[ExI] [mta] Re: Long Term Bitcoin Catastrophe?

[Mirco Romanato]

Il 23/05/2013 06:07, Brent Allsop ha scritto:
> Hi Gordon,


>> > It could become the Mother of all Ponzi schemes. 

>> Ponzi schemes, normally understood, involve early investors being paid
>> with the investments of late investors. That is not happening with
>> bitcoin.

> If you really think this, you should canonize it.  I bet nobody would
> agree with you.

I agree with him.
Ponzi Schemes or Pyramid Schemes are more like Social Security.

> But I could be very mistaken.  You haven't convinced me
> with just this.  Sure, talking short term, what you are saying may be
> true.  But long term, after Bitcoins have sucked every cent of capital
> out of the stock market, all real estate, and everything of any value,
> all of the people that had been living high on the hog for so long, off
> of the profits of the last investors, and there is finally nothing of
> value left in society to invest in Bitcoins, what happens then?

Then, Bitcoin will be a global currency independent from government, not
inflatable.
It is designed to be used as a currency. Not consumed. Just used.
I can transfer the ownership of my Bitcoins to everyone I choose, if I
know his Bitcoin Address. And no one can take my Bitcoin, if he do not
know the secret key(s) of my addresses.

It will just suck out the value of fiat currencies. Not of stocks (maybe
the stocks of Western Union, PayPal and so on will not fare well, but
this is another problem, the "horse and buggy builder problem).

> It's
> obviosly not like any Ponzi scheme to date, but I believe your missing
> the possible bigger picture.  Again, canonizer.com can help filter
> mistakes like this, if they are mistakes, from all of our thinking,
> while the good ideas can rise above this kind of noise by building an
> expert consensus.

Austrian School people argued for maybe two-three years about Bitcoin
and The Regression Theorem of Mises. Now, their consensus is Bitcoin
satisfy Mises' Regression Theorem. We know when, for the first time,
Bitcoin were used to buy something (pizza).
The contention is if Bitcoin is money or just a mean of indirect
exchange. But this is just a question of "who is the bigger"


>> > If you project the current growth rates at all, it seems very likely that a single
>> Bitcoin could be worth over 
>> a $ million within 5 years.  And a good possibility that that will be
>> just the start.<

>> I hope you're right!

> Again, short term, I, and I'm sure the entire herd is obviously very
> tempted to think the same.  But, are you being completely morally blind
> to the long term fundamental possibilities?

The last statement is like a divide by zero.
I did an investment, I hope it is right and reap a lot of profit.
And, by the way, the long term possibilities are better than the status
quo. With Bitcoin there are no TBTF institutions. Good institutions
live, bad institutions die and do not stick the bill to people.

>> > I've canonized a first draft of my thoughts about Bitcoins, and their
>> future in a "Currency Expert Survey Project" See:
>> http://canonizer.com/topic.asp/155<
>>
>> Interesting project. I might contribute if I find the time.

I just noted an error.
Mt.Gox and CoinBase are not wallets.
They are exchanges that allow to have accounts to send and receive BTC
(and some other currencies)

Blockchain.info have wallets, Multibit, BitcoinQT, Armory, are clients
able to manage a wallet.

But a wallet can just be a piece of paper with the address and the
secret key to manage it.


>> > How many of you own bitcoins?  Anyone Mining bitcoins?  and what do
>> all of you think the value of a Bitcoin will be in one year?:<

>> I followed Bitcoin casually from its inception, but (regrettably) did
>> not take it seriously until only recently, when the total
>> capitalization broke above 1 billion USD. I invested on three separate
>> occasions after the market corrected. I'm happy with my average price,
>> which is below the current market. 

Me too.

> Again, to me, this is all short term meaningless tea leaves that have
> nothing to do with any true long term mathematical fundamentals that
> really matter.

If you want mathematical fundamentals, I have just one.
Bitcoin payments cost around 1% to common merchants, where
PayPal/Visa/Debit card cost >3% to them. This is, at best, 2% difference
for the merchant. Add the "no charge-back possible" difference. And $ in
their accounts the day after.

So it allow the people using bitcoin to have, at least, 2% saving
compared to credit card users. This allow the economy using Bitcoin an
internal growth around the same. Take away the repayment of investment
and likes, this is around 1% for day in growth.

I computed the mean growth rate of BTC price during the last 900 days
(MTgox exchanges rates with US$). It is around 0.8% / day, compound.

> You can't predict how fast the current holders of
> Bitcoins are going to temporarily cash in, and even if you could, what
> good is that compared to any long term mathematical fundamentals.  As is
> typical of the herd, so many pundits are focusing on this kind of short
> term BS, and completely missing what is really important.

BTC holders do not want "cash in", unless the "cash" is used immediately
to buy something. They want hold and use their US$ or € or whatever (get
rid of bad money - reduce their balance at the bank - etc.), because the
value of the US$ is falling but the value of BTC is increasing (short
and long term).

They will start using their BTC when the value of their US$ will become
insignificant compared to the value of their BTC.

> You're at least as good as an expert as I, and probably 90% of the
> world's experts.  Let's get a "Currency Expert" camp started for you. 
> As a peer, I'd surely rate you near the top of My list of experts. 
> There are quite a few experts out there I know I'd rank highly.  Who do
> you all think we would all rank as the worlds best currency expert?
> http://canonizer.com/topic.asp/151.  Would all of you trust the
> consensus of such a list of peer ranked experts as much as I would or
> should?



> The question is, how much expert consensus is there about either of our
> positions?  That is what will surely be the "expert consensus", any such
> expert consensus that arises will be way more intelligent than any of us
> as blind and biased individuals could come up with.





> What do you currently think the value of Bitcoins will be in one year? 

Between 200 and 1.000 US$, maybe more.

> Is there any possibility it will be around 5 times it's value today, as
> is being predicted by the "Law of Bitcoins" camp? 

Yes. It is entirely possible.
I would not be surprised if, by this time, next year, it could be around
4.000.

> http://canonizer.com/topic.asp/154/2  If so, it takes less than a minut
> to join that camp.  If not, it only takes a minute or two to start a new
> camp providing any different POV - so we can see which way the emerging
> expert consensus is leaning.  Far less time than it took you to waste
> your time replying to this post.  Or do you just prefer lazy half baked,
> possibly mostly mistaken thinking, and have no interest in finding out
> if anyone agrees with you, or not, and why?



> Here's another question for all you way better than me experts,
> especially Giulio who I've CCed.  Is there any way the Bitcoin network
> could be altered to allow for more than currently allotted 21 million
> Bitcoins?  Even if 90% of the holders wanted to do this to try to stop a
> terrible hyper deflation?  It doesn't seem possible to me, since even if
> 90% of the exchanges did agree to 'fork' the block chain, if 5% kept the
> old only 21 million chain operating, everyone would quickly abandon the
> 90% fork and switch over to purchase the still hyper deflating chain,
> making the problem explosively worse.  Am I just a clueless, mistaken,
> Bitcoin non expert, or has anyone else wondered such things?  If I'm
> mistaken, what is the expert consensus, and what will make it pop, or
> not - and when?

When deflation is horrible?
Just after the government inflated bubble pop.
Deflation reward prudent people, savers, inflation reward imprudent and
indebted people.

> Gordon, another question for you.  What do you think is the best wallet,
> and which wallet are you using?  Are you in the Coinbase camp, or is
> there something better and safer? http://canonizer.com/topic.asp/127 . 
> And what do you think of any other currency, in comparison, like the
> Ripple?  http://canonizer.com/topic.asp/150/4 ?  Are you investing in
> any other currency?  Which ones are you most focusing on?  Do you have
> any interest in how your current thinking may compare with other
> experts?  Anyone else?  Same questions!  Would you not value knowing
> what the experts think is the current best and safest wallet to use?  If
> the one you are currently using, become risky, or inferior compared to
> another, wouldn't you want to know, before everyone else?

Ripple is very different from Bitcoin or other crypto.

MIrco