<div dir="ltr">On Wed, Nov 6, 2013 at 10:12 PM, Brent Allsop <span dir="ltr"><<a href="mailto:brent.allsop@canonizer.com" target="_blank">brent.allsop@canonizer.com</a>></span> wrote:<br><div class="gmail_extra"><div class="gmail_quote">
<blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left-width:1px;border-left-color:rgb(204,204,204);border-left-style:solid;padding-left:1ex"><br>
Transhumanist economists,<br>
<br>
As most of you know, in 2010, some guy purchased about $25 worth of Bitcoin, which is now worth over $800K. My working hypothesis is that this will continue and that before 2020, Bitcoin will be worth a million bucks. It's so funny to tell people that, and see them look at you with that "Your CRAZY" look in their eyes, as they say "A Bitcoin isn't going to be worth a million bucks!"<br>
</blockquote><div><br></div><div>It did briefly shoot above $300 for a moment this morning. Crazier things have happened. My dad is typical of the "it's a Ponzi scheme" crowd. I don't know exactly how to explain why it is not a Ponzi scheme, but it is my belief that it is not.</div>
<div><br></div><div>In looking at the graph, it seems we're in a third bubble at the moment. It is just going up too steep. The $20 of bitcoin I bought Tuesday are now at $25. Crazy stuff.</div><div> </div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left-width:1px;border-left-color:rgb(204,204,204);border-left-style:solid;padding-left:1ex">
Have you checked the price of Gold, lately? It's been crashing, dramatically, for 2 years now. Why do you think? The so called gold experts, are saying things like:<br>
<br>
"The bear market in gold has been going on for two years. It seems to fly in the face of fundamentals, as central banks print enough currency to paper the world."<br></blockquote><div><br></div><div>It is hard to believe that gold isn't flying upwards given the state of the world. Guess there are more optimists than pessimists. Which overall may be good, or bad... depending on who's right about that sort of thing.</div>
<div> </div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left-width:1px;border-left-color:rgb(204,204,204);border-left-style:solid;padding-left:1ex">Once you factor in the fact that there is a new competitor in town, and that people are starting to sell Gold to buy Bitcoin, that explains what otherwise doesn't make sense to these traditional gold "experts" that have made lots of money up till two years ago. In other words, All the money that is in the pockets of holders of Gold, is now flowing into the pockets of holders of Bitcoins, at a very rapid rate.<br>
</blockquote><div><br></div><div>I think it is incredibly premature to say "All the money" is doing ANYTHING. All the Bitcoins in the world are worth around $3.5 billion dollars at present. (It was $2.5 billion last week, so who knows where it will be next week)</div>
<div><a href="http://blockchain.info/charts/market-cap">http://blockchain.info/charts/market-cap</a> </div><div><br></div><div><br></div><div><span style="color:rgb(0,0,0);font-family:sans-serif;font-size:12.666666984558105px;line-height:19.19791603088379px">Accordign to </span></div>
<div><a href="https://en.wikipedia.org/wiki/Gold">https://en.wikipedia.org/wiki/Gold</a><span style="color:rgb(0,0,0);font-family:sans-serif;font-size:12.666666984558105px;line-height:19.19791603088379px"><br></span></div>
<div>The total gold mined to 2012 was estimated to be <span style="color:rgb(0,0,0);font-family:sans-serif;font-size:12.666666984558105px;line-height:19.19791603088379px">5.6 billion </span><a href="https://en.wikipedia.org/wiki/Troy_ounce" title="Troy ounce" style="color:rgb(11,0,128);background-image:none;font-family:sans-serif;font-size:12.666666984558105px;line-height:19.19791603088379px">troy ounces</a><span style="color:rgb(0,0,0);font-family:sans-serif;font-size:12.666666984558105px;line-height:19.19791603088379px"> </span></div>
Current spot is $1305.40, so that's $7,310,240,000,000 if I did my math right. Not quite half of the US national debt. </div><div class="gmail_quote"><br></div><div class="gmail_quote">That means all the gold in the world is worth 2089 times what all the Bitcoins in the world are currently worth (even in the current little bubble). Do you honestly think the price of Bitcoins could effect the price of gold all that much given that ratio?</div>
<div class="gmail_quote"><div><span style="color:rgb(0,0,0);font-family:sans-serif;font-size:12.666666984558105px;line-height:19.19791603088379px"><br></span></div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left-width:1px;border-left-color:rgb(204,204,204);border-left-style:solid;padding-left:1ex">
And My belief is that this Gold casualty that is just getting started, is just the first casualty. It will soon spread to stocks, bonds, real estate, and anything with value that can be sold. All the money in the pockets of the people holding them, will be quickly draining into the pockets of Bitcoiners at an increasing accelerating rate.<br>
</blockquote><div><br></div><div>We'll see. I'm a huge fan of Bitcoins. I think they will keep going up (although they might go down a little before they continue up). But someone explained to me last night that if you valued everything on the planet, and divided it by the number of Sitoshi you would get about 50 cents. (They used this to prove that the rapper 50 cent is Sitoshi, an interesting speculation at best.)</div>
<div> </div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left-width:1px;border-left-color:rgb(204,204,204);border-left-style:solid;padding-left:1ex">
Bitcoin, as many experts are starting to say: "is simply the best investment out there, bar none." So what would you expect? Money flows to where it is treated the best, just like water flows downhill. And if you have a Bitcoin in your pocket, that is looking increasingly tempting.<br>
</blockquote><div><br></div><div>Scary that people look at it as an investment, rather than as a means to an end.</div><div> </div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left-width:1px;border-left-color:rgb(204,204,204);border-left-style:solid;padding-left:1ex">
As the cost of money and interest rates starts to skyrocket, as all sources of capital continue to flow into Bitcoin what will happen? I think at least the following will happen:<br>
<br>
1. People will be selling anything they can liquidate, so they can buy Bitcoin. Even at a loss, since that loss will soon be made up for, once it is in Bitcoin. (Do you think a tax penalty of 10%, will stop people from liquidating their IRAs?)<br>
</blockquote><div><br></div><div>That kind of "gold fever" is not sustainable, and this kind of thinking does turn Bitcoin into a kind of Ponzi scheme.</div><div> </div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left-width:1px;border-left-color:rgb(204,204,204);border-left-style:solid;padding-left:1ex">
2. People will be borrowing money, mortgaging things, like their house, to buy Bitcoins, because no interest rate will come close to the rate at which Bitcoin will continue to go up.<br></blockquote><div><br></div><div>
I hope people don't do that.</div><div> </div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left-width:1px;border-left-color:rgb(204,204,204);border-left-style:solid;padding-left:1ex">
3. The price of stocks will decline. The PE ratio of stocks has historically been at around 20. This will drop by half or more, as nobody will want to buy stocks, unless it is a very good value. The greatly reduced PE, will become "the new normal" and it will be much harder to make money by going public.<br>
</blockquote><div><br></div><div>It would take a mass hysteria for that to happen.</div><div> </div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left-width:1px;border-left-color:rgb(204,204,204);border-left-style:solid;padding-left:1ex">
4. Interest rates will go up significantly, because of the demand for money, to buy Bitcoins.<br>
5. The economy will convert from a consumer economy with lots of debt to everyone will only want to only buy something when they absolutely need it. As it will be far better to spend it on something that will be worth 10 times its value in a year or so. It will convert to a bit time saving economy. Will this stabilize the boom and bust cycle?<br>
</blockquote><div><br></div><div>This all assumes that Bitcoin is going to catch on like wildfire. If people don't use it like money, it won't succeed, and then it is just a Ponzi scheme.</div><div> </div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left-width:1px;border-left-color:rgb(204,204,204);border-left-style:solid;padding-left:1ex">
6. The Winklevoss twins will be laughing at Facebook, and Zukkerberg, as Facebook stock price continues to decline and fails to keep pace with their 1% of all bitcoins.<br></blockquote><div><br></div><div>That could happen.</div>
<div> </div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left-width:1px;border-left-color:rgb(204,204,204);border-left-style:solid;padding-left:1ex">When we head into a recession, the fed lowers the interest rate to Zero to provide 'liquidity' and in hopes people will borrow money to invest in the economy. But this doesn't work very well as there is nothing that is making money, to make it worth borrowing during a recession.<br>
<br>
But Bitcoin will change this dramatically. Everyone will want to borrow money even more in a recession, as recession will cause Bitcoins to go up even faster than they are now. People will have even less motivation to invest in the economy. So there will be two market forces. Bitcoins driving up interest rates, and the federal reserve printing money and trying to lower interest rates. People will be borrowing this printed money, purchasing Bitcions. WIll that cause rapid inflation of fiat currency?<br>
<br>
Who will win such an epic battle between Bitcoin trying to increasa interest rates, and the Fed trying to lower them? What will the effect be, when Bitcoin starts rapidly approaching one million $$ ?<br>
<br>
My minds seems to get all scrambled when I try to analyze such. Can you guys help provide some additional rational to my attempt to get my head around what could happen? Could everyone brainstorm some of the long term possibilities, here?<br>
</blockquote><div><br></div><div>What COULD happen is anything. I think that some sanity will eventually grip the market, and that Bitcoin will settle back into a slower growth mode. How far in the future that is depends on whether it can be made into real money, or just the biggest mess in the history of ever.</div>
<div> </div><blockquote class="gmail_quote" style="margin:0px 0px 0px 0.8ex;border-left-width:1px;border-left-color:rgb(204,204,204);border-left-style:solid;padding-left:1ex">I've tried to browse some of the Bitcoins forums for some intelligent information on this, but all of them are idiots that can only think linearly, and they haven't got a clue. While Transhumanists are good at thinking exponentially. So, what are some of the more extreme possibilities you guys see?<br>
<br>
One thing I feel for sure. Everyone should have at last one Bitcoin. And people only say there is no such thing as a "Get Rich Quick Scheme", because they don't know how close the singularity is. <br></blockquote>
<div><br></div><div>How do you see the Singularity as being tied to Bitcoin? (Real question, not rhetorical.) I just bought my first bitcoins the other day. I will buy more soon if I can.</div><div><br></div><div>-Kelly</div>
</div></div></div>