The most irritating bitcoin misconception that needs explaining? - page 3.

twiifm

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Quote from: Bit_Happy on March 26, 2014, 05:39:03 PM

I just learned that some scholars question "Tulip Mania", thinking the stories were exaggerated.
How can we learn from history, if the truth is not known?

Quote from: hilariousandco on March 26, 2014, 02:02:00 PM

....
Then why not just call it a speculative investment?...

Of course, this can be done right away.
So... if I can show tulips were a speculative investment, that would strengthen the comparison to Bitcoin even more?

Tulips were a speculative investment, they had "formal futures markets".
Here is 'proof':
The contract price of rare bulbs continued to rise throughout 1636, but by November, the price of common, "unbroken" bulbs also began to increase, so that soon any tulip bulb could fetch hundreds of guilders. That year the Dutch created a type of formal futures markets where contracts to buy bulbs at the end of the season were bought and sold.
http://en.wikipedia.org/wiki/Tulip_mania

ps. When I compare Tulip Mania to Bitcoin it's about the way people rush in trying to make big money fast.
There is a strong similarity, whether you see it or not.
Bitcoin speculation also has some amazing similarities to a Ponzi scheme, but it is NOT a Ponzi.

Besides tulips there were a lot of speculative bubbles and they all share similarities regardless of asset class.

Definition from investopia: A speculative bubble is usually caused by exaggerated expectations of future growth, price appreciation, or other events that could cause an increase in asset values. This drives trading volumes higher, and as more investors rally around the heightened expectation, buyers outnumber sellers, pushing prices beyond what an objective analysis of intrinsic value would suggest.

The bubble is not completed until prices fall back down to normalized levels; this usually involves a period of steep decline in price during which most investors panic and sell out of their investments.

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Quote from: Bit_Happy on March 26, 2014, 05:39:03 PM

I just learned that some scholars question "Tulip Mania", thinking the stories were exaggerated.
How can we learn from history, if the truth is not known?

Quote from: hilariousandco on March 26, 2014, 02:02:00 PM

....
Then why not just call it a speculative investment?...

Of course, this can be done right away.
So... if I can show tulips were a speculative investment, that would strengthen the comparison to Bitcoin even more?

Tulips were a speculative investment, they had "formal futures markets".
Here is 'proof':
The contract price of rare bulbs continued to rise throughout 1636, but by November, the price of common, "unbroken" bulbs also began to increase, so that soon any tulip bulb could fetch hundreds of guilders. That year the Dutch created a type of formal futures markets where contracts to buy bulbs at the end of the season were bought and sold.
http://en.wikipedia.org/wiki/Tulip_mania

ps. When I compare Tulip Mania to Bitcoin it's about the way people rush in trying to make big money fast.
There is a strong similarity, whether you see it or not.
Bitcoin speculation also has some amazing similarities to a Ponzi scheme, but it is NOT a Ponzi.

I can see the similarity, but it's still a misleading and invalid comparison, and so is comparing it to a Ponzi. Ponzis are a scam. Tulip Mania had the quick rise then the quick fall to worthlessness. You can't say it's half Tulip Mania because it meets the criteria of the first half. It's Tulip Mania because of the rise and fall. Can we compare the Pope to Adolf Hitler because they both wore trousers?

twiifm

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Quote from: GenTarkin on March 26, 2014, 04:56:56 PM

Yeahp and I think the HUGE thing that people struggle with is the word "Decentralized" ... they dont get how much of an impact that word when it has in relation to current monetary systems.
I dont think they can fathom it. I knew for the first 2 weeks I was introduced to Bitcoin, I was CONFUSED as fuck and Im a nerd/geek for my career & passion for the last 20yrs of my life!
If it was that hard for me, tryin to get an avg person to wrap their heads around it... I can see how they are confused as hell and the media just jumps on that confusion and drives fear into them =( .. scaring them away from potentially the greatest invention in the 21st century ... it saddens me really =(

Maybe its you who don't understand "decentralized". Before Centrals Banks all currency were decentralized meaning it was backed by the individual issuer (private banks).

What you don't understand is that bitcoin isn't even money. Money is an IOU thats backed by the issuer. For example in the olden days: Someone holding your gold deposit will give you gold note in return. You go spend that note and the person holding the note has claim that amount in gold from issuer.

Fiat is money that is not backed by hard asset so it has no intrinsic value. By definition bitcoin is fiat. However, fiat is backed by gov't. The gov't creates fiat on debt. Then they make you pay taxes so they can pay down that debt in future. Because we are legally required to pay taxes the demand on dollar is guaranteed. This assures its stability not some "trust" system. Fiat currencies valuation are derived from things like GDP and also supply/ demand of money.

What I noticed is that bitbugs get smarmy about their knowledge of bitcoin. But most don't understand undergrad economics. The irritable misconception of bitcoin come from the bitcoin community itself not from outside.

Most bit bugs are towing the line without critical thought whatsoever

Bit_Happy

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I just learned that some scholars question "Tulip Mania", thinking the stories were exaggerated.
How can we learn from history, if the truth is not known?

Quote from: hilariousandco on March 26, 2014, 02:02:00 PM

....
Then why not just call it a speculative investment?...

Of course, this can be done right away.
So... if I can show tulips were a speculative investment, that would strengthen the comparison to Bitcoin even more?

Tulips were a speculative investment, they had "formal futures markets".
Here is 'proof':
The contract price of rare bulbs continued to rise throughout 1636, but by November, the price of common, "unbroken" bulbs also began to increase, so that soon any tulip bulb could fetch hundreds of guilders. That year the Dutch created a type of formal futures markets where contracts to buy bulbs at the end of the season were bought and sold.
http://en.wikipedia.org/wiki/Tulip_mania

ps. When I compare Tulip Mania to Bitcoin it's about the way people rush in trying to make big money fast.
There is a strong similarity, whether you see it or not.
Bitcoin speculation also has some amazing similarities to a Ponzi scheme, but it is NOT a Ponzi.

twiifm

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Quote from: Beliathon on March 26, 2014, 05:03:27 PM

Quote from: twiifm on March 26, 2014, 04:45:24 PM

Or maybe they don't buy into the hype. Its bitcoin speculators who are emotional from greed. For everyone else you guys are nuts buying bitcoins

I'd argue that most of us early investors did so for reasons other than greed. Speaking for myself, I held onto my BTC for months as it lost value before finally seeing (enormous) profit.

For me, divesting from my nation's fiat was primarily an ethical decision, and that is why I did so with my entire life savings. I was later financially rewarded for my sound ethical choice.

Yeah right. Roll Eyes

Unless you can pay taxes in bitcoin you'll have to convert those into legal tender i.e. fiat. It is impossible for you to divest yourself from fiat.

GenTarkin

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Quote

But it's not just that it's rising quickly - it's also that it doesn't have intrinsic value, like tulips. A share of a company that rises quickly in value has intrinsic value in that it means you own a portion of the company. Bitcoin's value comes only from the trust that we share - the trust that if someone gives you bitcoins for a real product, you can spend them elsewhere to get other real products.

I disagree w/ that ... Bitcoins value goes far beyond that. It functions in ways that money / currency never has for humanity. This aspect alone makes it extremely valueable. Its utility value as money.

Your form of value placed in Bitcoin sounds more like why people trust in government backed fiat currencies.

GenTarkin

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Quote from: MashRinx on March 26, 2014, 05:02:28 PM

Quote from: GenTarkin on March 26, 2014, 04:56:56 PM

I have to reply to this thread....

So, when I talk to many people about Bitcoin or if they ask me a question...

Most people are very confused about what Bitcoin is(duh) but those confused people I talk to, think its a "company" and there is a "ceo" ... or "Bitcoin is in risk of going bankrupt" .. Or "going out of business"

Every fucking intelligent person(obviously idiots too) cant wrap their mind around the simple fact that its NOT A COMPANY nor is it controlled by a COMPANY.

I simply respond to them.... "Thats like calling gold a company..."

Id have to say, recently the above is the most irritating misconception I run into.

I had a conversation this past Thanksgiving with an in-law who is a current macro econ professor at a well-reputed university here in the US and he kept talking about "yeah, but when the person who controls bitcoin does ..."

There's a looong way to go before most people think of bitcoin or other digital currencies beyond what they see/hear in the media, if even that much.

Yeahp and I think the HUGE thing that people struggle with is the word "Decentralized" ... they dont get how much of an impact that word when it has in relation to current monetary systems.
I dont think they can fathom it. I knew for the first 2 weeks I was introduced to Bitcoin, I was CONFUSED as fuck and Im a nerd/geek for my career & passion for the last 20yrs of my life!
If it was that hard for me, tryin to get an avg person to wrap their heads around it... I can see how they are confused as hell and the media just jumps on that confusion and drives fear into them =( .. scaring them away from potentially the greatest invention in the 21st century ... it saddens me really =(

hilariousandco

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Quote from: K128kevin on March 26, 2014, 04:17:25 PM

Quote from: hilariousandco on March 26, 2014, 04:12:08 PM

Yeah, that's what he's saying, but then you could call any investment that showed very fast returns Tulip Mania. If Bitcoin collapses quicker than it came, then the comparison will be apt but it's not until it does.

But it's not just that it's rising quickly - it's also that it doesn't have intrinsic value, like tulips. A share of a company that rises quickly in value has intrinsic value in that it means you own a portion of the company. Bitcoin's value comes only from the trust that we share - the trust that if someone gives you bitcoins for a real product, you can spend them elsewhere to get other real products.

What happens when the company goes bust? And if that was the case, you can't compare them just because they do or don't share intrinsic value.

Beliathon

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https://youtu.be/PZm8TTLR2NU

Quote from: twiifm on March 26, 2014, 04:45:24 PM

Or maybe they don't buy into the hype. Its bitcoin speculators who are emotional from greed. For everyone else you guys are nuts buying bitcoins

I'd argue that most of us early investors did so for reasons other than greed. Speaking for myself, I held onto my BTC for months as it lost value before finally seeing (enormous) profit.

For me, divesting from my nation's fiat was primarily an ethical decision, and that is why I did so with my entire life savings. I was later financially rewarded for my sound ethical choice.

MashRinx

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Quote from: GenTarkin on March 26, 2014, 04:56:56 PM

I have to reply to this thread....

So, when I talk to many people about Bitcoin or if they ask me a question...

Most people are very confused about what Bitcoin is(duh) but those confused people I talk to, think its a "company" and there is a "ceo" ... or "Bitcoin is in risk of going bankrupt" .. Or "going out of business"

Every fucking intelligent person(obviously idiots too) cant wrap their mind around the simple fact that its NOT A COMPANY nor is it controlled by a COMPANY.

I simply respond to them.... "Thats like calling gold a company..."

Id have to say, recently the above is the most irritating misconception I run into.

I had a conversation this past Thanksgiving with an in-law who is a current macro econ professor at a well-reputed university here in the US and he kept talking about "yeah, but when the person who controls bitcoin does ..."

There's a looong way to go before most people think of bitcoin or other digital currencies beyond what they see/hear in the media, if even that much.

GenTarkin

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Activity: 2450

Merit: 1002

I have to reply to this thread....

So, when I talk to many people about Bitcoin or if they ask me a question...

Most people are very confused about what Bitcoin is(duh) but those confused people I talk to, think its a "company" and there is a "ceo" ... or "Bitcoin is in risk of going bankrupt" .. Or "going out of business"

Every fucking intelligent person(obviously idiots too) cant wrap their mind around the simple fact that its NOT A COMPANY nor is it controlled by a COMPANY.

I simply respond to them.... "Thats like calling gold a company..."

Id have to say, recently the above is the most irritating misconception I run into.

twiifm

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Quote from: Beliathon on March 26, 2014, 04:32:20 PM

The most common misconception I hear from friends and family is that Bitcoin has "peaked" in value, and that they're "too late" to benefit from investing now.

I've tried my best to explain why that's illogical, but the argument comes from an emotional place (regret, envy of early investors), and people seem largely immune to logical arguments.

Or maybe they don't buy into the hype. Its bitcoin speculators who are emotional from greed. For everyone else you guys are nuts buying bitcoins

Raxe.io

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Quote from: MashRinx on March 26, 2014, 12:47:55 PM

Please refer to "Tulip Mania" (or Beanie Baby Mania, for that matter) and differentiate. Every time I see that comparison I chalk it up to the person stating it as having no idea what they are talking about and just regurgitating what they've heard other people say, but it's still irritating.

This. Tulips are still beautiful.

Beliathon

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https://youtu.be/PZm8TTLR2NU

The most common misconception I hear from friends and family is that Bitcoin has "peaked" in value, and that they're "too late" to benefit from investing now.

I've tried my best to explain why that's illogical, but the argument comes from an emotional place (regret, envy of early investors), and people seem largely immune to logical arguments.

K128kevin

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Quote from: hilariousandco on March 26, 2014, 04:12:08 PM

Yeah, that's what he's saying, but then you could call any investment that showed very fast returns Tulip Mania. If Bitcoin collapses quicker than it came, then the comparison will be apt but it's not until it does.

But it's not just that it's rising quickly - it's also that it doesn't have intrinsic value, like tulips. A share of a company that rises quickly in value has intrinsic value in that it means you own a portion of the company. Bitcoin's value comes only from the trust that we share - the trust that if someone gives you bitcoins for a real product, you can spend them elsewhere to get other real products.

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Quote from: K128kevin on March 26, 2014, 03:02:41 PM

Quote from: hilariousandco on March 26, 2014, 02:24:51 PM

Well then that's a good investment, not a tulip mania. Are profitable stocks and shares Tulips too? You can compare Bitcoin to Tulip Mania when Bitcoin becomes essentially worthless, and until it does you shouldn’t be propagating this negative comparison.

I think the idea of the comparison is that it is behaving the way tulips did when they were skyrocketing in value, and therefore it isn't illogical to predict that they might crash like tulips did. I don't think this will be the case but I can see how people would make the comparison. It doesn't have to have already crashed for the analogy to work.

Yeah, that's what he's saying, but then you could call any investment that showed very fast returns Tulip Mania. If Bitcoin collapses quicker than it came, then the comparison will be apt but it's not until it does.

K128kevin

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Quote from: zimmah on March 26, 2014, 03:32:34 PM

by that logic, facebook and twitter and pretty much every successful company is a tulip mania.

That's not really the same logic. Facebook and Twitter are companies not currencies. Also they both have intrinsic value, which is probably the biggest difference.

twiifm

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Quote from: zimmah on March 26, 2014, 03:32:34 PM

Quote from: Bit_Happy on March 26, 2014, 01:24:42 PM

Quote from: MashRinx on March 26, 2014, 12:47:55 PM

Please refer to "Tulip Mania"...

If you bought only $50 to $100 of BTC in early 2010 and sold in late 2013 you would have ~$12,000,000 (12 Million) USD for every small purchase 3 years earlier.
No matter how great (and different) Bitcoin is, the "Tulip Mania" references are rational and fair.

by that logic, facebook and twitter and pretty much every successful company is a tulip mania.

Wrong FB & TWTR are companies. Their stock value can be fundamentally derived from things like earnings per share. They generate revenue so thats why they have value. However you are correct that sometimes these companies stock price get too far ahead of their valuation.

Bitcoin's value can't be derived from fundamentals. It should be treated more like a commodity like gold. Except gold has a history as money haven in crisis and actual intrinsic value for jewelry & electronics.

Bitcoin is a binary bet. If it becomes mainstream then it will be of great value. But it could also disappear and be zero value.

The problem with bit coin is that it is not a well designed currency. By its design it will fail at mass adoption.

EternalWingsofGod

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That Bitcoin is volitaile and scary without explaining adoption S Shaped curves and emerging technology

zimmah

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Quote from: Bit_Happy on March 26, 2014, 01:24:42 PM

Quote from: MashRinx on March 26, 2014, 12:47:55 PM

Please refer to "Tulip Mania"...

If you bought only $50 to $100 of BTC in early 2010 and sold in late 2013 you would have ~$12,000,000 (12 Million) USD for every small purchase 3 years earlier.
No matter how great (and different) Bitcoin is, the "Tulip Mania" references are rational and fair.

by that logic, facebook and twitter and pretty much every successful company is a tulip mania.

Topic: The most irritating bitcoin misconception that needs explaining? - page 3. (Read 4482 times)