Let's talk about Cryptocurrencies

[Fuzz]

I have a nice line on some tulips if you are interested...I hear they are due for a bump.

[karl262]

And I suppose blockchain tech is also useless and stupid? Please tell me more!

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[afc wimbledon]

Originally Posted by karl262

And I suppose blockchain tech is also useless and stupid? Please tell me more!

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I have no idea but that has nothing to do with the value of cryptocurrencies, and if the rest of blockchaining requires the kind of power consumption that crapping out a couple of bitcoins does then yes its useless.

[karl262]

blockchain tech has just about everything to do with the value of cryptocurrencies!

I don't know what else to say really, maybe check out the ethereum project to learn more, its very cool stuff.
https://www.ethereum.org/

[afc wimbledon]

Originally Posted by karl262

blockchain tech has just about everything to do with the value of cryptocurrencies!

I don't know what else to say really, maybe check out the ethereum project to learn more, its very cool stuff.
https://www.ethereum.org/

Don't ever invest in anything if you don't understand the basic concept of value, it is determined by one thing and one thing alone, demand.

If no one wants to buy your bitcoin, or diamond or house it is valueless

[karl262]

Originally Posted by afc wimbledon

Don't ever invest in anything if you don't understand the basic concept of value, it is determined by one thing and one thing alone, demand.

If no one wants to buy your bitcoin, or diamond or house it is valueless

Wait wait wait. Hold on just one gosh darn minute. You're telling me that if no one is willing to buy something I own it has no value?

Thanks professor.

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[afc wimbledon]

Originally Posted by karl262

Wait wait wait. Hold on just one gosh darn minute. You're telling me that if no one is willing to buy something I own it has no value?

Thanks professor.

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Yep, economics 101, if you don't believe me I can show you a house in Detroit worth 40000 that's frankly nicer than mine in East Vancouver that's worth 1,800,000.

[OMG!WTF!]

GBTC (and by proxy all crypto's) looks like it might be good for a buy. I'll buy some above $10.

[GGG]

Originally Posted by afc wimbledon

All crypto currancies have to be converted into some other form of currency to be used, even if the end user converts them for you after you've made a purchase, as in 'US currency accepted here'.


What is the point of any crypto currency other than criminal activity? the point of the pound is to buy things in the UK, it works in some other places, you can speculate on it in the FX market and convert it into Canadian but its purpose is to buy crap in Britain, crypt has no other purpose but drugs and guns.

Crypto has use in that it isn’t subject to the money printing whims of a nation state. It has a fixed number of total coins and there for is deflationary. This also makes it useless as a currency but as a hedge against inflation like gold it could work out long term if people back it. Golds value as bouillon is its cost to mine vs it’s percieved value. Now there is some industrial use but at a far lower value than its institutional value.

So saying Bitcoin can’t have value is akin to saying gold has no value.

[afc wimbledon]

Originally Posted by GGG

Crypto has use in that it isn’t subject to the money printing whims of a nation state. It has a fixed number of total coins and there for is deflationary. This also makes it useless as a currency but as a hedge against inflation like gold it could work out long term if people back it. Golds value as bouillon is its cost to mine vs it’s percieved value. Now there is some industrial use but at a far lower value than its institutional value.

So saying Bitcoin can’t have value is akin to saying gold has no value.

All value is derived purely from demand, gold has value because it is much in demand, and has been for 4000 years, if bitcoin can get your schlong slobbered on for 4000 years you might have a point

[JohnnyB]

Originally Posted by afc wimbledon

All value is derived purely from demand, gold has value because it is much in demand, and has been for 4000 years, if bitcoin can get your schlong slobbered on for 4000 years you might have a point

Talk about repeatedly beating the same drum without any apparent consideration of nuance. This is not presenting yourself as an intelligent or mature participant in a conversation....

[afc wimbledon]

Originally Posted by JohnnyB

Talk about repeatedly beating the same drum without any apparent consideration of nuance. This is not presenting yourself as an intelligent or mature participant in a conversation....

Talk about not having any point to refute a damn thing I've said, if you have an argument against my point, that 'value' is derived from your ability to sell something, then do pray elucidate, bearing in mind that for this whole thread your argument in favour of cryptocurrencies has been basically 'they make shedloads of money when you sell them'.

[karl262]

you can sell your crypto for gold, so...value?

[afc wimbledon]

Originally Posted by karl262

you can sell your crypto for gold, so...value?

Yes it has the value the market will bear, which, as it has little use other than as a kind of weird stock, reliant on nothing more than the optimism of the owners, no company or product backing it, no dividend, and, unlike all other currencies, no practical way to spend it in day to day life or Nation to back it, is potentially (and frankly likely) zero.


This whole conversation is effectively about investing, market gains and stock valuation, that's not how you value a currency, if you looked at crypto as a stock you would run a mile, it would be a classic pump and dump with the only difference that all of the investors are aware it is inherently valueless, unlike most pump and dumps where only a handful are aware.

[karl262]

Originally Posted by afc wimbledon

Yes it has the value the market will bear, which, as it has little use other than as a kind of weird stock, reliant on nothing more than the optimism of the owners, no company or product backing it, no dividend, and, unlike all other currencies, no practical way to spend it in day to day life or Nation to back it, is potentially (and frankly likely) zero.


This whole conversation is effectively about investing, market gains and stock valuation, that's not how you value a currency, if you looked at crypto as a stock you would run a mile, it would be a classic pump and dump with the only difference that all of the investors are aware it is inherently valueless, unlike most pump and dumps where only a handful are aware.

That would be the blockchain project that backs each crypto. It's a great technology. Look into it.

[afc wimbledon]

Originally Posted by karl262

That would be the blockchain project that backs each crypto. It's a great technology. Look into it.

No, blockchain doesn't 'back' crypto, it doesn't do anything more than make crypto technically possible, there is no central bank of blockchain, blockchain doesn't pay you a dividend.

Blockchain may well prove to be an important software innovation and a company that finds a way to use it to turn a profit on some function, unhackable passwords for a fee etc may well be a huge investment opportunity but blockchain isn't what drives crypto's value, the only thing driving it is the belief of people like you that it will keep going up. that's it full stop, that's a pump and dump or pyramid scheme at its finest

[JohnnyB]

Originally Posted by afc wimbledon

Talk about not having any point to refute a damn thing I've said, if you have an argument against my point, that 'value' is derived from your ability to sell something, then do pray elucidate, bearing in mind that for this whole thread your argument in favour of cryptocurrencies has been basically 'they make shedloads of money when you sell them'.

Not trying to refute your point. You're just not presenting yourself as a legitimate participant in a conversation with any openness to changing your point of view. Waste of time for everyone in the thread that you are so intent on pumping full of your apparently fairly shallow understanding. If you're not open to having an exchange of ideas, you should just leave the thread to people who are.

[afc wimbledon]

Originally Posted by JohnnyB

Not trying to refute your point. You're just not presenting yourself as a legitimate participant in a conversation with any openness to changing your point of view. Waste of time for everyone in the thread that you are so intent on pumping full of your apparently fairly shallow understanding. If you're not open to having an exchange of ideas, you should just leave the thread to people who are.

I'm not sure what I'm supposed to be open too, crypto's have neither intrinsic value (true of all currency's) nor economic backing, they are worth less than Canadian Tire money if the market collapses and outside of criminal or other illegal uses crypto currency's have no specific reason to exist, assuming you believe an imaginary number actually exists.


You want me to be open to crypto explain to me what the use of crypto's is that no other currency can do, Canadian Dollars can buy you things in Canada, no other currency can do that, therefore Canadian Dollars will always have a use. Where can you spend crypto as a currency without involving exchanging it into something else except in dark web criminal uses?


To me the very success of crypto's rising price is proof of its intrinsic failure, currency's aren't supposed to increase massively in value, currency's aren't an investment, you don't hear anyone ever say 'I wish I'd bought into Dollars last year, I'd be a millionaire now if I had' for the simple reason that that isn't the purpose of a currency, no one trades FX looking for 10 or 20% annual returns on a buy and hold sterling position, you trade FX based on small moves, mostly as a hedge against other markets instability.


Explain to me how you are viewing this as a currency rather than a stock pick as to me you are talking a stock not a currency, I am open to either frankly, if I am missing something then explain, alternatively if the only point of crypto is to make money on its increasing value then own that and stop going on about it being anything more than a form of penny stock

[Itse]

There's nothing inherently wrong with calling Bitcoins or other blockchains a currency.

A currency is really just something that's used like a currency. Cigarettes have been used as currency in prisons, before "the invention of money" grain (or loans backed by grain banks) was used as a currency etc. Really anything that people will commonly accept in a trade even though they personally might not have a use for it can be called a currency.

Although, if you decide to call Bitcoins a currency, then you essentially have to call all publicly traded financial instruments as currencies, because the standard you are using is "commonly accepted in trades", and most of them are actually more commonly accepted than Bitcoins, which are generally only accepted by people who already own Bitcoins. (For a comparison; you can use stocks as a form of payment with anyone who trades in stocks, but also with many people who don't. More employees will accept stocks than Bitcoins I suspect.)

There is also a major problem with Bitcoin that most other currencies don't have: it's super trackable. This is a feature supposed to stop it from being stolen, but it hasn't stopped Bitcoins from being stolen. Trackability is why criminals are mostly abandoning Bitcoins and moving on to other currencies. (I hear Monero is the way to go now.)

It's privacy is also really only protected by companies who handle them, which can be a) hacked b) forced to give over customer information.

Then there's the problem that blockchains have no inherent value. Some blockchains are designed so that they can have (at least theoretically) inherent value also called "some other use than tracking transactions of itself". That potential use gives them inherent value that Bitcoin doesn't have. See Aeternity or Etherum for example. Whether those proves to be of value is yet to be seen, but at least if it is what it says it is, you can use Aeternity for recording other transactions than just Aeternity.

Bitcoin is a blockchain that's designed to be just "a currency", or in other words it's essentially designed to be useless. (EDIT: It's inherently useless because the only thing a bitcoin block contains is information about bitcoin transactions, which only has value if you accept that Bitcoins have value... which only have value as a form of keeping track of Bitcoin transactions. You see how circular that all is?)

Bitcoin is also proven to be more volatile and thus a less safe investment than traditional currencies. (This is exactly why it's such a popular investment right now: volatility means there's a chance to make quick money.) The only thing backing Bitcoin is the faith of the markets, and we know how fickle that is. In comparison, every traditional currency is backed at least by some local government... but really all of them are to some extent backed by the global financial and political system, which has a significant interest in not letting any currency be completely wiped out, or even crash very badly.

All this makes IMO Bitcoin very likely to just die off in the near future and be replaced with safer, less trackable cryptocurrencies. Bitcoin has no competitive edge beyond it's name.

That doesn't of course mean people who currently own bitcoins will lose everything... but very likely a lot of people are going to lose a lot.

Then there's the really major issue that the whole blockchain technology isn't really very battle-tested yet. It's supposed security is mostly theoretical at this point, and it very much remains to be seen whether or not it proves to be as secure in practice as it is in theory. (For example, it's been shown that you could theoretically take over Bitcoin by attacking just four points in the network.)

Situations like the Ethereum hard fork where the users collectively updated the system to retroactively make a major Ethereum theft (theoretically worth $80M) not have happened should raise some pretty big flags with people. If other users can decide you don't have the currency you have, that's a problem for the system.

The whole blockchain technology is also based on the idea that people who take part have an interest in holding the system together because they want to own that currency. (Even if you steal some, you still need the system to prove you have it.) What happens when someone just wants to destabilize a cryptocurrency? Nobody knows yet, but someone maliciously destabilizing currencies (generally for profit) is something that happens at times.

(Of course most likely in such a scenario people would point to the person who got rich by destabilizing the currency, buying the crashed currency on the cheap and then cashing in after the crash, as proof that the blockchain currency is a success.)

Then there's the whole question that blockchains safety is in part dependent on decentralization, but decentralization just means you have to attack a system at a lot of different places. That's perfectly doable if you can properly automate that attack. And of course each individual blockchains security is dependant on whether or not the people who created it really knew what they were doing. Etc etc. Blockchain is likely to have it's uses, but there's a reason why the people hyping it are mostly not IT professionals.

[Itse]

And then there's the people who think blockchains could save us from things like the Lehmann crash. (As many would know, the cryptocurrencies took off in part as a response to the financial crash 10 years ago.)

Anybody suggesting this is being ridiculous and doesn't understand at all what happened. Sure, the Lehman brothers crashed because they had tons of things on their balance sheets that had no actual value. But they didn't fake those sheets, which is the only thing a cryptocurrency offers protection from. Yes there was a crisis of trust in who was financially solvent and who wasn't, but the crisis of trust wasn't created by anyone fudging the books and pretending to have something they don't.

That crash happened because financial institutions had created (likely intentionally) opaque financial instruments, the value and functionality of which most people didn't understand. Then when those financial instruments were primarily traded by people who did not understand (or care about) their value beyond the current trade value, this created a situation where the value of those instruments could end up being massively overrated, and some fundamentally incompetent institutions gathered tons and tons of them because they saw easy money in them. Then when that bubble popped, nobody knew what was the right value for those instruments anymore, especially since there were a lot of similar but not exactly the same instruments, so just because one of them had no value didn't automatically mean that another one had no value... but it might. That's a situation that will take time to sort out, and in the meantime you have a fundamental lack of trust over who's able to pay their bills.

One might notice that blockchain currencies actually look a lot like the thing that caused the 2008 financial crisis.