact it has on lowering the price is lessened but it never increases the price. You need some assumption of constant increase in demand to make the price go up by just halving the amount of new coins.

I think we're going from 15 mil coins to 17,5 mil in a 4 year span and the impact of new coins keeps getting smaller every year.

I can see a bright future where one buys a bot network with Btc to mine Btc because actually using your own hardware and paying for electricity just isn't cost effective. And the circle of life is complete.

People have taken that one step further and designed bitcoin mining malware which has been installed on botnets etc.

[BeerAndPoker]

Down over 9% to $412 today.

[sonatine]

Low: 401.157 USD
High: 451.5 USD

^ five hour dive.

[Starbucks Spunk Bucket]

Well fellow cryptonerds...Merry Xmas

Why the reason for the price drop this time?

[sonatine]

Well fellow cryptonerds...Merry Xmas

Why the reason for the price drop this time?

Because the vast majority of people who got BTC for Xmas arent simpletons so they dumped them as fast as their keyboards would allow.

[donkdowndonedied]

Well fellow cryptonerds...Merry Xmas

Why the reason for the price drop this time?

Because the vast majority of people who got BTC for Xmas arent simpletons so they dumped them as fast as their keyboards would allow.

Lol at all these simpletons. I read this forum for the poker scamming stuff and I read this thread to hear everyone's stupid as fuck opinion.

One will be hard pressed to find a place with so many seemingly experts who know almost next to nothing.

One thing in this thread is right about mining halving - the halving has nothing to do with the end consumer except that the downward price pressure/inflation will be halved.

BTC does one thing and one thing sorta well and that is take the control of money out of the hands of organizations. (And I say "sorta well" because it is dependent on uncensored internet infrastrucure) Most people don't begin to comprehend how capital control can be used to fuck you.

BTW, I gave some investment advice a year+ ago. It was easy to turn $30 into $600-$1k depending on your timing. I hope at least someone out there listened. (Granted, it would take a little work to do it.. I only got a couple dozen investments in at $30-$40)

Cheers! and Happy Holidays!