Is anyone else starting to become a bit worried? mod note in first post

makeorbrake

smacl wrote: »

Doing a search on the above it seems difficult enough to get neutral coverage on it, NullTX was probably among the better ones I scanned, and it does seem to be a turnaround from his piece in the NY Times in July;

I would have said as much were I not having to deal with a less than objective troll. However, just 2 or 3 pages back, I'm on record as saying that info regarding crypto cannot be trusted.

That said, it was a direct quote I was looking for - and unless they've blatantly lied entirely, that seems to confirm the view he expressed.

I think it's interesting as we've also seen a softening of Robert Shiller's view (he certainly hasn't changed his mind but the level of conviction expressed softened in his most recent comments). We've had bankers say all manner of things about bitcoin and crypto only to find that all the while, they've been busy setting up trading desks and the like.

Bob24

makeorbrake wrote: »

Following on from earlier - a clarification of Paul Krugman's comments at last weeks ChainXchange conference in Las Vegas;

LINK

“Gold is dead… Bitcoin has more utility than gold,”

"There is some chance for Bitcoin to be valuable in the future."

I find it hard to take seriously a statement starting with “gold is dead”. Mind you, I think bitcoin could have a future, but someone saying gold is dead is just telling BS to seek attention.

makeorbrake

Bob24 wrote: »

I find it hard to take seriously a statement starting with “gold is dead”. Mind you, I think bitcoin could have a future, but someone saying gold is dead is just telling BS to seek attention.

I suppose it goes back to the origins of the 'store of value' debate. Some say that 'store of value' is just a default position whereby bitcoin has no utility whilst others claim that it can act as a store of value.

If it can, then it takes on gold. It effectively would have the same 'utility' as gold - with the ability to be able to transact it digitally - quickly and to where-ever on the planet. The logic goes that if it can achieve only a few % of the overall volume use of gold, then it becomes much more significant...

Dohnjoe

JohnnyFlash wrote: »

The whole thing is a mess. Listen, people lost money. It’s only money.

Just to address this, people who bought into that bubble in December/Jan have lost money, many investors who bought in before then are up (significantly up in quite a few cases). A reminder that Ethereum was 10 euros only last year

Bob24

makeorbrake wrote: »

I suppose it goes back to the origins of the 'store of value' debate. Some say that 'store of value' is just a default position whereby bitcoin has no utility whilst others claim that it can act as a store of value.

If it can, then it takes on gold. It effectively would have the same 'utility' as gold - with the ability to be able to transact it digitally - quickly and to where-ever on the planet. The logic goes that if it can achieve only a few % of the overall volume use of gold, then it becomes much more significant...

Convenience is not always the main thing people are looking for though, especially if you talk about an asset seen as a last resort store of value.

Gold has a very long proven track record, is tangible, and doesn’t require continuous availability of any type of technology to keep playing its role. Bitcoin loses on all these criteria, which would be important to many people who are buying gold (especially physical gold, bitcoin could be more of a competitor for gold ETFs).

So again, no saying there is no role for bitcoin to play but “gold is dead” makes zero sense and is just an attention grabbing exercise.

makeorbrake

Dohnjoe wrote: »

Just to address this, people who bought into that bubble in December/Jan have lost money, many investors who bought in before then are up (significantly up in quite a few cases). A reminder that Ethereum was 10 euros only last year

If people chose to make speculative investments, they stand to gain or lose. I have a friend that day trades the conventional markets - it cuts both ways - regardless of what the underlying asset happens to be.

I don't think there's anyone here that's suggesting that there are no risks with speculation.

The separate track to the discussion is consideration of the tech itself - how it's being developed, how it's anticipated to pan out, it's use case, etc. You can definitely decouple one from the other.

makeorbrake

Bob24 wrote: »

Convenience is not always the main thing people are looking for though, especially if you talk about an asset seen as a last resort store of value. Gold has a very long proven track record.

I think the key is track record. It's a matter of whether bitcoin continues to stick around - if people still keep the faith with it. Right now, it is a store of value (albeit a very volatile one...and that's something else that would have to be ironed out if it is to succeed in this use case). Then again, perhaps there's more utility in a stablecoin for such a purpose...we will have to see.

Bob24 wrote: »

So again, no saying there is no role for bitcoin to play but “gold is dead” makes zero sense and is just an attention grabbing exercise.

Maybe he was playing to the gallery - and of course, if he is not a believer in gold anyways (regardless of what he believes about crypto), more likely to come out with this.

RoboRat

Gold has a very long proven track record, is tangible, and doesn’t require continuous availability of any type of technology to keep playing its role. Bitcoin loses on all these criteria, which would be important to many people who are buying gold (especially physical gold, bitcoin could be more of a competitor for gold ETFs).

Gold has a value because it is physical and can be touched. Gold also has a historical value when it was rare and used as currency, and like diamonds, the supply of gold is held back to keep the price high. Everyone is looking for something to bench mark crypto against but the reality is that there really isn't anything.

Personally rather than solving mathematical problems, I would love to see the 'mining' being used to solve actual problems which would benefit the world as a whole.

grindle

RoboRat wrote: »

Personally rather than solving mathematical problems, I would love to see the 'mining' being used to solve actual problems which would benefit the world as a whole.

If PoS takes off miners can throw their power towards the computational tasks there'll be a market for thanks to blockchain. It's evolution, it just takes time. Imagine ETH and BTC's hashrate being used for projects like Golem or web services, decentralised AI compute. Instead of an arms race towards mining coins in the hope speculative frenzy kicks in it'll be an arms race towards disrupting existing monopolies in compute fields, trying to either fully replace or maybe become integral parts of AWS or VMware's businesses.

Pintman Paddy Losty

makeorbrake wrote: »

I suppose it goes back to the origins of the 'store of value' debate. Some say that 'store of value' is just a default position whereby bitcoin has no utility whilst others claim that it can act as a store of value.

If it can, then it takes on gold. It effectively would have the same 'utility' as gold - with the ability to be able to transact it digitally - quickly and to where-ever on the planet. The logic goes that if it can achieve only a few % of the overall volume use of gold, then it becomes much more significant...

Wait a minute...

So people are now saying bitcoin is not a currency, as it's too expensive to actually use in transactions. Instead, Bitcoin's real use is as a store of value; gold 2.0. But if it's too expensive to transact in, and unlike gold has no other actual uses, what value does it have to store?

At least gold is used in jewellery, electronics and many other industries. It also has a track record as a store of value for millenia.

People hodling bitcoin as a store of value because they think the whole financial system is going to come crashing down. Do you really think a crypto currency like bitcoin would do well in an apocalyptic scenario like that. What with its ludicrous electricity use, reliance on broadband and powerful asic processors. Laughable stuff.

smacl

Pintman Paddy Losty wrote: »

But if it's too expensive to transact in, and unlike gold has no other actual uses, what value does it have to store?

The value that people give it obviously. No different from gold in that respect, and to quote krugman once again 'Most gold just sits there, possessing value because people believe it possesses value' The fact that you can make pretty trinkets out of gold or use it to fill your gap teeth isn't what gives it value. It is its scarcity and desirability, much like BTC.

Bob24

makeorbrake wrote: »

I think the key is track record. It's a matter of whether bitcoin continues to stick around - if people still keep the faith with it. Right now, it is a store of value (albeit a very volatile one...and that's something else that would have to be ironed out if it is to succeed in this use case). Then again, perhaps there's more utility in a stablecoin for such a purpose...we will have to see.

Maybe he was playing to the gallery - and of course, if he is not a believer in gold anyways (regardless of what he believes about crypto), more likely to come out with this.

Agreed overall, but I wouldn’t underestimate tangibility and non-reliance on any technology as important factors.

While it might seem like paranoid thinking, things like the facts that you can see gold or burry it in your garden if you want, or that it would survive a computer apocalypse are part of what gives it universal acceptance as one of the most resilient stores of value in existence.

grindle

Pintman Paddy Losty wrote: »

So people are now saying bitcoin is not a currency, as it's too expensive to actually use in transactions.

That's the meme created by Blockstream and Core devs, anybody with an ounce of sense sees through the bull.

Pintman Paddy Losty wrote: »

Instead, Bitcoin's real use is as a store of value; gold 2.0. But if it's too expensive to transact in, and unlike gold has no other actual uses, what value does it have to store?

A bank account you can carry around inside your head? Good luck getting gold though any rigorous border control.

I can't speak to the rest of whatever you're saying because I don't really think Bitcoin can or will win out. But maybe it will. The incentive to adopt is extremely enticing and people are greedy.

makeorbrake

#1782 : ignored.

Bob24 wrote: »

Agreed overall, but I wouldn’t underestimate tangibility and non-reliance on any technology as important factors. While it might seem like paranoid thinking, things like the facts that you can see gold or burry it in your garden if you want, or that it would survive a computer apocalypse are part of what gives it universal acceptance as one of the most resilient stores of value in existence.

It's all psychological - and millennials are more likely to get their head round the non-tangible aspect...potentially ...not saying it will play out that way. I guess it still needs more time. Gold has to be respected as it's been around since the year dot.

As regards the other uses that are referenced re. gold - I really don't think that has such a bearing on the value of gold. It's 90% about store of value with gold. Gold fillings, use in tech hardware, etc. - to me that's peripheral.

LoLth

imho its a bit early to consider Crypto as a replacement for Gold.

Gold has been around since the year dot as makeorbrake says and , to now, there has been no successful method of faking it, cloning it or generating it from base materials (despite centuries of attempts and research).

The same cannot be said for Crypto currencies. Nothing has been found, yet, but plenty of currency attempts have been found lacking, enough to extend the period of distrust for all Cryptocurrencies.

Yes, it can be attributed to a generational thing but not necessarily because Millenials get their head around the concept easier. Millennials may be less risk averse and in some cases, just plain reckless or more easily lead....

hots

LoLth wrote: »

imho its a bit early to consider Crypto as a replacement for Gold.

Gold has been around since the year dot as makeorbrake says and , to now, there has been no successful method of faking it, cloning it or generating it from base materials (despite centuries of attempts and research).

The same cannot be said for Crypto currencies. Nothing has been found, yet, but plenty of currency attempts have been found lacking, enough to extend the period of distrust for all Cryptocurrencies.

Yes, it can be attributed to a generational thing but not necessarily because Millenials get their head around the concept easier. Millennials may be less risk averse and in some cases, just plain reckless or more easily lead....

I don't think anyone suggests crypto in general as a gold replacement? Bitcoin gets that tag a bit as people have come to realise it's a poor currency, but other cryptos tend to get bandied around as the solution to other problems...


It would take a huge shift to replace something like gold as an arbitrary hold of value, but less of a huge shift to create a new channel as the preferred method of transferring value say, or a new network for proving ownership of x. Crypto as a store of wealth is almost an oxymoron for me, doesn't add up at all.

makeorbrake

hots wrote: »

I don't think anyone suggests crypto in general as a gold replacement?

Krugman just did. This guy just did but clearly has a vested interest. Others have held that belief - can't remember any notables right now but it has been suggested.

hots wrote: »

Bitcoin gets that tag a bit as people have come to realise it's a poor currency

You're right - it has been discussed in that way....the suggestion that 'store of value' is just a fallback position for it simply not having a functional utility otherwise. However, I believe that the gold thing is psychological. If people will it, then it can. At the end of the day, you can say that gold or bitcoin or whatever has certain qualities - but people decide if it has a tangible value. At the moment, bitcoin has a value - it's an unsettled value but of course, if faith is lost, it could evaporate. We will have to see.
The other issue....I think bitcoin can eventually settle and deal with the volatility issue. However, will this come soon enough as it's likely to be a long drawn out process? This could mean that a stablecoin would be more suited as a store of value....but then pegging a stablecoin to the USD may bring a different set of problems down the road...

hots wrote: »

It would take a huge shift to replace something like gold as an arbitrary hold of value

Most peoples thinking is that in no way would we see a total flippening. However, if bitcoin cornered a couple of percent of the gold market, that would be huge (when you consider just how tiny crypto and bitcoin market cap. is).

hots wrote: »

but less of a huge shift to create a new channel as the preferred method of transferring value say

I think it's equally - if not more difficult. As well as the crypto needing to have the right qualities to pull this off (which it doesn't right now...maybe if Lightning Network comes through...), the eco-system needs to be built out to facilitate people to use it. In many instances, it would solve a problem that a lot of people don't have (plenty of people are happy with their current options and don't care so much about decentralisation and privacy) That said, there may be parts of the world and situations where there is an active use case.

hots wrote: »

Crypto as a store of wealth is almost an oxymoron for me, doesn't add up at all.

Why should anything be a store of wealth? It's all psychological.

LoLth wrote:

Yes, it can be attributed to a generational thing but not necessarily because Millenials get their head around the concept easier. Millennials may be less risk averse and in some cases, just plain reckless or more easily lead...

Millenials are definitely less risk averse and less conservative - and so more willing to try out new things. As younger people come through, digital currency won't be such a strange/weird concept for them - like it has been for the rest of us when we first stumbled across it.

LoLth wrote:

imho its a bit early to consider Crypto as a replacement for Gold.

A complete replacement, absolutely not...but perhaps it could make modest inroads eg. a couple of percent (which may not mean much from a gold perspective but would be massive when considering the overall numbers for BTC and crypto).

smacl

makeorbrake wrote: »

Krugman just did.

He did. My take on this from a philosophical standpoint is that value isn't so much intrinsic to a thing as a relationship between that thing and one or more people. The notion that the value of gold is somehow connected to is utility in terms of making jewelry or filling teeth I think is entirely specious. We make jewelry from gold because we ascribe value to gold, not the other way around. Gold will remain a preferred method for storing value until such time as it isn't. This could well be the case for a very long time yet but the reasons why this should be so are liable to become eroded over time. Nobody ever got fired for buying IBM until people got fired for buying IBM

Bob24

Just came accros this chart from a financial analyst defining what criteria are required to be considered a safe heaven investment and rating several asset classes including gold and bitcoin based one those:



I don’t necessarily think it covers the whole story or agree with all his assessments, but it can be good for thoughts in the discussion we’ve been having.

smacl

Bit of an odd one to put future demand certainty for US treasuries, Gold and reserve currency ahead of agricultural commodities. Pretty certain that people will continue to eat. It would also be interesting to have some other large tech shares like Google or Apple in the mix. Also not quite sure where how BTC and ETH are at different ends of the spectrum in terms of scarcity of supply, assuming green means scarce and valuable on that basis.

Dohnjoe

smacl wrote: »

Bit of an odd one to put future demand certainty for US treasuries, Gold and reserve currency ahead of agricultural commodities. Pretty certain that people will continue to eat.

I believe it's because many agricultural commodities have shorter lifespans than treasuries

Bob24

smacl wrote: »

Bit of an odd one to put future demand certainty for US treasuries, Gold and reserve currency ahead of agricultural commodities. Pretty certain that people will continue to eat.

I guess when you are looking for a safe heaven what matters is to have certainty of demand within the lifespan of the particular asset you are buying (which guarantees you can dispose of it if you want to), rather than more generally knowing that the asset class it belongs to will still be in demand in the future. As per a previous post the issue here is probably related to lifespan: if you buy loads of dairies and due to over supply no one want to buy the off you before they goes bad, you’ll effectively never have had any demand for your asset, and the fact that dairies become very high demand again a month later is no good to you as your stock is not in sellable condition anymore.

Bob24

smacl wrote: »

Also not quite sure where how BTC and ETH are at different ends of the spectrum in terms of scarcity of supply, assuming green means scarce and valuable on that basis.

My understanding is that bitcoin specifies a maximum number of coins eventually in circulation (ie the scarcity they are reporting) whereas ether doesn’t.

But I’m not sure I fully buy that argument: the scarcity of bitcoin is only defined by an algorithm which could be changed easily from a technical point of view, as opposed to the scarcity of gold which is defined by natural limits outside of human control (until we are able to produce artificial gold, but that is much more of a challenge that amending an algorithm). Also currently bitcoin is only sustainable because there is a buisiness model for miners who get paid coins for running the network. I am not super bitcoin savvy but I am not clear what the plan is to keep things going once the limit has been reached and no new coins can’t be generated anymore to pay miners. Won’t this upper limit be questioned then?

Dohnjoe

The artificial scarcity of Bitcoin is the key component of it's market value

makeorbrake

Bob24 wrote: »

I am not super bitcoin savvy but I am not clear what the plan is to keep things going once the limit has been reached and no new coins can’t be generated anymore to pay miners. Won’t this upper limit be questioned then?

tx fees.

Bob24

makeorbrake wrote: »

tx fees.

That’s what I had in mind, but it would probably reduce liquidity even more.

makeorbrake

Bob24 wrote: »

That’s what I had in mind, but it would probably reduce liquidity even more.

Why? BTC goes to 8 places of decimal.

Bob24

makeorbrake wrote: »

Why? BTC goes to 8 places of decimal.

If some of the transaction cost which is currently covered by the network (by generating new coins and giving them to miners) is transfered to the 2 parties carrying out the transaction (as a transaction fee), there would presumably be less transactions i.e. the bitcoin market would become less liquid.

Basically to my understanding the mining process as it stands slightly devalues all bitcoins in existence to fund transactions (by creating new coins out of nothing and using them to remunerate miners), whereas fully moving to a transaction fee system instead would transfer that currently shared cost* only to the people trading bitcoins (and while guaranteeing scarcity that increased trading cost for the 2 parties who are transacting would incentivise against making transactions hence reducing market liquidity).

* currently part of the the cost of each BTC transaction is shared by all bitcoin holders who accept a small dilution of the value of their asset each time a bitcoin is generated out of thin air by the network and given to a miner for processing transactions. So even if I never transact, as long as I hold bitcoins I am funding other people’s transactions through that process.

smacl

Bob24 wrote: »

If some of the transaction cost which is currently covered by the network (by generating new coins and giving them to miners) is transfered to the 2 parties carrying out the transaction (as a transaction fee), there would presumably be less transactions i.e. the bitcoin market would become less liquid.

As crypto moves from PoW to PoS this tends to become less of an issue. I think a major difference here between the BTC and ETC over the other items listed is how new they are and the amount of change they're still going through and how poorly understood they are. Gold, pork bellies, and bricks and mortar are an order of magnitude more stable, where cryptocurrencies are dynamic, volatile and not really comparable at this point in time. I'd guess we need quite a few years of maturing before this changes, and like many pioneers, most current cryptos will be found dead with arrows in their backs. That said, I'd feel confident that both blockchain and crypto will initially survive and subsequently flourish.

grindle

Bob24 wrote: »

...to my understanding the mining process as it stands slightly devalues all bitcoins in existence to fund transactions (by creating new coins out of nothing and using them to remunerate miners), whereas fully moving to a transaction fee system instead would transfer that currently shared cost* only to the people trading bitcoins (and while guaranteeing scarcity that increased trading cost for the 2 parties who are transacting would incentivise against making transactions hence reducing market liquidity).

I can see what you're thinking but your logic seems to be that Bitcoin will remain technologically static until the last Bitcoins are mined - if Bitcoin is around in 120 years (unlikely) it'll have an absurd valuation, scale properly and have a zillion side-chains and scaling mechanisms attached so that nobody would be thinking negatively about transaction fees.