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csomar

If anything to like about Bitcoin is that it has proved that almost everyone else is wrong.

* SilkRoad shutting down? Bitcoin is doomed.

* Mt.gox is not paying in time or at all? Bitcoin doesn't work.

* Asics? There will be a flood of new coins.

And yet Bitcoin value continue to raise. If history repeats itself, we should see 1 Bitcoin levels at around $2,000.

I think Bitcoin is an interesting phenomena to watch. Being too solid for the quakes that it got, means it's going to stay for a longer period.

I'll be just watching, meanwhile.

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> And yet Bitcoin value continue to raise. If history repeats itself, we should see 1 Bitcoin levels at around $2,000.

It's 2007 I have a house I bought for $300,000 which is now worth $600,000, would you like to buy my house and in two years you will make another $600,000? If there's one thing about real estate in the last 10 years it's that it's proven all those naysayers like Shiller wrong.

I'm not sure we've waiting long enough for Shiller to be proved correct.

If monetary policy wasn't blowing the roof out on equity valuations, we'd be seeing mean-reversion as we should.

Can you elaborate on his prediction?

I would suggest you read up a bit on Robert Shiller and CAPE

Thanks for the elaboration and useful links.

I assumed you could just look in any introductory finance textbook, but here:

CAPE Formula:

- Adjust each of the yearly earnings of the last 10 years for inflation.

- Average the result of the step 1.

- Divide the current price by the result of step 2.

When I say yearly earnings I really mean trailing twelve months. Use TIPS etc to adjust for inflation.

CAPE is mostly horseshit but basically it's designed to give a sense of over/undervaluation of risky assets

It's about as awful as any other valuation metric though.

What strange times we live in where a leisure boat can be talked about as investment!

Isn't money a valuable good? Buying goods and providing liquidity to them helps everyone. If you dig well it's the same thing as every other (things you would call) investment.

It's not surprising that it's rising in value. People are holding on to ~12M coins (worth approx. $2.4B) and are hyping it up so that more people buy them.

The more people that buy them, the more the price will go up, the more that they'll be worth, the more that people will buy them....

Hmm, there are fewer than 12 million Bitcoins in existence.

https://blockchain.info/charts/total-bitcoins

I'm certainly hoarding a couple, but there are plenty of people selling on the exchanges. There is no liquidity shortage that I can see.

Ah, the old and false "holding" argument.

2 million coins have changed hands in the last 30 days: http://bitcoinity.org/markets/list?currency=ALL&span=30d And that is just on these exchanges, not even counting other places of exchanges (coinbase which is probably the 2nd largest coins seller in the US), or purchases (Bitpay signed up 10 thousand vendors!), etc.

If this rate is kept, the entire existent volume of bitcoins, a bit less than 12 million, would change hands in the next 6 months.

It doesn't matter if it is 1 coin changing hands 12 million times, or 12 million coins changing hands one time each. Volume is volume. And it proves that not that many coins are being hoarded.

> It doesn't matter if it is 1 coin changing hands 12 million times, or 12 million coins changing hands one time each. Volume is volume.

Correct

> And it proves that not that many coins are being hoarded.

False. There's nothing in what you said to give any logical or empirical evidence that coins aren't being hoarded.

You'd be better off making the argument that it doesn't matter that they're being hoarded because the market is still liquid.

Strictly speaking, you are right. It is theoretically possible that 11,999,999 coins are hoarded, and only 1 coins is being exchanged many time.

I should have said simply that because the market is very liquid, it does not seem to suffer from hoarding and/or hoarding does not matter.

What you haven't shown is that the market is liquid when it comes to cashing out. Not too long ago someone dumped a bunch of coins at once and the market cratered in a matter of hours.

That's the only statistic that matters: how much USD-equivalent is being injected into/out of system. That tells you whether they're being hoarded.

"What you haven't shown is that the market is liquid when it comes to cashing out".

I showed it. When 2 million coins are changing hands per month, it means 2 millions coins are sold/"cashed out" (and 2 millions bought).

"That's the only statistic that matters: how much USD-equivalent is being injected into/out of system. That tells you whether they're being hoarded."

No. If the rate of transactions per user remains constant, and if the user base grows, you would see exactly that: more USD being injected in the system, than being taken out of it. This would not mean there is hoarding, but simply that the economy is growing (which is exactly what is happening). Again when you see a single Bitcoin payment processor like Bitpay reaching the "10 thousand vendors signed up" milestone, it is hard to reject the claim that the Bitcoin economy is growing...

Do you have a source for this claim that 12 million coins are being hoarded?

> Asics? There will be a flood of new coins.*

the rate of production is fixed, so no one would have predicted that.

asic would increase the difficulty level significantly though.

Being wrong rarely stops people from predicting things

>the rate of production is fixed, so no one would have predicted that.

IIRC, the arguments actually went that GPU miners had their equipment already paid for, and so could afford to hoard their mined coins, but that ASIC miners, who were paying thousands of dollars for their equipment, would be forced to sell their coins immediately to pay for their equipment & electricity.

I'd dare say the majority of GPU miners did invest in new equipment. I'd venture that there were plenty of nerds who were interested in mining that didn't already have rigs with decent GPUs already.

This isn't quite right. The rate of production has increased, because the computing power is increasing at a very high rate between difficulty adjustments. Blocks are being solved faster than they are "supposed" to be, statistically.

It won't last, eventually the increase in computing power will taper off, but that's the state of things at the moment.

"Asics? There will be a flood of new coins."

Whoever made that argument has a fundamental misunderstanding of the pre-defined rate of Bitcoin production.

It's hard to source an argument when you're quoting strawmen.

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