[Forbes] The Bitcoin Crash | Bitcointalksearch.org

cbeast

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Let's talk governance, lipstick, and pigs.

Quote from: Cluster2k on August 08, 2011, 09:25:34 AM

Quote from: cbeast on August 08, 2011, 06:38:16 AM

There are nearly 7 billion people in the world that do not use USD. Does this mean that the USD will soon be worthless? Probably so.

I would wager most people on this planet use USD. Every day. Indirectly. Did they use any crude oil derived products? Cook corn? Bake bread? Eat tofu? All are priced directly in USD for the whole planet or tied strongly to US markets as market makers.

All prices in are in USD for 3% of the world population. Sure, the commodity indexes are mostly gauged in USD for now, but they are traded in local currencies. China in fact, only pegs the yuan to the dollar as a convenience, but will not for much longer. Euros have long since drifted from the USD. I realize this is a very complex economic issue, but remember "past performance does not predict future results." The USD can go the way of the Confederate dollar.

joepie91

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Quote from: Cluster2k on August 08, 2011, 09:25:34 AM

Quote from: cbeast on August 08, 2011, 06:38:16 AM

There are nearly 7 billion people in the world that do not use USD. Does this mean that the USD will soon be worthless? Probably so.

I would wager most people on this planet use USD. Every day. Indirectly. Did they use any crude oil derived products? Cook corn? Bake bread? Eat tofu? All are priced directly in USD for the whole planet or tied strongly to US markets as market makers.

This fact suddenly massively increases the Bitcoin userbase in the industry of Alpaca sock stores.

Cluster2k

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Quote from: cbeast on August 08, 2011, 06:38:16 AM

There are nearly 7 billion people in the world that do not use USD. Does this mean that the USD will soon be worthless? Probably so.

I would wager most people on this planet use USD. Every day. Indirectly. Did they use any crude oil derived products? Cook corn? Bake bread? Eat tofu? All are priced directly in USD for the whole planet or tied strongly to US markets as market makers.

molecular

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Quote from: JoelKatz on August 07, 2011, 10:08:26 PM

Or, in summary, once this unique event ends, the price of bitcoins will go up, go down, or stay about the same.

Joel, I usually enjoy your posts for their depth and insight, this one for it's humor.

TheMalon

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I wouldn't call it a Crash ... it's a Recovery.
I do think that the real power of a currency is given by the number of people who use it as a "medium of exchange". Thats why gold never was and will never be a powerful currency ... its too precious (ppl will try to keep it instead of use it). The Bitcoin have some unique qualities but this qualities are not enough to keep the Bitcoin alive, we need ppl to use them as a "medium of exchange".
I think Bitcoin is recovering from the "wanna be rich" folks attack. In the past 3 months Bitcoin was used a "medium for getting USD".
I do hope Bitcoin will get under 5$ (3$ is better) this way people will casually mine and start use the Bitcoin to buy things.

TheMalon

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Quote from: cbeast on August 08, 2011, 06:38:16 AM

There are nearly 7 billion people in the world that do not use USD.

FALSE!
Today ... the reserve currency of the world is USD ... which means that all the fiat-money in circulation are another faces of the same thing ... USD.
(of course there are gold/siver etc too but they are a very small percentage of a national reserve)

cbeast

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Let's talk governance, lipstick, and pigs.

There are nearly 7 billion people in the world that do not use USD. Does this mean that the USD will soon be worthless? Probably so.

joepie91

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Claim:

Quote

You guys are in the DENIAL phase

Supporting argument:

Quote

since you're denying reality.

Some bulletproof debating skills you have there.

JCbit

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Quote from: Raoul Duke on August 07, 2011, 10:33:49 PM

Quote from: HappyFunnyFoo on August 07, 2011, 10:29:30 PM

You guys are in the DENIAL phase, since you're denying reality. Have fun @ $1 / bitcoin soon

Yup, I will have a lot of fun with $1/bitcoin...
I'll have fun buying it Wink

LOL

hugolp

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Radix-The Decentralized Finance Protocol

Quote from: JoelKatz on August 07, 2011, 10:08:26 PM

Or, in summary, once this unique event ends, the price of bitcoins will go up, go down, or stay about the same.

Spoken like a true professional economist. Grin

pent

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Hold on, Timmy, hold on... Its the final phase of bitcoin hype cycle.

JoelKatz

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Democracy is vulnerable to a 51% attack.

Quote from: cunicula on August 07, 2011, 10:37:39 PM

The speculative bubble could be "is bursting"/"is dropping" or "has burst"/"has dropped". Distinguishing between "is -ing" and "has -ed" requires a crystal ball. In your description of the speculative bubble, you pick "has -ed." Is there reasoning behind this selection, or did you just choose your words carelessly?

I specifically choose the most extreme version to contrast as dramatically as possible with the other option. The question of how much of the speculative bubble "has burst" versus how much "is bursting" is largely the same question as how much of the present value of bitcoins is due to investment value and how much is due to the inherent usefulness of bitcoins as a medium of exchange. My own opinion is that currently most of the value of bitcoins (80%?) is as an investment/speculation vehicle but that this value is at least indirectly grounded in the reasonable belief that bitcoins have a chance of acquiring significant future value as a medium of exchange.

Bimmerhead

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Quote from: JoelKatz on August 07, 2011, 10:08:26 PM

First, let me just say that I fully agree that the properties of the bitcoin system create a floor value that typical private currencies wouldn't have. However, I do think that there are really only two possible explanations for the crash:

1) A short-term speculative bubble has burst. The price has dropped to one based almost entirely on the current usefulness of bitcoins as a medium of exchange and long-term investment vehicle. The price will shoot back up if there's another speculative bubble. Otherwise, it will gradually rise or fall as the value and usefulness of the bitcoin system changes due to adoption, competitors, and so on.

2) Unique events (early adopters selling, stolen bitcoins being dumped, etcetera) have pushed the price way down. If not for these, the previous increases (whether due to speculation, the usefulness of the bitcoin system, or whatever) would have continued, and as soon as this stops, the price of bitcoin will begin sharply increasing until the next such unique events.

Most likely, the truth is between these two.

Or, in summary, once this unique event ends, the price of bitcoins will go up, go down, or stay about the same.

Or,
3) an on-going world-wide credit contraction that will dwarf the events of 2008 is compelling btc holders to liquidate into the one asset class that is rapidly shrinking: USD.

Although it would be helpful for gold to drop to give credence to that theory.

cunicula

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Quote from: JoelKatz on August 07, 2011, 10:25:13 PM

Quote from: cunicula on August 07, 2011, 10:15:15 PM

In 1), do you have a reason for picking "has burst"/"has dropped", rather than "is bursting"/"is dropping"? I would expect a more careful choice of words from you.

I'm stating the two theories as the extremes. The truth is likely in between those extremes.

I wasn't disagreeing that some combination of unusual events and a speculative bubble is at work, but I want to focus on the speculative bubble part.

The speculative bubble could be "is bursting"/"is dropping" or "has burst"/"has dropped". Distinguishing between "is -ing" and "has -ed" requires a crystal ball. In your description of the speculative bubble, you pick "has -ed." Is there reasoning behind this selection, or did you just choose your words carelessly?

Raoul Duke

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Quote from: HappyFunnyFoo on August 07, 2011, 10:29:30 PM

You guys are in the DENIAL phase, since you're denying reality. Have fun @ $1 / bitcoin soon

Yup, I will have a lot of fun with $1/bitcoin...
I'll have fun buying it Wink

HappyFunnyFoo

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You guys are in the DENIAL phase, since you're denying reality. Have fun @ $1 / bitcoin soon

JoelKatz

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Democracy is vulnerable to a 51% attack.

Quote from: cunicula on August 07, 2011, 10:15:15 PM

In 1), do you have a reason for picking "has burst"/"has dropped", rather than "is bursting"/"is dropping"? I would expect a more careful choice of words from you.

I'm stating the two theories as the extremes. The truth is likely in between those extremes.

cunicula

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Quote from: JoelKatz on August 07, 2011, 10:08:26 PM

First, let me just say that I fully agree that the properties of the bitcoin system create a floor value that typical private currencies wouldn't have. However, I do think that there are really only two possible explanations for the crash:

1) A short-term speculative bubble has burst. The price has dropped to one based almost entirely on the current usefulness of bitcoins as a medium of exchange and long-term investment vehicle. The price will shoot back up if there's another speculative bubble. Otherwise, it will gradually rise or fall as the value and usefulness of the bitcoin system changes due to adoption, competitors, and so on.

2) Unique events (early adopters selling, stolen bitcoins being dumped, etcetera) have pushed the price way down. If not for these, the previous increases (whether due to speculation, the usefulness of the bitcoin system, or whatever) would have continued, and as soon as this stops, the price of bitcoin will begin sharply increasing until the next such unique events.

Most likely, the truth is between these two.

Or, in summary, once this unique event ends, the price of bitcoins will go up, go down, or stay about the same.

In 1), do you have a reason for picking "has burst"/"has dropped", rather than "is bursting"/"is dropping"? I would expect a more careful choice of words from you.

JoelKatz

legendary

Activity: 1596

Merit: 1012

Democracy is vulnerable to a 51% attack.

First, let me just say that I fully agree that the properties of the bitcoin system create a floor value that typical private currencies wouldn't have. However, I do think that there are really only two possible explanations for the crash:

1) A short-term speculative bubble has burst. The price has dropped to one based almost entirely on the current usefulness of bitcoins as a medium of exchange and long-term investment vehicle. The price will shoot back up if there's another speculative bubble. Otherwise, it will gradually rise or fall as the value and usefulness of the bitcoin system changes due to adoption, competitors, and so on.

2) Unique events (early adopters selling, stolen bitcoins being dumped, etcetera) have pushed the price way down. If not for these, the previous increases (whether due to speculation, the usefulness of the bitcoin system, or whatever) would have continued, and as soon as this stops, the price of bitcoin will begin sharply increasing until the next such unique events.

Most likely, the truth is between these two.

Or, in summary, once this unique event ends, the price of bitcoins will go up, go down, or stay about the same.

evoorhees

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Democracy is the original 51% attack

Quote from: enquirer on August 07, 2011, 08:17:59 PM

The fact that there are 300 million Americans who use dollars for their day-to-day transactions creates a floor for the value of dollars.

soon we learn where that floor really is

+1

Topic: [Forbes] The Bitcoin Crash (Read 3635 times)