Topic: ETH = Game Over - page 3. (Read 40467 times)

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Because the higher the speculative part of the price, the higher the volatility, and the higher the mining cost of the network, and hence the cost of using it.  If the cost of using it (volatility risk plus using cost) increases, this eats away the competitive edge that bitcoin can bring over other means of payment, and hence diminishes the incentive to adoption for genuine usage.


Absolutely not, if it is speculative.  I'm all with you if market cap goes up because of currency usage, because that gives it a solid demand which has higher and higher inertia.  The criteria to pick one currency over another for competitive edge reasons are usually not very variable, so that demand shouldn't fluctuate much.  However, speculative demand varies A LOT as a function of rumours, technical analysis and price fluctuations inducing beliefs in rise and fall.  So the higher the speculative part of an asset, the higher the volatility.   The frequency spectrum of that volatility depends, however on the temporary expectations of the speculators, so it isn't necessarily high-frequency volatility.

But an asset that has in three years time, come down a factor of 6 and rose again a factor 3 in a year's time, is not exactly something with low volatility.  

For a currency, price going up is just as much a problem as price going down.  If I agree with you that you do a job for 20 bitcoin the next 2 months, and in 2 months, bitcoin has doubled, then the price I have to pay you is twice what I had in mind when we made the agreement.  If I have to hedge that by buying right now the coins that I will pay to you in 2 months, then I have to immobilize that money, which is not exactly something that will give it a competitive edge to use it over another way of payment.  It might be that I didn't earn them yet and was coun Of course, you, on the receiving side, will be happy, but essentially, this has put a lot of uncertainty in the use of bitcoin in an agreement, making it a less attractive means of payment than fiat if fiat can be used.

Strange dinofelis that you cannot even recognize the lunacy of your own logic.... not only your lunacy in this point, but nearly all your points are full of selective and non-factual speculative bullshit.

First:  Why does it matter to poor people about the price of bitcoin if they are using it to transmit value?  you buy and then you sell.. The only matter is the cost of the transaction.  The same is true if they chose to hold the bitcoin, it does not matter how much it costs, it only matters if it goes up in value from the point after they bought it.  Have you ever heard of buying a fraction of a bitcoin.

Second:  regarding your lame-ass nonsense about market cap, I am not the only person here attempting to get this into your apparently thick skull.  If market cap goes up, then volatility is likely to go down, one of the very things that you seem to be complaining about.

 

One interesting thing about bitcoin is that a lot of us have come to rethink these categories and differentiations between assets and currencies.

Bitcoin is both an asset and currency, and various fiats can also serve as both assets and currencies.  There is a matter of degree of adoption and use, and there is a question of factors that affect it in such a way that it is either likely to lose its value, retain its value or appreciate in value.

The actual and true decentralization of bitcoin (to the extent that it can be retained) is likely to bring a whole new level of understanding of scarcity and deflationary in regards to the increasing supply.  Surely, people still have some impact over the governance and direction of bitcoin, so it will be quite interesting to witness whether digital scarcity (of thew 21 million remains), or whether traditional banking factors are going to be allowed into bitcoin to such an extent that fractional reserves screw up its scarcity or whether people are going to be smart enough to identify a real and meaningful appreciation for either actually personally controlling the bitcoins that they own or having a meaningful way to assure and/or insure that their coins are not being diluted by fractional reserve practices.

Ethereum Price Technical Analysis – ETH Another Breakout Attempt

Ethereum price fell yesterday back towards the $11.50 versus the US Dollar, but somehow buyers managed to protect the downside move. There was a nice upside move in ETH/USD, taking it above the 23.6% Fib retracement level of the last drop from the $12.22 high to $11.46 low. It was a positive sign, which encouraged the buyers to take the price above the 100 hourly simple moving average...

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That has nothing to do with it.  The P/E ratio gives you the price of the capital over the YEARLY value production.  If your company is going to last for more than 20 years, the price is even less than the value it is going to produce over its existence.

The value a *currency* produces is only the competitive edge it brings over the use of other currencies, in one way or another.  That is an infinitesimal fraction of the volume.  If I can do a deal with bitcoin for a value worth, say, $100 000,- and by doing it with bitcoin, and not with a bank transfer or VISA or whatever, I can win, say, $100 in costs, then the produced value of bitcoin in this transaction is $100.  Not $100 000,-.  This is like the value produced by a truck: it is, after deduction of all its costs, the competitive edge using the truck has brought me over using, say, a train, because the costs are lower, I can reach a customer that I couldn't reach with the train, I can help my customer faster than the competition that uses a train, ...  This competitive edge is only a small fraction of the value the truck transports.

A currency is like a truck: it transports value.  But the produced value of a currency is not the value it transports, but only the small edge it can bring over other ways to transport value.


Sure, but that is only "greater fool" stuff.  That isn't the value that bitcoin produces.  The value bitcoin produces is the little edge it brings in those transports of value that you can better do with bitcoin, at lower cost, faster,.... than with other means of transporting value, such as the fiat system.


Most of them are not users but gamblers.


But a stash of bitcoin held by someone doesn't buy capital goods.  Savings create capital if they are used to buy capital goods.  There's a difference between holding and investing: economy 101 too.


Of course not.  How does someone doing research on bitcoin obtain capital goods when bitcoin goes up, because the coins are held more tightly by speculators ?  Nobody's buying capital goods anywhere.


I perfectly agree with you, but speculating on bitcoin is not transferring money frictionlessly, on the contrary, it increases friction: because of the higher volatility (risk is higher, which has to be hedged), and mining is more expensive (which is paid for by inflation and fees).


That is exactly the value of bitcoin, and it is that which is NOT most of its usage or market cap.  It is exactly that what is harmed by too high a market cap.


These two concepts have nothing to do with each other.   The P/E ratio of stock is the price of the asset "for eternity" as compared to the yearly PRODUCTION of value.  If you hold the share for 20 years, you will have, with no growth, paid back the price of the asset.  So a P/E ratio of 20 just means that you expect the company to exist for 20 years (I'm oversimplifying: one should use discounted cash flow of course).

https://en.wikipedia.org/wiki/Discounted_cash_flow

On the other hand, the ratio of speculation over fundamental value (Fisher) is just the inflation of the speculative bubble over the true value of the asset.

If you want to compare it to stock, it would be rather like the following: the sum of all the assets of a company is X, and the sum of all its shares is 20 X.

A company that is "worth" (if you would sell all of its assets), say, $10 million would have a market capitalisation of $200 million.  Everybody would claim that its stock is way, way overpriced and is in a full speculative bubble - or that they are on something and that their actual assets will soon rise to $200 million by the exceptional inventions that they are doing.


That is bluntly not true.  Holding assets doesn't invest them.

Read this:

http://moneyfortherestofus.net/mny060-hoarding-investing/


Hahaha, that's of course funny.  You are simply suggesting that cancer reseachers join you in the greater fool theory game, and hope for more greater fools that will buy enough bitcoin at higher prices still so that they can make a benefit.  You are suggesting that they become greater fools that will find still greater fools. 



What gives value to the US dollar is Fisher's formula, and its use as a currency.  The same thing that gives about $30 of value to bitcoin.

If people were now hoping on "increased adoption" of the dollar, and its value increase, so that they would pile up hoards and hoards of dollar bills, such that the dollar rose a twenty-fold in value, with people hoarding more and more of it, because its value increased (because of that demand), that would be an extremely unhealthy situation for the dollar.  Its value would be much more volatile, it would suffer a very speculative bubble, and it would of course, at a certain point, come crashing down when it wouldn't increase any more, and all people that were only holding piles of dollars hoping for it to increase, would start spending them because they lost hope in still a lot of increase, which was their main motive to hold it it the first place. 

You'd have the dollar come crashing down.

yeah etherum is in deep trouble after the incidents, ethereum lost most of it's user, they somehow don't believe in their security anymore, we can just see what will the next step etehreum developer do, to be honest ethereum is quite a good alts it's such a shame if we have to lost this coin

Stocks have usually a P/E ration of 20x, with all this moneyprinting it's more like 50x, and nobody complains.

Bitcoin is good as it is, it has anticipated future value built in it, nothing wrong with this.




No, it you check the forum nr of new users, and the google searches, it always goes up when the price goes up.

So the higher price, the more users. Calculate it yourself.



No because savings create capital ,and capital is required for investments into research. Economy 101.

If bitcoin goes up 100%, more capital is available for researchers.




This is debatable.





Which is highly correlated ,so price does matter.



You seem to have no idea how markets work and why they are useful to society. It's not a "gambling toy" it helps a lot of people if they can frictionelssly transfer money.

Remittances
Poor people transacting
etc...






Stocks have a good P/E ratio of 20x so this is perfect.





Good for you, I am sure the 3.5 billion people who are also extorted by banks in Africa and other places with huge comissions and capital controls don't agree with you.

Bitcoin is primarly for them, that is why you see a surge from Kenya and SE Asia.





Yes, but by holding it, it gives capital to the other users who might want to use it for research purposes.

If a cancer research does a crowdfund and gets 10,000 BTC, well if the price in the meantime goes up 50%, all the better.







Bitcoin is made of of many independent projects, and with the implementation of sidechains, this will be more clear.

Each project does it's thing ,and in the end it increases the value of BTC collectively.

What is the worth of the USD? It's just a paper, but it represents a 18 TRILLION $ economy , with different economic activities taking place in it, each giving value to the USD.

You seem to have a hard time understanding the difference between an asset and a currency.

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Besides there is 1 more important thing why Bitcoin is crucial.

Cyber Warfare

The fact that all major banks get hacked constantly, should concern you, so far nobody hacked BTC, and I hardly thing it will be succesful. It's a global currency and it's the best there is.

i think ethereum is losing its shine now...etherium pays much bigger in the last month and because of the hacking i thinks its value is lowering and losing its shine.....
lets trade at caution......

Maybe.  But if you look at Fisher's formula, and if you assume that the time between acquiring a bitcoin (by earning it, buying it on an exchange, mining it....) and spending it at one of these merchants' places is, say, two weeks (like the average holding time of a monthly salary is, say), then a coin goes around 25 times a year.   So a market cap of $ 1 billion would correspond to a yearly turn-over of $ 25 billion worth of merchandise bought with bitcoin.  I have serious doubts that these 250 000 merchants each have a bitcoin-related turn-over of $ 100 000,- each.  I don't think that the use of bitcoin corresponds to a world market with a yearly turn-over of $25 billion.

And if that were the case, we would only have 10% of the current market cap.  If bitcoin's market cap today were used entirely in the above way, one would have a $250 billion yearly turnover bought with bitcoin.  I simply don't believe that.  I even don't believe that it is $25 billion.

This is my whole point: the real currency usage of bitcoin is minuscule as compared to its actual market cap.  Not implying that bitcoin has no usage, but that its market cap is huge.


Absolutely not.  That is exactly my point.  Whether bitcoin is at $1, $10, or $10 000 doesn't change ziltch to its value if the amount of usage as a currency is the same.



All this is marketcap independent, and is already over and done.  The capital control will rather be induced more when the market cap rises.


That's actually its biggest failure.  The idea was that individual nodes would mine, not that this would become an oligarchy of a handful of industrial miners.


All this is related to its use as a currency, not to the 95% of speculative market cap.


Again independent of its market cap (as long as it isn't meant as a financial gambling toy).


That "base" is for the moment about 1/20 of the market cap of bitcoin.  


On the contrary.  That's the best form of mining one can have.  The reason why one cannot have bitcoin today with the mining tech of 2012, is simply because the market cap is too high, which makes for too much seigniorage which has to burn, and the emission rate which is ill-defined in bitcoin.


Wow.  10%.  My bank only takes 2%.  That's peanuts as compared to the taxes and social duties I pay, which amount to about 50%.  If I handle legally, it costs me 50% with normal banking, and, say, 48% using bitcoin, but including the volatility risk, you see the point.  There isn't any for using bitcoin when doing legal business.  For me, it wouldn't change a thing.


Speculation is the act of acquiring an asset with the sole aim of selling it at a higher value, right ?

That's not what a monetary asset is for.


Buying potatoes to eat them is not speculation.  Speculation is the act of acquiring an asset with the *sole* (or main) motivation of selling it for a higher value.  Speculation is not "taking economic risk".  Every economic act contains economic risk.

Investing is the act of acquiring directly or indirectly production capital with the aim of obtaining a reward for the produced value with that capital.

There's NOTHING in bitcoin that improves when its market cap increases by the act of speculation.  The market cap of bitcoin is a (necessary) nuisance.  The lower it is, the better.  But a monetary asset can simply not exist without SOME market cap, due to Fisher's formula.  But the lower it is, for a given usage, the better. Especially if its cost of usage is proportional to its market cap.  If the market cap has to rise because of increased usage, then that rise in market cap, although in itself something evil, is a signature of more usage, which is good.  But that's about it.

How can you say this so sure, have you even looked at the bitcoin economy? THere are 250,000 merchants you know, and new innovations come out daily.

Investing in bitcoin is not gambling (unless you gamble with it afterwards), but those who hold it, actually help grow the economy of bitcoin.

It is essentially like investing in a company, but this company is global and decentralized. A price of bitcoin of 1$ doesnt bring high IQ PHD's to work here, but a price of 600$ surely does.

✔ Bitcoin has advanced cryptography
✔ Bitcoin has created and efficientizes blockchain
✔ Bitcoin is creating frictionless global transactions / without capital control interference
✔ Bitcoin has a very robust decentralized mining network
✔ Bitcoin has created a new industry mining, but also indirectly contributes to microchip research
✔ Bitcoin is advancing the field of computer programming ,security research (including money security), and computer science massively (not to mention the hardware research)!
✔ Bitcoin's blockchain can help tons of sciences: biology, math, physics, etc by distributing heavy calculations globally for a fee
✔ Bitcoin is growing an alternative economy (not just gambling) but things like Openbazaar
✔ Bitcoin can create a decentralized Forex and Crypto market with Bitsquare
AND MUCH MORE...


So it's not speculation, bitcoin is the founding block of the alternative economy and the basis of it, so as things will be built on it, directly with sidechains in the future, bitcoin will be the center of all internet economy in the future.

It would be like investing in Google in the early days, but like 100000x better and bigger.

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A small mining market with GPU and CPU is not good, its inneficient, provides less security, and less throughput, you cannot have a bitcoin of today with only miners of 2012, it wont work.

Mining is good as it is today, efficient, and it would be like this either way, as market forces force people to make things efficient.


No you are wrong, regulators put their noses everywhere, regardless of dangers to customers and investors and things like that. If a harmless lemonade stand is so overregulated, then it shows you that they dont care about your safety, they just want more power.



Because after you paid your license, and after you paid your taxes, you still have to pay a huge fucking comission to the banks. Why not skip the latter part, legally, if you have the option?

I dont know where you live but here banks easily charge you 5-10% comission on every business transaction. Why would you not want to skip that? Give bitcoin's yearly ROI, the volatility doesnt even matter, instead of paying a 10% extra fee, you could make a 50% profit by holding BTC.

Once you have good exchange points like Bitpay and others, it would be very foolish to not use this opportunity.


Banks do way more shady things than any bitcoiner could imagine, i hardly doubt that.

You use the word "speculation" in a so negative manner, but i bet you dont even know what it means. All bitcoin holders are essentially speculators, i am not even sure what you think the word means.

There is nothing wrong with speculations, you are a speculator when you buy a bag of potatoes because you dont know ahead if half of them will be rotten by the time you eat it.

The price is more stable now because it's more liquidity (Gemini exchange, Bitpay , Localbitcoins at all time highs, etc..). With more liquidity the market is harder to manipulate, therefore it's more efficient and fair.

It seems that there really are people here that when one points out a potential problem with bitcoin *as well* as with other altcoins, that they suffer from some dissonance. 

I only say that if the price of an asset is mainly made up by demand by people hoping for a price rise, that one is in the schoolbook example of "greater fool theory", and that an inevitable speculative bubble is (being) formed - that's an undeniable fact.

Now, I'm pointing out that most of bitcoin's (and altcoin's) market cap is indeed, made up of demand coming from people "hoping for a price rise".  The 95% is a ballpark estimate of this, it could be 80% or 99%, it is a matter of speaking, and apparently JJG kind of agreed with that number.

My "attack" was not so much against bitcoin particular, but people have to realize that if the main drive for demand (and hence price, and hence market cap) for an asset is *hope for price rise* then there is a serious risk that one is in a speculative bubble, to say it mildly.  Whenever a speculative bubble arises, there is always group think that denies this, and that talks about "paradigm shift" and the like.  Like the "new economy" in the dot-com bubble.

I also pointed out that one cannot really "invest" in a crypto currency, but only GAMBLE on it, if one doesn't *use* it.  A crypto currency is invented to be used, and its usage is "store of value".  In the short term, that's called a "currency", and in the longer term, a "store of value" (like gold).  But one doesn't "invest" in a store of value, one only STORES value in it.  The USAGE of the monetary asset is its "value proposition": the fact that one can use it as a currency (to earn it and to spend it), or the fact that one can store value in it.  This usage can open possibilities (of earning and spending, or of longer term value storage) that *didn't exist before* and that's the true economic production of value such a crypto currency has.

For instance, buying stuff on dark markets is something that is difficult to do with VISA, and a crypto currency opens that possibility. Or doing small transactions to the other side of the world.  Or this, or that.  All those usage cases where a crypto currency opens a new possibility that didn't exist before, or that did cost much more before or that was much riskier before, or that took longer before, is the economic value production of that crypto currency.  It is what I call "the competitive edge it brings".

This is production of value, when one uses crypto in an economic activity that brings value.  But apart from that, just "investing" in crypto to hope for its rise, is just *participating in a zero sum game*.  So all "investors" are nothing else but gamblers that win as much as one of their peers looses.   Their "investment" doesn't increase any value production of the crypto currency in the economy.  Whether they hold their stash and buy more of it or not, doesn't increase the competitive edge the crypto currency can bring (on the contrary).

This, in contrast to an investor in company stock, where the investment is used to buy more production capital.  If you buy new stock issued by a company, you are giving money to that company that it will use to acquire production capital and bring it more competitive edge.  If you buy and hold bitcoin, eth, .... , then nothing improves economically somewhere for a *user* of that crypto (on the contrary).


You can stop at "gambling".  Indeed.


It depends what you call "go mainstream".  If that is "bitcoin will be used in general as a currency/store of value WITHOUT an expectation of its price rise as its main drive" then yes.   I agree with you, but this is not what we are witnessing over the last years.  I have the impression that bitcoin is, after these years, still (or even more) driven by "expecting a higher price" and not by "usage".   I pointed out that it is very well possible that one day that will come, but also, that this will be hampered by exactly the consequences of the way too high price right now.


Mining is the price of the system (I fully agree that it is necessary, but it is a necessary evil).  The higher the price of the system, the lower the competitive edge it can bring.  So the minimal amount of mining that "works" would be optimal.  That amount of mining is directly proportional to the price.  It could hence be 20 times less if all those gamblers hadn't blown up the price of bitcoin 20-fold over its necessary value to be used as a store of value.

That's not nothing: 20 times less cost of production !  This is why I say that this speculation harms the usage.



I seriously doubt that regulators would look so hard at it if its market cap where smaller and banks wouldn't be looking at it, but maybe you're right there.


The whole thing is that bitcoin's main value proposition is that you can in principle do such now without banking, and hence without licence (yes, totally illegal).  Once you've paid your licence, and once you're paying your taxes, what point is there to use anything else but a normal bank ?  Bitcoin is exactly bringing economic value there where you have to be outside of the legal system.


The point is that of course, if banks use it, it will be totally regulated, and its use in illegal affairs, which is the main value it can bring, is then in any case dead.


I think we went through a period of stability because speculation had diminished.  But with the halving and all the BS that was told around it, it is back in full force. 

Ethereum Price Technical Analysis – ETH is Forming Base?

Ethereum price broke down further as sellers remained in action. There was a break below the $11.60 support area for a move towards $11.50. Once again a new weekly low was formed at $11.46. The price was seen correcting higher yesterday, but it found sellers near $12.10. I was correct when I called for a test of the 1.618 extension of the last swing from the $11.84 low to $12.28 high. The price not only tested it, but also broke it for a new low...

Link

You can identify all you like with the libertarian nut jobs, yet you seem to be attempting to attribute too much to me in terms of what protections and actions that I am taking on a personal level.  In other words, you seem to be getting defensive merely because I characterized some libertarians as "nut jobs."




What the fuck are you talking about?  Yeah, there are a lot of folks in bitcoin for a variety of reasons and some of them happen to fall in various places on the libertarian scale.  In other words, you seem to be attributing some kind of strawman argument to me in order that you can rebut it.  I never made any such argument to suggest that banks were better than bitcoin, blah blah blah


Sure, I don't expect you to necessarily read or to understand my lengthy responses; however, apparently, you got so caught up in your nonsensical attempts to equate my position and dinofelis that you failed to recognize that there has been considerable substantive differences between what each of us has been saying.

The diversion aspect began more or less when dinofelis, began arguing that ETH was a scam based on its being a speculative bubble, and he argued that BTC was pretty much the same as ETH... and we went from there.  He may have backed off a little bit from his original claim, but not much.

I personally don't think that both of us are trolls, but I will concede that we had diverted considerably from the topic of this thread.



Yes.. that is what dinofelis is saying, more or less.  Certainly I am not saying that.



sure, there is nothing wrong with bringing matters back on topic.

You are a goofball.

You should realize that there is a difference in my making the assertion that "greater fool theory" does not apply to bitcoin, and my asserting that greater fool theory never could be applied to bitcoin.  I said the former, not the later.

You attempt to make your "greater fool theory" apply to bitcoin because you are engaging in selective wishful thinking, and failing/refusing to account for certain facts and certain reasonable logical conclusions based on some of those facts.

So, yeah, of course you can apply your "greater fool theory" if you selectively choose to ignore some of the facts and logic.




Snap out of it.  You are overly generalizing in a kind of I told you so monday morning quarterbacking.

So fucking what?  A lot of folks may have gotten caught up in .com hype and overly invested, and even if there was an overall and possibly unfair general market correction, there were also a variety of scenarios that played out, even in that general up/down trend that historically took place.




Yeah.. you are all over the place.. maybe it is maybe it isn't .. it is, it could be... blah blah blah.



Yes, it could be.. who gives a shit?  I don't claim to know anything about where bitcoin is exactly, except to say to you that I am investing into it because I think that it's chances of going up are greater than it's chances than going down...

So who gives a shit about where it really is?  Where bitcoin really is will play out over time, and I will adjust my strategy will adjust over time.  I make my decisions day by day and I have a plan that can be adjusted if needed and if information changes.  Other people make similar kinds of decisions, and we will see how these matters play out.

your going on and on and on about how speculative bitcoin is seems like a whole bunch of nonsense hype, and now, it seems that you are backing off of your earlier position to say "what if" rather than "it is" in a speculative bubble.   I recognize that you are also throwing in a few "it ought to be"s as well when you are describing the "is" status, but that is another set of delusional facts and logic that you are spewing out from time to time in your all over the place analysis.



you seem to be placing way too much value judgment in your labelling of some folks as "visionaries."  Sure folks have differing levels of insight and maybe even some folks exercise better judgement than others, but "visionaries," come on?  You are failing and refusing to acknowledge that people view the world in probabilities, and yeah sure there a lot of folks that attempt to predict absolutes, but really when push comes to shove, they don't really believe the future is an absolute in the same way that the past is an absolute (because it already has taken place).



Nobody said that you were saying such.


To the extent that I kind of understand what you are saying, you seem to be over generalizing what is the constitution of bitcoin's demand... probably because you want to select and describe facts to support your stupid ass "greater fools" theory.




That doesn't matter.  The main motivation will be "it's going to rise" (whether that analysis is profound of superficial doesn't matter) --> greater fool theory.  If the main motivation is "I want to put this amount of value aside for later, and bitcoin is a great store of value to get out what I put in"  --> sustainable price.