18 Thursday May 2017
Posted | May 18, 2017 9:02:55 | Economics
The price of a bitcoin hit fresh record near $1,900 amid increased political risk says CNBC. How crazy can things get?
How High Will Bitcoin Go?
Bitcoin proves the greater fool theory is alive and doin’ fine.
I failed to post the above poll and that was the whole point of this post. Here are the results so far.
Mike “Mish” Shedlock
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Bitcoin uses a blockchainthat can contain images.
I’m wating for someone to put kiddie porn into the blockchain.
That would render it illegal in most jurisdictions.
What would happen to the price.
Silliness..if that were truly the Case..why are ALL the Behemoth Banking Conglomerates..Looking into ‘Block-chain’ technology to Save massive amounts of Salary on Administrative costs…??? lolol
yea and whose gonna find it
It’ll go to $3000.00+ just because I don’t have bitcoin. I can guarantee it’ll drop to near “0” if I buy some.
Dear Mish
You might like this explanation of the block chain.
http://www.amarketplaceofideas.com/what-is-bitcoin-mining.htm
Clearly Mish has not had to pay any computer ransoms lately:
http://www.nbcnews.com/storyline/hacking-of-america/companies-stockpiling-bitcoin-anticipation-ransomware-attacks-n761316
All other uses for Bitcoin currently pales in comparison to its use as a conduit for Chinese moving wealth out of their country. As little as a year ago, this was not the case. But right now, it’s pretty much a China thing.
As Bitcoin has gone up, the Chinese have figured they can hold on to them once they get them, rather than converting them to western currency. So each new Chinese wanting to move wealth abroad, has to pay a higher and higher price for each Bitcoin. So in that sense, it kind of is a greater fool’s game.
Eventually, with enough wealth held in Bitcoin, those holding them will be able to buy goods and services with them directly. Then Bitcoin will no longer be as volatile, and will no longer be any more of a fools game than other large currencies. Minus the debasement looting.
There are millions of chinese trying to stash money in the west thru bitcoin because they think a) their environment will be completely destroyed in china so they have to have an escape planned b) their personal crimes and corruption in how they got the money will be discovered and they will be put into prison so they have to have an escape planned c) they think the chinese communist party will crash and burn causing major instability in China (think venezuela) so they have to have an escape planned d)they want to move to west and have to first transfer their wealth there e)they are just investing in bitcoin chinese style aka gambling.
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Bitcoin will crash once China starts cracking down on all the corrupt chinese who are using bitcoin currently.
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Another way bitcoin will crash is if China lets yuan float freely with it’s value decided by markets and frees money transfers and transactions to western style freedom to move wealth around.
Bitcoin would crash under 500 dollars in both cases.
The actual value for each bitcoin is maybe 1 dollar.
Thing is, there is little reason to believe China will become a freer, less politically risky, place to hold savings. And, instead of China becoming freer, what is happening is that the West is becoming more like China: A surveillance society where the majority wealth is redistributed to the politically connected on a whim.
Hence, whatever reasons the Chinese currently have for using Bitcoin, are increasingly present, though perhaps not yet to quite the same degree, for Westerners as well. And developments in that direction, does not look likely to reverse anytime soon. Unless, perhaps, mass adoption of Bitcoin forces the issue……
The article could use a minimum of added meat. Mish do you believe Bitcoin is worthless idea? Or are you saying it was ok at a lower price and now it’s at a crazy high price?
Hey Mish – as I’ve been commenting here for a while…I think you’re missing the point on BTC and cryptos. They have the potential to change humanity.
I made a video about why I think so here: https://www.youtube.com/watch?v=KM_HSOsdtlQ
Would love to hear your thoughts. (Plus you can put a face to the name.)
– It’s in early stages
– Losses are possible (They sure seem to be since I still don’t know what I would be buying.)
– Government has no possibility to tax this form of currency (Really? They might pronounce it illegal or something…)
The video mentioned several times that it’s in the early stages, something new, but failed completely to explain WHAT it is. I wouldn’t buy.
I am with you on this. Very light on details and specifics, very heavy on hype and hopium. Never mind who the evangelists are, and who the heavy users are.
On the other hand, what can you expect. This is the result of printing untold amounts of fiat.
The very appealing idea is that it’s not under central cabal’s control, but that’s about it.
Fair dues. My point was to explain why it changed the world; others have explained what it is and its uses and have done a good job, so I figured it wasn’t worth repeating their work.
Bitcoin isn’t all that it’s cracked up to be. LIke all technology, its flaws are being discovered and exploited and/or squirreled away for future use. It’s great if you have a real need for it-the question is: what need to do you have for it?
“what need to do you have for it?”
Same thing that people “need” safes, guns and, back before they were forced to join the Mafia as well, Swiss banks for: Attempts to safeguard ones savings and some basic fundamental privacy.
I’ve watched your video. My comments: I admire your hope of wanting to make a better world for one and all. However, you are very clueless about the technology, and I would strongly suggest you pull down your video, lest you be made a fool of by your peers.
As Foghorn Leghorn would say: “Now pay attention, son…”
(1) You are repeating the usual anti-Fiat money yahoo, and wants to go back to something akin to the Gold Standard-in your case, Bitcoin. Nah. Gonna. Happen. First off, I have big issues with people who say that “Gold is money”-it is not. (Sorry Mish, but your dead wrong.) Gold is a commodity. Second off, Bitcoin has been plagued with all sorts of frauds scandals (Mt. Gox, anyone?)
Son, listen to someone who has been in the trenches of FinTech for over 30 years. Even IBM is taking their sweet time trying to make sure that the fundamentals of blockchain are sound before even daring to hawk their wares to their clientele of Too Big to Fail banks.
Based on what I’ve seen to date, Bitcoin right now is mostly used for two main things: (1) Asset movement by individuals who don’t want their government to know what they’re doing, as Stuki Moi points out in his reply (Excellent work, sir!) and (2) Engage in commerce of certain questionable goods and services.
I hope you find this informative.
How is money not a commodity?
https://www.merriam-webster.com/dictionary/commodity
“an article of commerce especially when delivered for shipment”
Just because there’s an unlimited supply doesn’t mean it isn’t a commodity. Look at advertising. For years there was an artificial limit on advertising, just because there was a self-selecting group of viewers (people watching a particular program or reading a newspaper), even when as proven by Computer Shopper magazine and QVC in some cases all of the content is advertising.
But now we’re seeing an ad market with unlimited inventory. Ad rates have been in constant free fall since the beginning of the World Wide Web and will continue eroding away margins. Media will end up like Venezuela if they don’t figure this out (or drop the ad model completely and get micropayments figured out).
I’d rather be an anti-fiat money yahoo, than a fiat money yahoo! =)
And you’re missing its biggest use case, a quickly growing base of people who are becoming wise to the fiat money scandal who want to protect their wealth with the added benefit of easily transferring money between parties with little barriers. I believe that group is growing exponentially.
Right now only punters and those wishing to barter in questionable goods use Bitcon. It appears that your Commanding Self has a pretty good grip on you.
Excellent video and for once I disagree with Mish. Crypto currencies are not crazy, fiat currencies are crazy. $ has weakened against BTC, 95% past few years. People are willing to pay an increasingly high price (denominated in fiat) for freedom.
Thanks for the feedback; well said.
Blockchain technology will be adapted for all kinds of applications.
Mortgages, Deeds, Titles are perfect
I agree. The possibilities are nearly endless. There is a bevy of applications being developed on the ethereum blockchain.
I’ll wait to invest in tulip coins before I get on this train wreck
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How crazy high did tulip bulbs go ??
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tulip bulbs aren’t nearly as useful.
Bitcoin is how you smuggle cash out of China.
Since I am very conservative regarding currencies (would prefer gold or silver), could someone make a short explanation what this Bitcoin is supposed to be? And why i should trust it?
Perhaps this is of interest,,,
“Bitcoin seems to be a very promising idea. I like the idea of basing security on the assumption that the CPU power of honest participants outweighs that of the attacker. It is a very modern notion that exploits the power of the long tail.”
– Hal Finney
This topic is way too complex to adequately address in single forum post or video. “Bitcoin” actually has two meanings: 1) an open-source software protocol that runs on a global network of computers, and 2) a digital token of value (i.e., money). It was invented during the 2008 financial crisis to be a new form of money outside of the control of governments, banks, and corporate entities. The inventor described it as “peer-to-peer digital cash.” Like physical cash (which governments want to eliminate), it enables individuals to exchange value directly without the permission or help of third parties who take a percentage, store (and fail to protect) personal ID information, perform surveillance for the government, etc. Unlike physical cash, Bitcoin can be sent across the globe in seconds and cannot be counterfeited.
The “money supply” of Bitcoin was loosely based on gold. As time passes, the difficulty of “mining” for Bitcoin increases and the yield decreases; the total supply of Bitcoin will never exceed 21 million [but each Bitcoin is infinitely divisible].
I regard Bitcoin as a high risk investment with very high potential reward. It is currently facing something of a crisis due to the emergence of a powerful mining cartel in China which has blocked protocol improvements that would increase Bitcoin’s capacity to process transactions. As a result, transaction fees and delays have increased greatly, harming Bitcoin’s user experience and utility for exchanging small amounts of value. If this problem is not solved, Bitcoin could lose its market share to a different cryptocurrency.
I do not recommend that you “trust” Bitcoin. However, I strongly recommend that you learn about it and buy a small amount to experience it. Here is a playlist of videos to get you started: https://www.youtube.com/playlist?list=PLDto3IHr_v57h3FFYlLN3-3_J9H8lMFaH
Open source and can not be counterfeited or stolen?
I have also one simple principle derived from my years at the university. If someone can’t explain me on layman’s terms what something is about, I won’t buy it. The best guys in physics or any field of science seemed to be able to explain their field of study even the details were far beyond my understanding.
I see a scam here. Someone telling that an algorithm can’t be altered or the amount of Bitcoins changed sounds like outright lie to me.
Thanks for your answer, though. It confirmed my belief that Bitcoin is not something I want to invest in.
I did not say BTC cannot be stolen, nor did I say the algorithm can’t be changed. In fact, I mentioned that protocol improvements are needed to help bitcoin’s transaction processing capacity keep up with rapidly growing demand. It is even technically possible to alter the amount of BTC issued, though it would require most participants in the system to decide to act against their own financial interest.
It is true that Bitcoin is a complex and evolving system that is not amenable to simple and brief explanation. Since you are not motivated to learn more about Bitcoin, I agree with your decision to avoid it.
To further clarify…. Bitcoin (the digital token of value) can be thought of as the first “app” of bitcoin (the open source software protocol). Many other applications have been and will be developed, but I think none as revolutionary as Bitcoin (the money).
You may read establishment “FinTech” types claim that “blockchain technology” is what’s valuable about Bitcoin. The blockchain is only one of several technological innovations that make Bitcoin possible. Centralized institutions (e.g., private banks) are trying to adapt this blockchain technology to improve the efficiency of their operations. By itself, blockchain technology is not revolutionary or disruptive, and its adoption by private centralized institutions poses some serious risks that are prevented by the open and decentralized nature of Bitcoin.
For anyone interested, here’s a video in which Andreas Antonopoulos discusses risks of implementing blockchain technology in a centralized system, and explains how Bitcoin is like a swarm of sewer rats: https://www.youtube.com/watch?v=810aKcfM__Q
Ha! And to imagine,,,,it’s priced in Federal Reserve Note funny bucks.
Bubble? http://pricedingold.com/bitcoin/
Bitcoin and crypto currencies offer a non-fiat (yes like gold or silver) currency that can be transacted electronically.
The money supply of a crypto is determined by an algorithm. In general, crypto coins cannot be created out of thin air.
Different crypto currencies have algorithms rules.
Typically there is a shared ledger, known as a blockchain, that contains every transaction ever performed.
A network of machines continually update the ledger. In bitcoin, for example, these nodes can receive a small transaction fee for processing transactions.
Making processing power available to the network also allows the creation of a small amount of crypto currency. This is called ‘mining’. Analogous to gold mining, only a small, predictable amount is created.
ium is a crypto currency that permits a small amount of logic being inserted into its shared ledger, allowing for so called ‘smart contracts’.
As an example of a smart contract coded in Etherium, I saw an a pyramid scheme that had been implemented. This wasn’t intended to defraud people, it was created as an example. By depositing etherium at a particular address, you entered the pyramid scheme. Subscribers to the scheme had their subscription fee automatically distributed to those above them in the scheme. The distribution of this money is performed by the network automatically, with no human involvement.
It is suggested that Etherium could be the basis of companies that exist outside of government jurisdiction because the distribution of dividends can be handled on a fully automated basis. The concept of companies like this is broadly known as DAO, Digital Distributed Autonomous Organisation.
Most crypto currencies are not truly anonymous. But some attempt to be. People use jumbling services to create a large number of transactions hide the trail of their transactions
“Leave a reply”, yes but I don’t know what to say. Summer festival season is starting here in Holland, and I will ask specially young people how they think about this, if they use it at all. What I do notice, more and more people, even here in the rural area, are buying goodies from all over the world over the internet. First it were Dutch companies were they bought from, then European, and now from all over the world. Maybe they will start using the bitcoin more too?
Other subject, no new government here yet. Talks between parties stranded, (as expected I think). At some point we will get a new government, but its hard to see which parties will form it.
Bitcoin is worthless.
Everything is trackable and there is no intrinsic value with it.
Bitcoin is like trading tulip bulbs in the netherlands long ago.
Chinese use it to transport corruption money out of China because chinese government has cracked down on everything else like even ATM withdrawals in Macau and casino chip purchases in casinos abroad and “investments” into western countries and that is the reason for the bitcoin rise.
Do NOT be the one left holding the bag.
Yes intrinsic value zero. Same as fiat. But worlds no 1 fiat currency has lost 95% of its value against bitcoin over past few years. Is that a sign we should take seriously?
Only gold/silver is without counterpart risk. Gold has been honest money for 5000 years, and some people continue to claim gold is a commodity only.
Fiat currency has some value, it can be used to pay off debts. That’s guaranteed by law. Bitcoin doesn’t even have that going for it.
Precisely, bitcoin is not legal tender, and nobody is obliged to accept it. Unfortunately, government printed fiat is. As I noted, I fully excepted it, and find some appeal in it, after the official money counterfeiters run their operations under the cover of the law.
Does there exist any “law” with even the most tenous of claims to universal validity, that exalts fiat currency?
The general trajectory of all societies that has succumbed to the siren song of convenient theft that is fiat money, is that they go under long before any claims to their legal code’s validity can be said to have lasting impact. Weakening from the inside, until sacked by outsiders with the sense to transact in real money.
China will crack down on bitcoin, and then it will be worthless. They can do this tomorrow. Just forbid banks to allow customers to buy/sell bitcoin for currency.
That is the weakness of bitcoin. You still have to use a bank to buy or redeem them into currency.
China has shut down everything else which conflicts with their political power. They will shut this down too.
When I first heard about Bit-Coin I thought it was a joke. Then there were stories of more and more individuals and even corporations using it. Then the FBI took down a black market operator (I use the term black market loosely) and took all of his bit-coins. Now the Chinese seem to have a strangle hold on the electronic currency and its relative value has been increasing greatly. The one key to the value of Bit-Coin that I do not see discuses is the electrical power grids. As a currency, it is totally dependent on electric power and the internet grids. If as so many Cassandras are crying, world or large scale regional war is coming to a country near you, then there is a very good chance of grave dislocation to the electrical grid and correspondingly the internet grid. If you live in that disrupted area what is the value of your bit-coin?
Your Bitcoin would remain safe in the network, but you would not be able to spend or transfer your money until you were able to access the internet.
My point was that without electric power there is no Bit-Coin. If I understand the system correctly, the currency needs a certain number of nodes (how many computers make up a node is not specified) to operate and create more currency. If power outages cause a significant loss of nodes, then the currency is at risk of being lost. But no matter, isolation from the internet or isolation from electric power render the currency vulnerable. And this is the problem with what might be perceives as a rush to a paperless currency by globalists. As long as all is working all’s right with the world, but when it isn’t?
without electric power it is no fiat money either. Your bank account is gone, stock casino is goon and the fed will be gone to.
Kind of like a desperation when the ATMs of one bank have an outage for a day. Only the outage would spread to all banks, and for much, much longer.
Mish,
Central banks are not propping up cryptocurrency markets. There is no Bitcoin Plunge Protection Team. No bailouts of Bitcoin exchanges that get hacked or go bankrupt. No FDIC insurance for Bitcoin. It is a FREE MARKET, and free markets discover the truth about the relative value of assets.
If you’d like to learn more about Bitcoin, this playlist of videos would be a good start: https://www.youtube.com/playlist?list=PLDto3IHr_v57h3FFYlLN3-3_J9H8lMFaH
Regards,
MJS
And the central banks cannot apply the monkey hammer.
That has not and will not stop them from trying. For example, the PBOC suspended Bitcoin withdrawals from exchanges in China.
Bitcoin primary use is capital flight out of China
Speculation accounts for much of the rest
I do not believe your assertion about the primary use of Bitcoin has ever been true. After the PBOC forced Chinese exchanges to impose trading fees and stop lending money in January, the volume of trading on those exchanges immediately collapsed and the Bitcoin price corrected down to the $700’s (where it had been trading a few weeks earlier). In February, the PBOC forced the exchanges to entirely halt all withdrawals of Bitcoin (and they are still halted). Since then, the global demand for Bitcoin has increased and the price is approaching $2000.
Your comment about “speculation” suggests you believe Bitcoin is experiencing an investment bubble fueled by investors who have “weak hands” and will be prone to panic sell. I am sure some Bitcoin users fit that description, but I believe most do not. Here’s a recent article discussing whether Bitcoin is in a bubble: https://www.linkedin.com/pulse/bitcoin-boom-bust-vikram-mansharamani?published=t
Financial oppression through inflation, capital controls, negative interest rates, bail-outs, bail-ins, surveillance, demonitization events, tariffs, etc is increasing all over the world. Bitcoin provides an exit ramp on the road to tyranny. The exit ramp is still small and under construction, but increasing numbers of drivers are finding and using it. https://www.youtube.com/watch?v=Bu5Mtvy97-4&list=PLDto3IHr_v57h3FFYlLN3-3_J9H8lMFaH&index=8&t=2s
Seems that Bitcoin is taking up the role
once provided by Gold ( emphasis on the word “once”)
you could see Bitcoin as a kind of decentralised money
and money flows into and out of it represent an outlet for
whatever you wish to see.
eg Chinese people and or others trying to
circumvent whatever barriers they may face in moving wealth from A to B.
(apparently for the past few years Chinese people have been using
the Vancouver housing market as a conduit for money transfers)
BTW, I wouldn’t dismiss Bitcoin as just another fad, although it is in a bubble
(It was less than $300 18 months ago)
ps try not to push the Chinese (capital-flight meme) too far, for recent rise in price
see below
5.Japan has overtaken China as the country with the highest crypto trading volume. XRP is popular in Japan, and one writer surmises it is because of the work Ripple does in Japan, such as through its joint venture, SBI Ripple Asia, with SBI Holdings.
https://dollarcollapse.com/crypto-currency/bitcoins-fatal-flaw/
if I buy bitcoins with USD, who gets the dollars? who is holding the fiat money spent to buy bitcoins?
Whoever it is who sells the Bitcoin to you; just as when you buy anything else. You’ll probably never know who sold; any more than when you buy stocks.
Bitcoin = Garbage.
Q: How High can it go?
A: A lot higher
Q: How low can it go
A: Zero
Seems like it would be fun to trade…
About where my thoughts stand.
At the end of the day … TPTB want everyone to use fiat … go outside the boundary (including gold) … and risk it being banned or forfeited.
Banking partly evolved from satisfy accounting between two separate jurisdictions. At its most basic the buyer and seller, where the buyer did not want to carry gold around, and so carried a note.
International banking is similar, a note on a claim on say gold in one country, would be accepted by a bank in another country, the balance between banks settled at the end of the day.
That still occurs in modern banking using fiat, where fiat is a claim not on gold, but on the goods and services of its country of origin.
There are many restrictions and charges on using the managed fiat banking system, and so when people find an easy and unrestricted means of settling accounts globally, by transfering ( ultimately the claim on goods and services) between each other without banking and legislation, they use that. Garbage money displaces not so good money, displaces good money. Some even use garbage money to store wealth or make a profit, but its value vs. fiat does not matter in the transfer framework, you can transfer a million ones or one million, as long as it is reasonably reliable and stable during the transaction. If it is allowed to be used widely, it will obtain much greater depth and therefore be much more stable. There is no absolute reason why it cannot be more reliable and stable than the banking system we actually use.
it will ultimately be easier to short than to determine how high it can go.
> Mish, > I would appreciate your comments on this excerpt, and especially the GDP 4.2 for 2Q Always a pleasure to read your comments Claude > Wednesday’s Selloff Was about the Fed, Not Trump > > In recent issues, I’ve said that it would be a mistake for the Federal Reserve to raise interest rates next month. The economy, sadly, just isn’t strong enough. Since I’m not a member of the Federal Open Market Committee, my views on the matter don’t count for much. But this week, the world may have shifted in my direction. > > According to the latest futures prices, the market is placing 73.8% odds on a rate increase in June. That’s high, but it was even higher not too long ago. That’s why Wednesday’s selloff caught my attention. The worst performers were big banks and financial institutions. The best performers were high-dividend stocks like REITs and utilities, with some consumer cyclicals. > > Whenever you see banks and dividend stocks move in opposite directions like that, you know that the market is arguing about the direction of short-term interest rates. Banks want short rates to go up. Dividend-payers want them to go down. When it’s a big drop like this, it’s almost as if the market is begging the Fed for some relief. I don’t know if they’re listening. > > What makes this more interesting is that the economic news has been getting a little better recently. Still not enough to justify a rate hike, in my opinion, but we must consider all the evidence. For example, on Monday, the industrial production report was quite good. Economists had been expecting industrial production to show a 0.4% rise for April. Instead, it was up a full 1% . That’s the biggest increase in three years. Importantly, it’s for the month of April, which is in Q2. > > A few weeks ago, we learned that the U.S> economy grew by a meager 0.7% for Q1. That’s pretty bad. Next week, we’ll get an update. But now we’re starting to get a few clues for what the Q2 numbers will be like. The Atlanta Fed has its GDPNow forecasting tool, which says that Q2 GDP is currently tracking at 4.1% . I have to be honest: that shocked me. I hope they’re right, but we still need to see more data. > > Last Friday, shortly after I sent out the newsletter, the government released the inflation report for April. If you recall, the report for March was light—very light. Core inflation had its steepest drop in 35 years. The numbers for April were higher, but still quite subdued. Headline inflation rose by 0.17% for April , and core inflation was up by 0.07%. Except for March, that’s the softest in four years. No matter how you look at it, inflation just isn’t out there. > > What’s interesting is th
It should be pretty obvious that at some point governments will ban bitcoin. Why? Because they can’t control it. Of course the excuse will be “it’s used by terrorists and criminals”.
To enforce the ban, they would need to ban (at least electronic) communication, which is tricky to do.
Or, they can attempt to ban exchanges in and out of their national currency, once cash is outlawed. But would then also have to ban travel, since otherwise people would simply spend their earnings abroad.
Governments always call those threatening them supposedly derogatory names. Not realizing that in a totalitarian state where 95+% of laws are unjust, things which aids and abets criminals, is almost always good for the vast majority of people. While “terrorist” is just Newspeak for freedom fighter.
You are correct. Here’s a good video on this topic: https://www.youtube.com/watch?v=Bu5Mtvy97-4&list=PLDto3IHr_v57h3FFYlLN3-3_J9H8lMFaH&index=5&t=2s
I sold my bitcoin after it doubled in value last year. That was after holding it for a year because it had dropped to 1/3 of what I paid for it. But I didn’t buy it to invest, I bought it because I thought there were businesses starting to use it and wanted to learn about how it worked. The 3 times I tried to use it I was met with blank stares and confusion. I ended up buying Amazon gift cards to get rid of it.
The point of crypto currency shouldn’t be an investment, it should be a way to conduct business without all the overhead. The fact that it has gone sky high in the past 6 months is a very bad thing for the future of this concept. Stability is really the key to a currency being accepted and used.
And people really aren’t getting the concept either. The exchange of bitcoin doesn’t rely on a Mt Gox or other intermediary to make things happen. You don’t need to “store” your wallet at a 3rd party. In fact, I’d say it is a very bad idea to store you wallet anywhere but at your home. All you need is a flash drive or even a printed QR code. I kept my bitcoin on my iPhone for 3 years, no problem. Even if it were stolen and I remote wiped it, I could recover the wallet from a backup.
The USD value of bitcoin aside, bitcoin has provided us with an interesting look at how markets would function if there were not central banks intervening. I’m support the view of Austrian economics and I think bitcoin has proven that without intervention there would be significant drops that wipe out the weak hands, while eventually rises when people find use cases for it. Bitcoin mirrors the Nikkei index from 1950 to 1990 before the Japanese became Keynesian morons.
Cryptocurrencies *in general* have a bright future, but will not be “safe” until major governments endorse them (not bloody likely). BC will continue rising until fedguv decides it constitutes an existential threat.
That’s when it goes to zero.
In 1994 lots of people told me that this new internet thing isn’t going to mean anything either. If you don’t see the value in Bitcoin, you’ve not thought of it enough.
This is a big deal, and it will affect everyone.
” If you don’t see the value in Bitcoin, you’ve not thought of it enough.
This is a big deal, and it will affect everyone.”
Kind of a chicken and egg issue. It can only become a big deal and affect everyone if everyone sees value in it and thinks of it enough.
There have been lots of great products that never made it because they couldn’t create enough mind share to create enough demand to make production profitable.
Bitcoin requires people changing their payment settlement method. People generally don’t change until they are either forced to or see remarkable value in doing so. I think it will be difficult for Bitcoin to reach either of these situations.
Stability is the issue. Price wise people accept all the costs of fiat and steady deflation of value for the stability. With btc, barring legislative and technical, you should have a steady increase in value, with fluctuations as a function of how shallow the market is. If the world only had btc, you would see no fluctuation, what you would see fluctuate is the price of end goods and services according to whatever real factors affected them.
How to get rich – start your own cryptocurrency. The early generation of a new one is easy and can be done on a desktop PC. Eventually, the generation of them costs more in energy use than one gets from their generation as is the case with Bitcoin now. This guy mined 7,500 of them IN A WEEK in 2009 on a now very old tech laptop, then threw away his hard drive:
Missing: hard drive containing Bitcoins worth £4m in Newport landfill site
https://www.forbes.com/sites/kellyphillipserb/2013/11/30/from-treasure-to-trash-man-tosses-out-bitcoin-wallet-on-hard-drive-worth-9-million/#245cdc41245c
Excerpts:
Buried somewhere under four feet of mud and rubbish, in the Docksway landfill site near Newport, Wales, in a space about the size of a football pitch is a computer hard drive worth more than £4m.
It belonged to James Howells, who threw it out when he was clearing up his desk in mid-summer and discovered the part, rescued from a defunct Dell laptop. He found it in a drawer and put it in a bin.
And then last Friday he realised that it held a digital wallet with 7,500 Bitcoins created for almost nothing in 2009 – and then worth about the same.
That lost hard drive, though, contains the cryptographic “private key” that is needed to be able to access and spend the Bitcoins; without it, the “money” is lost forever.
And Howells didn’t have a backup.
***Howells stopped mining after a week*** because his girlfriend complained that the laptop was getting too noisy and hot while it ran the programs to solve the complex mathematical problems needed to create new Bitcoins.
In 2010, the Dell XPS N1710 broke after he accidentally tipped lemonade on it, so he dismantled it for parts. Most were thrown away or sold, but he kept the hard drive in a desk drawer for the next three years – until that fateful summer day when he had the clearout.
> Mish, > I would appreciate your comments on this excerpt, and especially the GDP 4.2 for 2Q Always a pleasure to read your comments
> Wednesday’s Selloff Was about the Fed, Not Trump > > In recent issues, I’ve said that it would be a mistake for the Federal Reserve to raise interest rates next month. The economy, sadly, just isn’t strong enough. Since I’m not a member of the Federal Open Market Committee, my views on the matter don’t count for much. But this week, the world may have shifted in my direction. > > According to the latest futures prices, the market is placing 73.8% odds on a rate increase in June. That’s high, but it was even higher not too long ago. That’s why Wednesday’s selloff caught my attention. The worst performers were big banks and financial institutions. The best performers were high-dividend stocks like REITs and utilities, with some consumer cyclicals. > > Whenever you see banks and dividend stocks move in opposite directions like that, you know that the market is arguing about the direction of short-term interest rates. Banks want short rates to go up. Dividend-payers want them to go down. When it’s a big drop like this, it’s almost as if the market is begging the Fed for some relief. I don’t know if they’re listening. > > What makes this more interesting is that the economic news has been getting a little better recently. Still not enough to justify a rate hike, in my opinion, but we must consider all the evidence. For example, on Monday, the industrial production report was quite good. Economists had been expecting industrial production to show a 0.4% rise for April. Instead, it was up a full 1% . That’s the biggest increase in three years. Importantly, it’s for the month of April, which is in Q2. > > A few weeks ago, we learned that the U.S> economy grew by a meager 0.7% for Q1. That’s pretty bad. Next week, we’ll get an update. But now we’re starting to get a few clues for what the Q2 numbers will be like. The Atlanta Fed has its GDPNow forecasting tool, which says that Q2 GDP is currently tracking at 4.1% . I have to be honest: that shocked me. I hope they’re right, but we still need to see more data. > > Last Friday, shortly after I sent out the newsletter, the government released the inflation report for April. If you recall, the report for March was light—very light. Core inflation had its steepest drop in 35 years. The numbers for April were higher, but still quite subdued. Headline inflation rose by 0.17% for April , and core inflation was up by 0.07%. Except for March, that’s the softest in four years. No matter how you look at it, inflation just isn’t out there. > > What’s interesting is th
Regardless of whether bitcoins are viable or not, people are using them to move money out of China and elsewhere undetected. This points to a niche underground market if nothing else. Governments should hope it stays just that. I also think they are being used to illegally move funds way more than anyone thinks.
Absolutely
I am on the road and slow to reply
How crazy can it get, you ask? Well,,,,,
https://www.forbes.com/sites/forbesfinancecouncil/2017/04/04/what-will-it-take-for-a-bitcoin-etf-to-get-approved/#160de66a36d0
When these Bitcoin ETF’s hit the market, it’s inevitable there will be leveraged products to soon follow. Who will generate the quantity of “Coins” necessary to satisfy ETF demand?
A derivative of an apparition?
Who ya gonna call?
The value of bitcoin has increased by 1,300% since Mish first dissed it (back in 2013.)
No, What someone is willing to pay in fiat or goods for bitcoin has increased. The value of any medium of exchange is only what someone will give you in exchange for it. For bitcoin that has fluctuated by orders of magnitude in timescales short compared to reasonable needs to store wealth (years).
There is absolutely no fundamental reason bitcoin should have value save hope that someone will still give you something (hopefully more) for it tomorrow.
It will continue to go up in price until it does not. Unlike fiat which is normally debased slowly (though there are exceptions to even that) bitcoin price can swing in hours – minutes even – the moment people fear its “value” tomorrow will be much less than today. It is an illiquid market the moment many people want to convert it back to fiat or goods.
It does have uses for movement and transfer of value with fewer fees but with capital risk. It has some uses for moving relatively small values with short term anonymity, though any large scale movement of bitcoin can be traced through the blockchain to where conversion to fiat for a specific holder can be determined. eg tracking down the end destination of ransomware payments
And it has lots of potential for speculation – where the total amounts losers will lose and winners will win are closer to being equal than for other casinos – ie the house (financial industry) take is smaller.
Assuming it’s a bubble, it would be interesting to compare it with similar historical occurrences. At the At the height of the Dutch Tulip Bulb Market Bubble, the rarest tulip bulbs traded for as much as six times the average person’s annual salary. So, there may be quite a ways to go just yet.
It’s going to $20,000/coin, which would make it as valuable as the market cap of Google, Facebook, IBM, etc. It’s a universally accepted store of value , much like gold, but without all the cumbersome problems gold has. Been long Bitcoin since 2013
One more scam requiring a third party guarantee for payment. Also requires power, and a working computer able to communicate with other computers all of which can be hacked. More like a “solution looking for a problem.” Gold doesn’t have any of these problems or requirements.
Yep. Baseball cards, beanie babies, pet rocks… and now bitcoins. What they all have in common is smooth talking hucksters convincing you to get rich without doing any actual work.
If it sounds too good to be true…
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While I can certainly understand the average person failing to understand the value proposition of Bitcoin, I find it extremely interesting to see people who read a financial website such as Mish being so negative/naive about Bitcoin. Just goes to show how much more room it has to go, imo. Not financial advice :-). It took me 2 years to achieve my aha moment. I’m sure those posting here will one day as well.
already 2500 $