[2019-1-12]St. Louis Federal Reserve Report: Increased Supply of Altcoins Will.

figmentofmyass

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Quote from: Betwrong on January 13, 2019, 11:46:37 AM

Quote from: figmentofmyass on January 13, 2019, 01:45:47 AM

Quote

The creation of competing altcoins is likely to place downward pressure on the prices of all cryptocurrencies, including Bitcoin (BTC). This conclusion was found by research conducted by the Federal Reserve Bank of St. Louis and published on Jan. 11.

there is some prima facie logic to this conclusion, but it's wrong. ever since 2011, dozens and then hundreds and then thousands of altcoins were launched. with each market cycle, exponentially more altcoins are created. and with each market cycle, bitcoin's price exponentially increases.

most people don't stop to consider the actual dynamics of bitcoin/altcoin money flow. if altcoins didn't exist, a lot of the BTC circulating in the altcoin market would be dumped back into BTC/USD as supply, driving prices downwards. altcoins pump the whole market.

there are other obvious examples of this "supply withholding / price pumping" mechanism. consider proof-of-stake coins or masternode coins. their markets have greatly benefitted from this dynamic.

I enjoyed reading your first paragraph because indeed the reality contradicts the conclusions of that research. But why do you think that those BTC would be necessarily dumped for USD?

because it's BTC being used for speculation/trading. without altcoin or security/token markets, the only thing left to speculate on would be BTC/fiat prices. i definitely don't think all BTC trading on the altcoin markets would return to the BTC/fiat ask side, but it would obviously be a non-zero amount. it would be naive to assume every altcoin speculator would otherwise be a BTC hodler, amirite? so based on that logic, altcoins should have a net positive effect on BTC prices.

in addition to the above, demand for altcoins can also create demand for BTC. for everything besides the top coins (which have liquid fiat markets), people need to buy BTC before they can buy into altcoins. the flip side of this = altcoiners create additional BTC supply during bear markets as they sell everything off for fiat. but really, as long any value is held in altcoins at all, the net effect on bitcoin's price should be positive.

gentlemand

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Quote from: squatter on January 13, 2019, 05:06:10 PM

It might bolster BTC's position relative to other altcoins, but I'm not even sure that's true. Even if it were, that doesn't mean it's a boon for BTC's price either. If anything, panic selling in altcoin markets usually translates to selling in the BTC market.

I also don't think the realities of the ETC attack have (or will) sink in for altcoin investors. POW coins have been getting 51% attacked for years and but they keep getting launched and people keep buying them. With altcoins, I've always thought it prudent to wait for payments to be very deep in the blockchain before accepting them as confirmed.

We're still in the infantile shit-thrown-at-the-wall phase where no one knows the value of anything and blatant crap is pursued just as furiously as stuff that'll survive and thrive. I'm kind of shocked we're still in this phase.

Another few years of failure and insults to intelligence will elevate the stronger stuff to an unassailable position. There'll be more shit than ever but it'll be scrabbling around down at the bottom and it'll stay there.

squatter

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Quote from: gentlemand on January 13, 2019, 12:43:11 PM

Every alt that launches and falters bolsters BTC's position. The ETC attack is just the latest example of that. If you value your value then you can't afford to be dicking around with weak development and mining.

It might bolster BTC's position relative to other altcoins, but I'm not even sure that's true. Even if it were, that doesn't mean it's a boon for BTC's price either. If anything, panic selling in altcoin markets usually translates to selling in the BTC market.

I also don't think the realities of the ETC attack have (or will) sink in for altcoin investors. POW coins have been getting 51% attacked for years and but they keep getting launched and people keep buying them. With altcoins, I've always thought it prudent to wait for payments to be very deep in the blockchain before accepting them as confirmed.

1Referee

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Quote from: pixie85 on January 13, 2019, 01:03:37 PM

LTC went down like a rock when Charlie Lee sold his coins.

I like that action. It's a message that says 'I'm out of this shit'.

Charlie Lee is a very smart being, and realistic as well. He for sure won't backstab Litecoin, and will continue to help out where possible, but he understands that with Bitcoin's Lightning Network gaining more growth by the day, his toy is toasted.

By the time the channels can be funded with as many coins as possible, there is nothing that prevents it from being an instant settlement layer for financial institutions and whatnot, so even XRP will lose its shine eventually. To make things even worse, I think it's more likely that financial institutions will fork the crap out of what Ripple allows them to use for value transfers.

It will come down to the utility platforms to co-exist with Bitcoin, which it will be time will tell, but Ethereum has the best shot so far due to its network effect.

gentlemand

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Quote from: pixie85 on January 13, 2019, 01:03:37 PM

Most altcoins end up in flames because they are centralized.

That's the thing that blows my mind the most. After all this time and all the lessons learnt there really are hardly any coins that make a decent shot for proper decentralisation. It's like the people who hawk alts are not capable of processing this fact when everything springs forth from there.

Bitcoin, despite its many issues, is still the prime standard bearer by a country mile.

pixie85

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Quote from: gentlemand on January 13, 2019, 12:43:11 PM

Every alt that launches and falters bolsters BTC's position. The ETC attack is just the latest example of that. If you value your value then you can't afford to be dicking around with weak development and mining.

Reports like this seem to believe that it's spreading things too thin when ultimately it's going to drive people back to the thing that most people gather around.

But alts will never, ever, ever go away. There's always going to be a 'bitcoin killer' launching with at least $50 in marketing funds.

This is so true. Most altcoins end up in flames because they are centralized. They depend on some dev team and have frontmen who make mistakes and make fools of themselves like Craig Wright and Roger Ver did in their time. Who says Garlinghouse or Hoskinson aren't going to do it? LTC went down like a rock when Charlie Lee sold his coins. Bitcoin is the best and you need the experience of losing money with some shitcoins to realize that.

BitHodler

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Quote from: Betwrong on January 13, 2019, 11:46:37 AM

I mean, I have a feeling that right now altcoins are serving neither good nor bad purpose regarding the the price of BTC. They just exist, not affecting Bitcoin in any way. If Bitcoin fails, they all fail, no doubt about that, but not the other way around.

It's keeping a large number of coins off the market, even right now. If you take that away, you take away the demand for these coins, so what's left other than dumping if the holders are in only for the profits?

I don't think that if Bitcoin fails the whole altcoin industry fails. I'm sure that exchanges will do everything they can to have it be replaced by something else to still have crypto remain relevant and profitable enough for their business.

It's all about the money at the end of the day, and we have seen that exchanges have started prioritizing the listing of altcoins because that's what noobs want. It's supply and demand speaking here.

gentlemand

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Every alt that launches and falters bolsters BTC's position. The ETC attack is just the latest example of that. If you value your value then you can't afford to be dicking around with weak development and mining.

Reports like this seem to believe that it's spreading things too thin when ultimately it's going to drive people back to the thing that most people gather around.

But alts will never, ever, ever go away. There's always going to be a 'bitcoin killer' launching with at least $50 in marketing funds.

Betwrong

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Quote from: figmentofmyass on January 13, 2019, 01:45:47 AM

Quote

The creation of competing altcoins is likely to place downward pressure on the prices of all cryptocurrencies, including Bitcoin (BTC). This conclusion was found by research conducted by the Federal Reserve Bank of St. Louis and published on Jan. 11.

there is some prima facie logic to this conclusion, but it's wrong. ever since 2011, dozens and then hundreds and then thousands of altcoins were launched. with each market cycle, exponentially more altcoins are created. and with each market cycle, bitcoin's price exponentially increases.

most people don't stop to consider the actual dynamics of bitcoin/altcoin money flow. if altcoins didn't exist, a lot of the BTC circulating in the altcoin market would be dumped back into BTC/USD as supply, driving prices downwards. altcoins pump the whole market.

there are other obvious examples of this "supply withholding / price pumping" mechanism. consider proof-of-stake coins or masternode coins. their markets have greatly benefitted from this dynamic.

I enjoyed reading your first paragraph because indeed the reality contradicts the conclusions of that research. But why do you think that those BTC would be necessarily dumped for USD? I mean, I understand that altcoins were good for Bitcoin in the past, and that's why the conclusions of that research are wrong. But would it be bad for BTC if they disappeared today? I mean, I have a feeling that right now altcoins are serving neither good nor bad purpose regarding the the price of BTC. They just exist, not affecting Bitcoin in any way. If Bitcoin fails, they all fail, no doubt about that, but not the other way around.

snipie

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It is sure that having only bitcoin to buy will make it more valuable and will drive its price to increase continuously and having many altcoins to choose will diversify those money in between. But i don't think a part this fact there is other reasons to think about.

figmentofmyass

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Quote

The creation of competing altcoins is likely to place downward pressure on the prices of all cryptocurrencies, including Bitcoin (BTC). This conclusion was found by research conducted by the Federal Reserve Bank of St. Louis and published on Jan. 11.

there is some prima facie logic to this conclusion, but it's wrong. ever since 2011, dozens and then hundreds and then thousands of altcoins were launched. with each market cycle, exponentially more altcoins are created. and with each market cycle, bitcoin's price exponentially increases.

most people don't stop to consider the actual dynamics of bitcoin/altcoin money flow. if altcoins didn't exist, a lot of the BTC circulating in the altcoin market would be dumped back into BTC/USD as supply, driving prices downwards. altcoins pump the whole market.

there are other obvious examples of this "supply withholding / price pumping" mechanism. consider proof-of-stake coins or masternode coins. their markets have greatly benefitted from this dynamic.

coolcoinz

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Most of these altcoins aren't competing with Bitcoin and Bitcoin holders aren't going to switch to some shitcoins all of a sudden. It's the other way round. In a bear market Bitcoin is seen as a safer choice, a lesser evil if we could call it that. It's still going down but slower than the rest and it can't go bankrupt like XRP or BCH because it doesn't have a human face. Imagine Roger Ver or Craig Wright being arrested for some reason. BCH/SV would tank. That's why Bitcoin will remain the top coin in the sphere.

anamie

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St. Louis Federal Reserve Report: Increased Supply of Altcoins Will Decrease BTC’s Value

The creation of competing altcoins is likely to place downward pressure on the prices of all cryptocurrencies, including Bitcoin (BTC). This conclusion was found by research conducted by the Federal Reserve Bank of St. Louis and published on Jan. 11.
The report cites two perspectives: Bitcoin bulls’ belief that the capped supply and increased demand will increase BTC’s price, and the bears’ belief that its price will fall to zero. The researchers state:
“We think the future price path is more likely to remain bounded between these two extremes.”
According to the research, the United States dollar price of BTC will also depend on its exchange rate relative to altcoins. The report explains that the bulls expect Bitcoin to appreciate relative to altcoins, or to keep its market capital relative to the global crypto market cap constant. Still, the researchers show that this hasn’t been the case so far.

Readmore: https://cointelegraph.com/news/st-louis-federal-reserve-report-increased-supply-of-altcoins-will-decrease-btcs-value

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