Mmm. I am not sure if Square actually lets you transact using Bitcoin or if this is just about purchasing and selling it to hold it as an investment. I haven’t actually tested it out.
1,348 karma · joined March 26, 2012
> Transactions that are computationally impractical to reverse would protect sellers from fraud.
The reason I believe it will be inversely related is because it is still a relatively new market whose market cap is minuscule compared to other established markets.
During a recession people will naturally look for other places to put their money and gold will be the obvious choice. Bitcoin has all the same properties as gold except it is cheaper to acquire (fees), cheaper to store, has a fixed mining rate (with gold more supply is created when the price increases which drives the price back down), and has only 1% of gold’s market cap. The way I see it, it would be silly not to at least hedge a small amount of money into BTC/crypto.
The other economics reason is pure supply and demand. The supply of Bitcoin is shrinking every day as more people decide to hold it long term. Many more get lost or stolen. Every couple years the block rewards get cut in half as well.
All of that said, the rise and fall in the last year has definitely shaken the public’s confidence so it may take a long time before new money starts flowing into it. All of my timelines are years down the road. (10-20 years)
For example last year there was a point during the bull market when the price dropped from $5k to $3k and that was one example of “when the price started to decline”.
Thanks for the story!
https://www.reddit.com/r/BitcoinMarkets/comments/7xq7mp/comm...
https://suremoneyinvestor.com/2017/08/how-the-feds-money-pri...
I think the bank argument is a little weak since banks are the exact group that crypto currencies are disrupting and stand to lose the most if crypto currencies succeed. If I were a bank I wouldn’t want to be involved with any company that makes it easier for people to trade US dollars for crypto currencies either.
https://tether.to/wp-content/uploads/2017/09/Final-Tether-Co...
No, I believe that Bitcoin is going through a more general adoption wave.
So yes, it was in a bubble last year, but it is all part of a larger adoption pattern. It is the same way Amazon stock was in a bubble from 1998 to 2000 when its value rose from $3 to over $100 and back down to $5, but where is it today?
It is very likely the federal reserve is going to do something very similar in the coming years. They will also print more of their coin at will, but no one is going to make a stink about that cause they have already been doing it for a hundred years.
I agree with you they should have an audit done to prove definitively one way or the other that they are backed by USD to put this entire thing to rest.
As it is now, it keeps coming back up every few months in the media, and the narrative is getting old.
The difference is that the housing prices were clearly in a bubble and banks were intentionally packaging subprime mortgages that they knew were bad and selling them as a low risk investment. This is much much different than Bitcoin. I would argue that Bitcoin is the only asset class that is not currently in a bubble.
> The article doesn't prove the math is sound
I suppose you are right, but I still think it brings up some good points. The Bitcoin market cap is minuscule compared to any other established market. What gives gold its value? It is not that it is used in jewelry. It is that there is a limited supply of it, it can’t be easily created/counterfeited/reproduced, it is divisible, and it can be used to store and exchange value. Bitcoin has the exact same properties, but is even easier to purchase, store, and exchange. I fully believe that Bitcoin and Gold market caps will reach parity some day. Maybe it will take 10 or 20 years, but I believe it will happen.
> Lack of transparency does not necessarily indicate fraud
> This method is not conclusive, but it has helped government authorities and academics spot suspicious activity in the past.
I haven’t read the entire 66 page report yet, but assume for a second that the relationship between Tether and US dollars is 1:1. This would mean that during a bull market, when the price started to decline, big players invested money to buy up the available supply. Nothing about that seems suspicious to me. They may have chosen to use Tether instead of US dollars for any reason. Perhaps because there are more exchanges that have USDT trading pairs than there are with USD pairs. Or perhaps because it made arbitrage easier (transferring USDT from one exchange to another is much simpler than USD where you would have to first move it to a bank account then wait days for a new transfer to take place).
There is a chart at the end of the report that shows that the Tether issuance continued to increase even as the BTC price was falling. Also it shows that less than 25% of BTC trading volume came from Tether while over 60% came from USD (page 38).
It is funny that claiming that the price decline in BTC since December is manipulation will lead to you getting flamed here and people will tell you that it is just going to its “natural value of zero”, but the idea that there was a conspiracy to pump up the price last year is greeted with open arms, and everyone latches onto it (The reality is probably somewhere in between). The math regarding Bitcoin’s price increase is actually pretty sound, and I encourage anyone who disagrees to read this article:
https://medium.com/the-crypto-times/why-is-everyone-investin...
---
As a side note, I think if you said this exact same thing about the stock market, it would not be big news at all: “US dollars were used to pump up the stock market after it experienced big dips”. And meanwhile BTC is 0.3% the size of the stock market.
https://www.reddit.com/r/IAmA/comments/80ow6w/im_bill_gates_...
I somewhat disagree about Bill Gates and Warren Buffet’s intentions though. I believe strongly that wealthy individuals and banks and governments are very scared about the threat that crypto currencies pose to their wealth. The more money that moves into crypto currencies from the traditional financial system the more they have to lose. Also some of the quotes they are throwing around are not those found in a well educated debate, but rather childish, playground insults:
“Probably rat poison squared” – Warren Buffet
“A rare technology that has caused deaths in a fairly direct way” – Bill Gates
“Worthless, artificial gold” – Charlie Munger
“A scum-ball activity.” – Charlie Munger
“It’s just dementia. It’s like somebody else is trading turds and you decide I can’t be left out.” – Charlie Munger
Nearly as bad as trading “freshly harvested baby brains” – Charlie Munger
If they really did not feel threatened by Bitcoin or think there was something there, they would keep their mouths shut.
Well aware of this fact, but it has never happened partially because Bitcoin is the largest and most secure blockchain. Regular currencies can be double spent too, but rely on trusted intermediaries to step in and reverse the fraudulent transactions. In a way that is part of what makes Bitcoin so remarkable. That you can transact without having to depend on intermediaries.
> It can not, therefore, represent an economy that expands in real value as it grows to include more people engaging in more trade.
No, the value is in the fact that what you hold represents a piece of a limited number of coins that will ever exist. Gold does not increase in value because people are actively spending it to purchase coffee. It is a hedge against inflation.
As more US dollars enter the economy and are used for transactions, the value of a single dollar decreases.
> The network presently costs the Earth as much energy as the entire energy usage of the country of Denmark.
I am not going to defend the energy usage and say that that is good, but the energy usage is part of the reason the network is secure and why there hasn’t been a 51% attack. FWIW the traditional economy: banks, vaults, armored vehicles, money printing, etc uses up far more energy.
I would also encourage you to watch this: https://www.youtube.com/watch?v=2T0OUIW89II. Bitcoin actually has the power to introduce innovations to produce cheaper, alternative energy due to mining competition.
> A transaction can take "anywhere from 30 minutes to over 16 hours" to be recorded in the ledger.
The lightning network solves this by creating payment channels off chain which can be processed and confirmed in less than a second.
It is silly to criticize a software project for inefficiencies now that will be improved upon and changed in the future.
> That there is a limit on the divisibility of a Bitcoin makes its deflationary nature even more of a liability.
If the value of 1 satoshi (smallest divisible unit of a Bitcoin) were to get to $0.01 it would mean each Bitcoin would be worth $1 million. This problem also exists with gold, but it is even worse there. A gram of gold would cost around $40 right now, and it is not really possible to split it up much further than that.
> Bitcoin has been stolen from marketplaces and web wallets with impunity. Even air-gapped storage is not invulnerable.
Yes, but the fact that people are trying to steal it in the first place means that they think it is worth something. This is also true of any valuables. Jewelry, diamonds, gold, silver all can be stolen. Bitcoin can be stored in secure vaults or in your head.
https://medium.com/@super.crypto1/4th-dimension-bitcoin-mani...
There are also documented case studies of banks paying to fund studies designed to harm crypto currencies or produce content. For example: https://www.cnbc.com/2018/02/22/poland-central-bank-paid-you...
A lot of the FUD attacks in the media have also been fake in order to create panic selling. For example: http://m.scmp.com/business/article/2132379/us-news-groups-ta...
There are also clear coordinated attacks from CNBC such as a couple weeks ago when Warren Buffet, Charlie Munger, and Bill Gates all got together to trash Bitcoin.
These are carefully timed and executed attacks.
I am aware there are a lot of Bitcoin haters here, but i believe it is the purest form of sound money (other than perhaps gold, but that is also debatable).
It can’t be counterfeited, it is deflationary with a maximum supply of 21 million, it is very costly to produce, it is divisible to 8 decimal places, it can be stored very cheaply. The mainstream media narrative goes to extremes to try to manipulate the public’s perception and scare them away from it, but I think it’s very difficult to say what the fair market value for one Bitcoin should be. I personally think it should be much higher than what it is priced at today.
Buy up a ton of Bitcoin during the lead up to futures trading, then short Bitcoin on the futures market while market selling thousands of the cheaply acquired Bitcoin on spot exchanges. You succeed in lowering the price of Bitcoin, killing the public’s perception of crypto currencies, scaring away retail investors, and you make a killing in the process.
JPMorgan has been using futures markets to manipulate Gold and Silver spot prices for years while also accumulating huge amounts.
Look at an early article that was published prior to the launch:
https://www.coindesk.com/cme-groups-leo-melamed-well-tame-bi...
It was all planned ahead of time for Wall Street to get maximum profit at the expense of regular people. What else is new.
Yes, Bitcoin has lost a lot of value since Christmas, but it is still up around 600% from last year. I am taking a long term view here. It is unfair to criticize Bitcoin’s decline because in terms of an asset class it is still miniscule. I consider it in the early price discovery days. Amazon stock declined from $107 to $7 around 2000-2001 so you could make the same argument that buying Amazon was a bad investment then, but you would look pretty dumb today. For reference, just last year, Bitcoin’s market cap was around $15 billion. That would be the equivalent of buying Amazon at around $32 based on the current price.
The Bitcoin volatility will stabilize over time, and I think it will become a legitimate asset class. I would like to ask you in response to
> There might have been people orchestrating surges and crashes, but that's pretty much the best case scenario for assets which people have no reason to value at all.
Why would you say that fiat currencies have value (other than because the government says so)?
The fact is, if you hold your savings in USD in a bank account with close to zero interest rates, your life savings will be worth less every single year (purchasing power, not dollar amount). With a deflationary currency such as gold or bitcoin, that is not the case. I think as people realize this, it will eventually become a self fulfilling prophecy where people are pushed into cryptocurrencies as a hedge against hyperinflation (it is already happening in certain countries such as Venezuela).
It stands to throw off the entire balance of power in the world which is why people in high places are trying to slow it down and prevent it from happening, but I believe it is just putting off the inevitable. That is why I am saying it wont happen today. I said 10 to 20 years as an aggressive estimate, but in reality it could take 50 to 100 years.
I also believe the entire surge in Bitcoin and crypto and subsequent crash may have been orchestrated by big players in order to shake the public’s confidence and trust in these markets to push adoption farther down the road.
If you wanted to pay someone in another country $1,000 would you trust sending that much money in the mail?
> Blockchains don’t scale
This is very shortsighted. I’m not talking about now. I’m talking in 10 or 20 years. The internet didn’t scale in the early 90s. Software by its nature is designed to evolve. I think there is a high likelihood Blockchain tech will rival traditional payment gateways in the next 10 or 20 years.
The lightning network and other software will solve many of the issues with regards to transaction fees and delays. I think adoption will eventually come back.
There aren’t restrictions on who you can send them to, what time of the day you can send them, the maximum amount you can send. You don’t have to worry about your bank account being frozen or suspended. You don’t have to wait days for transactions to go through. You don’t need a bank account at all to store them. The more that banks restrict the way people are allowed to use their money, the more it will push people into crypto currencies.
State backed crypto currencies are unlikely to succeed in the same way that decentralized ones like Bitcoin are because central control allows the bank or government to print as much as they would like and alter transactions however they see fit. It’s unlikely there will be any sort of public ledger/blockchain or accountability. Eventually people will catch on to this and figure out a way to move back to Bitcoin and others. It may take 10-20 years or longer, but I don’t think this charade is going to last forever.
In addition, I am always wary when banks do things like this citing reasons like: “Our goal is to protect our customers. It’s too volatile. It’s used for money laundering.” Banks have never and will never care about their customers. In fact, they benefit from their customers going into debt (credit card fees, loan interest, overdraft fees, etc). How concerned were the banks about issuing loans to customers leading up to the 2008 housing crisis? Money laundering is still primarily done using cash and often with banks turning a blind eye.
This is all about banks understanding the threat of crypto currencies and trying to maintain control of the financial system by eliminating any and all competition. They know that widespread crypto adoption will make them obsolete. I think this battle will go on for years, but I think eventually the banks are going to lose. It’s possible that they already know that too.
Please read:
- https://www.theregister.co.uk/2018/03/23/cloud_act_spending_...
- https://www.eff.org/deeplinks/2018/03/responsibility-deflect...
I personally believe the Facebook “scandal” is/was a smoke screen to draw the media attention away from this (4 or 5 year old scandal with regards to data collected for the Government to begin with). No private information was leaked (private messages, chats, etc) from Facebook as far as I am aware. I am not saying Facebook is innocent here – they are far from it, but I can’t stop thinking that the timing is too convenient and too much of a coincidence. Also recall that Zuckerberg liquidated around $500 million of Facebook stock in February.
All of the major tech companies (Apple, Google, Facebook, Microsoft, etc) co-authored a letter supporting this legislation saying that it represents “notable progress to protect consumers’ rights.” despite the fact that it does the exact opposite. I think it will save them money from drawn out legal battles, legal fees, and the possibility of having to build additional data centers in other countries/continents to replicate and provide access to customer’s data for law enforcement agencies.
The CLOUD act allows access to ANY data including emails, private messages, etc. without requiring a warrant or having to inform the person that it is being collected. It gives additional power to the executive branch as the attorney general and certain members of the cabinet can access data on unsuspecting individuals without having to notify Congress or the Judicial branch. Also data collected from another party interacting with someone else could be used to criminally prosecute them even if they were not under any suspicion or investigation to begin with.