Brent Allsop <brent....@canonizer.com> wrote:
> It could become the Mother of all Ponzi schemes.
Ponzi schemes, normally understood, involve early investors being paid with the investments of late investors. That is not happening with bitcoin.
> If you project the current growth rates at all, it seems very likely that a single Bitcoin could be worth overa $ million within 5 years. And a good possibility that that will be just the start.<
I hope you're right!
> I've canonized a first draft of my thoughts about Bitcoins, and their future in a "Currency Expert Survey Project" See: http://canonizer.com/topic.asp/155<
Interesting project. I might contribute if I find the time.
> How many of you own bitcoins? Anyone Mining bitcoins? and what do all of you think the value of a Bitcoin will be in one year?:<
I followed Bitcoin casually from its inception, but (regrettably) did not take it seriously until only recently, when the total capitalization broke above 1 billion USD. I invested on three separate occasions after the market corrected. I'm happy with my average price, which is below the current market.
The longer term charts would seem to indicate that the price is currently completing a consolidation pattern with the price fairly stable around $122 +/- $5 or so. If the price breaks higher here, to about $130-$135, especially on high volume, I would guess then that it might rise again in the next year to something near its all time high of about $260. If it instead breaks to do the downside then I would be concerned about the next year or so. Of course this is all predicated on the validity the science (art?) of technical analysis of price trends, which might be akin to reading tea leaves. If anyone has developed a model for doing fundamental analysis of bitcoin prices then I would be interested in hearing about it.
> I know all of you are very intelligent Bitcoin experts
I do not consider myself an expert in Bitcoin, but I do have a lot of experience trading and investing in other markets. I spent many years as an investment adviser. I happen also be something of a geek, and so here I am with a position in bitcoins. :)
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From: "David Hamilton" <swimqu...@gmail.com>
To: transf...@googlegroups.com
Sent: Thursday, May 23, 2013 8:35:27 AM
Subject: Re: [mta] Long Term Bitcoin Catastrophe?
Brent, the deflationary aspect of the currency is something everyone agrees on.
What they do not agree on is the effect that deflationary currencies have on an economy. There are those who argued that the gold standard (which was also deflationary)
caused more economic volatility, and there are those who argue precisely the opposite.
As currencies are required to sustain a volume of transactions that is proportional to the total capital in the market, bitcoins (if fully adopted) would naturally rise in value to match some percentage of the total capital in the market. Once bitcoins reach a saturation point and everyone who is going to use them already does, at the point one would only expect to see fluctuations between bitcoin and other currencies to the extent their governments decided to inflate them.
Most of the reason why the dollar value of bitcoins is growing is because more and more people are buying them. But there is some increase in value that is purely the result of the devaluation of the dollar. Bitcoin is designed to be currency that can NEVER lose value because it is impossible to "print" more of it. The thing you're calling a bug is in fact a feature, according to those who designed the currency.
But Gold is very different than Bitcoin. The production of Gold has always been growing at an exponential rate, through all history, especially when prices are the way they are now. In other words, it seems to me you must agree that Bitcoin will be way more deflationary than Gold ever was.
And even when Bitcoins have reached this saturation point, if the economy does continue to grow exponentially, and Bitcoins stay flat, there will still be a huge increase of relative value, way beyond one satoshi being = $1. Maybe it will no longer be 100% every two years, but it will still be something significant, like maybe 100% every 7 years, do you think? It will certainly be proportional to the rate of expansion of the economy, which would track with the need for Bitcoins or the availability of capital to invest in Bitcoins?
On Sat, May 25, 2013 at 3:11 PM, Brent Allsop <brent....@canonizer.com> wrote:
And even when Bitcoins have reached this saturation point, if the economy does continue to grow exponentially, and Bitcoins stay flat, there will still be a huge increase of relative value, way beyond one satoshi being = $1. Maybe it will no longer be 100% every two years, but it will still be something significant, like maybe 100% every 7 years, do you think? It will certainly be proportional to the rate of expansion of the economy, which would track with the need for Bitcoins or the availability of capital to invest in Bitcoins?
The bitcoin implementation currently allows for something like 12 digits of precision but this could easily be increased indefinitely with minor adjustments to the protocol. This is not a problem at all.
I would suggest studying bitcoin (and general economics) more before you jump to the conclusion that this will cause crashes. There are literally hundreds of years worth of theories involved here. Wikipedia does a pretty good job of describing the basics. The Austrian school is the one that thinks gold-based economies are good. You might want to start there to get the point of view of the bitcoin creators.
As I said earlier, there are other cryptocurrencies that function just like bitcoin but instead have a steady rate of inflation baked in. You might prefer one of these after becoming more acquainted with the various economic theories. The difficulty in adopting these is that it is very hard to pick an algorithm that will always adjust inflation at the right pace. I suspect we'd probably need to be able to quantify the rate of accelerating returns in world productivity better before we could come up with a good algorithm.
8 Digits of precision, one "Satoshi" being worth 1 / 100 millionth of a Bitcoin. As I indicated, if "the law of bitcoins" camp prediction holds, that Bitcoinds will continue their historical trend of each successive bubble increasing in value 10 times, every 2 years, 1 bitcoin will be worth 1 cent around 2018 and worth $1 around 2022. And I indicated it won't stop there, as I agree with you that they will be able to increase the precision. That kind of change will be easy. But good luck with trying to increase the rate at which Bitcoins can be mined. Even if they succeed at doing that kind of change with Bitcoin there is always the possibility that some other currency will not change, or even be more restricted than Bitcion was, befor such a change. Capital will always tend to flow to wherever the best return on investment is, abandoning all others.
I've been doing exactly this for some time, but am still not a true expert, and I am aware of other schools of thought, not just the Austrian school, that is in the camp that Gold is good currency. I"m not denying that some still exist, all I'm saying is that these theories that Gold is good currency has recently been falsified for many people, and that the number of experts supporting this view has dramatically decreased, given recent evidence such as that coming out of Japan, due to their very successful expansion of their money supply.
with all this. And since gold cant be lost, like Bitcoins can, I'll be selling gold and buying Bitcoins as fast as I can.
That is one of the beauties of Bitcoin. Scarcity is built into the system. Think of it as a precious metal in this respect
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I think the evidence is against Austrian theory rather than for it.
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If you dont see austrian economic policy fanboy postings daily online (some by me) you are blind,
In academic circles I'm sure its different
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Your reasoning here doesn't make sense. Of course the bitcoin mining rate is designed NOT to be changed, which we all already agree on. Where your logic fails is in how you seem to think that this supposed flaw in bitcoin will cause it to inevitable take down the economy. This doesn't make sense to me because if bitcoin is an ineffective economic instrument then it won't be adopted. On the other hand, if it is an effective instrument, then it won't lead to the dangers you worry about. You act like we will inevitably be led to our doom by bitcoin. That just doesn't make sense. We won't destroy ourselves against our will.
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Hi James,
Yes, very interesting "Tangent". I think I hear you saying that people will not act rationally, or at least for the good of the economy, yet they will act selfishly, investing in Bitcoins, endlessly, as long as they are hyperdeflating, over things like the Stock Market? And that while this would likely not be "catastrophic" it could things like significantly increasing the cost of capital, slowing the economy and society down?
James, all I'm saying is that I don't think bitcoin will cause the human race to go extinct against our wills. Anything more than this is beyond my claim. If you do think that bitcoin will probably cause the human race to go extinct, then you disagree with me. Otherwise I think we agree.
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