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Old 27-12-2017, 12:41   #121
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Re: Friend found some bitcoins he'd forgotten about lol

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Originally Posted by daletournier View Post
OK is Bitcoin money. When I Google "properties of money" this is the very first hit, BTW I think it's quite ironic that this definition comes from a reserve bank, they should read their own definition sometime.. Lol.

From the Federal Reserve of St Louis
The*characteristics of money*are durability, portability, divisibility, uniformity, limited supply, and acceptability.

So does Bitcoin fit into this definition?

Durability, as long as there's computers, electricity, miners I suppose it does? Currently the answer is yes.

Portability, the above also applies to portability, so yes.

Divisibility, I'd say yes.

Uniformity, I'd say yes.

Limited supply? I'd say NO. Can Bitcoin or any other currency be replicated by others? what are its unique qualities that other cryptos can't have or can't replicate ? What's stopping another cryto limiting its coin to 10 million, thus being more limited than Bitcoin? What's stopping tampering down the track to raise that limit if miners collectively change their minds (can this be done?) so to me this is a No. I have not heard one valid argument proving the limitation argument. Happy to be persuaded.

Acceptability, at this stage it's a very big NO. most of the world dosent accept it. Currently transactions are very slow, unlikely to change as it grows, from what I read it will get slower? It has a long way to go to compare to credit cards as transactional tool.

It fails the definition of money. It's also a very poor currency, a means of exchange. As mentioned many times, scalability, transaction costs and lack of speed limit it's value as a currency.

Now, definition of store of value.

A*store of value*is the function of an asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved. More generally, a*store of value*is anything that retains purchasing power into the future.

With its history of volatility how at this stage could it be considered a store of value. In seven days it gone from 20k to 10k back up to 16k. This is not predictable, there's no way of knowing what your Bitcoins worth tommorow, just not enough history and the history that is there is very volatile, huge price swings in short periods of time.

So if it's not money, at best its a very, very very poor currency and its not a store of value, so what is Bitcoin?
Just to expand on this...

Right now Bitcoin has a rough market of a quarter trillion (whole crypto is approx 1/2 trillion) Transaction times are 4-10 hours and cost approx $20-$40 depending of amount (your transaction times/costs vary depending on how much you're willing to pay for it to get processed). In order for crypto to become a true 'world currency' it will need to realise a total market of roughly 10 trillion usd so 20 times what is is now. Assuming no other forks and bitcoin stayed as is, transactions would take be right back where we are with current legacy systems, 7-10 days and 3-15% of the total transaction cost. Forking the currency causes serious liquidity issues and creates a significant amount of distrust in the asset and its offspring. No financial institution will ever use a digital asset that can be split by a consensus of anonymous individuals, with a 50/50 chance that the asset(s) they hold could be worthless in a matter of hours with the inability to liquidate. One of the biggest drivers of the bitcoin price is speculation on another fork in hopes of doubling the amount of holdings after said hardfork, but when there's no liquidity to cash out your newly acquired asset what good is it?

Quote:
but it's clear the banking institutions (aka Jamie Dimon) are worried
I wouldn't say their scared of BTC, more annoyed. The real threat to current financial systems is
1) The idea that everyday people can now invest/speculate (they're the same thing sorry) directly; this takes the power away from the industry and a lot of money with it by cutting out the middle man. Last year the top 10 banks in the world made almost 13 billion dollars investing your money, that's clients giving their money to banks to try and make more money and most will be lucky to see a 3% annual return but the banks collect their fees first and foremost.
2) Is the issuance of ICO's (initial coin offerings similar to IPO's) which have been able to circumvent the SEC and regulated (read more bank fees) means to issue investments and raise venture capital. This again allows people and companies to cut out the banks to both buy and sell securities directly.
I own a list of traditional investments, real estate, equities, bonds ect; But if you've got some money your willing to risk and some time to research the payoff is/can be huge and you'd be foolish to outright ignore this market. Yes its gambling but so is any other investment and it comes down to a calculated informed risk.
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Old 27-12-2017, 12:50   #122
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Re: Friend found some bitcoins he'd forgotten about lol

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I get your inference however real estate prices here have maintained that kind of valuation for 10+ years and show no signs of slowing . ( not to say its not going the other way somewhere else.)
example is the house I grew up in was purchased for 35k in 1990 when folks sold it and its now worth 225k ( tax assessment) .
I never was much on the short game.
Totally agree. The crypto market is a long haul as well but the bubbles come to the surface a lot quicker. If you look back at the real estate market or any market there are always ups and downs but the general trend is up. The crypto market seems (still early) to do the same but at breakneck speed. Say you'd get a 15% market correction on traditional investing say every decade, crypto can do that three times in a day.The technology allows for transfer of funds with little to no resistance. If you needed to liquidate your traditional investments 'right now' you'd be lucky to see your funds by the end of the January once you track down your broker file the paperwork, fees, taxes and penalties are done; Its a slow regulated process.
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Old 27-12-2017, 12:50   #123
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Re: Friend found some bitcoins he'd forgotten about lol

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Ironically bitcoin is down about 40% today...
I do believe it was Jimmy Carter who proposed a one world currency. Thankfully it never became a fact.
Any currency that can swing 40% is not the place to put your assets unless they are disposable assets.
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Old 27-12-2017, 12:53   #124
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Re: Friend found some bitcoins he'd forgotten about lol

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Totally agree. The crypto market is a long haul as well but the bubbles come to the surface a lot quicker. If you look back at the real estate market or any market there are always ups and downs but the general trend is up. The crypto market seems (still early) to do the same but at breakneck speed. Say you'd get a 15% market correction on traditional investing say every decade, crypto can do that three times in a day.The technology allows for transfer of funds with little to no resistance. If you needed to liquidate your traditional investments 'right now' you'd be lucky to see your funds by the end of the January once you track down your broker file the paperwork, fees, taxes and penalties are done; Its a slow regulated process.
agreed ( me personally I'm lucky I would have my funds in a day in form of a loan from my broker. He is one of my best customers ) . ( and doesn't charge me any fees )
he says I'm to small to charge.
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Old 27-12-2017, 13:34   #125
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Re: Friend found some bitcoins he'd forgotten about lol

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agreed ( me personally I'm lucky I would have my funds in a day in form of a loan from my broker. He is one of my best customers ) . ( and doesn't charge me any fees )
he says I'm to small to charge.
I was buying a jet boat off a buddy for 20K a few years back, had the cash in my account but it took the bank (big bank) 3 days to get me cash in hand. You also touch on a very important point here as well. A lot of people i run into have the argument that they can transfer their money via e-transfer (2k limit usually) or credit card (cant send to individuals), paypal etc in seconds so why use crypto? When in fact the money doesn't change hands, the third party pays on your behalf and they charge out the nose for that service (similar to you receiving a loan with your investments as a security).
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Old 27-12-2017, 13:44   #126
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Re: Friend found some bitcoins he'd forgotten about lol

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I do believe it was Jimmy Carter who proposed a one world currency. Thankfully it never became a fact.
Any currency that can swing 40% is not the place to put your assets unless they are disposable assets.
There will never be 'one' world currency as long as there are international borders. What the world needs is a fast effective way to transfer between all/any currency(ies). Current forex trading pairs/corridors are terrible. It's one thing to excahnge USD for EUR but try trading Bahraini dinar for a Nepalese rupee (No i didn't verify the trading pair) you might have to use 2-3 currency pairings to make the exchange and lose a percentage each trade.
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Old 27-12-2017, 17:11   #127
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Re: Friend found some bitcoins he'd forgotten about lol

Wow. As a newbie member this is certainly not the conversation I expected to find here!

I think DTournier was the OP, and asks/answers "What is money? is Bitcoin money?" I happen to have read and thought a bunch about money (and some about Bitcoin), and wrote a little note about money back in 2012:
Canadian MoneySaver Article | Bacq2Bacq: Ben (and Xty's!) blog (link to PDF of published article there...)

Here's a little dose <rant on?>:
- There is plenty of disinformation about money and finance out there. Most of the people practising in the industry literally don't know what they are doing, because the financial flat-earthers have been doing the teaching and preaching for so long. Money and currency are really not that hard to understand. But, perpetual-motion machines, for example, are pretty hard to understand and explain, because they violate laws of physics. This is why a lot of people are confused about things financial right now. Most of us have been in Plato's cave being taught about perpetual motion on this stuff for so long we squint and blink and disbelieve when we are shown the light. Lots of people with advanced degrees in economics or finance are unable to understand anything resembling truth about all this. Russell: "We are born ignorant. It is education that makes us stupid." There are a few good guys I know of out there: Russ Roberts, Nassim Nicholas Taleb...

- "Money" is an idea only, "the centroid of value". Just like other ideas about our physical world, like mass, acceleration, velocity. We knew all about these ideas eons before they were made concrete and given vocabulary by Newton. We grabbed the spear, hefted it, and launched it in a perfect parabolic arc towards dinner. Paleolithic Man understood these ideas perfectly, we just hadn't made them concrete and expressable yet.

- "Currencies" are the things that make that money-idea expressable and concrete, and conveniently manipulable using equations and (potentially lying!) statistics. The goods that are most liquid (and best meet some of those typical requirements OP posted) at a point in time and space evolve into currencies. I choose the word "evolve" carefully, because currencies are in fact selected-for. Even when imposed by act of fiat, it is in the end market participants who choose, or not, to use it for trade, even if it is just a particular coercive authority insisting on having its rent paid in one particular currency. When our fiat fails, it will be because of market rejection, not that someone or some government made it so.

- It may seem pedantic, but when people talk about "money" they are usually talking about a specific currency.

- Bitcoin is a currency. It's not a fiat currency, by my or other common definitions, as there is no coercive authority insisting we use it. Bitcoin is indeed limited in supply.

- For a while, the flat-earth financiers maintained the fictional notion of a "money supply" of fiat debt-based currency. I used to see published measures of M0, M1, M2... all measuring debt of various maturities to try and get a handle on it. They've largely given up. When currency can be created through opaque and complicated derivative-swaps for example, the supply is no longer a knowable quantity.

- In Man's history there have been *lots* of different goods selected-for (naturally or un-naturally) and used as currency by markets. I noted a few in that article. Bitcoin and cryptos in general though have some very interesting properties. Assuming we have a free internet, that is. Without a free internet, their value plummets.

- As an aside (feel free to try to refute! I don't know of any...) every single instance in history of un-naturally imposed fiat currency has imploded. The metals have all survived to this day, but it was evolution and natural selection that picked them. Someone earlier posted that gold, like bitcoin, has no intrinsic value. Quite wrong, No, it is in fact the best conductor of both heat and electricity, extremely inert and malleable, and I could go on and on, but what markets long ago decided was that the precious metals had greatest value to various local economies as currency (read about currencies' economic value in reducing N^2 pricing and simultaneous-need in that article) Much of the value ascribed to various precious metals continues to come from their currency-value, but not all.

- It is extremely important when asking and trying to answer questions about complex systems that one carefully consider scale. Much "disagreement" is rather a failure to properly consider scale. Things that are true at one are not always true at another. I fully expect the electron occasionally to be on the wrong side of the quantum-well. I never expect to see my car suddenly appear in the the driveway after I park it in the garage. (Note: my kids have all already left home...)

- Many (most?) economists, financiers, etc are still stuck with a very Newtonian mindset about how the world, and their branch of it in particular, really works. Newton's world is very predictable, and gives one a marvellous feeling of being "in control" when we are lucky enough to be operating at a scale when it all works, but the model just doesn't apply at most physical scales. Control mechanisms that work well at local scales usually don't work well at global scales.

- Our more recent learning from quantum, relativity, non-linear dynamics, complexity, chaos and information theories are yet to really penetrate the models of reality that exist in most people's minds. It's hard for egos to handle it, as it requires admitting that we really truly are in control of very, very little, and that we actually understand very, very little, at least, in that way that allows us to make accurate predictions about the future of complex systems. A quark is a system. So is a galaxy, and so is everything in between, including human societies and economies, and their currencies.

- Before we had the technology that enables Bitcoin (everything from wire and transistors and microprocessors to the IP protocol and distributed cooperative routing and computation, to the latest discoveries in math that allow shared truths to be known) there was great social value in having order imposed on societies. We lacked an efficient-enough means of communication to allow order to spontaneously emerge as we see throughout nature, so hierarchy and coercion was a way to scale human operations efficiently.

- There has been great value in the last hundred years to a very small subset of humanity in ensuring that both common-folk and "experts" alike remain stupefied (as opposed to "ignorant"...) of the true nature of today's currencies, banks, means of trade-settlement, etc, as it serves to enrichen some at the expense of others. This doesn't mean that there is necessarily some "conspiracy". Once shared self-interest is in play, it may have all the appearances of conspiracy, yet everyone is just acting on their own. Every neuron in your brain acts on its own yet they conspire to cause you to think.

Having said all that, we don't have to just throw up our hands and think it is all impossible to sort out. But we really do need to take some steps way, way back, and re-analyze a great deal of what we have been taught, as most of it was conceived while the world was in a very Newtonian frame-of-mind, and history is also always at first written by the winners, until sensible folk come along to tidy up the mess and paint a more accurate picture.

The way nature works is through patient but uncaring iteration, evolution, and natural selection. And man is not above and immune to her laws. Math is quite natural, and we didn't invent it, we discovered it. What does the math tell us now?

Well, first, that order is an emergent phenomenon, and if we try to impose order on a system, it takes energy. We should not be surprised that, faced with coercively-imposed fiat currencies in their death throes and madness in markets that a new specie of currency (pardon pun) should evolve. If it hadn't been "Nakamoto" and Bitcoin it would have been someone/something else.

Just as the distributed and free and cooperative and largely democratic principles of the Internet have now allowed dramatic improvements in economic efficiency, so too might distributed, free, open, public ledgers and currencies deliver superior value based on nifty new math. Yes, for example we would not right now be jumping through hoops to "de-register" and "re-register" our boat with US and Canadian national authorities if we had, say, an "ether-boat.org" public crypto-ledger. "Click." A subsistence family could live for a year on the savings. Efficiency matters, if you value human lives, anyway.

While in the past there was great social value in imposing order through coercion, Nature will gradually do away with many of the functions currently served by government, and these functions will be better served instead by emergent self-organizations. Currency may well be one. It really is inevitable, provided we have a free Internet. You can see it happening everywhere, all the time, if you look.

But it is not likely that those with vested interests in maintaining the current imposed order will let go easily. Anyone following the story of Bill Browder? I'm beginning to think the guy is a hero...

I think it is quite important that everyone, but Americans in particular, spend some time trying to wrap their heads around things monetary and financial (and the importance of maintaining a free and open Internet!), because America arguably has the most to lose during global currency crisis, as centralized coercive authority wanes, Bretton-Woods fades, and all those decades of exported dollars come home to roost looking for something of worth to trade for.

If you are an American, and you believe that the Federal Reserve is either Federal (ie in the end owned by the American people) or has reserves (ie vaults that contain gold bars or other goods of intrinsic value in some reasonable proportion to the outstanding float of US currency) please, please, please seek out a more accurate story! Your country and likely many others' are on the line. The Founding Fathers are rolling in their graves...
<rant off>

Disclosures:
- I was a proud owner of digital currencies in the 90's knowing they were going to be huge at some point. Anyone remember Digi-Cash? Cyber-bucks?
- I went so far as to open an account at a bitcoin exchange long ago, but never got around to doing a transaction. I may just have met too many rich arseholes in the interim, and so now think there is a causal connection. I am sure there are exceptions, and that had I actually invested, I would be one of those ;-)
- I swapped from mono- to multi-hull a few years ago and may now be suffering some kind of multiple-disorder.
- I promise any follow-up posts will be much more concise. Just had to get that holiday rant off my chest...
- These conversations are better over beer, so I'll buy a Kalik or Sands for anyone reading this that we bump into in the Bahamas in Feb-March.

cheers,
ben
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Old 27-12-2017, 22:29   #128
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Re: Friend found some bitcoins he'd forgotten about lol

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There will never be 'one' world currency as long as there are international borders. What the world needs is a fast effective way to transfer between all/any currency(ies). Current forex trading pairs/corridors are terrible. It's one thing to excahnge USD for EUR but try trading Bahraini dinar for a Nepalese rupee (No i didn't verify the trading pair) you might have to use 2-3 currency pairings to make the exchange and lose a percentage each trade.
I agree with alot of what you have said, both in previous posts and this one. I disagree with Bitcoin being investing BUT that's a small speed hump.

I really hadn't spent any time looking into ripple, I made some assumptions, just another Bitcoin, I've changed my mind.

My whole argument is what problem does it solve? Other than a flight of capital from a country that is suffering hyperinflation. From what I see it's value is derived from speculation, not much more.

After spending a couple of hours reading about Ripple I can see why you think it's much superior to Bitcoin, It's attempting to solve a problem! not just saying it's going to solve a problem.

It seems to have awesome transaction speed and is actively being used by financial institutions, it's value comes from its better technology actually solving a problem (think the model T anology you gave), you are investing in Ripple when you buy an XRP. It's value will be driven by its utility, something Bitcoin just doesn't do well. In fact that will be the driving force behind all cryptos once the mania goes away, how can I use it, the ones like Ripple that are actually solving problems should be valuable? Value needs to be derived from the problem it solves, the bigger the problem solved the more value.

Bitcoin seems like a nice shop front to me, but nothing on the shelves. Ripple seems to be stocked well.
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Old 28-12-2017, 00:08   #129
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Re: Friend found some bitcoins he'd forgotten about lol

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I agree with alot of what you have said, both in previous posts and this one. I disagree with Bitcoin being investing BUT that's a small speed hump.
I was more implying that what is investing other than speculating that what you’re buying today will be worth more in the future? That said investing/speculating on crypto is taking a chance that what youre buying will
have utility in the future.
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Old 28-12-2017, 00:50   #130
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Re: Friend found some bitcoins he'd forgotten about lol

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I was more implying that what is investing other than speculating that what you’re buying today will be worth more in the future? That said investing/speculating on crypto is taking a chance that what youre buying will
have utility in the future.
I suppose it comes down to individual definitions.

For most, bitcoin is pure speculation, you are taking a punt it will go up based on? no way to determine market value, little history, no references points. True that most investing has a degree of speculation BUT there's usually a way to determine value, or least have a very educated guess. A true speculative investor, or let's say "value investor" looks for something that can be proven through historical metrics amongst other things to be selling under fair market value and will usually sell once it reaches fair market value.

Use real estate for example, house price vs household income, there's decades of records to give you an indication of fair market value, or rental return on investment. Imho most houses are liabilities not assets, they take money out of your pocket.

I look at things a different way, to me something that puts money in my pocket today, not a hope that it will in the future is an asset, the deal must make sense now, if it goes up in capital value that's a bonus. I have a couple of of properties in Australia, I expect them to take a reasonable hit in the future, I would prefer they didn't but it dosent really matter because I purchased them for cash flow, they work for me. That's an asset. Some keep precious metals, I understand this although it goes against my above philosophy, but in current times they seem like a logical hedge, to some degree it's speculating BUT I can put up quite a strong argument about how undervalued precious metals currently are particularly based on recent central banks behaviour.

Take the markets, using P/E ratios or cape ratio shows whether there's value in these markets, currently very over valued, if I'm not mistaken they have only been this overvalued once in the last 100 years. I wouldn't go near them. I'd rather be out a year early than a day late. If your invested in dividend returning companies one could argue that's different.

At the moment I don't see value in the world, for me investing is finding value, this can be in business (your own or not), stocks, bonds, real estate or cryptocurrencies.

I've got a friend who has a big fund, last time I spoke to him he has a very large cash position because he just can't find value, he's very rich and has been doing this for a very long time. I'm a financial nobody but I do agree with him. Show me the value, then I'll invest.
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