Do you think Bitcoin is a safe store of value?

[ERICOPOLY]

Go back three years on this board and gold and silver are the only true money.  Search for broxburnboy's posts.

 

Today that's forgotten and now if dollar gets replaced it will be bitcoins.

 

Bitcoin's price skyrocketed, gold and silver... down.

[rkbabang]

I think of money as a means of short term value storage to facilitate transactions.  I don't consider any form of money a good long term savings vehicle.  I am worried about future inflation of the US dollar, which is why I remain fully invested in securities.  I think that stocks are the best protection against inflation as long as the entire system doesn't collapse.  And if I thought that was going to happen I wouldn't be buying gold or bitcoins either. I'd be buying guns, ammo, non-perishable food, toilet paper, razor blades, non-electric handtools, building greenhouses, raising more animals, etc.

[DoddDisciple]

Stocks seem to be the most resilient form of holding value. The article I mentioned about German stocks keeping up with Weimer hyperinflation was really fascinating.

 

Do you all know there are actually bitcoin and cryptocoin stock exchanges? Where you can invest in the miners and currency exchanges? Has anyone looked at these?

[wachtwoord]

Do people remember the late 90's? People tried online currencies but it failed miserbaly.

 

http://www.cnet.com/1990-11136_1-6278387-1.html

 

#4 on the list

 

Yup because these are centralized (egold was the most famous I believe). In 2009 Satoshi Nakamoto made a revolutionary new approach which makes all this feasible.

[DoddDisciple]

But what if Satoshi Nakamoto = North Korea, NSA, etc. Again, possible tinfoil talk :P

[rkbabang]

But what if Satoshi Nakamoto = North Korea, NSA, etc. Again, possible tinfoil talk :P

 

It doesn't matter.  It is open source.  If there was a backdoor or a weakness in the code it would most likely have been seen by someone by now. When the source code is open for all to see, it doesn't matter who originally wrote it.  What if Shakespeare didn't write Hamlet?  We have it, does it really matter who wrote it at this point?

[rkbabang]

Stocks seem to be the most resilient form of holding value. The article I mentioned about German stocks keeping up with Weimer hyperinflation was really fascinating.

 

Do you all know there are actually bitcoin and cryptocoin stock exchanges? Where you can invest in the miners and currency exchanges? Has anyone looked at these?

 

I just went back to read it.  Yes it is fascinating and it makes sense.  When the value of the money goes down, things of value cost more. That includes labor.  So people get paid more. Services, real goods, and real estate cost more, what gets wiped out is cash savings and anyone on a fixed income.  This is why I think of cash as a very short term storage.  To put it in computer terms, cash is the equivalent of data being stored in the SRAM cache by the processor just long enough to use it, while stocks are the equivalent of data being stored on the hard drive long term for when its needed.

[jb85]

In regards to the perceived weakness that bitcoin is deflationary ("it will encourage hoarding and reduce consuption")  I find this quote helps me think why that may not be the case

 

"Why would anyone buy a product today with a deflating currency that will be worth more tomorrow?"

 

"Why would anyone sell their products today for an inflating currency that will be worth less tomorrow?"

 

at the end of the day, talk to people who have held bitcoins for a while.  While it may seem easy to "hoard" bitcoins until they are worht 100K/coin, almost everyone i've spoken with who were early adopters have sold a substantial portion of their coins already.  Holding to coins when they increase 100x is much harder than people think.  The temptation to sell out is very high.  This is what i've never understood about the need for an inflating currency.  People act like there is no cost to holding a currency (even if it is deflationary).  People make cost benift analysis everyday and just because a currency is deflating at 1 or 2% a year, doesn't mean i'm going to hold it forever.  at a certain point the value of a new TV etc is greater to me than the deflating currency.  The cost benift analysis certainy changes, but the idea that world would be perfectly fine in a 1 or 2% inflationary world...but would collapse in a 1 or 2% deflationary world always seemed odd to me.

 

_____

in regards to the other arguments

 

"Comparision to other earlier digital currencies" - none of these other currencies have been decentralized.  This is itself makes the comparison invalid IMO

 

"The US may shut it down/make it illegal" - this is a valid argument, but when compared to todays valuations i don't see how its relevant.  The bitcoin market cap is about $7 Billion now.  If even 1 or 2 small unstable countries adopted bitcoin (officially or unofficialy) then just based on money supply ratios to GDP, bitcoin would be worth much more than todays prices.  So while a full bull case for bitcoin would involve full 1st world country adoptions, there is also a long term scenario where bitcoin is used as a means of exhcnage or store of value in less stable 3rd world countries"

 

*Also, when people bring up the hyperinflation of the 1920s in germany...its worth mentioning that none of that would've happened in a bitcoin demonated currency. I'm not saying no problems would've existed, but the inflation in germany was a direct result of money printing (which was a result of other issues).

 

*Stocks are still a better place to park your wealth in the long term, but only when/if bitcoin becomes mass adopted.  Once/if it reaches a steady state, the return on bitcoin will basically match the growth of the economy (production increases, but the amt of currency stays the same..meaning each unit of currency rises with the rate of GDP increase).  The play now is ride bitcoin as it becomes mass adopted and then convert back into stocks or other higher growth investments.

 

 

I still think bitcoin fails 95% of the time going forward...but it seems like such an asymetric bet, that putting in a small portion of your savings seems to make sense.  No one can fully predict what will happen, but the payoff is so skewed at this point, that unless you are 99%+ sure that it will fail, a small bet in bitcoin may make sense

[DoddDisciple]

Overstock.com to begin accepting Bitcoin Q2 2014?

 

http://blogs.marketwatch.com/thetell/2013/12/19/overstock-com-to-accept-bitcoins-ceo-says-money-is-too-important-to-leave-in-the-hands-of-government-officials/

[wachtwoord]

Worlds Within the Margin you seem to miss the point so much it's probably impossible to explain it to you. Therefore I'll ignore most of your rant but I'll offer these 2 points:

 

1. Tulips aren't unlimited in amount and tulips spoil. I have no idea why anyone would compare Bitcoin to that except utter ignorance.

2. There are companies who pay their employees in Bitcoin. The first one is Finish I believe and recently I remember seeing this: http://www.coindesk.com/polish-web-design-company-pays-salaries-bitcoin/ in the news.

 

I hope you educate yourself better :)

[jb85]

 

The problem with any crypto currency in the long run is that most economic theory doesn't work too well with it. There is lots of established research on how supply and demand reacts to price level changes in fiat currencies. There is plenty of economic research over the past two centuries about physically backed currencies. Both of these have been tested in one form or the other on a large scale over centuries or in gold's case millennias of real usage.

 

Bitcoin lacks the requirements to make it a currency, it lacks the historical and cultural significance of gold, it lacks any government backing, it's inherently harder to use than practically any currency, it's not very secure, has very few benefits over existing currencies.

 

 

 

What is difficult about scanning a QR code?  If anything the base bitcoin protocal allows for innovations that make sending and receiving money much more easily/cheaper (especially for merchants) than current transaction methods.

 

Is it a universal requirement that government back is required for something to be a medium of exchange?  Without getting too political, there are many that would argue that private/competing forms of currency allow an economy to perform just fine.  a decent part of the 1800s in the US had many competing currencies, and GDP/capita rose at the same rate during this period as it has post 1913.  Obviously a ton of variables in this, but the idea that a currency collapes without govt backing is far from proven IMO.

 

Finally, i would argue the bitcoin is actually much more secure than gold or any other currency.  Not only is it decentralized and relatively immune from manipulation, but if proper security precautions are taken...is virtually impossible to hack/steal.  There have certainly been hacks, but none of these have been the result of brute force hacking of the private key.  It was some other user error that allowed the coins to be stolen.  That is not the fault of bitcoin...and I believe over time more secure third party options will come online. 

[LC]

This is what i've never understood about the need for an inflating currency.  People act like there is no cost to holding a currency (even if it is deflationary).  People make cost benift analysis everyday and just because a currency is deflating at 1 or 2% a year, doesn't mean i'm going to hold it forever.  at a certain point the value of a new TV etc is greater to me than the deflating currency.  The cost benift analysis certainy changes, but the idea that world would be perfectly fine in a 1 or 2% inflationary world...but would collapse in a 1 or 2% deflationary world always seemed odd to me.

I don't think the 1-2%/year real costs are the worry, I think it's when something black swan-esque happens and there is real value to a measured inflating of the currency value. Ray Dalio's "beautiful deleveraging" comes to mind.

[jb85]

This is what i've never understood about the need for an inflating currency.  People act like there is no cost to holding a currency (even if it is deflationary).  People make cost benift analysis everyday and just because a currency is deflating at 1 or 2% a year, doesn't mean i'm going to hold it forever.  at a certain point the value of a new TV etc is greater to me than the deflating currency.  The cost benift analysis certainy changes, but the idea that world would be perfectly fine in a 1 or 2% inflationary world...but would collapse in a 1 or 2% deflationary world always seemed odd to me.

I don't think the 1-2%/year real costs are the worry, I think it's when something black swan-esque happens and there is real value to a measured inflating of the currency value. Ray Dalio's "beautiful deleveraging" comes to mind.

 

Yeah its an interesting question that I don't pretend to know the answer with anything near certainty.  But in our hypothetical world, were bitcoin is the only currency.  Then there would still be credit etc...but the backdrop would be much less safe/assured (no govt backing of any asset).  The argument has been made that credit/GDP went up so much because of the implicit government backing, and that if that government backing was not there, then banks etc would have been much more prudent with their lending and the credit/GDP would never have gotten to the levels that it did...therefore removing the need for a "beautiful deleveraging".  Kinda similar to Talebs ideas of anitfragility etc.  A lot of times what we consider as "safety nets" actually make the system more dangerous.  I by no means agree with all of Talebs ideas, but that is at least one of the arguments against the "safety nets"/"government backing is essential" arguments

 

I think at the end of the day this boils down to whether the libertarian ideas in macroeconomics work...and whether they'll be given a chance to be tested.  I have no idea the outcome...but i'm skeptical of people who seem to 100% what the outcome will be.  I will say this though...I don't think the rise in GDP/capita over the last 200+ years required a centrally backed curency.  You can make the argument that the dips/rises would've been higher/lower in a centrally backed/not centrally backed currency.  But i think if we had private currencies for the entire 200+ year history, that GDP/capita would be about where it is today.

[yadayada]

Worlds Within the Margin you seem to miss the point so much it's probably impossible to explain it to you. Therefore I'll ignore most of your rant but I'll offer these 2 points:

 

1. Tulips aren't unlimited in amount and tulips spoil. I have no idea why anyone would compare Bitcoin to that except utter ignorance.

2. There are companies who pay their employees in Bitcoin. The first one is Finish I believe and recently I remember seeing this: http://www.coindesk.com/polish-web-design-company-pays-salaries-bitcoin/ in the news.

 

I hope you educate yourself better :)

he actually seems to make some v good points.. Seems like you are ignoring all the good points in this thread. They are compared to tullips because values of cryptocurrencies are massively inflated right now, They are both in a bubble. And who the fk wants to get paid in bitcoin when buying power can crash 50% the next day?

 

Ill add another one. The security is horrible and forces you to essentially use a centralized wallet with an extra layer of security. Since you can brute force, it wouldnt take long to crack the weak bitcoin passwords, meaning, the use of like less then 8 or 9 truly random characters and numbers. With most password protected things it shuts down after x amount of failed tries. But that is not the case with this. So in a way to be secure you have to centralize it. Or you have to use very long pain in the ass passwords. Allthough that is not necessairy in small quantities. But even with like 10k$ you dont want to use words. And they are generally easiest to remember. So there is the added risk that you lose or forget your password and forever lose your money.

 

ALso not a single bitcoin fanatic has adressed the problem of volatility. We have a real chicken and egg problem here.

[jb85]

 

 

Ill add another one. The security is horrible and forces you to essentially use a centralized wallet with an extra layer of security. Since you can brute force, it wouldnt take long to crack the weak bitcoin passwords, meaning, the use of like less then 8 or 9 truly random characters and numbers. With most password protected things it shuts down after x amount of failed tries. But that is not the case with this. So in a way to be secure you have to centralize it. Or you have to use very long pain in the ass passwords. Allthough that is not necessairy in small quantities. But even with like 10k$ you dont want to use words. And they are generally easiest to remember. So there is the added risk that you lose or forget your password and forever lose your money.

 

ALso not a single bitcoin fanatic has adressed the problem of volatility. We have a real chicken and egg problem here.

 

Go to download the bitaddress.org source code from github (all open source) and generate paper wallet.  There is practically no way to brute force hack with that method.  This is the way you shuold be storing any significant amts of bitcoin.    It is fairly easy to generate these paper wallets in bulk...Store the vast majority of your bitcoins in these paper wallets...occasionally transfer money to less secure hot wallet for everyday spending.  This is somewhat troublesome at this point (though would prob require about 5 minutes of xfering work on the computer per month), but third party apps will exist in the future that makes this easier.

 

For the sake of discussion, it seems like most here are using arguments about a lack of features that are not the responsibilty of that actual bitcoin protocal, but the responsibiltiy of third party applications that work with the bitcoin protocal.  If these applications don't exist yet that doesn't mean that 1) there is a flaw in the bitcoin protocal 2) that these applications won't be created in the future by 3rd parties.

 

And finally in order to determine if something is in a bubble, then a fundamental value has to be assigned to it.  I'd be curious to hear everyones thoughts on this.  I personally view in the following format (price/coin : chance of this happening)

 

$500K/coin : 1%

$200K/coin : 1%

$100K/coin : 1%

$50K/coin : 1%

$25K/coin : 1%

sub $1k/coin : 95%

 

those numbers are approximate and frankly just used for demonstration purposes.  The point is that if those nubmers are accurate then bitcoin could be undervalued.  Now if you think with 99+% certainty that bitcoin will fail, then fine...anything above $100 is a bubble...in which case the 6 month price stability in the middle of this year was also a bubble..  Just seems to me that people are yelling bubble because the price went up.  That kinda logic isn't always true and really needs to get back to the fundamental analysis.  Microsft went up similar amts in the 80s  it wasn't a bubble.

 

 

[tombgrt]

In regards to the perceived weakness that bitcoin is deflationary ("it will encourage hoarding and reduce consuption")  I find this quote helps me think why that may not be the case

 

"Why would anyone buy a product today with a deflating currency that will be worth more tomorrow?"

 

"Why would anyone sell their products today for an inflating currency that will be worth less tomorrow?"

 

at the end of the day, talk to people who have held bitcoins for a while.  While it may seem easy to "hoard" bitcoins until they are worht 100K/coin, almost everyone i've spoken with who were early adopters have sold a substantial portion of their coins already.  Holding to coins when they increase 100x is much harder than people think.  The temptation to sell out is very high.  This is what i've never understood about the need for an inflating currency.  People act like there is no cost to holding a currency (even if it is deflationary).  People make cost benift analysis everyday and just because a currency is deflating at 1 or 2% a year, doesn't mean i'm going to hold it forever.  at a certain point the value of a new TV etc is greater to me than the deflating currency.  The cost benift analysis certainy changes, but the idea that world would be perfectly fine in a 1 or 2% inflationary world...but would collapse in a 1 or 2% deflationary world always seemed odd to me.

 

 

IMO: Because consumption doesn't create more wealth for consumers whereas production normally does create more wealth for the producers?

The increase in wealth for producers is high enough to offset any reasonable inflation. Deflation however delays (or sometimes completely removes) average consumption and investment just enough to have that disruptive effect. You're just not going to come up with the same economic growth numbers, not ever. You need a force that pushes people into eventual consumption (but that also isn't too great to shun producers away from production). That's my view (with terrible English language skills which makes it hard to explain it properly, sorry. ;)).

[DoddDisciple]

Who's actually purchased any of these? What online wallets are you using?

 

I'm thinking of getting 1 BTC and holding, and then an equal BTC/USD amount of each other crypto currency and the same equal amount for each cryptostock and holding them as well. That's more than 100 position types, hence my desire to not setup a physical wallet for each one.

 

I don't see how anyone can have a directional position on any of these in the short term. I've frequently seen "pump and dump" being explained as a good thing (for current holders of course) and if you look at the IRC/trading chats, there is a lot of discussion of technical analysis. Maybe there's some value in technical analysis, I don't know, but even if there is, I don't see how any of it could be relevant since the markets are not liquid on these at all. There are multiple day delays between USD to BTC to altcoins and back again. You could have a massive increase on the altcoin basket side and then lose 50% going from BTC to USD.

 

Who knows, maybe HoboNickels will be the currency of the future :P

[wachtwoord]

You need a force that pushes people into eventual consumption (but that also isn't too great to shun producers away from production). That's my view (with terrible English language skills which makes it hard to explain it properly, sorry. ;)).

 

Why would you think this? Are you going to hold onto all your possessions until your death if I guarantee they'll rise in value @ a steady 2% APR indefinitely? Of course not, you want to use and enjoy your "money", for that is the only purpose to pursue wealth in the first place.

[DoddDisciple]

2. Don't invest in alt-coins and if you must stick with LTC and PPC (most are just git clones of the Bitcoin codebase, be careful!)

 

I really think a basket method is the best way to go about this. No one knows what is going to happen, except for maybe Satoshi, the Winklevii, and the FBI (since they hold so much of DPR's money :P). Who would have thought Dogecoin and Deutsche eMark (I love these names!) would have rocketed up yesterday?

 

You're not going to see possible 100x growth in just Bitcoin. $60k a coin where you have to worry about them being stolen? Not to mention that the average American is notoriously bad with decimal places to actually split that up and spend it right.

 

I haven't even heard people talking about Ripple, which is near a $2B market cap and where they did the complete opposite of BTC as far as I can tell and made all the coins and are now selling em'. It's #2 ahead of LTC.

 

 

[yadayada]

he actually seems to make some v good points..

 

I can't see a one. But to be fair I'll respond to your entire post now.

 

Seems like you are ignoring all the good points in this thread. They are compared to tullips because values of cryptocurrencies are massively inflated right now, They are both in a bubble. And who the fk wants to get paid in bitcoin when buying power can crash 50% the next day?

 

Bitcoin is massively undervalued, so it's not a bubble. It might go down a lot from here still though. That does not make it a bubble.

 

I definitely would not mind being paid in Bitcoin. Although I'd prefer the be paid multiple times per month then to Dollar cost average a little better :)

 

Ill add another one. The security is horrible and forces you to essentially use a centralized wallet with an extra layer of security. Since you can brute force, it wouldnt take long to crack the weak bitcoin passwords, meaning, the use of like less then 8 or 9 truly random characters and numbers. With most password protected things it shuts down after x amount of failed tries. But that is not the case with this. So in a way to be secure you have to centralize it. Or you have to use very long pain in the ass passwords. Allthough that is not necessairy in small quantities. But even with like 10k$ you dont want to use words. And they are generally easiest to remember. So there is the added risk that you lose or forget your password and forever lose your money.

 

It's more secure than any other store of value I ever used or seen. The decentralization is the thing that makes it secure (so if you start using a centralized approach you know where you've gone wrong). The security is in your own hands, so as a highly educated IT professional I can tell you I have decent security ;)

 

Don't know how to do that yourself and need it? Hire me or someone like me.

 

ALso not a single bitcoin fanatic has adressed the problem of volatility. We have a real chicken and egg problem here.

 

That's because volatility isn't a problem. If you start something from scratch is going to be volatile. What do you think the prices of any huge ass company of today would look like in the first years after its inception (Think MSFT or GOOG for instance). That's just the way it goes when 1. something truly valuable starts from scratch and 2. The value is actually being expanded as you go. The more massive something is undervalued to more massive the price fluctuations.

again your kinda ignoring my points really. First bitcoin is massively overvalued. If you say it is undervalued then you dont understand what the fundamental value of bitcoin is. When it was 30$ it had the same amount of daily transactions at 1k$. It means people arent really using it much to pay for stuff, but mostly to speculate and day trade. So hence its massively overvalued. Everyone is hoarding it, and that is why the price is so high now. Even most bitcoin fanatics agree with this. Bitpay had like 100 million$ of transactions total now. Given its daily volume, and given the fact iv seen a bunch of merchants basicly saying that barely anyone uses it to pay for stuff, it means people dont really use it yet. Daily transaction volume was like 20 million early this year. So that is exactly 5 days of volume before the two bubbles. And at some point everyone is going to look around and realize, everyone is speculating, and nobody is using this for stuff! And then the price will crash to like 20$ again.

 

And second, the whole point is that if it is volatile and risky to use, people wont use it. And so it will not stop being volatile. You need widespread adoption to stop this. You basicly said, naaah google was volatile as well. But that comparison is completly ridicilous because google's value could be volatile, because it didnt get in the way of its use.

 

And really you want to be paid in bitcoins?? What if you have to pay rent. You get paid when they are worth 1k$. And now they are at 600$ and you have to pay your living expenses from a salary that is worth almost 50% less. Im not sure anyone but gamblers want to get paid like this. So again, because I think you dont understand this, most regular people dont like to use bitcoin, because it doesnt really offer a big advantage, and you could lose like 30% before you get to pay for your stuff.

 

And if you just keep dollars in a bitstamp account or something, and pay with those, then why the hell use them in the first place? Why not use paypal. Does exactly the same. And it is actually free to use.

 

And finally alot of bitcoin's usefullness is really only because banks are still inefficient in certain areas. If it really becomes a thread, they can just band together and become more efficient.

 

But yeah i guess these problems will just magically take care of it self.

[wachtwoord]

2. Don't invest in alt-coins and if you must stick with LTC and PPC (most are just git clones of the Bitcoin codebase, be careful!)

 

I really think a basket method is the best way to go about this. No one knows what is going to happen, except for maybe Satoshi, the Winklevii, and the FBI (since they hold so much of DPR's money :P). Who would have thought Dogecoin and Deutsche eMark (I love these names!) would have rocketed up yesterday?

 

You're not going to see possible 100x growth in just Bitcoin. $60k a coin where you have to worry about them being stolen? Not to mention that the average American is notoriously bad with decimal places to actually split that up and spend it right.

 

I haven't even heard people talking about Ripple, which is near a $2B market cap and where they did the complete opposite of BTC as far as I can tell and made all the coins and are now selling em'. It's #2 ahead of LTC.

 

If you want to speculate that's fine. Dogecoin will go nowhere it's a Bitcoin clone and Deutsche eMark is a PPCoin clone. If you're going to speculate don't do it basket style as you'll lose guaranteed. You'll need to cherry pick the pump and dumps that will work. Good luck, I think the luck factor is even larger than when doing the same with penny stocks.

 

I'd advice to stick with the real thing or invest in altcoins that at least vary on the original concept. Even LTC (different hashing algorithm) and PPCoin (Proof of Stake) are only minor variations and these variations can be included in Bitcoin if this is needed. So even LTC and PPCoin have very limited chances of success.

 

If an alt-coin is ever created which revolutionizes crypto-currencies in a way that Bitcoin cannot adopt it, by all means jump on it as soon as possible. 

[wachtwoord]

he actually seems to make some v good points..

 

I can't see a one. But to be fair I'll respond to your entire post now.

 

Seems like you are ignoring all the good points in this thread. They are compared to tullips because values of cryptocurrencies are massively inflated right now, They are both in a bubble. And who the fk wants to get paid in bitcoin when buying power can crash 50% the next day?

 

Bitcoin is massively undervalued, so it's not a bubble. It might go down a lot from here still though. That does not make it a bubble.

 

I definitely would not mind being paid in Bitcoin. Although I'd prefer the be paid multiple times per month then to Dollar cost average a little better :)

 

Ill add another one. The security is horrible and forces you to essentially use a centralized wallet with an extra layer of security. Since you can brute force, it wouldnt take long to crack the weak bitcoin passwords, meaning, the use of like less then 8 or 9 truly random characters and numbers. With most password protected things it shuts down after x amount of failed tries. But that is not the case with this. So in a way to be secure you have to centralize it. Or you have to use very long pain in the ass passwords. Allthough that is not necessairy in small quantities. But even with like 10k$ you dont want to use words. And they are generally easiest to remember. So there is the added risk that you lose or forget your password and forever lose your money.

 

It's more secure than any other store of value I ever used or seen. The decentralization is the thing that makes it secure (so if you start using a centralized approach you know where you've gone wrong). The security is in your own hands, so as a highly educated IT professional I can tell you I have decent security ;)

 

Don't know how to do that yourself and need it? Hire me or someone like me.

 

ALso not a single bitcoin fanatic has adressed the problem of volatility. We have a real chicken and egg problem here.

 

That's because volatility isn't a problem. If you start something from scratch is going to be volatile. What do you think the prices of any huge ass company of today would look like in the first years after its inception (Think MSFT or GOOG for instance). That's just the way it goes when 1. something truly valuable starts from scratch and 2. The value is actually being expanded as you go. The more massive something is undervalued to more massive the price fluctuations.

again your kinda ignoring my points really. First bitcoin is massively overvalued. If you say it is undervalued then you dont understand what the fundamental value of bitcoin is. When it was 30$ it had the same amount of daily transactions at 1k$. It means people arent really using it much to pay for stuff, but mostly to speculate and day trade. So hence its massively overvalued. Everyone is hoarding it, and that is why the price is so high now. Even most bitcoin fanatics agree with this. Bitpay had like 100 million$ of transactions total now. Given its daily volume, and given the fact iv seen a bunch of merchants basicly saying that barely anyone uses it to pay for stuff, it means people dont really use it yet. And at some point everyone is going to look around and realize, everyone is speculating, and nobody is using this for stuff! And then the price will crash to like 20$ again.

 

And second, the whole point is that if it is volatile and risky to use, people wont use it. And so it will not stop being volatile. You need widespread adoption to stop this. You basicly said, naaah google was volatile as well. But that comparison is completly ridicilous because google's value could be volatile, because it didnt get in the way of its use.

 

And really you want to be paid in bitcoins?? What if you have to pay rent. You get paid when they are worth 1k$. And now they are at 600$ and you have to pay your living expenses from a salary that is worth almost 50% less. Im not sure anyone but gamblers want to get paid like this. So again, because I think you dont understand this, most regular people dont like to use bitcoin, because it doesnt really offer a big advantage, and you could lose like 30% before you get to pay for your stuff.

 

And if you just keep dollars in a bitstamp account or something, and pay with those, then why the hell use them in the first place? Why not use paypal. Does exactly the same. And it is actually free to use.

 

And finally alot of bitcoin's usefullness is really only because banks are still inefficient in certain areas. If it really becomes a thread, they can just band together and become more efficient.

 

But yeah i guess these problems will just magically take care of it self.

 

You're just reiterating your previous points without really reading my responses. I could do the same but that wouldn't really be valuable :)

 

If your this sure Bitcoin is overvalued I'd direct you to https://www.bitfinex.com/ to short sell Bitcoin and put your money where your mouth is.

[yadayada]

he actually seems to make some v good points..

 

I can't see a one. But to be fair I'll respond to your entire post now.

 

Seems like you are ignoring all the good points in this thread. They are compared to tullips because values of cryptocurrencies are massively inflated right now, They are both in a bubble. And who the fk wants to get paid in bitcoin when buying power can crash 50% the next day?

 

Bitcoin is massively undervalued, so it's not a bubble. It might go down a lot from here still though. That does not make it a bubble.

 

I definitely would not mind being paid in Bitcoin. Although I'd prefer the be paid multiple times per month then to Dollar cost average a little better :)

 

Ill add another one. The security is horrible and forces you to essentially use a centralized wallet with an extra layer of security. Since you can brute force, it wouldnt take long to crack the weak bitcoin passwords, meaning, the use of like less then 8 or 9 truly random characters and numbers. With most password protected things it shuts down after x amount of failed tries. But that is not the case with this. So in a way to be secure you have to centralize it. Or you have to use very long pain in the ass passwords. Allthough that is not necessairy in small quantities. But even with like 10k$ you dont want to use words. And they are generally easiest to remember. So there is the added risk that you lose or forget your password and forever lose your money.

 

It's more secure than any other store of value I ever used or seen. The decentralization is the thing that makes it secure (so if you start using a centralized approach you know where you've gone wrong). The security is in your own hands, so as a highly educated IT professional I can tell you I have decent security ;)

 

Don't know how to do that yourself and need it? Hire me or someone like me.

 

ALso not a single bitcoin fanatic has adressed the problem of volatility. We have a real chicken and egg problem here.

 

That's because volatility isn't a problem. If you start something from scratch is going to be volatile. What do you think the prices of any huge ass company of today would look like in the first years after its inception (Think MSFT or GOOG for instance). That's just the way it goes when 1. something truly valuable starts from scratch and 2. The value is actually being expanded as you go. The more massive something is undervalued to more massive the price fluctuations.

again your kinda ignoring my points really. First bitcoin is massively overvalued. If you say it is undervalued then you dont understand what the fundamental value of bitcoin is. When it was 30$ it had the same amount of daily transactions at 1k$. It means people arent really using it much to pay for stuff, but mostly to speculate and day trade. So hence its massively overvalued. Everyone is hoarding it, and that is why the price is so high now. Even most bitcoin fanatics agree with this. Bitpay had like 100 million$ of transactions total now. Given its daily volume, and given the fact iv seen a bunch of merchants basicly saying that barely anyone uses it to pay for stuff, it means people dont really use it yet. And at some point everyone is going to look around and realize, everyone is speculating, and nobody is using this for stuff! And then the price will crash to like 20$ again.

 

And second, the whole point is that if it is volatile and risky to use, people wont use it. And so it will not stop being volatile. You need widespread adoption to stop this. You basicly said, naaah google was volatile as well. But that comparison is completly ridicilous because google's value could be volatile, because it didnt get in the way of its use.

 

And really you want to be paid in bitcoins?? What if you have to pay rent. You get paid when they are worth 1k$. And now they are at 600$ and you have to pay your living expenses from a salary that is worth almost 50% less. Im not sure anyone but gamblers want to get paid like this. So again, because I think you dont understand this, most regular people dont like to use bitcoin, because it doesnt really offer a big advantage, and you could lose like 30% before you get to pay for your stuff.

 

And if you just keep dollars in a bitstamp account or something, and pay with those, then why the hell use them in the first place? Why not use paypal. Does exactly the same. And it is actually free to use.

 

And finally alot of bitcoin's usefullness is really only because banks are still inefficient in certain areas. If it really becomes a thread, they can just band together and become more efficient.

 

But yeah i guess these problems will just magically take care of it self.

 

You're just reiterating your previous points without really reading my responses. I could do the same but that wouldn't really be valuable :)

 

If your this sure Bitcoin is overvalued I'd direct you to https://www.bitfinex.com/ to short sell Bitcoin and put your money where your mouth is.

You basicly said, well no your wrong, it is udnervalued. And no volatility is not a problem! Without responding to my points, or saying why.  That is like only putting the final answers on a math test without showing how you got there.

[wachtwoord]

I responded to the volatility and explained why it's not a problem. Volatility for an investment isn't important, we just require a stronger rate of return. Further extreme volatility is to be expected in something that is as grossly undervalued as Bitcoin and will balance out as the market cap grows. I'm sure the same thing happened to gold when it was first discovered. With our current fast paced society the fluctuations just go a hell of a lot faster  :)

 

You claimed overvaluation because it went up fast and then down by ~50% in a few days and I claimed that's not what defines overvaluation. I can't provide a truly accurate valuation besides WAY WAY higher than today. People have done this in the past and continue to do so. This: http://bitcoin-valuation.org/fair-value-bitcoin-28823/ is an example and this ignores most of the uses of Bitcoin and also forgets to inflate the money supply to account for 20 years of inflation. The thing is, if you believe it's overvalued today you must be pretty sure the value is very close to zero as the market cap today is just way too low as a currency. Even if Bitcoin would only replace gold (and Bitcoin is better than gold) the value would be >$300k per Bitcoin given the current market cap of gold.  This can be your opinion (that the whole idea behind crypto and probably gold even does not appeal to you at all) but then say so and at least offer the common Keynsian arguments instead of the non-arguments your offering now.

 

You see, I don't think our discussion is very productive in the way we're doing it now :)

[DoddDisciple]

Yadayada is bringing up some good points. The fact of the matter is, BTC doesn't do anything better than what's already out there.

 

Who wants to use a credit card with no chargeback options? Through cashback and sign-on bonuses, I actually make money using a card, and if I get a shoddy merchant, it may save me thousands.

 

Fees are nothing at banks and other institutions. I can convert pretty much any fiat for $2 at IB. Yeah, if I am doing this with more than a few million, the cost rises a little ($2k on $1M), but that seems like a rich person problem. How is BTC going to save the world's poor when this is one of the problems it's supposed to solve? Hell, you have to have a computer, Internet access, and some technical savvy to even buy these.

 

If BTC is going to $1M a coin like some people say, why do I need more than 1? That's almost a 100,000% return from now, or a thousand-bagger. I don't see that happening. That being said, I'm a cheapskate in the boonies. $1M and I'd be set.

 

At the same time, for that to happen, there has to be an absolute mania on these. Grandma and grandpa have to put their life savings in these since they've been burnt by the housing bubble, dot com bubble, Japan bubble, etc. and want to finally catch up. There will be a paradigm shift. Cryptocurrency will be the "wave of the future." BTC may be $10k or $100k a coin, but hey, their friendly local broker has a "hot tip" on HoboNickels. "Just think if these go to $1k, they're only $1-$10 now," he'll say.

 

I'm going into these with full expectations that it is a complete and absolute gamble based on greed. When I read about people going from $3k to $100k in 2 months, there is no other explanation.