Cryptocurrencies

posted by justincredible

Coinbase prices have tanked over the last day. BTC down to $12k.

Shocker

Less than a week after trading futures began.  Color me not surprised.

Just HODL.  They'll go back up.

posted by O-Trap

Less than a week after trading futures began.  Color me not surprised.

Just HODL.  They'll go back up.

I guess people weren't willing to wait for their returns to become a capital gain instead of ordinary income...

In related news, Long Island Ice Tea company - which makes tea and has nothing to do with cryptocurrency - changes its name to Long Blockchain...and saw its stock price rise 200%.  

GTFO out of BTC!!!

posted by gut

In related news, Long Island Ice Tea company - which makes tea and has nothing to do with cryptocurrency - changes its name to Long Blockchain...and saw its stock price rise 200%.  

 

GTFO out of BTC!!!

What a time to be alive ...

I finally got my identity verified on another exchange so I can start buying again. I'm expecting another big dip after the new year. 

posted by justincredible

I finally got my identity verified on another exchange so I can start buying again. I'm expecting another big dip after the new year. 

I agree.  I expect it to be larger, as well.

posted by O-Trap

I agree.  I expect it to be larger, as well.

What a wild ride....If it dips big, I might throw some money at it for shits and giggles.  Odds are at least as good as the blackjack table,  right?

After this next sell-off, that might be the end of the roller coaster as it has all the hallmarks of a bubble implosion.  Although I'm guessing the speculators will try to make another run at it because I don't suspect the run-up was really driven by all that much amateur "investor" money.

ELI5: How does this have any value beyond use in the illegal and blackmarket?

It seems to have less backing than any government fiat currency.

posted by Verbal Kint

ELI5: How does this have any value beyond use in the illegal and blackmarket?

It seems to have less backing than any government fiat currency.

It's value, IMO, comes from the technology it's built on, and it's decentralized nature. There's no Fed to inflate the supply (there will only ever be 21 million bitcoins in existence).

I don't know who Charlie Stross is, but his quote in this Krugman blog is a big reason that I'm interested in the technology.

https://krugman.blogs.nytimes.com/2013/12/28/bitcoin-is-evil/

BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind—to damage states ability to collect tax and monitor their citizens financial transactions.

BTC down to $12,600 on coinbase right now.

posted by justincredible

It's value, IMO, comes from the technology it's built on, and it's decentralized nature. There's no Fed to inflate the supply (there will only ever be 21 million bitcoins in existence).

I don't know who Charlie Stross is, but his quote in this Krugman blog is a big reason that I'm interested in the technology.

https://krugman.blogs.nytimes.com/2013/12/28/bitcoin-is-evil/

BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind—to damage states ability to collect tax and monitor their citizens financial transactions.

Is the 21M backed by anything particular.

I dislike Paul Krugman's economic points of view.

posted by Verbal Kint

Is the 21M backed by anything particular.

I dislike Paul Krugman's economic points of view.

LOL, I read the first paragraph and quit as soon as Krugman threw "most economists" under the bus for "failing to distinguish positive from normative economics".

The truth is, Krugman is generally not taken very seriously by the economics community since he quit being objective (and basically quit being an economist) and began pushing the liberal agenda, couched in "normative economics", for the NY times or whichever liberal rag he works for these days. 

https://www.newyorker.com/news/john-cassidy/interview-with-eugene-fama

"Krugman wants to be the czar of the world. There are no economists that he likes. (Laughs)"

"(Laughs) My attitude is this: if you are getting attacked by Krugman, you must be doing something right."

- Gene Fama, Nobel Laureate University of Chicago

I hope my quoting from the Krugman blog didn't give you the wrong impression, I'm not a fan of his either. I haven't listened in a while, but I used to listen to a podcast called Contra Krugman that was specifically created to refute Krugman's weekly NYT column.

posted by Verbal Kint

Is the 21M backed by anything particular.

I dislike Paul Krugman's economic points of view.

It's backed by the belief in the techology it's built on. Also, it's not backed by debt, which is nice.

posted by justincredible

It's backed by the belief in the techology it's built on. Also, it's not backed by debt, which is nice.

Well, technically it only has value because investors agree it does (kind of like gold, although it does have real world use in electronics, jewerly, etc.).

I wonder if Bitcoin is open source technology, otherwise I wonder what would happen if a bank or country just took the basic code for its own and ultimately crowded out Bitcoin....would the holders of Bitcoin have a patent infringement claim on the technology?

To me the scariest thing about these cryptocurrencies is that there are so many the market can move almost overnight to a competing one and destroy the value of Bitcoin.  Also, while 21M is currently the hard cap on supply, I believe that COULD be changed (although I'm not sure there's a reason why it ever would be, unless a small cabal controlling the bulk of supply decided to expropriate wealth from other holders....but as soon as they tried the value would plummet almost instantaneously).

posted by gut

Well, technically it only has value because investors agree it does (kind of like gold, although it does have real world use in electronics, jewerly, etc.).

I wonder if Bitcoin is open source technology, otherwise I wonder what would happen if a bank or country just took the basic code for its own and ultimately crowded out Bitcoin....would the holders of Bitcoin have a patent infringement claim on the technology?

To me the scariest thing about these cryptocurrencies is that there are so many the market can move almost overnight to a competing one and destroy the value of Bitcoin.  Also, while 21M is currently the hard cap on supply, I believe that COULD be changed (although I'm not sure there's a reason why it ever would be, unless a small cabal controlling the bulk of supply decided to expropriate wealth from other holders....but as soon as they tried the value would plummet almost instantaneously).

Ultimately, isn't the functional value of anything found in the willingness of a segment of the population to obtain and use it?

In regard to whether or not the BTC blockchain can be duplicated, it somewhat has, and there can even be a case that there are alts who have built a better mousetrap, but there's value in being first to the party, which helps BTC retain its value.

Eventually, I think BTC will fall behind others.  It might have been the pioneer project, but others have, and continue to, refine it.  For that to happen overnight, though, you'd need a coordinated effort by a large number of holders.  Not saying it's impossible, as I believe the bulk of BTC is held by less than 10% of those who hold any at all, but still ...

posted by O-Trap

Ultimately, isn't the functional value of anything found in the willingness of a segment of the population to obtain and use it?

Well, even Krugman said the dollar has value and large demand created by the US govt because of taxes, among other reasons.  Gold and silver still have value because of real demand for actual productive use.  Cryptocurrencies are none of those things.

The other big problem with cryptocurrencies is most of the demand is coming from investors, which means the buy & hold isn't facilitating transactions.  But then if the investors go away, where's the demand to transact and exchange?

A number of economists have talked about competing currencies...I think in the long-run that is what we will see happening, with your major banks issuing their own cryptocurrencies.  I'd expect those to be more stable in value, and quicker and cheaper to transact with.

Ultimately, I can't see more than a couple cryptocurrencies surviving.  So this retailer accepts Bitcoin but not Litecoin, and that retailer accepts Ethereum but not Bitcoin or Litecoin.  You're going to say "of course they could and would accept them all", but that will never happen in the real world, the same way you can't go to the corner 7/11 and buy milk with MXN or EUR, or any currency other than USD.  I could see one or two cyrptocurrencies surviving as a sort of alternative to debit cards.  Pick the wrong one and the bottom will fall out fast when it does happen, and you'll be left holding a worthless bunch of code.  Or one or two could survive to facilitate large international transactions, but again it's not practical to expect more than one or two to emerge as widely accepted for that to happen (the same way USD is pretty much the international reserve currency, despite efforts to make JPY or EUR a significant and viable alternative).

posted by gut

Well, even Krugman said the dollar has value and large demand created by the US govt because of taxes, among other reasons.  Gold and silver still have value because of real demand for actual productive use.  Cryptocurrencies are none of those things.

The cryptocurrencies themselves provide the token infrastructure for a blockchain (decentralized, shared ledger or database for transactional recording) to exist.  Without the cryptocurrencies themselves, there are no tokens associated with the ledger.  And given that one of the touted advantages of blockchain is that it's both shared and decentralized, you'd need a collection that offer both incentive and ability to be easily dispersed.  Cryptocurrencies offer precisely that.

As such, they do, themselves, have functional value, aside from any use as a currency, which has been what has caused them to become "commodities" as much as they might otherwise be used as currencies.
 

posted by gut

The other big problem with cryptocurrencies is most of the demand is coming from investors, which means the buy & hold isn't facilitating transactions.  But then if the investors go away, where's the demand to transact and exchange?

I very much agree with this, though the more I look into the uses of blockchain, the less this bothers me.  What you've references here is exactly why the values of so many are so inflated (aside from the "fad" of it).  Buying and holding a particular crypto is essentially buying and holding a share of a ledger system.

Still, for it to be truly decentralized, it would be ideal for it to pass hands more often ... something I think should happen once these cryptos fall to a more realistic value.

posted by gut

A number of economists have talked about competing currencies...I think in the long-run that is what we will see happening, with your major banks issuing their own cryptocurrencies.  I'd expect those to be more stable in value, and quicker and cheaper to transact with.

Well, "cheaper" is probably not the case.  Certainly, if you transact through an intermediary, a fee usually occurs.  However, it is possible to transact without such an intermediary.  As such, it can theoretically be "free" without anyone's permissions to transact using crypto.

Banks issuing their own will potentially defeat two of the advantages of blockchain as a whole:  (1) They can essentially act as a middleman and control the price of transaction, and (2) it centralizes the currency to a larger degree, which nullifies the security advantage (see what has happened with compromised crypto exchanges, with both whatever value the coins represent stolen, but also the information that they contain, the protection of which is part of why decentralization is important).

posted by gut

Ultimately, I can't see more than a couple cryptocurrencies surviving.  So this retailer accepts Bitcoin but not Litecoin, and that retailer accepts Ethereum but not Bitcoin or Litecoin.  You're going to say "of course they could and would accept them all", but that will never happen in the real world, the same way you can't go to the corner 7/11 and buy milk with MXN or EUR, or any currency other than USD.  I could see one or two cyrptocurrencies surviving as a sort of alternative to debit cards.  Pick the wrong one and the bottom will fall out fast when it does happen, and you'll be left holding a worthless bunch of code.  Or one or two could survive to facilitate large international transactions, but again it's not practical to expect more than one or two to emerge as widely accepted for that to happen (the same way USD is pretty much the international reserve currency, despite efforts to make JPY or EUR a significant and viable alternative).

Eh, I wouldn't say they could and would accept them all.  That would be daunting, and with the sheer number of minor ones, it's just not practical.

However, if you're sticking to a few major ones, sure.  Why not?  The ability to do this is actually already in place, so if the tech is there, why wouldn't you?

The Exodus wallet, for example, has the ability to accept and keep eighteen different ones.

As for the idea that only a few will survive, I disagree.  I think there will probably be one for each major blockchain.  Now, how many of them actually get used like currency on a wide scale?  Your guess could certainly be more accurate then, though I still think it would be more than one or two.

I don't think we're going to have a single international reserve currency in the way we have had up to this point, and I think that the ability for each unit to be an actual piece of an industry's transaction ledger essentially adds more intrinsic value to the unit itself than our current financial system.

Now, there's obviously benefit to being first to the party for something like this.  Just as BTC has benefitted from being the first more-widely circulated cryptocurrency despite being less efficient than some of its predecessors, the current currency system would as well.  It's established, while any alternative, whether or not it would be a better mousetrap, is still a "Johnny-come-lately."  As such, I don't think the current system is going away entirely any time soon.  Certainly not in my lifetime.  Even still, I think we'll see almost competing markets, as well as competing currencies, as a result of blockchain-backed crypto.

Having said all of this, I'm not saying the crypto market in its current iteration is what we'll end up with, but I do think that it has been innovative enough that it won't ever phase out, and it'll change the currency system and financial systems we've had up to this point, both in the addition of competing currencies and (more importantly) the introduction and common implementation of blockchain technology for recording any transactional history, financial or otherwise.

https://www.bloomberg.com/news/articles/2018-01-02/criminal-underworld-is-dropping-bitcoin-for-another-currency