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Old 13th December 2017, 04:33 AM   #1041
Eddie Dane
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Originally Posted by Craig B View Post
From "CIty AM"
You hear the dreaded words: “this time it’s different”.

During every asset bubble, you will find scores of professionals telling you that it isn’t a bubble; this time, it’s a real and important forward step in technology.

This is very confused. The fact that there’s a genuine step forward doesn’t mean it can’t be a bubble.

There was a railroad bubble back in the 1870s in which thousands of small investors were wiped out. That didn’t mean that the railroad wasn’t the future of transport. And the dotcom bubble of the 1990s didn’t mean that the internet had no future.
I forget her name, but there was a South American economist who -after the railroad bubble burst- proposed that these bubbles pay for the infrastructure and technological development that comes to fruition later.

This rings true. It happened with railroads, cars, the internet, and possibly now with blockchain.

The promises of the dotcom hype are now coming true, twenty years later Amazon is actually the juggernaut that was predicted to materialise.
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Old 13th December 2017, 04:49 AM   #1042
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Originally Posted by Craig B View Post
From "CIty AM"
You hear the dreaded words: “this time it’s different”.

During every asset bubble, you will find scores of professionals telling you that it isn’t a bubble; this time, it’s a real and important forward step in technology.

This is very confused. The fact that there’s a genuine step forward doesn’t mean it can’t be a bubble.

There was a railroad bubble back in the 1870s in which thousands of small investors were wiped out. That didn’t mean that the railroad wasn’t the future of transport. And the dotcom bubble of the 1990s didn’t mean that the internet had no future.
Since you wrote this as a response to me, I kinda feel like I may be expected to react to it in some way... but I can't really seem to link the highlighted quote to something particular I've written. If you were making a point and expect me to say something about it, my apologies for not understanding. If you just wanted to post this quote and don't need anything from me, no problem; it is an interesting quote.
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Old 13th December 2017, 04:59 AM   #1043
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Originally Posted by Craig B View Post
The definition of a bubble is whether current investors in the affected asset stand to suffer irretrievable loss of a significant part of their investment, not whether the brand will survive. I think people who have bought Bitcoin at say $15,000 are at risk of suffering such loss. I would be surprised if they come out unscathed.
What proof do you have that "this time it is different" and those who buy at the current price peak will be the first people ever who don't recover if they hold on to their bitcoins?
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Old 13th December 2017, 05:06 AM   #1044
Craig B
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Originally Posted by Thabiguy View Post
Since you wrote this as a response to me, I kinda feel like I may be expected to react to it in some way... but I can't really seem to link the highlighted quote to something particular I've written. If you were making a point and expect me to say something about it, my apologies for not understanding. If you just wanted to post this quote and don't need anything from me, no problem; it is an interesting quote.
I simply thought your post was interesting, and hoped that my quote from City AM would be enlightening. I don't need you to respond unless you feel moved to do so.
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Old 13th December 2017, 05:13 AM   #1045
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Originally Posted by Craig B View Post
I simply thought your post was interesting, and hoped that my quote from City AM would be enlightening. I don't need you to respond unless you feel moved to do so.
It's all fine. I just genuinely couldn't tell whether you were expecting a response from me or not. I can't currently think of anything I might add to your quote from City AM, so I'll just see what others will say.
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Old 13th December 2017, 05:16 AM   #1046
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Originally Posted by psionl0 View Post
What proof do you have that "this time it is different" and those who buy at the current price peak will be the first people ever who don't recover if they hold on to their bitcoins?
Not sure what you mean. Although the Dutch tulip industry is still with us, the people who paid hundreds of guilders for a bulb back in 1637 effectively lost the lot. By 1639 tulip bulbs could be bought from garden supply shops for a few stuivers apiece.

Another example. There was a huge real estate price boom in Florida in 1925-26. People who bought at the peak and held on, saw the nominal dollar value of their investment (not the real value) back to their purchase level around forty years later. But that isn't a good way of stashing money away for forty years, and although Florida is still there, and real estate is still bought there, these investors suffered a large irretrievable loss. The bubble burst.
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Old 13th December 2017, 06:00 AM   #1047
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Originally Posted by psionl0 View Post
What proof do you have that "this time it is different" and those who buy at the current price peak will be the first people ever who don't recover if they hold on to their bitcoins?
I certainly don't think they will be the first people ever to lose even while intending to hold on to their assets. After the last crash, it took three years for the price to bounce back. After the next crash, it may be what, five years? Seven years? We don't know, do we?

Humans do not live forever. Some people will simply die while holding on to their bitcoin, never seeing any return in their life whatsoever. Some will see their bitcoins stolen or lost to exchange crashes, digital theft, hardware disasters. Some people will get into financial troubles for unrelated reasons (healthcare expenses, housing problems, family issues, whatever) and will be forced to liquidate their stock and lose money - or, if they refuse to sell, be even worse off, as they will effectively be short all that money at the time they need it the most.

The simple fact is that the longer someone has to hold on to an asset to even break even, the more they expose themselves to all those risks - and of course, the worse they are simply as a consequence of having to live without their tied up money. If the next decline lasts long enough, then even though the price may technically bounce back up, hardly anyone will recover their losses. Because no matter how much they wish to, people cannot hold on to their assets indefinitely, and due to the finite nature of human lifespan, the utility of postponed monetary gains inevitably declines over time.
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Old 13th December 2017, 06:20 AM   #1048
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Originally Posted by psionl0 View Post
bitcoins
Originally Posted by Craig B View Post
Dutch tulip industry
You still can't address the bitcoin price history directly.
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Old 13th December 2017, 06:29 AM   #1049
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Originally Posted by Thabiguy View Post
I certainly don't think they will be the first people ever to lose even while intending to hold on to their assets. After the last crash, it took three years for the price to bounce back. After the next crash, it may be what, five years? Seven years? We don't know, do we?
Of course we don't know. What we do know is that 3 years is the longest that anybody ever had to wait to see the price recover from a crash and that they all went on to make spectacular gains since. 3 years is hardly a life time.

Of course if you are going to gamble on bitcoin with money you can't afford to lose or are unable to wait a few years to see if the price will rebound then .....

Incidentally it took 5 years for the Dow Jones index to get back to the peak of 2007 after the 2008 crash. http://www.macrotrends.net/1319/dow-...storical-chart
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Old 13th December 2017, 07:00 AM   #1050
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Originally Posted by psionl0 View Post
You still can't address the bitcoin price history directly.
I haven't addressed the price history of any bubble or probable bubble directly, because I have observed in opposition to your general thesis about Bitcoin that
Originally Posted by Craig B View Post
That is a feature if all bubbles. Every prediction that they will pop is wrong until the one that is right.
I am now very surprised at your protectiveness of this asset inflation against even neutral historical comments. Is this a question of some ideological standpoint that you are defending as a matter of principle against scoffers and heretics? As The Washington Post has noted.
That ... has become a Ponzi scheme for redistributing wealth from one libertarian to another. Actually, I would like to amend that a little bit: Bitcoin has now graduated to being a Ponzi scheme for redistributing wealth from one person to another.

When it started out, bitcoin had two major constituencies: techies who were blown away by its sheer technical accomplishment, and End-The-Fed types who were convinced it would replace the dollar. Now, it entices these libertarians who, for the most part, have been trading it among themselves, with early investors cashing out some of their winnings as new investors come in.
Are you defending it because of some ideology of this, or some other, type?
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Old 13th December 2017, 07:06 AM   #1051
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Originally Posted by psionl0 View Post
Of course we don't know. What we do know is that 3 years is the longest that anybody ever had to wait to see the price recover from a crash and that they all went on to make spectacular gains since. 3 years is hardly a life time.
Almost every year of my life, I have been stronger than the year before. If there was a temporary setback, every time I later recovered and became stronger than ever before.

By applying the logic of your argument, this proves that I will keep getting stronger forever. With even greater confidence, because I have been around quite a bit longer than bitcoin, and this pattern has been reliable all this time.
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Old 13th December 2017, 07:51 AM   #1052
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Originally Posted by Thabiguy View Post
Almost every year of my life, I have been stronger than the year before. If there was a temporary setback, every time I later recovered and became stronger than ever before.

By applying the logic of your argument, this proves that I will keep getting stronger forever. With even greater confidence, because I have been around quite a bit longer than bitcoin, and this pattern has been reliable all this time.
That is not a valid analogy. You know that your physiological makeup is the same as that of all human beings in which at some point in you life, you will reach a peak physically and mentally then go into a decline that will continue until you are dead (barring unforeseen tragedies).

Bitcoin is like nothing that has been before. There is no way to tell if or when a saturation level might be reached where anybody who might be interested in bitcoin has had all they want to do with it. New players could enter and leave this system indefinitely. Some stocks last forever and some have a very short life. We have no way to tell where in that spectrum bitcoin lies.

Another important factor is that the underlying blockchain technology is increasingly being seen as a legitimate way to eliminate unreliable central registries. Applications range from contracts to voting and there are many applications that haven't been imagined yet.

As long as the blockchain technology becomes increasingly legitimate, cryptocurrencies are likely to gain mainstream acceptance. It may not be bitcoin that becomes a universal currency but as a store of value, this commodity/currency/whatever could have a place for the foreseeable future.
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Old 13th December 2017, 08:18 AM   #1053
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Originally Posted by psionl0 View Post
There is no way to tell if or when a saturation level might be reached where anybody who might be interested in bitcoin has had all they want to do with it. New players could enter and leave this system indefinitely. Some stocks last forever and some have a very short life. We have no way to tell where in that spectrum bitcoin lies.
Yes, I agree with this.

What I'm saying is that the argument that the speculators cannot lose their money if they buy now, because every time there had been a dip in the past, the asset has recovered later, is fallacious. - That premise holds true for any asset whatsoever that is at its historical high when the statement is made, but obviously, many examples show that the conclusion doesn't necessarily follow.

Basically, any argument that claims to be able to make predictions about future price developments based on price history alone (of bitcoin or any other asset) is flawed. That includes even claims as mild as that the current buyers will always be able to recover their losses. No, they may not, even if the asset itself eventually recovers at some later time.

One could make an argument for predicting future price development based on the details of the asset itself. That I have no problem with. The argument could still be flawed or sound, convincing or not, but at least it wouldn't automatically be a fallacy.
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Old 13th December 2017, 08:42 AM   #1054
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Originally Posted by Thabiguy View Post
What I'm saying is that the argument that the speculators cannot lose their money if they buy now, because every time there had been a dip in the past, the asset has recovered later, is fallacious.
I am not making that argument but many people have been consistently making the opposite argument ever since the first pizza was paid for with bitcoin.
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Old 13th December 2017, 09:32 AM   #1055
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Originally Posted by psionl0 View Post
I am not making that argument but many people have been consistently making the opposite argument ever since the first pizza was paid for with bitcoin.
I'm not even sure what is the opposite argument - that the buyer must lose money? Obviously that would be just as fallacious.

There are some interesting things that can be proven, however. For example, that the average amount of money that the people trading bitcoin on exchanges have made is negative.
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Old 13th December 2017, 10:53 AM   #1056
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Originally Posted by Eddie Dane View Post
I forget her name, but there was a South American economist who -after the railroad bubble burst- proposed that these bubbles pay for the infrastructure and technological development that comes to fruition later.

This rings true. It happened with railroads, cars, the internet, and possibly now with blockchain.

The promises of the dotcom hype are now coming true, twenty years later Amazon is actually the juggernaut that was predicted to materialise.
This reminds me a bit of the hype cycle theory:
https://en.wikipedia.org/wiki/Hype_cycle
There's a new technology and much hype and exuberance and then hype eventually peaks
People become impatient and disillusioned as the reality doesn't meet expectations, then:
Eventually the technology matures and starts to actually deliver after the hype crash
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Old 13th December 2017, 11:11 AM   #1057
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Originally Posted by portlandatheist View Post
This reminds me a bit of the hype cycle theory:
https://en.wikipedia.org/wiki/Hype_cycle
There's a new technology and much hype and exuberance and then hype eventually peaks
People become impatient and disillusioned as the reality doesn't meet expectations, then:
Eventually the technology matures and starts to actually deliver after the hype crash
That is very apt. As I have said, in many cases the objects of speculation survive the bubble and crash, but many investments are lost anyway. The South Sea Bubble represented the introduction of joint stock companies, which are still with us. For that matter the South Sea Company itself survived (modestly) until 1853. Railways are also an excellent example, following the Railway ManiaWP of the 1840s.

Last edited by Craig B; 13th December 2017 at 12:00 PM.
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Old 13th December 2017, 05:45 PM   #1058
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Originally Posted by Craig B View Post
That is very apt. As I have said, in many cases the objects of speculation survive the bubble and crash, but many investments are lost anyway. The South Sea Bubble represented the introduction of joint stock companies, which are still with us. For that matter the South Sea Company itself survived (modestly) until 1853. Railways are also an excellent example, following the Railway ManiaWP of the 1840s.
None of that proves that this peak represents the highest price that bitcoin will ever get up to. Nor the next peak. Nor the one after that nor the one after the one after that .......
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Old 13th December 2017, 05:49 PM   #1059
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I don't think anyone is talking about proving anything, to be fair, so proving stuff in this context isn't really relevant?
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Old 13th December 2017, 06:21 PM   #1060
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Originally Posted by p0lka View Post
I don't think anyone is talking about proving anything, to be fair, so proving stuff in this context isn't really relevant?
So why mention these irrelevant examples if they don't prove anything?

The examples given are all flash in the pan investments that peaked once and never again. Bitcoin has had more peaks than a mountain range - each one higher than the preceding one.
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Old 14th December 2017, 02:29 AM   #1061
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Originally Posted by psionl0 View Post
So why mention these irrelevant examples if they don't prove anything?

The examples given are all flash in the pan investments that peaked once and never again. Bitcoin has had more peaks than a mountain range - each one higher than the preceding one.
Not uncommon. It won't go on for ever. Here's dot com bubble period Nasdaq http://news.bbc.co.uk/1/hi/business/8558257.stm
Index of railway shares, 1840s http://www.thebubblebubble.com/wp-co...roadstocks.jpg
This is the Dow Jones index 1929 https://www.marketwatch.com/story/sc...ion-2014-02-11
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Old 14th December 2017, 03:21 AM   #1062
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Originally Posted by Craig B View Post
Not uncommon. It won't go on for ever. Here's dot com bubble period Nasdaq http://news.bbc.co.uk/1/hi/business/8558257.stm
Index of railway shares, 1840s http://www.thebubblebubble.com/wp-co...roadstocks.jpg
Those examples compare bitcoin to one shot investments even though bitcoin has been anything but.

Originally Posted by Craig B View Post
That 3yo article compares the DJI then to the DJI as it was in 1929. Needless to say, it was as reliable an indicator of stock prices today as it was an indicator of bitcoin prices today.
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Old 14th December 2017, 03:41 AM   #1063
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There will be leaks and troughs, but this looks like a bubble. In fact it looks like the biggest in history. I ask again, are you stating that this will go on forever, and that people buying in at today's prices are making a sound investment? It's not clear what claim you are making, and I note with interest that you have made no response to my question whether you have an ideological commitment to Bitcoin, on libertarian or similar principles.

Here is an interesting passage from J K Galbraith, The Great Crash, 1929
... it is in the nature of a speculative boom that almost anything can collapse it. Any serious shock to confidence can cause sales by those speculators who have always hoped to get out before the final collapse but after all possible gains from rising prices have been reaped. Their pessimism will infect those simpler souls who had thought the market might go up forever but who now will change their minds and sell. Soon there will be margin calls, and still others will be forced to sell. So the bubble breaks.
Are you one of the simpler souls?
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Old 14th December 2017, 04:57 AM   #1064
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Doesn't the value of bitcoin have to constantly increase for the miners to remain profitable? If the value of the bitcoin recieved as payment for maintaining the block chain is less than the cost of electricity to mine it, you will lose miners and thus reduce the utility of the bitcoin as getting transactions registers will take longer and thus hurt the value of bitcoin. This will further decrease the value. But a constantly increasing value is simply not sustainable.

How can the limited number of bitcoins and the nature of mining do anything other than result in a crash?
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Old 14th December 2017, 08:04 AM   #1065
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Originally Posted by Craig B View Post
There will be leaks and troughs, but this looks like a bubble. In fact it looks like the biggest in history.
So you have told us.
.... and told us.
.... and told us.
.... and told us.
.... and told us.
.... and told us.
.... and told us.
.....
Yet not once have you given us reason to believe that this is the final bubble.

Originally Posted by Craig B View Post
I note with interest that you have made no response to my question whether you have an ideological commitment to Bitcoin, on libertarian or similar principles.
No, I have an ideological commitment against BS and you are full of it.

Originally Posted by Craig B View Post
Here is an interesting passage from J K Galbraith, [i]The Great Crash, 1929 ............
I see, shift the goal posts towards short term speculators because you might find more losers among that crowd.
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Old 14th December 2017, 08:12 AM   #1066
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Originally Posted by ponderingturtle View Post
If the value of the bitcoin recieved as payment for maintaining the block chain is less than the cost of electricity to mine it, you will lose miners and thus reduce the utility of the bitcoin as getting transactions registers will take longer and thus hurt the value of bitcoin.
Incorrect. The mining difficulty automatically adjusts so that the block creation rate remains at 1 block every 10 minutes no matter how many miners there are. So if you get fewer miners then the cost of mining decreases and thus the rewards of mining increase for the remaining miners.

One thing you are likely to see is that as block rewards decrease, transactors will have to offer larger fees in order to get their transaction confirmed by a miner. This will further discourage the use of bitcoin as a currency.
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Old 14th December 2017, 08:32 AM   #1067
Craig B
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Originally Posted by psionl0 View Post
So you have told us.
.... and told us.
.... and told us.
.... and told us.
.... and told us.
.... and told us.
.... and told us.
.....
Yet not once have you given us reason to believe that this is the final bubble.


No, I have an ideological commitment against BS and you are full of it.


I see, shift the goal posts towards short term speculators because you might find more losers among that crowd.
This invective of yours is ignorable, but you seem confused. I'm saying that Bitcoin is a bubble. Do you agree or not? What may or may not be final is the current peak and trough price cycle. That is invariably unpredictable. It may go up and down again a number of times, but it is unquestionably a bubble. It will not last forever. It will pop sooner or later.

You have not answered the question about your ideological predisposition, but instead have rewarded me with invective. I take it therefore that you do have an ideological commitment to this object of speculation, which you think I have affronted.
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Old 14th December 2017, 08:53 AM   #1068
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Originally Posted by Craig B View Post
I'm saying that Bitcoin is a bubble. Do you agree or not?
GOTO 1000

Originally Posted by Craig B View Post
You have not answered the question about your ideological predisposition, ....
I have no ideological predisposition towards or against bitcoin. It is just something you can buy or sell if you wish.
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Old 14th December 2017, 08:58 AM   #1069
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Originally Posted by Tippit View Post
So, at current rates, my friend's bitcoin stash of 12,000 is worth $187,080,000. If he had simply kept his original 35,000 bitcoin stake, it would be worth over one-half billion dollars.
Theoretically.
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Old 14th December 2017, 12:28 PM   #1070
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I'll go on record saying I think not only is it a bubble, I think bitcoin's destination is the dustbin. It is just a matter of time. I think in its wake, some of the technology is here to stay and we'll have crypto currency or currencies but there are a some unfixable flaws with bitcoin.
Maybe I'll have to come back to this thread in a few years and eat crow. Time will tell.
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Old 14th December 2017, 01:37 PM   #1071
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Originally Posted by portlandatheist View Post
Maybe I'll have to come back to this thread in a few years and eat crow.
I doubt it. Every time bitcoin makes a jackass out of a doom merchant, they tend not to return to this thread.
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Old 14th December 2017, 02:13 PM   #1072
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Originally Posted by Craig B View Post
There will be leaks and troughs, but this looks like a bubble. In fact it looks like the biggest in history. I ask again, are you stating that this will go on forever, and that people buying in at today's prices are making a sound investment? It's not clear what claim you are making, and I note with interest that you have made no response to my question whether you have an ideological commitment to Bitcoin, on libertarian or similar principles.
When are you going to short this biggest bubble in history?
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Old 14th December 2017, 02:43 PM   #1073
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I do not see any barrier to entering this game. The analogy to gold is false, since we know the supply is finite in a physical sense. Not so with bitcoin, because a duplicate entity is possible.
Bitcoin is a brand which begs for imitators that are identical. The 20k ceiling is set in concrete.
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Old 14th December 2017, 03:56 PM   #1074
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Originally Posted by Tippit View Post
When are you going to short this biggest bubble in history?
Never. I'm not a speculator. I take it you don't think this is a bubble.
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Old 14th December 2017, 03:58 PM   #1075
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Originally Posted by psionl0 View Post
GOTO 1000 So, you won't answer.


I have no ideological predisposition towards or against bitcoin. It is just something you can buy or sell if you wish.
Yes one can. Thanks for replying.
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Old 14th December 2017, 04:31 PM   #1076
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Originally Posted by Craig B View Post
So, you won't answer.
I don't know why you consider that a non-answer.

YES. Bitcoin is in a bubble and is probably due for a significant price reversal any day now. However, there is no reason to believe that the price won't recover or that bitcoin will have an extended period of price falls. These usually happen after a bad news event like a bitcoin exchange going kaput (and keeping all the bitcoins) or stories about a government crackdown.

Of course, there must be a lot of nervous nellies buying into bitcoin now so anything can happen.
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Old 15th December 2017, 12:07 AM   #1077
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Originally Posted by Craig B View Post
Never. I'm not a speculator. I take it you don't think this is a bubble.
I think the parabolic rise resembles a bubble, but I also think the technology is paradigm-changing, and I understand the reason why it was created - the money scam - a whole lot better than you do.
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Old 15th December 2017, 12:44 AM   #1078
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Originally Posted by Tippit View Post
I think the parabolic rise resembles a bubble, but I also think the technology is paradigm-changing, and I understand the reason why it was created -the money scam - a whole lot better than you do.
Do you? Yes, conspiracy theorists have special understanding not known to the sheeple masses. They know that the world is run by secret committees plotting all the financial developments in their own interests. They know it better than other people do, largely because other people think it's nuts. It's impossible to argue with that kind of conspiracy mania, so I won't try.

But one thing that has been stated repeatedly in this discussion, is that many bubbles, I will say even most bubbles, are based on paradigm changing developments. Tulips, I and others have said, are still there, but were new in 1637 Netherlands. Dot com was a bubble, but the internet is still there. The South Sea Company was a bubble, but joint stock companies are still with us. The Railway mania was a bubble, but in 1845 railways were indeed the transport system of the future. This has all been said in this thread. This bubble may represent the introduction of blockchain as a paradigm changing technology. That is very possible. But that doesn't stop it being a bubble. Please do try and keep up.
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Old 16th December 2017, 10:06 AM   #1079
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When one buys a share, one buys a share in the value of the company.

As long as the company keeps producing or has physical assets, it has a value that can be calculated.

Bitcoin has no intrinsic value other than a currency supposedly for trade.

If a dealer sold 100,000 bitcoins a month ago they got paid a certain amount. If all their customers decided to cash in tomorrow do you think they have the money to pay out?

If one holds on, and people find out how cumbersome bitcoin is to trade, what would it's future value be. Junk I think.

I have some rocks in my garden - very special because they are sold with a certificate with my name. Limited supply. Special price limited offer - only $100 a rock. Buy now before the demand pushes up the price. The sky is the limit. Could reach $20,000 in the next six months. (PS - if the scheme crashes you will at least have an asset - a rock.)

(BTW - Why is it that the rich get richer and the poor get poorer. Perhaps fools getting parted with their money?)
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Old 16th December 2017, 03:06 PM   #1080
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Originally Posted by PartSkeptic View Post
When one buys a share, one buys a share in the value of the company.

As long as the company keeps producing or has physical assets, it has a value that can be calculated.

Bitcoin has no intrinsic value other than a currency supposedly for trade.

If a dealer sold 100,000 bitcoins a month ago they got paid a certain amount. If all their customers decided to cash in tomorrow do you think they have the money to pay out?

If one holds on, and people find out how cumbersome bitcoin is to trade, what would it's future value be. Junk I think.
Instead of comparing bitcoin with a share, why not compare it with a fiat Federal Reserve Note?
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