Bitcoin is a scam with a realistic valuation of $0.
1. Bitcoin is one of the biggest scams perpetrated in world history. It has no intrinsic value. It is literally an electronic token that no government or any institution (to my knowledge) with any significant resources has stepped forward to back up or legitimate. It started as a graduate student's thesis experiment. And there is ample evidence of a pump and dump with another virtual currency, Tether.
2. Bitcoin is frequently used by money launderers, terrorists, and other criminals making it an ideal target for future regulation.
3. Bitcoin is unstable and thus not viable as a real currency long term.
4. There are many competitors. Why is Bitcoin putatively better than others?
5. When Bernard von Nothuas tried to create the "Liberty Dollar" he was indicted for counterfeiting. While one of the counts surrounded the putative likeness to actual U.S. coinage, the government also argued that creating a currency to compete with official U.S. currency, in the absence of a likeness to known issues, was counterfeiting. If this theory gains traction and is adopted by federal appellate courts, why would Bitcoin be excepted?
6. The IRS does not treat Bitcoin as a currency. It is treated as chattel. This means that there are taxable consequences both at the time of accepting and selling Bitcoin depending on the value of Bitcoin.
7. Any real "value" is with the block chain technology used to move Bitcoin which could be used by real world banks with real currency. This is independent and not directly tied to Bitcoin's value.
The U.S. coin market is a farce with its own issues.
1. Grade inflation has hurt the market. Even PCGS CAC coins aren't immune if enough collectors walk away.
2. Geopolitical events including pandemics, wars that disrupt energy resources, etc., can affect the markets. Many coins perform poorly during recessions. On the other hand, if stocks are booming, why dump $19k in a coin when you could put this into higher performing stocks?
3. The coin market has plenty of chicanery and fraud of its own.
I'm not keen on either, but I'd rather have the gold coin.
@derryb said:
bitcoins are imaginary, what could go wrong?
That's not quite true. They don't have a physical entity, but the same is true of your Apple stock. Bitcoins represent financial transactions. Mining of bitcoin amounted to payment for facilitating transactions. In some sense, they are more real than US $s...only they don't have an army to back them up.
But Apple is backed up by a trillion dollar company's capital/assets. You are buying an ownership share of something tangible. Bitcoin is an electronic token without the backing of anything.
Bitcoin is a fascinating experiment, but I don't expect it ever to be mainstream. Everyone who owns bitcoin expects "everyone else" to use it for payments, even though they themselves never do. Which is pretty funny.
We already have a digital currency, and if the govt doesn't shut them down or create its own, Paypal or Facebook or Amazon (or Ant or WeChat) will project it internationally. I can't wait to see how it all plays out.
@derryb said:
bitcoins are imaginary, what could go wrong?
That's not quite true. They don't have a physical entity, but the same is true of your Apple stock. Bitcoins represent financial transactions. Mining of bitcoin amounted to payment for facilitating transactions. In some sense, they are more real than US $s...only they don't have an army to back them up.
But Apple is backed up by a trillion dollar company's capital/assets. You are buying an ownership share of something tangible. Bitcoin is an electronic token without the backing of anything.
Bitcoin is backed by a huge amount of global computing infrastructure and a rapidly growing network of users and merchants. What is gold backed by?
Bitcoin is not a bubble. The secular trend is up in spite of sometimes dramatic price fluctuations. Regarding competition, have you ever heard of "first mover advantage" and "network effect"?
@derryb said:
bitcoins are imaginary, what could go wrong?
That's not quite true. They don't have a physical entity, but the same is true of your Apple stock. Bitcoins represent financial transactions. Mining of bitcoin amounted to payment for facilitating transactions. In some sense, they are more real than US $s...only they don't have an army to back them up.
But Apple is backed up by a trillion dollar company's capital/assets. You are buying an ownership share of something tangible. Bitcoin is an electronic token without the backing of anything.
Bitcoin is backed by a huge amount of global computing infrastructure and a rapidly growing network of users and merchants. What is gold backed by?
I meant financially backed. I can at least hold the gold in my hand, and there is some intrinsic value (although we can disagree on exact value). As a metal that has real world uses, value will never be $0. The same cannot be said of Bitcoin.
@derryb said:
bitcoins are imaginary, what could go wrong?
That's not quite true. They don't have a physical entity, but the same is true of your Apple stock. Bitcoins represent financial transactions. Mining of bitcoin amounted to payment for facilitating transactions. In some sense, they are more real than US $s...only they don't have an army to back them up.
But Apple is backed up by a trillion dollar company's capital/assets. You are buying an ownership share of something tangible. Bitcoin is an electronic token without the backing of anything.
Your ownership share is based on the faith/credit of Apple & the U.S. government backing it. It's a paper asset, like all other paper assets. You rely on someone else to back your ownership claim since you can't actually possess your one billionth of the company. The government could easily make your AAPL shares worthless (see GM in 2010) and at the same time make your paper money invaluable.
@derryb said:
bitcoins are imaginary, what could go wrong?
That's not quite true. They don't have a physical entity, but the same is true of your Apple stock. Bitcoins represent financial transactions. Mining of bitcoin amounted to payment for facilitating transactions. In some sense, they are more real than US $s...only they don't have an army to back them up.
But Apple is backed up by a trillion dollar company's capital/assets. You are buying an ownership share of something tangible. Bitcoin is an electronic token without the backing of anything.
Bitcoin is backed by a huge amount of global computing infrastructure and a rapidly growing network of users and merchants. What is gold backed by?
I meant financially backed. I can at least hold the gold in my hand, and there is some intrinsic value (although we can disagree on exact value). As a metal that has real world uses, value will never be $0. The same cannot be said of Bitcoin.
Did you ever wonder how many people felt the same way with stocks and other securities? Especially after the South Sea bubble, I wonder how many people felt that the entire securities industry was just a fiction.
In some ways, almost everything we possess is ultimately intangible. Even gold will have near zero value if the government stepped in and made it illegal. Your house is held by a deed, ownership only guaranteed by your ability to defend your claim or the government's willingness to defend your claim. Stocks aren't even pieces of paper anymore. In some ways, "real assets" are only as real as your ability to defend them with force. Otherwise, you rely on someone else (government) to defend your paper claims by force.
In some ways, bitcoin isn't any different than the rare coin market or any collectible market. The value only exists based on the perceptions of market participants as to the desirability of ownership.
@derryb said:
bitcoins are imaginary, what could go wrong?
That's not quite true. They don't have a physical entity, but the same is true of your Apple stock. Bitcoins represent financial transactions. Mining of bitcoin amounted to payment for facilitating transactions. In some sense, they are more real than US $s...only they don't have an army to back them up.
But Apple is backed up by a trillion dollar company's capital/assets. You are buying an ownership share of something tangible. Bitcoin is an electronic token without the backing of anything.
Bitcoin is backed by a huge amount of global computing infrastructure and a rapidly growing network of users and merchants. What is gold backed by?
@derryb said:
bitcoins are imaginary, what could go wrong?
That's not quite true. They don't have a physical entity, but the same is true of your Apple stock. Bitcoins represent financial transactions. Mining of bitcoin amounted to payment for facilitating transactions. In some sense, they are more real than US $s...only they don't have an army to back them up.
But Apple is backed up by a trillion dollar company's capital/assets. You are buying an ownership share of something tangible. Bitcoin is an electronic token without the backing of anything.
Your ownership share is based on the faith/credit of Apple & the U.S. government backing it. It's a paper asset, like all other paper assets. You rely on someone else to back your ownership claim since you can't actually possess your one billionth of the company. The government could easily make your AAPL shares worthless (see GM in 2010) and at the same time make your paper money invaluable.
But it is something . I never said stocks were risk free.
@derryb said:
bitcoins are imaginary, what could go wrong?
That's not quite true. They don't have a physical entity, but the same is true of your Apple stock. Bitcoins represent financial transactions. Mining of bitcoin amounted to payment for facilitating transactions. In some sense, they are more real than US $s...only they don't have an army to back them up.
But Apple is backed up by a trillion dollar company's capital/assets. You are buying an ownership share of something tangible. Bitcoin is an electronic token without the backing of anything.
Bitcoin is backed by a huge amount of global computing infrastructure and a rapidly growing network of users and merchants. What is gold backed by?
I meant financially backed. I can at least hold the gold in my hand, and there is some intrinsic value (although we can disagree on exact value). As a metal that has real world uses, value will never be $0. The same cannot be said of Bitcoin.
Did you ever wonder how many people felt the same way with stocks and other securities? Especially after the South Sea bubble, I wonder how many people felt that the entire securities industry was just a fiction.
In some ways, almost everything we possess is ultimately intangible. Even gold will have near zero value if the government stepped in and made it illegal. Your house is held by a deed, ownership only guaranteed by your ability to defend your claim or the government's willingness to defend your claim. Stocks aren't even pieces of paper anymore. In some ways, "real assets" are only as real as your ability to defend them with force. Otherwise, you rely on someone else (government) to defend your paper claims by force.
In some ways, bitcoin isn't any different than the rare coin market or any collectible market. The value only exists based on the perceptions of market participants as to the desirability of ownership.
But you have legal recourse and gold has utility as a metal. Companies have assets that can be encumbered and liquidated to pay bond holders and then stock owners leaving at least some prospect of recovery. What entity controls Bitcoin? Who do you sue when things go awry? How do I place a lien on electronic code with no central repository? How would there be any chance of executing any theoretical judgment?
@derryb said:
bitcoins are imaginary, what could go wrong?
That's not quite true. They don't have a physical entity, but the same is true of your Apple stock. Bitcoins represent financial transactions. Mining of bitcoin amounted to payment for facilitating transactions. In some sense, they are more real than US $s...only they don't have an army to back them up.
But Apple is backed up by a trillion dollar company's capital/assets. You are buying an ownership share of something tangible. Bitcoin is an electronic token without the backing of anything.
Bitcoin is backed by a huge amount of global computing infrastructure and a rapidly growing network of users and merchants. What is gold backed by?
Kitco
The government can end that "backing" in 30 seconds.
@derryb said:
bitcoins are imaginary, what could go wrong?
That's not quite true. They don't have a physical entity, but the same is true of your Apple stock. Bitcoins represent financial transactions. Mining of bitcoin amounted to payment for facilitating transactions. In some sense, they are more real than US $s...only they don't have an army to back them up.
But Apple is backed up by a trillion dollar company's capital/assets. You are buying an ownership share of something tangible. Bitcoin is an electronic token without the backing of anything.
Your ownership share is based on the faith/credit of Apple & the U.S. government backing it. It's a paper asset, like all other paper assets. You rely on someone else to back your ownership claim since you can't actually possess your one billionth of the company. The government could easily make your AAPL shares worthless (see GM in 2010) and at the same time make your paper money invaluable.
But it is something . I never said stocks were risk free.
It's barely something. I'm not completely disagreeing with you. I have serious questions about bitcoin. But I think we're all a little too sanguine about the "real" nature of other assets. All market traded assets ultimately depending on a level of faith in market participants and someone's ability to enforce.
Bitcoin is backed by a huge amount of global computing infrastructure and a rapidly growing network of users and merchants. What is gold backed by?
10,000 years of history.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Bitcoin is backed by a huge amount of global computing infrastructure and a rapidly growing network of users and merchants. What is gold backed by?
10,000 years of history.
You could have said the same about spears, or saddles...
I don't remember saddles ever being used as money.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
@privaterarecoincollector said:
In 10 years there will be much more buyers for bitcoin than today while supply is still quite limited.
The supply of bitcoin is essentially unlimited because they divide it into smaller and smaller pieces.
it's not unlimited. bitcoin has a finite amount of 21 million bitcoins. 1 bitcoin is 100 million satoshi. it's immune to monetary inflation. you would would have to create some other kind of ledger in order to inflate it.
@privaterarecoincollector said:
You guys need to think in terms what your children will do and not what you would do. My son will never enter any physical bank in his life. He will never pay with cash when he is grown up. He most probably will never drive a car himself. He will never read a physical book. and Im not even sure he will really learn how to properly write because they all use computers now in school.
Agree 110%
I’m not sure if my 24 year old son knows has ever written a check or addressed an envelope and I’m not convinced he can tell time off a traditional clock. He drives and has a car. Considering how few books he has read he writes quite well.
@privaterarecoincollector said:
In 10 years there will be much more buyers for bitcoin than today while supply is still quite limited.
The supply of bitcoin is essentially unlimited because they divide it into smaller and smaller pieces.
it's not unlimited. bitcoin has a finite amount of 21 million bitcoins. 1 bitcoin is 100 million satoshi. it's immune to monetary inflation. you would would have to create some other kind of ledger in order to inflate it.
Only if you believe inflation is only tied to supply of "money" (and I use "money" tongue in cheek).
What's stopping me from creating PCGSCryptoCoin tomorrow (other than maybe a trademark suit)? Would it be valuable just because I say it is? Other than name, would it really be materially different from Bitcoin? Not targeted at you guys, but I have some ocean front property in Wyoming I'd like to sell too. Any takers?
@privaterarecoincollector said:
In 10 years there will be much more buyers for bitcoin than today while supply is still quite limited.
The supply of bitcoin is essentially unlimited because they divide it into smaller and smaller pieces.
it's not unlimited. bitcoin has a finite amount of 21 million bitcoins. 1 bitcoin is 100 million satoshi. it's immune to monetary inflation. you would would have to create some other kind of ledger in order to inflate it.
Only if you believe inflation is only tied to supply of "money" (and I use "money" tongue in cheek).
What's stopping me from creating PCGSCryptoCoin tomorrow (other than maybe a trademark suit)? Would it be valuable just because I say it is? Other than name, would it really be materially different from Bitcoin? Not targeted at you guys, but I have some ocean front property in Wyoming I'd like to sell too. Any takers?
What inane questions. There are already scores of alternate crytocurrencies, some of which have done extremely well in their own right. You are free to create yet another one, but that will require a rather sizeable investment on your part both for infrastructure and marketing. Its ultimate value will be tied to its market penetration. With so many existing alternatives, your currency would have to offer some tangible advantage at this point to gain any traction.
You're also free to create a new search engine, social network, or iPhone alternative. Best of luck to you.
Bitcoin is backed by a huge amount of global computing infrastructure and a rapidly growing network of users and merchants. What is gold backed by?
10,000 years of history.
Sure, during which time it functioned as actual currency. At this point, gold's "value" is pretty much inversely correlated to that of the dollar (until that ceases to be the world's reserve currency). No central agency pegs its value to anything. There is more than enough already dug up to cover industrial demand, and plenty more in the ground if that changes. Back when gold actually circulated as money, people intuitively ascribed intrinsic value to it, but nowadays gold has essentially no utility (other than as a hedge against fiat currency) to its holders. Compare that to crytocurrencies, which do circulate and do have utility in the modern world.
Bitcoin detractors are ignoring the real money. Rationalize whatever you want, Bitcoin is up >100% since late August. That’s not a typo.
Imagine those who bought in when it was 8 cents a coin? Many vehicles of money are based on a critical mass of belief. Companies with physical assets posses only a fraction of their stock value in physical assets. The idea they could sell off their assets to cover shares is a fallacy.
Many countries and many companies have opted to invest in Bitcoin and other crypto as a means to diversify their holdings,
@privaterarecoincollector said:
In 10 years there will be much more buyers for bitcoin than today while supply is still quite limited.
The supply of bitcoin is essentially unlimited because they divide it into smaller and smaller pieces.
it's not unlimited. bitcoin has a finite amount of 21 million bitcoins. 1 bitcoin is 100 million satoshi. it's immune to monetary inflation. you would would have to create some other kind of ledger in order to inflate it.
Not true. Subdividing it is equivalent to creating more. They've already inflated it by changing the amount of bitcoin distributed per transaction. Don't be fooled by their word games.
@CoinJunkie said:
You're also free to create a new search engine, social network, or iPhone alternative. Best of luck to you.
But those goods and services provide utility and at least some putative value. Again, what value does an electronic token have that is not financially backed and cannot be exchanged with the issuer (like a store token) for items of value? It's "value" is based on pure speculation. While speculation is hardly unique to Bitcoin and occurs with tangible assets, with Bitcoin you are literally pumping money into the electronic ether/electronic black hole.
@CoinJunkie said:
You're also free to create a new search engine, social network, or iPhone alternative. Best of luck to you.
But those goods and services provide utility and at least some putative value. Again, what value does an electronic token have that is not financially backed and cannot be exchanged with the issuer (like a store token) for items of value? It's "value" is based on pure speculation. While speculation is hardly unique to Bitcoin and occurs with tangible assets, with Bitcoin you are literally pumping money into the electronic ether/electronic black hole.
That's not completely true. Bitcoin is tied to electronic transactions. There is a utilitarian value (to use your term) to the block chain currencies.
This is NOT a case of someone printing up digital currency and throwing it out into the ether to see who would use it. I think that's a bit of a misconception about the cryptos. They are more akin to commercial trade tokens than to monopoly money.
@CoinJunkie said:
You're also free to create a new search engine, social network, or iPhone alternative. Best of luck to you.
But those goods and services provide utility and at least some putative value. Again, what value does an electronic token have that is not financially backed and cannot be exchanged with the issuer (like a store token) for items of value? It's "value" is based on pure speculation. While speculation is hardly unique to Bitcoin and occurs with tangible assets, with Bitcoin you are literally pumping money into the electronic ether/electronic black hole.
@CoinJunkie said:
You're also free to create a new search engine, social network, or iPhone alternative. Best of luck to you.
But those goods and services provide utility and at least some putative value. Again, what value does an electronic token have that is not financially backed and cannot be exchanged with the issuer (like a store token) for items of value? It's "value" is based on pure speculation. While speculation is hardly unique to Bitcoin and occurs with tangible assets, with Bitcoin you are literally pumping money into the electronic ether/electronic black hole.
That's not completely true. Bitcoin is tied to electronic transactions. There is a utilitarian value (to use your term) to the block chain currencies.
This is NOT a case of someone printing up digital currency and throwing it out into the ether to see who would use it. I think that's a bit of a misconception about the cryptos. They are more akin to commercial trade tokens than to monopoly money.
"Electronic transactions" of what exactly? Computer generated code with no financial or governmental backing? If that's what you mean, we agree. Wasting electricity and needlessly generating carbon emissions doesn't really have much value.
There is merit to block chain technology, and it could have implications for real world banking. There is no doubt there. I am talking about the putative "currency" itself and not technologies that may arise from it (and that you have no ownership interest in the intellectual property with Bitcoin ownership).
Your analogy is not apt. A commercial trade token can be exchanged with the issuer (a fixed entity) for something of value and usually has a guaranteed exchange rate. The graduate student that created or issued this "currency" is anonymous. It literally is someone creating fake digital "currency" out of thin air.
@CoinJunkie said:
You're also free to create a new search engine, social network, or iPhone alternative. Best of luck to you.
But those goods and services provide utility and at least some putative value. Again, what value does an electronic token have that is not financially backed and cannot be exchanged with the issuer (like a store token) for items of value? It's "value" is based on pure speculation. While speculation is hardly unique to Bitcoin and occurs with tangible assets, with Bitcoin you are literally pumping money into the electronic ether/electronic black hole.
Have you ever noticed that those heavily promoting this stuff also tend to have large sums of money invested in it? Notice a pattern? Not targeted to that blogger specifically, but it something I have noticed. Also Google "Pump and Dump" with Bitcoin and Tether.
The utility is obvious. Say you want to put a big chunk of money in a place where you could access it from anywhere in the world at any time without any govt involvement. How would you do it?
You read about people trying to take their net worth with them in diamonds through airports, getting caught and jailed. Not necessary anymore, for now.
But the notion that while you’re doing that, your net worth also goes up 3x thru the magic of Bitcoin? Better have good timing.
Reminds me of the tulip bulb hysteria in 16th century Europe.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Every bubble seems to remind people of the Tulip Bulb hysteria. An interesting question would be: during that episode, what was the tulip bulb hysteria reminding people of?
@CoinJunkie said:
You're also free to create a new search engine, social network, or iPhone alternative. Best of luck to you.
But those goods and services provide utility and at least some putative value. Again, what value does an electronic token have that is not financially backed and cannot be exchanged with the issuer (like a store token) for items of value? It's "value" is based on pure speculation. While speculation is hardly unique to Bitcoin and occurs with tangible assets, with Bitcoin you are literally pumping money into the electronic ether/electronic black hole.
Have you ever noticed that those heavily promoting this stuff also tend to have large sums of money invested in it? Notice a pattern? Not targeted to that blogger specifically, but it something I have noticed. Also Google "Pump and Dump" with Bitcoin and Tether.
To date, anyone who bought and held bitcoin has done far better than anyone who "pumped it and then dumped it"
@CoinJunkie said:
You're also free to create a new search engine, social network, or iPhone alternative. Best of luck to you.
But those goods and services provide utility and at least some putative value. Again, what value does an electronic token have that is not financially backed and cannot be exchanged with the issuer (like a store token) for items of value? It's "value" is based on pure speculation. While speculation is hardly unique to Bitcoin and occurs with tangible assets, with Bitcoin you are literally pumping money into the electronic ether/electronic black hole.
That's not completely true. Bitcoin is tied to electronic transactions. There is a utilitarian value (to use your term) to the block chain currencies.
This is NOT a case of someone printing up digital currency and throwing it out into the ether to see who would use it. I think that's a bit of a misconception about the cryptos. They are more akin to commercial trade tokens than to monopoly money.
"Electronic transactions" of what exactly? Computer generated code with no financial or governmental backing? If that's what you mean, we agree. Wasting electricity and needlessly generating carbon emissions doesn't really have much value.
There is merit to block chain technology, and it could have implications for real world banking. There is no doubt there. I am talking about the putative "currency" itself and not technologies that may arise from it (and that you have no ownership interest in the intellectual property with Bitcoin ownership).
Your analogy is not apt. A commercial trade token can be exchanged with the issuer (a fixed entity) for something of value and usually has a guaranteed exchange rate. The graduate student that created or issued this "currency" is anonymous. It literally is someone creating fake digital "currency" out of thin air.
Bitcoin is paid out for facilitating secure financial transactions. But that is only one model. The cryptos represent a much broader class of block-chain applications...see your #2.
Your #3 refers only to bitcoin. If you look at the other cryptos (ethereum, for example), they are tied to specific block-chain applications. Some have even tried to tie them to actual cloud computing. While these particular trade tokens aren't fixed in exchange rate, neither is silver and gold.
@scubafuel said:
Every bubble seems to remind people of the Tulip Bulb hysteria. An interesting question would be: during that episode, what was the tulip bulb hysteria reminding people of?
Having just made a saffron sauce for Christmas, crocus bulbs are the new tulip bulbs.
This discussion began on 11/20 and BC was selling for $18,746.
Thirty eight days later it is selling for over $27K.
While BC may not be "real," its profits certainly are.
The million bitcoin question is "when and at what price will it end?" Seeing the bubble is one thing, not taking advantage of it is another.
Those who remind us of tulips forget that for every million dollars lost in tulip mania, it was gained by someone else. The savvy speculator welcomes bubbles, carefully picking his entry point and even more carefully picking his exist point. Bubbles rarely, if ever go to "worthless" without a declining price warning.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Going back to my OP, it seems to me that if one wanted a large gain they would buy a bit coin. If one wanted to avoid a large loss they would buy the gold proof coin. In five years a bit coin could be worth $250,000 or next to nothing. The $10 old proof gold will not be worth $250,000 but it will also never approach 0.
The old proof gold will give me alot more satisfaction owning it. On the other hand if i owned bit coin and it went to $250,000 i could buy alot more old proof gold.
This is quite interesting. Seems that excess monetary liquidity among the rich, (sound familiar?) drove this craze and it was only the big money and spice traders or the elite owners, as usual who were involved. An occasional farmer with a nice frilly, colorful unique one, won and only really fast. Sounds like refreshing a lot for an AGE privy to me.
@Goldminers - That is an interesting read. I like this part, "Writers and historians have reveled in the absurdity of the event".
We seem to have some writers, historians, and revelers here as well.
According to coindesk.com "only approximately 21 million bitcoins will ever be created. New coins are minted every 10 minutes by bitcoin miners who help to maintain the network by adding new transaction data to the blockchain."
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
@Smudge said:
Isn’t Bitcoin also is totally dependent on a working power grid while gold is not, at least at the bullion level?
Absolutely. And when a geomagnetic storm of sufficient intensity hits the earth.... or a rogue nation sets off an EMT high above the USA... your bitcoin will likely be gone and worthless. But then again, so will many other things that depend on computers, voltage lines, etc.
It's not tinfoil hat theory, but real and has some pretty high chances of happening. Carrington event in 1859 resulted in burning telegraph wires and started some fires on railroad ties (the rails conducted high currents from the magnetic storm). That was back in much less technical times... the microcircuits of today would likely be devestated.
According to coindesk.com "only approximately 21 million bitcoins will ever be created. New coins are minted every 10 minutes by bitcoin miners who help to maintain the network by adding new transaction data to the blockchain."
This is such a fictional number. They have absolutely inflated the number by decreasing (by design) the payout rate for bitcoin mining even as the effort of the mining went up. So, when the work you do was once worth 50 BTC, it's now worth 6.25 BC. That is 100% absolutely equivalent to increasing the number of BTC.
investopedia.com/tech/how-does-bitcoin-mining-work/
"How Much a Miner Earns
The rewards for bitcoin mining are reduced by half every four years. When bitcoin was first mined in 2009, mining one block would earn you 50 BTC. In 2012, this was halved to 25 BTC. By 2016, this was halved again to 12.5 BTC. On May 11, 2020, the reward halved again to 6.25 BTC. "
@jmlanzaf said:
This is such a fictional number. They have absolutely inflated the number by decreasing (by design) the payout rate for bitcoin mining even as the effort of the mining went up. So, when the work you do was once worth 50 BTC, it's now worth 6.25 BC. That is 100% absolutely equivalent to increasing the number of BTC.
investopedia.com/tech/how-does-bitcoin-mining-work/
"How Much a Miner Earns
The rewards for bitcoin mining are reduced by half every four years. When bitcoin was first mined in 2009, mining one block would earn you 50 BTC. In 2012, this was halved to 25 BTC. By 2016, this was halved again to 12.5 BTC. On May 11, 2020, the reward halved again to 6.25 BTC. "
I fail to understand your argument here. We agree that the number of Bitcoins is increasing due to mining rewards. The 21 million number is the ultimate cap on the number of Bitcoins that can exist, and is expected to be reached circa the year 2140. How is the payout rate being halved every four years relevant to anything? While miners are now getting 6.25 BC instead of the erstwhile 50 BC, the value (in dollars) thereof is much greater. Again, how is this relevant to anything?
@Smudge said:
Isn’t Bitcoin also is totally dependent on a working power grid while gold is not, at least at the bullion level?
Absolutely. And when a geomagnetic storm of sufficient intensity hits the earth.... or a rogue nation sets off an EMT high above the USA... your bitcoin will likely be gone and worthless. But then again, so will many other things that depend on computers, voltage lines, etc.
It's not tinfoil hat theory, but real and has some pretty high chances of happening. Carrington event in 1859 resulted in burning telegraph wires and started some fires on railroad ties (the rails conducted high currents from the magnetic storm). That was back in much less technical times... the microcircuits of today would likely be devestated.
I guess you don't realize that the Internet (and Bitcoin) are global entities with significant amounts of redundancy built in. If you want to make financial decisions predicated on a natural phenomenon that hasn't happened since 1859, that's your prerogative. Your gold has a much higher chance of melting in a common fire.
@jmlanzaf said:
They have absolutely inflated the number by decreasing (by design) the payout rate for bitcoin mining even as the effort of the mining went up. So, when the work you do was once worth 50 BTC, it's now worth 6.25 BC. That is 100% absolutely equivalent to increasing the number of BTC.
Total BS. The payout in coin per mining hour is continually decreasing because the number of bitcoin left to mine is shrinking. The rising price per coin is actually returning more dollars per coin mined even though it takes more time to mine that coin. The last coin will take weeks or even months to mine. Of course mining is increasing the number of BC, that is how it works. The number has not yet reached it's end of 21M BC. It is the shrinking supply of BC left to find that aids in driving the price.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Comments
Bitcoin is a scam with a realistic valuation of $0.
1. Bitcoin is one of the biggest scams perpetrated in world history. It has no intrinsic value. It is literally an electronic token that no government or any institution (to my knowledge) with any significant resources has stepped forward to back up or legitimate. It started as a graduate student's thesis experiment. And there is ample evidence of a pump and dump with another virtual currency, Tether.
2. Bitcoin is frequently used by money launderers, terrorists, and other criminals making it an ideal target for future regulation.
3. Bitcoin is unstable and thus not viable as a real currency long term.
4. There are many competitors. Why is Bitcoin putatively better than others?
5. When Bernard von Nothuas tried to create the "Liberty Dollar" he was indicted for counterfeiting. While one of the counts surrounded the putative likeness to actual U.S. coinage, the government also argued that creating a currency to compete with official U.S. currency, in the absence of a likeness to known issues, was counterfeiting. If this theory gains traction and is adopted by federal appellate courts, why would Bitcoin be excepted?
6. The IRS does not treat Bitcoin as a currency. It is treated as chattel. This means that there are taxable consequences both at the time of accepting and selling Bitcoin depending on the value of Bitcoin.
7. Any real "value" is with the block chain technology used to move Bitcoin which could be used by real world banks with real currency. This is independent and not directly tied to Bitcoin's value.
The U.S. coin market is a farce with its own issues.
1. Grade inflation has hurt the market. Even PCGS CAC coins aren't immune if enough collectors walk away.
2. Geopolitical events including pandemics, wars that disrupt energy resources, etc., can affect the markets. Many coins perform poorly during recessions. On the other hand, if stocks are booming, why dump $19k in a coin when you could put this into higher performing stocks?
3. The coin market has plenty of chicanery and fraud of its own.
I'm not keen on either, but I'd rather have the gold coin.
But Apple is backed up by a trillion dollar company's capital/assets. You are buying an ownership share of something tangible. Bitcoin is an electronic token without the backing of anything.
Bitcoin is a fascinating experiment, but I don't expect it ever to be mainstream. Everyone who owns bitcoin expects "everyone else" to use it for payments, even though they themselves never do. Which is pretty funny.
We already have a digital currency, and if the govt doesn't shut them down or create its own, Paypal or Facebook or Amazon (or Ant or WeChat) will project it internationally. I can't wait to see how it all plays out.
Bitcoin is backed by a huge amount of global computing infrastructure and a rapidly growing network of users and merchants. What is gold backed by?
Bitcoin is not a bubble. The secular trend is up in spite of sometimes dramatic price fluctuations. Regarding competition, have you ever heard of "first mover advantage" and "network effect"?
I meant financially backed. I can at least hold the gold in my hand, and there is some intrinsic value (although we can disagree on exact value). As a metal that has real world uses, value will never be $0. The same cannot be said of Bitcoin.
Your ownership share is based on the faith/credit of Apple & the U.S. government backing it. It's a paper asset, like all other paper assets. You rely on someone else to back your ownership claim since you can't actually possess your one billionth of the company. The government could easily make your AAPL shares worthless (see GM in 2010) and at the same time make your paper money invaluable.
Did you ever wonder how many people felt the same way with stocks and other securities? Especially after the South Sea bubble, I wonder how many people felt that the entire securities industry was just a fiction.
In some ways, almost everything we possess is ultimately intangible. Even gold will have near zero value if the government stepped in and made it illegal. Your house is held by a deed, ownership only guaranteed by your ability to defend your claim or the government's willingness to defend your claim. Stocks aren't even pieces of paper anymore. In some ways, "real assets" are only as real as your ability to defend them with force. Otherwise, you rely on someone else (government) to defend your paper claims by force.
In some ways, bitcoin isn't any different than the rare coin market or any collectible market. The value only exists based on the perceptions of market participants as to the desirability of ownership.
Kitco
But it is something . I never said stocks were risk free.
But you have legal recourse and gold has utility as a metal. Companies have assets that can be encumbered and liquidated to pay bond holders and then stock owners leaving at least some prospect of recovery. What entity controls Bitcoin? Who do you sue when things go awry? How do I place a lien on electronic code with no central repository? How would there be any chance of executing any theoretical judgment?
The government can end that "backing" in 30 seconds.
It's barely something. I'm not completely disagreeing with you. I have serious questions about bitcoin. But I think we're all a little too sanguine about the "real" nature of other assets. All market traded assets ultimately depending on a level of faith in market participants and someone's ability to enforce.
10,000 years of history.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
You could have said the same about spears, or saddles...
Isn’t Bitcoin also is totally dependent on a working power grid while gold is not, at least at the bullion level?
Yes. More than just a power grid. You also need a computer network that is operational.
I think that is too fine a point, however. If you have no power and no computer network, you'll have a hard time selling an ounce of gold also.
I don't remember saddles ever being used as money.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Actually, before "money" everything was barter...
it's not unlimited. bitcoin has a finite amount of 21 million bitcoins. 1 bitcoin is 100 million satoshi. it's immune to monetary inflation. you would would have to create some other kind of ledger in order to inflate it.
Agree 110%
I’m not sure if my 24 year old son knows has ever written a check or addressed an envelope and I’m not convinced he can tell time off a traditional clock. He drives and has a car. Considering how few books he has read he writes quite well.
Only if you believe inflation is only tied to supply of "money" (and I use "money" tongue in cheek).
What's stopping me from creating PCGSCryptoCoin tomorrow (other than maybe a trademark suit)? Would it be valuable just because I say it is? Other than name, would it really be materially different from Bitcoin? Not targeted at you guys, but I have some ocean front property in Wyoming I'd like to sell too. Any takers?
What inane questions. There are already scores of alternate crytocurrencies, some of which have done extremely well in their own right. You are free to create yet another one, but that will require a rather sizeable investment on your part both for infrastructure and marketing. Its ultimate value will be tied to its market penetration. With so many existing alternatives, your currency would have to offer some tangible advantage at this point to gain any traction.
You're also free to create a new search engine, social network, or iPhone alternative. Best of luck to you.
Sure, during which time it functioned as actual currency. At this point, gold's "value" is pretty much inversely correlated to that of the dollar (until that ceases to be the world's reserve currency). No central agency pegs its value to anything. There is more than enough already dug up to cover industrial demand, and plenty more in the ground if that changes. Back when gold actually circulated as money, people intuitively ascribed intrinsic value to it, but nowadays gold has essentially no utility (other than as a hedge against fiat currency) to its holders. Compare that to crytocurrencies, which do circulate and do have utility in the modern world.
Bitcoin detractors are ignoring the real money. Rationalize whatever you want, Bitcoin is up >100% since late August. That’s not a typo.
Imagine those who bought in when it was 8 cents a coin? Many vehicles of money are based on a critical mass of belief. Companies with physical assets posses only a fraction of their stock value in physical assets. The idea they could sell off their assets to cover shares is a fallacy.
Many countries and many companies have opted to invest in Bitcoin and other crypto as a means to diversify their holdings,
Not true. Subdividing it is equivalent to creating more. They've already inflated it by changing the amount of bitcoin distributed per transaction. Don't be fooled by their word games.
But those goods and services provide utility and at least some putative value. Again, what value does an electronic token have that is not financially backed and cannot be exchanged with the issuer (like a store token) for items of value? It's "value" is based on pure speculation. While speculation is hardly unique to Bitcoin and occurs with tangible assets, with Bitcoin you are literally pumping money into the electronic ether/electronic black hole.
That's not completely true. Bitcoin is tied to electronic transactions. There is a utilitarian value (to use your term) to the block chain currencies.
This is NOT a case of someone printing up digital currency and throwing it out into the ether to see who would use it. I think that's a bit of a misconception about the cryptos. They are more akin to commercial trade tokens than to monopoly money.
https://www.fool.com/investing/2020/12/19/why-i-invested-in-bitcoin-and-ethereum/
All I know "For Sure" is, I wish I bought a few hundred of them when they first came out....
But noooooo I did not.....
Have you ever noticed that those heavily promoting this stuff also tend to have large sums of money invested in it? Notice a pattern? Not targeted to that blogger specifically, but it something I have noticed. Also Google "Pump and Dump" with Bitcoin and Tether.
And up from the ground came a....
The utility is obvious. Say you want to put a big chunk of money in a place where you could access it from anywhere in the world at any time without any govt involvement. How would you do it?
You read about people trying to take their net worth with them in diamonds through airports, getting caught and jailed. Not necessary anymore, for now.
But the notion that while you’re doing that, your net worth also goes up 3x thru the magic of Bitcoin? Better have good timing.
Reminds me of the tulip bulb hysteria in 16th century Europe.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Every bubble seems to remind people of the Tulip Bulb hysteria. An interesting question would be: during that episode, what was the tulip bulb hysteria reminding people of?
To date, anyone who bought and held bitcoin has done far better than anyone who "pumped it and then dumped it"
Bitcoin is paid out for facilitating secure financial transactions. But that is only one model. The cryptos represent a much broader class of block-chain applications...see your #2.
Your #3 refers only to bitcoin. If you look at the other cryptos (ethereum, for example), they are tied to specific block-chain applications. Some have even tried to tie them to actual cloud computing. While these particular trade tokens aren't fixed in exchange rate, neither is silver and gold.
People tend to oversimplify the cryptos.
EVERY collectible reminds me of the tulip bulb hysteria.
Having just made a saffron sauce for Christmas, crocus bulbs are the new tulip bulbs.
This discussion began on 11/20 and BC was selling for $18,746.
Thirty eight days later it is selling for over $27K.
While BC may not be "real," its profits certainly are.
The million bitcoin question is "when and at what price will it end?" Seeing the bubble is one thing, not taking advantage of it is another.
Those who remind us of tulips forget that for every million dollars lost in tulip mania, it was gained by someone else. The savvy speculator welcomes bubbles, carefully picking his entry point and even more carefully picking his exist point. Bubbles rarely, if ever go to "worthless" without a declining price warning.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Going back to my OP, it seems to me that if one wanted a large gain they would buy a bit coin. If one wanted to avoid a large loss they would buy the gold proof coin. In five years a bit coin could be worth $250,000 or next to nothing. The $10 old proof gold will not be worth $250,000 but it will also never approach 0.
The old proof gold will give me alot more satisfaction owning it. On the other hand if i owned bit coin and it went to $250,000 i could buy alot more old proof gold.
This is quite interesting. Seems that excess monetary liquidity among the rich, (sound familiar?) drove this craze and it was only the big money and spice traders or the elite owners, as usual who were involved. An occasional farmer with a nice frilly, colorful unique one, won and only really fast. Sounds like refreshing a lot for an AGE privy to me.
https://www.smithsonianmag.com/history/there-never-was-real-tulip-fever-180964915/
National Commemorative Medals of the U.S. Mint:
https://www.pcgs.com/setregistry/u-s-coins/medals-tokens/national-commemorative-medals-united-states-mint-1940-present/alltimeset/195526
The number of bitcoins are CURRENTLY 21,000,000. This can be altered by changing the initial agreement, which has happened before.
@Goldminers - That is an interesting read. I like this part, "Writers and historians have reveled in the absurdity of the event".
We seem to have some writers, historians, and revelers here as well.
There are currently 18.58 million bitcoin.
According to coindesk.com "only approximately 21 million bitcoins will ever be created. New coins are minted every 10 minutes by bitcoin miners who help to maintain the network by adding new transaction data to the blockchain."
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Absolutely. And when a geomagnetic storm of sufficient intensity hits the earth.... or a rogue nation sets off an EMT high above the USA... your bitcoin will likely be gone and worthless. But then again, so will many other things that depend on computers, voltage lines, etc.
It's not tinfoil hat theory, but real and has some pretty high chances of happening. Carrington event in 1859 resulted in burning telegraph wires and started some fires on railroad ties (the rails conducted high currents from the magnetic storm). That was back in much less technical times... the microcircuits of today would likely be devestated.
Not always> @derryb said:
This is such a fictional number. They have absolutely inflated the number by decreasing (by design) the payout rate for bitcoin mining even as the effort of the mining went up. So, when the work you do was once worth 50 BTC, it's now worth 6.25 BC. That is 100% absolutely equivalent to increasing the number of BTC.
investopedia.com/tech/how-does-bitcoin-mining-work/
"How Much a Miner Earns
The rewards for bitcoin mining are reduced by half every four years. When bitcoin was first mined in 2009, mining one block would earn you 50 BTC. In 2012, this was halved to 25 BTC. By 2016, this was halved again to 12.5 BTC. On May 11, 2020, the reward halved again to 6.25 BTC. "
I fail to understand your argument here. We agree that the number of Bitcoins is increasing due to mining rewards. The 21 million number is the ultimate cap on the number of Bitcoins that can exist, and is expected to be reached circa the year 2140. How is the payout rate being halved every four years relevant to anything? While miners are now getting 6.25 BC instead of the erstwhile 50 BC, the value (in dollars) thereof is much greater. Again, how is this relevant to anything?
I guess you don't realize that the Internet (and Bitcoin) are global entities with significant amounts of redundancy built in. If you want to make financial decisions predicated on a natural phenomenon that hasn't happened since 1859, that's your prerogative. Your gold has a much higher chance of melting in a common fire.
Total BS. The payout in coin per mining hour is continually decreasing because the number of bitcoin left to mine is shrinking. The rising price per coin is actually returning more dollars per coin mined even though it takes more time to mine that coin. The last coin will take weeks or even months to mine. Of course mining is increasing the number of BC, that is how it works. The number has not yet reached it's end of 21M BC. It is the shrinking supply of BC left to find that aids in driving the price.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan