Bitcoin

dkane · 04-12-2013 5:53pm

The original story, before the Independent changed the facts! - http://bigstory.ap.org/article/2-arrested-bitcoins-seized-german-fraud-probe

Peterdalkey · 06-12-2013 10:38am

http://www.irishexaminer.com/business/irish-traders-avoid-bitcoin-bubble-251827.html well it appears not all Irish traders did!!

AtomicHorror · 06-12-2013 2:38pm

Peterdalkey wrote: »

http://www.irishexaminer.com/business/irish-traders-avoid-bitcoin-bubble-251827.html well it appears not all Irish traders did!!

I have bitcoins that I bought just last week that are still worth more today than I paid from. Some bubble.

Peterdalkey · 06-12-2013 3:11pm

AtomicHorror wrote: »

I have bitcoins that I bought just last week that are still worth more today than I paid from. Some bubble.

I am sure you are right, it will be a "soft landing" . The fundamentals are sound and the noise is just market overreaction!

dkane · 06-12-2013 3:18pm

Peterdalkey wrote: »

I am sure you are right, it will be a "soft landing" . The fundamentals are sound and the noise is just market overreaction!

or Bitcoin could go to the moon and everyone will be wishing they had bought at €800.
Its far too early to call it a bubble.
the charts (https://blockchain.info/charts/market-price )don't suggest that many people will have been burnt yet. I mean the high was around €900, its only fallen to €800.

In my opinion its 50/50 whether it hits €900 or €700 next.

AtomicHorror · 06-12-2013 5:07pm

Peterdalkey wrote: »

I am sure you are right, it will be a "soft landing" . The fundamentals are sound and the noise is just market overreaction!

Yeah I see what you're doing there.

It's all very well comparing the attitudes and the soundbytes, but much like the sceptics obsession with comparing BTC's growth to the classic bubble growth curve diagram, superficial comparisons are meaningless.

Anyway, I'm not making a point about BTC's long term chances, just saying that the article linked is way off base. Few people got burnt anywhere yesterday, in Ireland or elsewhere. Maybe BTC really will crash some day, but it didn't happen yesterday.

Peterdalkey · 06-12-2013 5:39pm

You are perfectly entitled to hold any belief you choose as am I and also to articulate it without being ridiculed as a some sort of a lesser educated baboon. This monkey just thinks they are BS, but are probably fit for the purposes of those of those involved in nefarious activities, and some others who value them.

Stamply · 06-12-2013 7:37pm

Peterdalkey wrote: »

You are perfectly entitled to hold any belief you choose as am I and also to articulate it without being ridiculed as a some sort of a lesser educated baboon. This monkey just thinks they are BS, but are probably fit for the purposes of those of those involved in nefarious activities, and some others who value them.

I've seen no response to this so I'm gonna post it again as that article is completely confusing intrinsic value with tangible product. Gold isn't just valuable because you can hold it in your hand...

"Put yourself in the position of a merchant rather than a currency speculator for a minute.

Right now taking payments online is risky business because of credit card fraud, which causes two main problems:

1) Fees charged by services providers are large, taking a big chuck out of your margin as a seller
2) Paying for things online is a pain in the ass due to security measures like 3D secure

With Bitcoin, as a seller you take payment in advance (like cash) so the risk is all on the buyer. Nobody sticks their hand in your bank account to take your money, you only push the credits at the seller. This is good for reliable sellers.

If sellers only accept small amounts of bitcoin in the beginning due to the risk they can set up automated exchanges at the end of the month and get notified of price fluctuations. Then over time they can increase their Bitcoin cashflow as risk is reduced.

At the very least this would put a fire under the established payment processing industry to lower prices to merchants because an alternative exists.

Thus, my view is that a nice parallel equilibrium will ensue with short term fluctuations in the price of Bitcoin causing marginal losses for merchants (crucially, these losses will be less than the cost of traditional payment processing because merchants will have low bitcoin cashflow in the beginning) and long-term fluctuations in the price of bitcoin periodically increasing and decreasing the cost of traditional payment processing.

This just makes sense to me... "

AtomicHorror · 06-12-2013 8:45pm

Peterdalkey wrote: »

You are perfectly entitled to hold any belief you choose as am I and also to articulate it without being ridiculed as a some sort of a lesser educated baboon.

Hold on a second. You could have said something like "I think this is analogous to the Irish housing bubble for reasons X, Y and Z", but instead you made a sarcastic comment which implied that I am deluded, stupid or lying depending on your views on those who predicted a soft landing for the housing market back in 2007. I called you on it.

Please don't make out that you're being victimised here. Make an argument to support your point instead.

AtomicHorror · 06-12-2013 8:56pm

Baidu have suspended BTC payments... this will be a serious test.

Peterdalkey · 06-12-2013 10:23pm

Sorry for being less than clear. I think bitcoins and it's markets are a crock. There is no Voodoo and Occult location on boards.ie but I can't see that discussions about speculating in or on them them has a place in a business and enterprise forum. You may be proven right of course, if so well done, I never bother arguing the toss when the result is of no interest or the other side is a zealot.

I bought Baidu at 82, happy days...

Stamply · 06-12-2013 11:04pm

Peterdalkey wrote: »

Sorry for being less than clear. I think bitcoins and it's markets are a crock. There is no Voodoo and Occult location on boards.ie but I can't see that discussions about speculating in or on them them has a place in a business and enterprise forum. You may be proven right of course, if so well done, I never bother arguing the toss when the result is of no interest or the other side is a zealot.

I bought Baidu at 82, happy days...

1) If Bitcoins were successful, however unlikely, it would be massive event in human history, so the idea that you are disinterested is ridiculous. That is further bolstered by the fact that you are vehemently calling it a "crock" and are spending time (maybe your time isn't valuable to you) posting about it in a forum, which shows you are actually interested in one sense. Its seems to me your interest is one more born of an ideology which sees Bitcoins as a threat. Thats the only way your posts make sense to me.

2) Many people who buy Bitcoins are ideological and are speculating on future value that they can't rationally justify. But many people are looking at the intrinsic value of organising a real economy on this store of value, for real practical & justifiable reasons. Those who are ideologically against these practical justifications dismiss the currency without engaging them, the same way as those who are ideologically invested in Bitcoins irrationally dismiss all justified arguments against the system.

Making real arguments for or against is hard but it makes for a much more interesting conversation...

In the end we'll just have to wait and see how the cookie crumbles.

Peterdalkey · 06-12-2013 11:32pm

Please do not attempt to attribute your values to my purpose, interest or motivations. I certainly have no interest in yours. My view is that I think that bit coins are a crock. If you don't like what I am saying, just ignore my posts and move on... Quote them back at me with your own views appended, I will pull your chain every time. Get over it!
Is someone here the keeper of the reputation of bit coins?

AtomicHorror · 07-12-2013 2:56am

Peterdalkey wrote: »

Sorry for being less than clear. I think bitcoins and it's markets are a crock. There is no Voodoo and Occult location on boards.ie but I can't see that discussions about speculating in or on them them has a place in a business and enterprise forum. You may be proven right of course, if so well done, I never bother arguing the toss when the result is of no interest or the other side is a zealot.

You really have no interest in talking about this do you? You'd rather repeat your opinion as often as possible without engaging? What's the point of that?

If you took the time to look at my posts on BTC, you'd see I'm no zealot. I hope for the best, but I recognise that there's every chance BTC will fail and fail hard. What I object to is misrepresentations of reality such as the article you posted, and the selective use of such articles in argument. Cherry picking will always annoy me, regardless of the topic.

thunderdog · 07-12-2013 3:13am

For those who have money invested. Bitcoin dropping fast. Currenlty worth 617 dollars. A good time to buy

Stamply · 07-12-2013 1:30pm

thunderdog wrote: »

For those who have money invested. Bitcoin dropping fast. Currenlty worth 617 dollars. A good time to buy

I couldn't invest in BTC until I saw definitive signs that a real economy was going to dominate the current speculative investment economy. There are real benefits to this and it makes perfect sense in theory to say it will... But a real economy means Joe tradesman buying car parts online with BTC (cutting out bank & PayPal charges) rather than Russians & Chinese using it to move their money from one currency to the next.

At the moment if you ask Joe tradesman about BTC are he will give you a look like you are talking about extra-terrestrial life...

Of course, if I see those signs it is probably too late for me to make a killing, but I'm not as confident in Joe Tradesman's computer skills, who very often can't even manage a CMS and is just getting used to email.

@Peterdalkey, if that is what you mean by a "crock" then fair enough, but if you can't make a coherent point with a reasoned argument then your posts are pointless & antagonistic, so I will indeed ignore them from now on... as should everybody...

Peterdalkey · 07-12-2013 2:55pm

By a crock I mean that something that can be worth 500 one day and 1100 within a few weeks then falling back over a couple of daysto under 700 is not a currency. Even the Zimbabwian $ is more stable than it! though it too has little intrinsic value supporting it or backing it up!
If I were selling a Lamborghini for say 200k, I take bit coins on Wednesday and by Friday they are only worth say 120k. Try running a business on this kind of profitability and cash flow! I am sorry, I thought the market behavious, easy money merchants investing and irrational values attributed to it would have rendered my points obvious. My mistake is making this assumption, and for that I am quite happy to apologise.
I prefer Paddy Power or a casino when I wish to gamble in this way.

Peterdalkey · 07-12-2013 3:02pm

Here is a 1950s version of such wonderful investment and trading beads http://www.independent.ie/business/remember-irelands-infamous-stamp-act-26130087.html

vard · 07-12-2013 3:08pm

What about litecoin? That seems to be a safer investment.

Gloomtastic! · 07-12-2013 3:13pm

Peterdalkey wrote: »

Here is a 1950s version of such wonderful investment and trading beads http://www.independent.ie/business/remember-irelands-infamous-stamp-act-26130087.html

Love this little snippet at the end of that article ......

Desmond Shanahan was sentenced to 15 months. He later became a barrister, practising in London.

Peterdalkey · 07-12-2013 3:15pm

Just goes to show, a leopard never changes his spots!

Stamply · 07-12-2013 4:46pm

Peterdalkey wrote: »

By a crock I mean that something that can be worth 500 one day and 1100 within a few weeks then falling back over a couple of daysto under 700 is not a currency. Even the Zimbabwian $ is more stable than it! though it too has little intrinsic value supporting it or backing it up!
If I were selling a Lamborghini for say 200k, I take bit coins on Wednesday and by Friday they are only worth say 120k. Try running a business on this kind of profitability and cash flow! I am sorry, I thought the market behavious, easy money merchants investing and irrational values attributed to it would have rendered my points obvious. My mistake is making this assumption, and for that I am quite happy to apologise.
I prefer Paddy Power or a casino when I wish to gamble in this way.

So you are saying that current volatility will mean the currency is always unstable?

When you got on a bicycle the first time, did you wobble before you built up enough speed?
When you started your business were you on shaky ground for the first while?
Do share of a big company fluctuate wildly when they go to IPO, before the price stabilises? Traders bet on what they believe the value will be in the end and buy at a lower rate...
Did the Euro wobble in its first decade? (you have a selective memory if you think it didn't)
When man first flew planes did many of them crash?
When the earth was formed was the climate stable enough to support life?

You're assumptions do not add up to a valid argument... Which is crazy because there are so many valid arguments against BTC, but you can't seem to come up with any...

Peterdalkey · 07-12-2013 4:49pm

Ah the hurt, I will get over it! Hope you do too.

Mickk · 07-12-2013 7:02pm

Hey Peter,

One of the main benefits of bitcoin is just as a vehicle for transferring existing currencies. The banking system is cumbersome and expensive (I once had a payment of 20k held in limbo and 10 days and later returned to me while a container was sitting in port and costing me demurrage because the company I was sending to wasn't the exact company name on the chinese bank account) Also western union and moneygram are extortionate both on the fee's and the exchange rate they offer.

The way I came to have some bitcoin was that I let a mate put something on my credit card and then he asked me how he could pay me back. He only has a hong kong bank account in USD, he asked me for my swift and iban and bank address and in 3 days it should hit my account, instead of all the messing I just gave him my bitcoin wallet address and 2 mins later it was paid with neither of us paying any fees. So for me it had a real use, I'm not just jumping on a bandwagon and hoping to use it to speculate, it's a better way to transfer and move money.

Admittedly it's still awkward enough to change euro or usd in and out of bitcoin but if it spreads it will become easier and also the more people who use it's network to transfer wealth the less need there will be to change it in or out of bitcoin. In a year or two I'd say the exchange rate will have stabilised and that element wont be as much of a concern.

Peterdalkey · 08-12-2013 12:32am

Hi Mick

I get all the bits that save money on speed, fees and charges etc, the problem I have is with the 80k I just lost on the sale of my Lamborghini. Is there a bitcoin angel/genie/god who has my dough and a will give it to me. Or is That the minor flaw?

Cheers

Peter

AtomicHorror · 08-12-2013 1:09am

Peterdalkey wrote: »

Hi Mick

I get all the bits that save money on speed, fees and charges etc, the problem I have is with the 80k I just lost on the sale of my Lamborghini. Is there a bitcoin angel/genie/god who has my dough and a will give it to me. Or is That the minor flaw?

Cheers

Peter

The risk is on buyer's side with BTC. Why would you give someone a car without getting the money first? As a seller, you're better off with BTC than say PayPal where the buyer can fraudulently claim they didn't receive the item and reverse the payment.

If non-reversible transactions bother you, there are plenty of ways around that with BTC just as there are with cash.

Peterdalkey · 08-12-2013 10:15am

Scenario in Post #68 refers,
If I were selling a Lamborghini for say 200k, I take bit coins on Wednesday and by Friday they are only worth say 120k. I am down 80k. Risk resides with the buyer, I don't think so.

relaxed · 08-12-2013 11:40am

Mickk wrote: »

Hey Peter,

One of the main benefits of bitcoin is just as a vehicle for transferring existing currencies. The banking system is cumbersome and expensive (I once had a payment of 20k held in limbo and 10 days and later returned to me while a container was sitting in port and costing me demurrage because the company I was sending to wasn't the exact company name on the chinese bank account) Also western union and moneygram are extortionate both on the fee's and the exchange rate they offer.

The way I came to have some bitcoin was that I let a mate put something on my credit card and then he asked me how he could pay me back. He only has a hong kong bank account in USD, he asked me for my swift and iban and bank address and in 3 days it should hit my account, instead of all the messing I just gave him my bitcoin wallet address and 2 mins later it was paid with neither of us paying any fees. So for me it had a real use, I'm not just jumping on a bandwagon and hoping to use it to speculate, it's a better way to transfer and move money.

Admittedly it's still awkward enough to change euro or usd in and out of bitcoin but if it spreads it will become easier and also the more people who use it's network to transfer wealth the less need there will be to change it in or out of bitcoin. In a year or two I'd say the exchange rate will have stabilised and that element wont be as much of a concern.

In fairness you probably had 6 weeks since the container left China to make the payment, so its not entirely the banks fault (happened to me too BTW)

Once the company details are correct on you online banking system then things should be smoother.

So lets say I import a container from China for $50000

Bloomberg rate says €/$1.350

thats €37037.04

Bank charge a spread of 0.003%, (so I get €/US1.34595 rather than $1.35)so it costs me €37148.48

Total bank cost = ~€111 + €12.50 bank charge

What would Bitcoin do it for, and is there any risk of it moving against you by say 2 or 3 or 5% during the trasaction

If I ring the bank they give the rate and lock it in, so if the Euro goes up or down by 10% during the transfer process it won't matter.

relaxed · 08-12-2013 11:51am

AtomicHorror wrote: »

The risk is on buyer's side with BTC. Why would you give someone a car without getting the money first? As a seller, you're better off with BTC than say PayPal where the buyer can fraudulently claim they didn't receive the item and reverse the payment.

If non-reversible transactions bother you, there are plenty of ways around that with BTC just as there are with cash.

Nobody would use PayPal for a big transaction due to the fees

Peterdalkey · 08-12-2013 11:55am

Well put relaxed.
The problem is that the bitcoin has failed in its intention to be become a stateless low fee digital currency. Rather it has morphed into an extremely high risk funds handling system favoured by those who wish to move money surreptitiously or just speculate. It has failed in it's basic raison d'etra

The reality is that only a few % of bitcoin transactions are for trade, the rest are for spec investments or moving cash in an opaque fashion.

There are spin doctors and medical doctors, if I have a health issue I go to a medial doctor. If I want to transfer funds digitally, I seek the services/ advice of a financial expert not a digital marketing marketing guru. Doctor or Digital it is still Horses for courses.

AtomicHorror · 08-12-2013 1:30pm

Peterdalkey wrote: »

Well put relaxed.
The problem is that the bitcoin has failed in its intention to be become a stateless low fee digital currency. Rather it has morphed into an extremely high risk funds handling system favoured by those who wish to move money surreptitiously or just speculate. It has failed in it's basic raison d'etra

The reality is that only a few % of bitcoin transactions are for trade, the rest are for spec investments or moving cash in an opaque fashion.

If that's the case then why did the dollar value of BTC wobble but the rapidly recover after the closing of the two main "surreptitious" websites and the subsequent introduction of regulation in China? Why has BTCs biggest fall come only in the wake of a reduction in it's utility as a currency with the suspension of Baidu's sales in BTC?

There is a strong proportion of BTC owners who want to use it as currency, and even speculators would prefer to "cash out" buy buying goods and services with BTC instead of having to endure the fees and delays associated with an exchange. People are willing to invest in BTC and hold BTC on the basis of its utility, they just need to be given the services.

Peterdalkey · 08-12-2013 2:32pm

That all you described happened, only serves to confirm the dangerous and unstable nature of the product.

The problem that bitcoin was feted to solve was never for a new currency, it just tried to be too much. There is no doubt that the existing money movement systems from credit cards to PayPal and all the other fee gouging/ripoff commission/currency conversion pillaging is at complete odds with the whole dynamic of the digital marketplace. Both buyer and seller are pilfered by these zero value adding intermediaries. It is a pity that all the talent behind the bitcoin did not focus on creating a real low cost digital purse and money movement system, rather than a madcap attempt to be all things to all men.

The opportunity to win this space remains.

alb · 08-12-2013 3:38pm

Peterdalkey wrote: »

That all you described happened, only serves to confirm the dangerous and unstable nature of the product.

But it's not a product, it's an invention, a new layer on top of the internet. You seem to think Bitcoin is already at endgame, and has failed, but it's still in its infancy. The products and services that will utilise the invention are only being developed now.

Email as an invention existed long before the average person was comfortable using it, services like gmail and hotmail and products like outlook made it easy for the masses.

Bitcoin has grown in every aspect this year - number of client application downloads, number of merchants, market cap. Without a better version to replace it or outright failure it will continue to do so.

AtomicHorror · 08-12-2013 3:46pm

Peterdalkey wrote: »

That all you described happened, only serves to confirm the dangerous and unstable nature of the product.

That doesn't address my point at all.

Stamply · 08-12-2013 3:55pm

relaxed wrote: »

In fairness you probably had 6 weeks since the container left China to make the payment, so its not entirely the banks fault (happened to me too BTW)

Once the company details are correct on you online banking system then things should be smoother.

So lets say I import a container from China for $50000

Bloomberg rate says €/$1.350

thats €37037.04

Bank charge a spread of 0.003%, (so I get €/US1.34595 rather than $1.35)so it costs me €37148.48

Total bank cost = ~€111 + €12.50 bank charge

What would Bitcoin do it for, and is there any risk of it moving against you by say 2 or 3 or 5% during the trasaction

If I ring the bank they give the rate and lock it in, so if the Euro goes up or down by 10% during the transfer process it won't matter.

I see your point and its a good contribution but I wouldn't see the utility of BTC being for transfers of that scale. For small transactions, buying online, the banks & merchant services charge a big whack of the seller's margin, between 5-10% generally. Imagine not having to pay that extra couple of quid every time you use your credit card online to buy a gig ticket...

I think the value of BTC is at this level, and I can certainly foresee BTC merchant services that take the risk of minor fluctuations in the currency before the merchant can cash in by buying euro or dollar by tying in a price at the end of each month or period.

Stamply · 08-12-2013 3:56pm

AtomicHorror wrote: »

That doesn't address my point at all.

Addressing points is not his style...

Peterdalkey · 08-12-2013 3:58pm

AtomicHorror wrote: »

That doesn't address my point at all.

As I just don't get them it as they relate to being a safe and useful tool to me, I was always going to be unable to provide you with the answers you seek.

I do note, however, that you have nothing to say on the alternative that I proffered in the same post. Tells me loads!

Peterdalkey · 08-12-2013 4:00pm

Stamply wrote: »

Addressing points is not his style...

Profound indeed!

AtomicHorror · 08-12-2013 9:06pm

Peterdalkey wrote: »

As I just don't get them it as they relate to being a safe and useful tool to me, I was always going to be unable to provide you with the answers you seek.

I do note, however, that you have nothing to say on the alternative that I proffered in the same post. Tells me loads!

It tells you that if I go to the trouble of making a point and you respond with a non sequitur, I won't respond to the non sequitur until you respond to my first point. You'd just do it again, wasting my time. Stamply's response suggests that this is not new behaviour either, so I'm skeptical that answering you is worthwhile. Sorry.

Mickk · 09-12-2013 12:16am

Peterdalkey wrote: »

Hi Mick

I get all the bits that save money on speed, fees and charges etc, the problem I have is with the 80k I just lost on the sale of my Lamborghini. Is there a bitcoin angel/genie/god who has my dough and a will give it to me. Or is That the minor flaw?

Cheers

Peter

What 80K? If you sold it for x amount of bitcoin then you will still have the same amount in your wallet. If you're talking about what you can exchange it for in different currencies then you're lucky you didnt sell it in Zimbabwe and have it go from 200k to 2c in a week? Or you're lucky you didnt keep it in the Bank of Cyprus or you'd be down 47%. You're not talking about the system, you're talking about real world events which have nothing to do with the system, the bitcoin system has had a bit of bad news with regard to China's handling of the system and so the price has reflected that, the same way whatever you held the proceeds of the lambo sale in is susceptible to fluctuation. Your arguments are all to do with real world events in this very short space of time when I'm impressed with the system as a system and the potential it has when the teething problems are ironed out.

It's funny, look 2 posts down from this at a thread called "Bank Payment Advice" about how someone needs to send money now and cant because banks only process payments for a couple of hours a day 5 days a week. He needs his money sent now, he's fortunate enough that he happens to be in the same institution as the person who he needs to transfer to so it should be close of business instead of 1 or 2 days and that's just between banks in the same country... By nature, the more people who use the bitcoin network and the more transactions rather than speculators will allow the rate to stabilise and then it's a great system for holding, transferring and being in full control of your own wealth.

In fairness you probably had 6 weeks since the container left China to make the payment, so its not entirely the banks fault (happened to me too BTW)

Once the company details are correct on you online banking system then things should be smoother.

So lets say I import a container from China for $50000

Bloomberg rate says €/$1.350

thats €37037.04

Bank charge a spread of 0.003%, (so I get €/US1.34595 rather than $1.35)so it costs me €37148.48

Total bank cost = ~€111 + €12.50 bank charge

What would Bitcoin do it for, and is there any risk of it moving against you by say 2 or 3 or 5% during the trasaction

If I ring the bank they give the rate and lock it in, so if the Euro goes up or down by 10% during the transfer process it won't matter.

Yes I did have weeks to pay the balance of the container but it took right up till the last week to get the money together. In this day and age with the level of innovation and advanced technology the banking system is a dinosaur, it's like snail mail against email.

Someone moved bitcoin worth 147 million the other day and didn't pay a penny transaction fees...

Peterdalkey · 09-12-2013 12:33am

You may have any rules you like for yourself. You would however be better doing your own research when it comes to assessing the the quality or history of my posts. There are plenty on this forum in plain view.

I remain of the opinion that BTC is not worthy financial instrument. To hold and articulate these does not require me to respond according to your wishes. I have given my reasons, which clearly do not suit you. You are free to air your own beliefs in any fashion you choose, it is a public forum and will, with luck, remain democratic into the future, unless taken over by the Bitcoin police.

AtomicHorror · 09-12-2013 8:57am

Peterdalkey wrote: »

You may have any rules you like for yourself. You would however be better doing your own research when it comes to assessing the the quality or history of my posts. There are plenty on this forum in plain view.

I remain of the opinion that BTC is not worthy financial instrument. To hold and articulate these does not require me to respond according to your wishes. I have given my reasons, which clearly do not suit you. You are free to air your own beliefs in any fashion you choose, it is a public forum and will, with luck, remain democratic into the future, unless taken over by the Bitcoin police.

Who is this addressed to, me or Mickk? This is like talking to someone who won't make eye contact.

pedronomix · 09-12-2013 11:46am

Interesting article from Forbes contributor on the topic

Testing Shiller's Nobel Prize Against The Bitcoin Bubble

Of course, this presupposes that Bitcoin is indeed in a bubble but I think that recent price gyrations show that it is, at the very least, showing the price behaviour of an asset in a speculative bubble. But here the interesting thing to me is something that Robert Shiller, joint winner of the Nobel for economics this year, has pointed out. That one of the things that pops speculative bubbles, one of the things that can actually prevent them forming, is people betting that it actually is a bubble. My contention is that if the Bitcoin market has an absence of these tools then that makes it more likely that we are indeed in a bubble.

Shiller’s basic point here is that in developed markets you can bet (speculate is the polite word) that the price of something will go down as well as up. That is, you can go short on stocks, buy a put option and so on. He then points out that you cannot do this with housing very well: and it’s the absence of that ability to go short the US housing market that allowed the housing market to get so out of hand. If there had been more people able to bet on falling prices then there would have been more people doing so. And the very existence of such speculation would have, if not popped, at least reduced the inflation of, the long only speculative bubble. This is why Shiller’s solution to this problem for the future is the creation of exactly those sorts of housing futures and options that would allow speculators to go short. And yes, this sort of research of his into financial markets is exactly why he got a share of this year’s Nobel.

Then we’ve this excellent little piece by Stephen Gandel. He goes off to test how easy or difficult it is to short Bitcoin. The answer is that it’s not easy, it’s not cheap and in at least one respect extraordinarily badly designed:
Bitcoin Market In Sharp Correction, What Is Next? Panos Mourdoukoutas Panos Mourdoukoutas Contributor
Bitcoin Gets Valued: Bank Of America Puts A Price Target On The Virtual Tender Samantha Sharf Samantha Sharf Forbes Staff
Central Banker On Bitcoin, At Least With Tulipmania You Got a Tulip At The End Tim Worstall Tim Worstall Contributor
Calling David Friedman, Redditors Providing Private Legal Enforcement Over Bitcoin Theft At Sheep Marketplace Tim Worstall Tim Worstall Contributor

With normal currency options you can choose to collect in whatever currency you are using to bet against another currency. So if you are betting the price of a euro will fall against a dollar, you can collect in dollars when the contract settles, thereby offsetting the fact that the euro just dropped in value.

You can’t currently do that with bitcoins. All of the bitcoin options and futures contracts are settled in bitcoins. This is a very bad deal. Because even if I end up with a bitcoin windfall, they will be worth a lot less when I convert them back into dollars.

That’s so badly designed that it is actually near useless as a speculative method of going short. But as a result of Gandel’s investigation we can see that there isn’t that market that Shiller would insist is necessary to prevent the forming of speculative bubbles. If you can’t short it efficiently then there is room for a bubble to grow.

This does not, of course, tell us that Bitcoin is in a bubble. That remains my opinion, that it is, but this particular test only tells us that one of the things that could or would prevent or pop a bubble is not present. That is a bubble is still possible.

Stamply · 09-12-2013 12:31pm

@Pedronomix, Absolutely excellent contribution...

I wonder how difficult it would be for someone to set up a business that made it easy to short BTC and how much money would they make...

have2flushtwice · 09-12-2013 12:31pm

Where is the value here? The value of gold is going up an up, the land no the moon was for sale, but whose was it to sell in the first place!
Same for bit coin, its use is zero, and its valued against currency, which we keep printing because we don't have enough, this makes it a third stage utility, which doesn't exist. Its a certificatewhich we can all print. Of course the certificate carries weight, but the weight has no monetary value. It can only be traded out through itself. Yes it will make money for some. And how much a share is the imaginary non existent utility worth? Ask again, is it a bubble?!

pedronomix wrote: »

Interesting article from Forbes contributor on the topic

Testing Shiller's Nobel Prize Against The Bitcoin Bubble

Of course, this presupposes that Bitcoin is indeed in a bubble but I think that recent price gyrations show that it is, at the very least, showing the price behaviour of an asset in a speculative bubble. But here the interesting thing to me is something that Robert Shiller, joint winner of the Nobel for economics this year, has pointed out. That one of the things that pops speculative bubbles, one of the things that can actually prevent them forming, is people betting that it actually is a bubble. My contention is that if the Bitcoin market has an absence of these tools then that makes it more likely that we are indeed in a bubble.

Shiller’s basic point here is that in developed markets you can bet (speculate is the polite word) that the price of something will go down as well as up. That is, you can go short on stocks, buy a put option and so on. He then points out that you cannot do this with housing very well: and it’s the absence of that ability to go short the US housing market that allowed the housing market to get so out of hand. If there had been more people able to bet on falling prices then there would have been more people doing so. And the very existence of such speculation would have, if not popped, at least reduced the inflation of, the long only speculative bubble. This is why Shiller’s solution to this problem for the future is the creation of exactly those sorts of housing futures and options that would allow speculators to go short. And yes, this sort of research of his into financial markets is exactly why he got a share of this year’s Nobel.

Then we’ve this excellent little piece by Stephen Gandel. He goes off to test how easy or difficult it is to short Bitcoin. The answer is that it’s not easy, it’s not cheap and in at least one respect extraordinarily badly designed:
Bitcoin Market In Sharp Correction, What Is Next? Panos Mourdoukoutas Panos Mourdoukoutas Contributor
Bitcoin Gets Valued: Bank Of America Puts A Price Target On The Virtual Tender Samantha Sharf Samantha Sharf Forbes Staff
Central Banker On Bitcoin, At Least With Tulipmania You Got a Tulip At The End Tim Worstall Tim Worstall Contributor
Calling David Friedman, Redditors Providing Private Legal Enforcement Over Bitcoin Theft At Sheep Marketplace Tim Worstall Tim Worstall Contributor

With normal currency options you can choose to collect in whatever currency you are using to bet against another currency. So if you are betting the price of a euro will fall against a dollar, you can collect in dollars when the contract settles, thereby offsetting the fact that the euro just dropped in value.

You can’t currently do that with bitcoins. All of the bitcoin options and futures contracts are settled in bitcoins. This is a very bad deal. Because even if I end up with a bitcoin windfall, they will be worth a lot less when I convert them back into dollars.

That’s so badly designed that it is actually near useless as a speculative method of going short. But as a result of Gandel’s investigation we can see that there isn’t that market that Shiller would insist is necessary to prevent the forming of speculative bubbles. If you can’t short it efficiently then there is room for a bubble to grow.

This does not, of course, tell us that Bitcoin is in a bubble. That remains my opinion, that it is, but this particular test only tells us that one of the things that could or would prevent or pop a bubble is not present. That is a bubble is still possible.

Peterdalkey · 09-12-2013 12:43pm

Hey Mickk

I never actually had a Lamborghini in the first place and if I had and wished to sell it, from my posts on here it should be pretty obvious that I would never have accepted BTCs in payment. So I never lost the 80K, it was just a bad dream.....

Peter

The Dagda · 09-12-2013 2:52pm

Stamply wrote: »

@Pedronomix, Absolutely excellent contribution...

I wonder how difficult it would be for someone to set up a business that made it easy to short BTC and how much money would they make...

http://www.spreadex.com/financials/trade-bitcoin/

Mickk · 09-12-2013 3:14pm

Peterdalkey wrote: »

Hey Mickk

I never actually had a Lamborghini in the first place and if I had and wished to sell it, from my posts on here it should be pretty obvious that I would never have accepted BTCs in payment. So I never lost the 80K, it was just a bad dream.....

Peter

I understand that Peter, I was going along with your hypothetical scenario. My point was that no matter what you choose to hold your wealth in, USD, EUR, bitcoin, land, property, business's, stock, gold, it's at risk to fluctuation, while you might think that the fluctuations of bitcoin are outside of what you want to risk holding your money in I was making the point that the systems you so highly value (government backed currencies) can be susceptible to even greater fluctuations and even complete failure (Zimbabwe dollars just aren't used any more).

Pedronomix, you can short sell on a few sites, btc-e.com is the most popular, you might not be able to settle in a different currency but you can sell pretty much instantly after you settle.

pedronomix · 09-12-2013 3:19pm

I only posted the Forbes piece on here as I thought it gave some quite balanced perspective on a topic that seemed to be getting rather heated and offered some comments worthy of consideration. Sadly it was not my work!!

alb · 09-12-2013 7:50pm

have2flushtwice wrote: »

Same for bit coin, its use is zero, !

wait, you're saying Bitcoin has no use? Bitcoin has many uses already and the potential for uses we haven't even dreamed of yet.

Regarding the Lamborghini example, was this a hypothetical example? as I'm not sure if you're aware but there is an actual Lamborghini dealership accepting Bitcoin for payment, and someone bought a Tesla there already: http://www.newsday.com/classifieds/cars/bitcoin-used-for-tesla-model-s-purchase-at-lamborghini-dealership-1.6568853

It's depressing that on the "Entrepreneurial" forum of all places people are dismissing Bitcoin without seemingly understanding it, instead of being curious and wondering about the business possibilities it could bring.

Bitcoin

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