[ExI] [mta] Re: "Crypto Coin Law" vs "Law of the Crypto Coin"?

Gordon gts_2000 at yahoo.com
Wed Aug 14 21:15:12 UTC 2013

Brent Allsop <brent.allsop at canonizer.com> wrote:

>>I recognize and trust you as much more of an expert on things like relationships of the dollar, Bitcion and the DXY, but I am interested, and was one of the only people that did comment on this...  Am I not getting everything you're getting from this?<<

It is important to understand that when you look at the market price of a bitcoin, you're actually looking at an exchange rate in the currency markets. If bitcoin is an accurate digital simulation of a precious metal backed currency, its exchange rate should behave like one. Eye-balling the charts, I observed that it did seem to behave like one for about six weeks. Perhaps it was only a coincidence, but if and when bitcoin becomes less volatile and more accepted as a currency, I plan to do some real statistical analysis of the relationship between bitcoin and the dollar.

This is not to say there is anything like a Moore's Law involved. I mean simply that when the dollar declines in value then all other things being equal it should take more dollars to buy a bitcoin, making bitcoin more valuable in dollars. And when the dollar appreciates, bitcoin should become less valuable in dollars. This same principle is true for bitcoin's relationship to the euro or any other ordinary currency. 

Bitcoin is I think already an interesting way to bet against the dollar, but very speculative. Assuming the inverse correlation with the dollar is meaningful and statistically significant, (as I suspect it is or will soon be), rapid and substantial appreciation in the dollar could disrupt the uptrend in bitcoin in dollar terms. This is true even if bitcoin continues to succeed in other ways. 


 From: Brent Allsop <brent.allsop at canonizer.com>
To: Gordon <gts_2000 at yahoo.com> 
Cc: "transfigurism at googlegroups.com" <transfigurism at googlegroups.com>; ExI chat list <extropy-chat at lists.extropy.org> 
Sent: Saturday, August 10, 2013 7:19 AM
Subject: Re: [ExI] [mta] Re: "Crypto Coin Law" vs "Law of the Crypto Coin"?

Hi Gordon,

I recognize and trust you as much more of an expert on things like
      relationships of the dollar, Bitcion and the DXY, but I am
      interested, and was one of the only people that did comment on
      this.  I also asked for more info from you - perhaps you didn't
      see that post?

It seems to me this indicates evidence of more volume of bitcoin
      activity, and evidence of more arbitrage activity, and I think I
      understand what you are saying about this being evidence of how
      much Bitcion is like all the other currencies?   Am I not getting
      everything you're getting from this?

I guess I'm just not as interested in short term things like this
      and spend more of my time on more important long term things that
      make all things like this irrelevant in the long term.

Also, I think we agree on most things, we are just twisting things
      a bit differently.  Even though I currently have a different
      opinion from you and think "Law of the Crypto Currency" is a good
      name for the camp, I do recognize, like you, there is some amount
      of risk, just like there is risk to things like "Moore's Law", and
      there is certainly short term risk to things like Kurzweil's law
      of accelerating returns.  But, again, long term is something,
      different, entirely.  True, what people want can change,
      especially in the short term, but in the long term they always
      tend to change towards that which is better.  Evolution, can
      suffer setbacks, for various short term reasons, but long term, it
      cannot 'devolve' - such is just logically necessary in a very law
      like way, in my opinion.


On 8/8/2013 11:50 PM, Gordon wrote:

Brent Allsop <brent.allsop at canonizer.com> wrote:
>> So are you and James saying that it isn't possible for very intelligent people to have real rational ways of seeing something, like a particular investment, is a sure thing...
>I can't speak for James, but I am saying that no rational investor believes in sure things. Naive, gullible, unsophisticated investors do.
>> You're only saying that because there has never been a sure financial bet before now!  
>I'm saying it because I know a little bit about how investments in commodities work, and bitcoin is just another commodity. It is unique, yes, but there is nothing about its uniqueness that suggests it should not act like any other commodity.
>It is something like a newly discovered precious metal, (digitally simulated), and one that lends itself to commercial transactions and thus might become widely accepted as a currency. I know something about how precious metals and currency markets work. They don't work according to anything like a "Moore's Law."
>I mentioned in a recent post which was mostly ignored that I
          was intrigued by how Bitcoin's recent price action seemed to
          have been inversely correlated with the DXY index, which is an
          index of the USD vs. a basket of currencies of major US
          trading partners. I wonder if you understood a single word I
          said, and why it might be important.
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