Bitcoin - World's 30th largest Currency

[Running_Man]

I have been watching Bitcoin and have watched the parabolic move which sure acts like a bubble and I keep waiting for it to pop. But today I saw an explanation that to me explains why this move is occurring.

The other bubble I have expected to pop that was in a parabolic move was Government debt, whether US, Europe or China. At some point I expected that Central Banks could not continue to grow currencies. Since 2007 the supply of money has been growing greater than 8 percent on average while the economy chugs along at 2-3 percent.

In previous times the only outlet for the expanse of money was to either spend the money or buy gold if you didn't want it, but now there is a third alternative - Bitcoin and all the other crypto-currencies. Bitcoin could be the bubble central banks have created in a digital world where people of means wish to deposit money that cannot be tracked. Today Bitcoin's market cap is about 200 Billion. If it continues to enlarge it becomes a currency unregulated by central banks that is going to cause them major headaches.

Unlike stock market and precious metals that can be propped up Bitcoin is going to be a hard investment for Central Banks to manipulate in the coming middle term (3-5 years). The advantage of Bitcoin not being able to be issued by Central Banks is it's major advantage and as size gets large enough that means it is being accepted as a currency, whether Jamie Dimon likes it or not.

Bitcoin jumping for 40 billion to 200 billion is seen as a bubble, while US currency being jumped by Fed from 4 trillion to 12 trillion over 12 years is viewed as prudence. In most cases properties of math flows to the offset, even if the equation is not understood.

It is possible what we are witnessing is the total depreciation of conventional currency as a result of years of unbridled quantitative easing. If, and it is a big if Bitcoin continues to gain in price, conversion of bonds to bitcoins could lead in years to come of the end of central banks. And the only weapon central banks appear to have against it is to call it a bubble -- ironically one I think they created.

 

[97guns]

India’s currency it taking a big hit and their people are flocking to virtual coin to preserve their money, India has always used gold to preserve wealth and I still feel it’s the better alternative. All central banks are in a bind, it’s just that ours is propped up with smoke and mirrors

 

[EvrClrx311]

The problem I see in how fast bitcoin has risen, is that as soon as any kind of pullback propagates at this stage... is sustainability (or lack there of). It's a much bigger risk now that individuals are investing heavily into this. The currency isn't really being used, it's simply a method to bloat value as people hope it'll just continue to bloat further and further. The downward potential is 100% (infinite) as there is nothing of substance supporting the currency - other than a hope it's "something different this time."

When bitcoin fell from $1200 to $600 in the matter of hours, it rebounded because the institutional (if you can call them that) doubled down to maintain the structure of this system - those people who got in when it was under $100 were ok staying in because they were still up, and they wanted the run to continue. That only took a few large players when the market cap was down around $15 billion. Once the public feels the sting of a 50% drop... it will scare the common investor away permanently (those that are responsible for most of the run to $10K), and the sting of that will ripple and affect everyone who is jumping into the game (over 50% of bitcoins value and exposure has gotten into it within the last month or two). That negative association on the currency won't be recoverable (my opinion)... so as some point to the bounce back in recent drops as evidence that it'll happen again, and everything will be fine... however I believe once the public feels a drop as the market cap had floated higher than institutional investors can prop up... it'll kill BitCoin for all intents and purposes. For, the run up can only continue if new money is excited about the prospect of potential of BitCoin to compete against traditional currencies. The hope that real world economic value can sustainably shift from governments to BitCoin.

Careful study of the largest bitcoin accounts (many who invested under 5% of what their accounts are actually worth today), shows they are slowly pulling value out as the market goes higher and higher - all of their value is a direct product of everyone who has invested after they did. I'd be doing the same in their shoes. Those who are just getting into the game now, aren't doing that as much. They are hoping to ride this momentum... and they will be scarred heavily from any significant pull back.

(my opinion... I've never owned or plan to own BitCoin)

 

[Big_Hitter]

i'm not sure bitcoin is even a financial asset and certainly not a real asset

it isn't even fiat money

 

[ulrichw]

i'm not sure bitcoin is even a financial asset and certainly not a real asset [...]

The IRS considers it to be an asset ("Property" to be precise):
from https://www.irs.gov/newsroom/irs-virtual-currency-guidance

The notice provides that virtual currency is treated as property for U.S. federal tax purposes. General tax principles that apply to property transactions apply to transactions using virtual currency.

 

[EvrClrx311]

All the gold in the world (currently $1,275.80 and ounce at time of this post) represents a market capitalization of $6.953 trillion. All the money in the world is very hard to pin down. For the purists out there (physically counting all the bills and physical coins) it's about $36 trillion. If you add to that all the "broad money" that is money that is assumed to exist due to the growth of numbers in bank accounts that sits as numbers in bank accounts that people presumably can access by getting physical cash for it... then we're looking at $90.4 trillion. Funds invested in derivatives (money that creates money from... nothing? but promises of money in the future - debt?) then we're looking at $544 trillion (though some argue it's actually $1.2 quadrillion). These numbers make the $160 billion market cap of BitCoin seem incredibly small.

I've seen people comparing bitcoins to gold as if a bitcoin should be competed to an ounce of gold, which doesn't make sense. The real value is the total market capital divided by the supply. I don't think BitCoin will come close to this value, but if it did essentially become as valuable as gold (supply/demand), then a single bitcoin would be worth $331,000. Because all the gold in the world represents again $6.953 trillion. Gold is much heavier than electrons... so far.

Years ago, I remember trying to make sense of why gold's price multiplied by the total gold in the world didn't equal all the money in the world. It really only represents a tiny fraction of all of the value of all of the money in the world (which is a very difficult thing to pin down... because fiat is so inflated and arbitrary). Making sense of just how money works and what it represents... is a fun mental exercise. Fiats exist, lots of them. They all hold value, in their own ways, and we compare them... through the dollar... mostly. But it's all rather arbitrary, yet all rather equally connected and complex. Point always being that stuff supports them. Governments, or things (physical gold). The stuff that supports BitCoin, is it's use to buy things... except it's not really taken off there yet. If the value of it's ability to allow people to transfer wealth for services starts to reach anything significant... I suppose it could justify it's value as a purpose it serves humanity. However, right now... the growth of BitCoin isn't in it's use... but in it's ability to bring in more money that wants to make (free) money by simply passing off the BitCoin to some future person who wants to spend more money on it. That's speculation. Similar to the derivatives market above... I don't think it's actually real. It's just debt... people giving money to each others and a market tracking it. Scary thing...

Random thoughts... I have a lot more on this one.

 

[Totoro]

Beanie babies. Only virtual, and on steroids.

Not joking:
https://coinjournal.net/ethereum-based-cryptokitten-sells-117712/

So you have a virtual kitten selling for $117,712. Yes, cats on the blockchain, that happened.

 

[Onward]

Beanie babies. Only virtual, and on steroids.

Not joking:
https://coinjournal.net/ethereum-based-cryptokitten-sells-117712/

So you have a virtual kitten selling for $117,712. Yes, cats on the blockchain, that happened.

 

[flintnational]

I remember the dot com bubble. Every day we saw articles and pundits suggesting the old metrics were not applicable and new metrics were needed to value dot coms. So, lesson learned. I get queasy when I see the same signs. That being said, like dot com companies, I suspect crypotocurrencies are a game changer. Just not something I can value and invest in.

 

[haha]

Cryto- currencies are vulnerable to government action to halt any threat that they may come to present to the government monopoly on currency creation and money supply. Not to mention surveillance.

Until then, speculators can drive prices anywhere, and I certainly wish that I had some low basis cryptos.

Once big brother says, "enough kiddies", I believe that it will be over.

Ha

 

[Teacher Terry]

So very happy that we got in 4 years ago. WE have cashed out some of ours and earned way more then we put in. We are still hanging onto 10 to see what happens.

 

[Texas Proud]

Wow... people do not think this is a bubble...

It amazes me how people can look at something like this and not see a problem... heck, this is worse than a ponzi scheme....

Greater fool theory at work...

I love the crypo kitties... kinda puts perspective into what a bitcoin really is...

 

[haha]

Wow... people do not think this is a bubble...

It amazes me how people can look at something like this and not see a problem... heck, this is worse than a ponzi scheme....

Greater fool theory at work...

I love the crypo kitties... kinda puts perspective into what a bitcoin really is...

I really cannot see what you are basing that on.

Ha

 

[Running_Man]

Cryto- currencies are vulnerable to government action to halt any threat that they may come to present to the government monopoly on currency creation and money supply. Not to mention surveillance.

Until then, speculators can drive prices anywhere, and I certainly wish that I had some low basis cryptos.

Once big brother says, "enough kiddies", I believe that it will be over.

Ha

Bitcoin will eliminate the need for shipping tons of gold around the world in settlement of government debts. Money does not need a physical presence, it will have all the advantages that paper money gave humans years ago without the fear of a printing press. So I see many advantages and potential uses for bitcoin. Also Jamie Dimon was being disingenuous as bitcoin transaction would potentially eliminate a huge swath of banking fees. In fact it is this issue that is so worrying the banking industry.

The pricing and action of bitcoin has certainly been bubble like, and could yet turn out to be a bubble if bitcoin never achieves acceptance as a currency, but due to the very finite nature of bitcoins this is not like other manias, if bitcoin ever gains favor as a currency.

However James Altchuter who has extraordinary long term vision and whose opinions I respect very much is a huge bitcoin fan and sees valuations going into the trillions of US dollars, which at this point is only a 10X increase. He is also not worried about 80 percent intermediate term declines as bitcoin has seen that before, that is a bit volatile for my tastes.

 

[flintnational]

Things I did this morning -

Checked my "My Space" page
Logged onto AOL to see if I had any mail
Went out to Napster and downloaded some tunes
Checked on the value of my Bitcoin

 

[Big_Hitter]

Bitcoin will eliminate the need for shipping tons of gold around the world in settlement of government debts. Money does not need a physical presence, it will have all the advantages that paper money gave humans years ago without the fear of a printing press. So I see many advantages and potential uses for bitcoin. Also Jamie Dimon was being disingenuous as bitcoin transaction would potentially eliminate a huge swath of banking fees. In fact it is this issue that is so worrying the banking industry.

The pricing and action of bitcoin has certainly been bubble like, and could yet turn out to be a bubble if bitcoin never achieves acceptance as a currency, but due to the very finite nature of bitcoins this is not like other manias, if bitcoin ever gains favor as a currency.

However James Altchuter and has extraordinary long term vision and whose opinions I respect very much is a huge bitcoin fan and sees valuations going into the trillions of US dollars, which at this point is only a 10X increase. He is also not worried about 80 percent intermediate term declines as bitcoin has seen that before, that is a bit volatile for my tastes.

bitcoin is only one of an infinite number of cyber currencies

 

[Big_Hitter]

Things I did this morning -

Checked my "My Space" page
Logged onto AOL to see if I had any mail
Went out to Napster and downloaded some tunes
Checked on the value of my Bitcoin

you forgot to check on your tulips

 

[flintnational]

you forgot to check on your tulips

It was in the original text. I wasn't sure everyone would get the reference.

 

[Running_Man]

bitcoin is only one of an infinite number of cyber currencies

Yes and Amazon is only one of an infinite number of businesses

 

[Big_Hitter]

Yes and Amazon is only one of an infinite number of businesses

bad analogy

 

[Texas Proud]

Bitcoin will eliminate the need for shipping tons of gold around the world in settlement of government debts. Money does not need a physical presence, it will have all the advantages that paper money gave humans years ago without the fear of a printing press. So I see many advantages and potential uses for bitcoin. Also Jamie Dimon was being disingenuous as bitcoin transaction would potentially eliminate a huge swath of banking fees. In fact it is this issue that is so worrying the banking industry.

The pricing and action of bitcoin has certainly been bubble like, and could yet turn out to be a bubble if bitcoin never achieves acceptance as a currency, but due to the very finite nature of bitcoins this is not like other manias, if bitcoin ever gains favor as a currency.

However James Altchuter who has extraordinary long term vision and whose opinions I respect very much is a huge bitcoin fan and sees valuations going into the trillions of US dollars, which at this point is only a 10X increase. He is also not worried about 80 percent intermediate term declines as bitcoin has seen that before, that is a bit volatile for my tastes.

Gold is not shipped around the world... all that happens is that they move some from one vault to another in NYC....

https://www.newyorkfed.org/aboutthefed/goldvault.html

 

[Running_Man]

Gold is not shipped around the world... all that happens is that they move some from one vault to another in NYC....

https://www.newyorkfed.org/aboutthefed/goldvault.html

Germany had 300 tons shipped this year

https://www.usatoday.com/story/money/business/2013/01/16/germany-gold-paris-new-york/1840731/

China is building a 1,500 ton gold vault on mainline China
https://www.bloomberg.com/news/articles/2017-06-06/china-s-gold-imports-seen-surging-50-as-investors-seek-haven
China is buying a gold vault in London that hold 2,000 tons
China to buy $90 billion gold vault in London - May. 16, 2016

China produces 458 tons of gold a year and directly imports 1,158 tons of physical gold per year or about 20% of the amount of gold held in the vaults of the FED, which is merely a holder of convienence for Central Banks. Gold of course historically flows to countries that have the biggest share of world income, used to be United States which is why US dollar was reserve currency, China is in the midst of taking over that role

 

[haha]

Bitcoin will eliminate the need for shipping tons of gold around the world in settlement of government debts. Money does not need a physical presence, it will have all the advantages that paper money gave humans years ago without the fear of a printing press. So I see many advantages and potential uses for bitcoin. Also Jamie Dimon was being disingenuous as bitcoin transaction would potentially eliminate a huge swath of banking fees. In fact it is this issue that is so worrying the banking industry.

The pricing and action of bitcoin has certainly been bubble like, and could yet turn out to be a bubble if bitcoin never achieves acceptance as a currency, but due to the very finite nature of bitcoins this is not like other manias, if bitcoin ever gains favor as a currency.

However James Altchuter who has extraordinary long term vision and whose opinions I respect very much is a huge bitcoin fan and sees valuations going into the trillions of US dollars, which at this point is only a 10X increase. He is also not worried about 80 percent intermediate term declines as bitcoin has seen that before, that is a bit volatile for my tastes.

You may well be correct. Still. I cannot see governments that tolerate no resistance to their absolute power over individuals standing for much of this, once it begins to appear that the King is not in absolute control. The state doesn't stop at murder, why stop at something like this? Again, if/when it cuts. Re; Altucher, maybe is a guru, but it doesn't appear that away to me. To me, he is just a weird guy with really bad hair.

Ha

 

[joeea]

The real value is the total market capital divided by the supply. I don't think BitCoin will come close to this value, but if it did essentially become as valuable as gold (supply/demand), then a single bitcoin would be worth $331,000.

As far as I can tell, there's nothing to prevent the supply of cryptocurrency from expanding geometrically without bounds. Maybe people will want to pay more for bitcoins forever, maybe not.

You pays yer bitcoins and you takes yer chances.

 

[joeea]

However James Altchuter who has extraordinary long term vision and whose opinions I respect very much is a huge bitcoin fan and sees valuations going into the trillions of US dollars, which at this point is only a 10X increase. He is also not worried about 80 percent intermediate term declines as bitcoin has seen that before, that is a bit volatile for my tastes.

This is the same James Altucher who lost $15 million on internet investments in two years, right?