This page has been archived and commenting is disabled.
As Bitcoin Plunges 25% On Government Scrutiny, The First BTC "Fair Value" Reco Has A Stunning Price Target
It took literally minutes following our report from yesterday that in addition to the ECB and Fed, it was the Senate's turn to finally shine the spotlight on the most notorious electronic currency with a hearing titled "Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies" next Monday, for Bitcoin to tumble 25% from its all time high just shy of $400, to $290 within 12 hours, in large part answering our rhetorical question if "the one thing that can finally end the dream of Bitcoin holders arrive soon: when the government, and existing monetary authorities, start taking it seriously." They appear to be doing just that, which is why additional upside from here may be in the eye of the Cray supercomputer-armed NSA beholder.
So yes: Bitcoin is volatile. Very. That much is clear. But what is not so clear, and perhaps a key reason for this volatility, is just what the fundamental, or intrinsic value of BitCoins is when one strips away the pure euphoric momentum to the upside or downside.
To answer that question, we go to Raoul Pal, head of the Global Macro Investor, and his November 1st recommendation to "Buy Bitcoins"(when BTC was $210 so nearly a 100% return in 1 week) which among other things attempts to "value BTC using a macro framework" or, in other words, the first supply-demand driven fair value assessment of BTC.
His take, and price target, in a nutshell:
A fudge, but not a stupid one
Let’s use a broad guesstimate. One Bitcoin should theoretically be worth 700 ounces of gold or pretty close to $1,000,000, if we adjust existing supply of both to equal eachother.
One BTC is currently worth 0.14 ounces of gold.
That gives BTC an upside of 5000 times to equal the current price of gold, supply adjusted. Clearly, I and everyone else believes that Gold may well be much higher than here in the next 5 to 10 years, thus versus the US Dollar the upside for BTC could be multiples of that.
Now, before you shake your head, simply go back to the chart of Gold versus the US Dollar and just recognise that it has risen 8750% since the 1920s. And just remember that Microsoft rose 61,000% from its IPO to it’s peak.
Considering what we know about the world, I personally believe that Bitcoin may well explode in value as more and more people begin to use it.
If you stuck $5,000 into Bitcoins and each Bitcoin did go up to a gold equivalent of let’s say, only 100 ounces of gold (not the potential fair value of 700), then at current prices your Bitcoin stash would be worth $3.3m.
Now that’s what I call a tail-risk option. It’s either worth zero or it’s worth a truly outstanding amount of money.
I bet you never thought you’d see this in a macro publication. But I’m serious. This just might work.
Read on in the attached pdf below (link)
»
- 55384 reads
- Printer-friendly version
- Send to friend
- advertisements -
Yes, and futher cements the fact that you spend too much time working on your abs while failing to realize it's just another ponzi that will end up in the dustbin of failed mediums.
"I am going to keep a percent of bitcoins (maybe even 5-10%), its a good bet as far as i'm concerned... at least for the next few years."
you just demonstrated what the skeptics are saying herein. you will keep them in the short term but you pretty obviously have no certainty about, say, > 2016. Dare I say that it's because you have concerns that the "bigger idiot" will be fewer in supply than the bitcoins that you want to peddle? You're not buying into this as a medium of exchange; you're speculating in abritrage: Fiat A for Fiat 2.0.
NO, cash is legal tender, law of the land, and bitcoin's value does not exceed that due to its massive losses from various peaks & more are coming.
It's too unstable. BTC over $3/each is nonsense.
And with some good math skills and a computer... you can start your osn currency?
What will happen when there's a competition of 5000 types of bitcoin?
Anyone can make coca cola too... try competing with it. I don't see bitcoin as being threatened any time soon... maybe never if its the widely adopted standard.
no.. there's a patent on Coca Cola.
And not on bitcoin.
No.. you can still create something similar. Same principle. There are plenty of gneric coca colas for sale out there, they still have a tiny market share.
That's also why I wouldn't put all my life savings into Coca Cola stocks :)
It's a marketing company and if the wind changes it's over.
Sales of Coke have been falling for a while now..
Only reason why the company has been sort of growing is due to acquiring other companies that sell water, juice, etc...
*sigh* .. thats due to many other reasons, one of which is a trend of people eating more healthy and avoiding HFCS.. thats why I havent had a cola in years. ..and even the sugar based one I avoid.
so what will happen to bitcoin when all the non backed currencies crumble?
bitcoin is also a faith currency he....
so like you say with cola, a change in behavior destroys a brand that can't adopt.
so... bitcoin can't adopt like you say... is't stuck with the flaws it was made...
see how botcoin will end now?
I know little about Bitcoin, but I do know what I see in ZH threads:
1) The gold folks HATE it, and hate it at a very high intensity. Probably for good reason in that every penny that goes into bitcoins is one less penny demanding gold and elevating its price. The gold folks hold gold and measure it in dollars or whatever currency, and that measurement can't possibly benefit from money flowing to something else.
2) Gold is not portable. Period. In the entirely credible capital controls scenario for which we have the Cyprus precedent, gold will be seen by the TSA X-Rays. You can't move it out of the country. It's not portable. Bitcoins appear immune to border controls.
1) I doubt very many hate Bitcoin. Sounds like plenty have both. It's the endless gold bashing that gets people mad.
2) Gold isn't portable? Yes, it is. I've gone through customs and airports a few times and my coins have been screened. Just don't have more than $10K worth at a time. There is no crime in that at all.
I clearly said in the capital controls scenario. It will be seen on xray and confiscated if capital controls are in effect. You would never have been able to move $50,000 of gold out of Cyrpus. You were (maybe still are, haven't checked) allowed access to max $250 per day there.
And thus, gold is proven not portable when you most need it portable.
And bitcoin is worse: any number of devices can destroy a device carrying bitcoin data & any number of attacks can jam a wireless network (and have) or cut off a wired network (and have).
Gold at least can go where you can go, you just need to be alert. Bitcoin can be stopped completely.
The crime is in there being a $10k limit.
Yes, I agree, but a slight clarification. You can take out any amount ($500,000 for example), it's just that you have to report it, there is an outgoing Customs Form for that.
1) The gold olks don't hate it because it would mean less money into gold....
Look, there's 2 kinds of people into bitcoins:
a: those who bought at below 1$. those are not investors, those where curious people and now lucky people.
b: those who chase momentum and buy for less than 10000$. Those are also he kind of people who wish it goes to 1 million because they own perhaps 10 bitcoins and only with those crazy number will they make money. they ectaully need and want it to be a 100 bagger... now... that shit rarely happens and never with a popular investment.
Same thing for the PM investors.
And they hate everybody who stand in the way of their dream of becomming a millionaire with just a 10000 dollar investment...
So i'm a silver bug en small gold bug. I'm in it with more money than the average person makes in 20 years and it's all physical.
So why do I hate bitcoin?
Because it's a obvious scam. I'm against every fiat currency. And bitcoin is no currency at all because the measure is only dollar on the exchanges.
it's a company stock backed by nothing but simple faith.
It's a Hahaha test tosee how many people would actually buy this if it would be popular...
It reminds me of the company stock called: NOTHINGBUTHOTAIR
99% of all people have no clue of economic events that are happening now. Bitcoin people reflect the 99% who have no clue but think they invented the wheel.
And greed will prevent most ofthem from ever cashing in so they'll lose it all again never the less.
sudden debt - the stupidity i see here from other peoples comments is stunning. even if you think the bernake printing press is crazy - they do have backing of the 'full faith and credit of the united states'. the US does have tax income, they do own huge amounts of land, there is something behind it for the creditors. they really could sell grand canyon and national parks to the chinese (if they haven't already)
bitcoin is nothing. it's completely digital zeros. sure, if you want to gamble tulip mania, go ahead kids.
i recommend to all of you a small book by jk galbraith (and he was a right c*nt). but - he was asstute. any time that there are large amounts of money being made where there was no money being made before at all - be careful. anybody want to try some cdo^2?? bit coin is ponzi, nothing else.
http://www.amazon.com/History-Financial-Euphoria-Penguin-business/dp/0140238565
A third type is C) those who have looked into Bitcoin and value the properties it possesses. These are:
scarcity, portability, divisibility, fungibility, recognizability, security, and it's intangible nature. These are things that you may not place value in or do not trust. That's perfectly OK. laters.
its only recognizability is as a fad that's highly volatile. It's like holding raw uranium in your hand. Dangerous, not smart at all.
And being intangible is the worst possible quality: it's the exact opposite of what money needs to be so I can't use it.
People WANT qualities that make a thing GARBAGE? That's not OK. That's assinine.
"2) Gold is not portable. Period. In the entirely credible capital controls scenario for which we have the Cyprus precedent, gold will be seen by the TSA X-Rays. You can't move it out of the country. It's not portable. Bitcoins appear immune to border controls."
1.) Buy gold in smaller denominations
2.) Swallow said gold
3.) Opt out of the airport scanners (and instead get groped)
4.) Poop out said coins at your destination
End of discussion...
I'm not a gold bug, or silver bug, or BTC bug - I just want my money to be real money. My initial allocation was 70% silver, 25% gold, 5% BTC - I'm now well over 50% BTC without buying any more.
At some stage I will be switching more BTC into silver, when we are looking closer to some kind of relief from the constant PM manipulation. Those who believe they are for 'real' money, and can't see anything except for gold - simply don't understand money.
bzzzzt wrong.
I can get off an island or through a port or over a fence faster than you can restore cut cables or jammed signals for a network connection to transfer bitcoins. AND you can count on a nice EMP zap or pat-down to confiscate / destroy any device you carry with you having bitcoins.
There's already quite a few alternate cryptocurrencies: litecoin and namecoin to name a couple. So yes, you can start your own.
The issue is ultimately one of adoption, which is why the fire is so hot with bitcoin right now -- it's entering the network effect phase where people buying/using it are fueling more people buying/using it, and this is really the first time that's happened with a cryptocurrency.
There are already excanges for the alternative coins, so what happens is you convert litecoin to bitcoin if you want to do something that supports bitcoin but not litecoin. I suspect in time, what will likely happen is bitcoin wins due to being first to market and network effects, and the alternatives die out, remain curiosities, or turn into some type of niche like airline reward points.
nah... it will end when the first good hacker is able to create a million bitcoins, becomes filthy rich and makes the useless.
Bitcoin is also already at the top of it's lifecycle within it's target group. Now t's entered the greedy phase and soon it will be the death cycle.
And as it's virtual that can go superfast.
Look how unsecure the owners are. a drop of 25% because of a rumor... that doesn't sound like sound money to me.
Fiat is for transactions
Gold and silver is for savings.
And bitcoin is a transaction coin as it was always designed to be. never forget it and don't just look for the info that supports your claims because you really really sound like a parrot :)
There are risks involved with bitcoin. ...but holding physical gold/silver has risks too. Theft being the biggest.
or just forgetting your password...
it's also just anyday now that hackers will get inside the bitcoin system en rob every owner blind.
You can create a paper bitcoin wallet and store it in a safe. This one cannot be "hacked" and you do not need to remember any passwords.... but it can also be stolen by physical theft.
Bitcoin has been around a while. It is out of its infancy period now. The world's smartest computer scientists, the world's most devious criminals and the NSA have been trying to hack it with no success. Part of BTC's current price (about $320 right now) is a bet that it won't be hacked.
"it will end when the first good hacker is able to create a million bitcoins, becomes filthy rich and makes the useless."
Oh wow, why didn't I think of this before? Why didn't this IBM chief computer scientist think of that before? http://www.youtube.com/watch?v=VDO7TDMlxsY
Of all the threats to bitcoin, a hacker creating millions of them is the least probable to occur. It's a two-part problem, since he not only has to come up with the bitcoins, but also convince 51% of the network nodes (meaning software wallets, including the one on my PC right now, as well as all the mining systems) to accept them as legitimate. This is on par with someone hacking every PC on the internet simultaneously to run their own code.
Basically, it's not going to happen. Something else may, but this particular part of the protocol is especially robust.
"it will end when the first good hacker is able to create a million bitcoins"
All transactions must be approved by everyone on the network. I could, right now, write a program to insert a fraudulent transaction onto the network granting me a million bitcoins. It's actually quite simple and wouldn't require "hacking" anything. The problem is, no other participants on the network would accept that transaction (public ledger, after all).
"a drop of 25% because of a rumor... that doesn't sound like sound money to me."
Small markets have large volatility. That's not a new phenomenon by any means. There will be more bubbles popping in the future, I'm sure. These are just growing pains.
There are - well ok not 5000 bitcoins clones... yet. http://www.coinwarz.com/cryptocurrency
It seems the next up and comer that is being compared to BC are Litecoins.
Facebook to introduce "Facecoin", Twitter to introduce "Twitcoin"; to the moon!
I like ObamaCareCoin: half the utility at twice the price!
Tesla, Twitter, Facebook, Bitcoin, Yelp; these valuations are sky fucking high and don't even make sense anymore.
This whole financial market has become nothing but a giant fucking casino completely out of touch with reality.
I like 'Rocket Fuel' (because you'd need a rocket just to get up to the basement)
E.g We define adjusted EBITDA as net income before income tax (expense) benefit, interest expense, net, depreciation and amortization (excluding amortization of internal use software), stock-based compensation expense and change in fair value of convertible preferred stock warrant liability. Adjusted EBITDA has a number of limitations as an analytical tool including the following:
-- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
-- adjusted EBITDA does not reflect changes in, or cash requirements for, the Company's working capital needs;
-- adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;
-- adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and
-- other companies, including those in the Company's industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure."
http://www.marketwatch.com/story/rocket-fuel-reports-record-revenue-in-t...
Welcome to Fantasy Island!
:-D
I expect Bitcoin to be obliterated and their value $0.00. I wouldn't put a plug nickel into bitcoins.
How Global Macro Investor can compare value of Bitcoin and Gold vs Money supply? Bitcoin's amount in curculation is growing - there are reports about hacking and unfare use by the miners already. People involved will corrupt everything. Another electronic currency can be introduced at any moment or Bitcoin can be banned as the Ponzi Scheme in competition with the FED. On another hand Gold can not be baned - China, India, Turkey, Thailand are buying record amounts of Gold this year. Gold supply can not be artificially increased (apart from leasing scam, which will end up in tears) - this where its value coming from.
Do we miss something? Comments are more than welcome.
Gold is traded on a fraudulent exchange and the fraudsters, most motivated to see it fail, own more of it than anybody. Bitcoin doesn't have this problem. Once futures and options are avallable for it, who knows what happens but it would have to go up a hell of a lot before that happens. If the Winkelvoss twins get the ETF approved, look out. This thing could skyrocket.
I want to trade options of the 3x BTC ETFs!
goldbugs
bitcoinbugs
<--- BOTH
+ 1
Big Time Gold Bug Bearing is just looking into Bitcoins now. Both as a speculation (SofV) as well as a way to move capital around should it come to that.
As long as I can get BTC more-or-less figured out (how to use, etc.), I will keep looking into it.
But, why, if I like gold so much?
Diversification, fishez!
BITCOIN Newsticker
from all around the world:
http://tersee.com/#q=bitcoin&t=text
neatish link. thanks. Doesn't bring up everything though it seems - unless I'm using it wrong.
...........Imbedded Fiat
i doubt someone can escape the gov. matrix with this BTC. its just too easy for gov. too kill it.
maybe im just a old fashion but i like my 6000 year old money
No. They've had 3 years now to attack Bitcoin and it held up just fine. The training wheels are off now. It is out there in the wild and won't be stopped. It is going viral now like other technologies have in the past... the telephone, the internet.
no, it really hasn't.
The main exchanges from fiat to btc are snooped & controlled.
The main computers harvesting btc out of future supply ARE GOVERNMENT SUPERCOMPUTERS.
You are sniffing glue.
Here on ZH where "fiat currency" is about the worst insult known, we have an article claiming a *bitcoin* has any value whatsoever in gold? That must be bitgold, or you must be huffing digital glue.
The real value of Bitcoin is its ability to serve as a financial transaction medium, and the market will eventually determine what that fair value is. We need to stop thinking of Bitcoin as having any other kind of value. There simply isn’t any.
Precisely - in the same way the market imputes value to gold, or silver - or any fiat currency. The difference between fiat and real money, is that someone cannot randomly print some off - thereby destroying its value.
I find it hard to understand the serious failure of people to understand the property of BTC that makes it money, is the inability to counterfiet it. It does have risks with long term store of value prospects - but those risks are either political (same risks face gold, confiscation - made illegal), or technical. The technical issues with BTC are going to be assessed by the market, and the market will price in the risks.
Amagnonx, I like your ideas.
Two things come to mind, however: First, I believe it’s fair to say that gold and silver have value related to their physical characteristics, not simply to their concepts. In other words, the metals are usable for certain physical applications, and therefore it may be fair to say there’s a fundamental difference between them and BTC.
The second thing, is that although BTC cannot be counterfeited as you say (I have no argument with that), there may be other similar crypto-currencies that are eventually introduced, which in a certain sense “dilute” the value of BTC. It’s not a technical issue, it’s more of a fundamental issue wherein there’s effectively a step-up function of increased supply, and that variable doesn’t exist with precious metals. Yes, there’s a slow and calculated increase of supply from precious metal mining activity, but that’s fundamentally different from introducing a new crypto-currency.
A gold rich meteor the size of Tasmania could slam into the earth diluting the value of gold as well.
since it serves a very poor role, perhaps the worst of all, for that purpose I guess btc is done, then.
Tyler, do you really think the price went down on "government scrutiny"? Who cares about the US government. US is 340M people out of 7 Billion in the world.
As Baidu CEO said, US is just another market, Nothing else. The time when US ruled is over. Sorry but that is a fact.
Thing about gold, right now, is that nobody can replicate it, and it has physical presence... There are various virtual currencies - what's to say that another, more popular virtual currency doesnt emerge?
That said, I love the idea of bitcoin, the fact that it is decentralised... and is limited in issuance - it's TPTB's worst nightmare
"what's to say that another, more popular virtual currency doesnt emerge?"
Barrier to entry.
https://en.wikipedia.org/wiki/Barriers_to_entry
Part of the value of Bitcoin right now is the power of the network - which is roughly 150 times more powerful than the top 500 supercomputers combined.
You could have made the same argument about Microsoft Windows circa 2000 but now I see OSX, iOS, Android. What happened was that the goalposts were moved. Virtual currencies still exist in their infancy. The goalposts will move many times.
Also, a network has no power as such, it is merely a series of connected nodes. If you're refering to all the CPU cycles that are currently being expended in the pursuit of BTC discovery, AKA 'mining' then yes, some serious CPU power is currently focused on that task
It absolutely IS NOT.
The most powerful 3 super-computers on Earth would exceed the full computing power of the bitcoin network hands down.
You've got an entire world chasing after a hyped-up "stock" with a current float of just 12 million units...
What do you think would happen for a while?
Come back in 10 years...
:) If "the entire world" would be chasing it. The price would be very different. It is yet a very small part of the worlds population that own or intend to buy any BTC. Mcap is less than 4 B. Which is rediculous. I dont understand the fear from US. Nobody else is afraid.
Its actually 1.2 quadrillion units - every BTC divisible to 8 decimal places. IN future that can be expanded as much as required - that is, it can be further divided.
There in lies the rub, division = expansion
expansion = inflation
inflation = fiat
So because you can divide a dollar into 10 dimes - then you can further divide those into 10 pennies, that somehow creates inflation? Try engaging the brain before putting the mouth in gear eh.
Perhaps it is you who should engage brain. Because something goes in a different direction (pennies used to be able to buy things) doesn't mean it is not inflation. I'll allow you to suss it out.
You are suggesting that the cause of inflation is the existence of pennies - Im pointing out that line of argument isnt looking too strong.
The division is there to raise prices. There's no other purpose for it.
Another liberal arts major?
When the this FED induced economy rolls over and crashes, people (Globally) will be looking to park their Fiat somewhere. Old money will go for Gold/Silver. The younger digital culture will go for Bitcoin. Some people have stacked enough and will hedge with a few BC's. I, like a fine lady, would like to have options for when the Economy crashes... #BackUpPlans are a good thing.
#Diversification
#Fishez
+ 1 !!
Holy Cow... Check out this Hilarious Video "JIM CRAMER'S TERRIBLE/BAD STOCK TIPS":
https://www.youtube.com/watch?v=Lhwplunz7-I
"If you stuck $5,000 into Bitcoins and each Bitcoin did go up to a gold equivalent of let’s say, only 100 ounces of gold (not the potential fair value of 700...)"
I'm still laughing...
Well if I'm a huge nuclear utility sick and tired of paying "negative prices" for my juice I could in theory set up a "bit coin mining operation" and see just how high the newbies want to take that electrical bill higher. Shutting down Silk Road? That's right up there with shorting Tesla and Solar City. I do agree an upgrade of the grid infrastructure is long over due.
"Firstly, there will only ever be 21 million of them. No more can ever be created, which is part of the genius of the design..."
A quick & simple change to the coding can fix that...
Get your Bitcoin 2.0. Many bugs fixed. New features.
You're right! Everybody Sell Sell Sell your bitcoins now before it's too late. We'Re DoOmeD!
*sigh
Nope. You'd have to change the code and get everyone on the network to adopt it, since all transactions are validated by all participants.
Anything less than that and all you've done is make a new type of virtual currency we'll call TrimmedHedgeCoins, and who would want those when Bitcoin already has an established userbase?
Ugh.
Why not just use gold? We're working on it: goldbulliondebitcard.com
Gold needs to be easily divisible and readilly accepted by merchants.
Gold is easy to short sell. Gold is easy to re-hypothetcate. Gold is the no #2 manipulated investment. Gold requires transformation to other assets in order to facilitate a remote transactiion.
actual gold in hand is immune to all of this.
Only paper promises for gold have this weakness.
As for "remote transactions" I DON'T WANT THEM.
I want my transactions local, in arm's reach, so if a person tries to take my money I can physically stop them.
The website address URL in the comment that I answered would suggest it was selling paper gold, or even worse, electronic gold. Personally I prefer silver to gold, but if I had invested all my silver into bitcoins at the start of the year I would be laughing right now (rather than crying).
certainly, if what you did next was unload them all before the big crash & get food, ammo, guns, gold, silver, maybe even move yourself somewhere more ideal...
that would definitely be good.
The last thing I want to hold onto is bitcoin but a fiat multiplier from $3 to $400 or even $150 would certainly be helpful to grab more gold & silver maples.
Your idea stinks of centralization (easy to attack) and 3rd party trust issues.
And "Uses the existing banking system for global acceptance" wtf? way to bag a sell.
Problem is easily solved by having more debit-card providers if there are enough debit-card customers.
Approx $1 million / BTC has been my estimated fair value for BTC for a few years. However, the head winds will grow with rising value. If BTC holds together long enough to crack $10k, then financial structures and nations will begin to be impacted - just slightly at those valuations, but measurably.
So if BTC did achieve $10k, then the rise from there would likely be slowed considerably as it would force a major restructuring, if it rose over $100k towards $1 mil this would begin to decimate banks, currencies and eventually states. Frankly - it would be a good thing, however at valuations over $10k - the powers arrayed against it would be enormous.
While $1 million per BTC is a solid estimate of value, the risks associated with it will impact on that valuation to a greater and greater extent as it rises - it is likely that risk aversion will swing the bid in golds favor for quite some time yet.
Even the most pro BTC people out there realize there are possible events that could wipe BTC to zero in an instant - it has a long journey to build trust, and will never be as sure and dependable as gold.
PS: Also regarding the 'volatility' - the latest moves were so predictable, I am sure I am not the only one to have sold at $400, and bought back in near $300 - only 35% of my total, but it was a nice trade.
if you valued silver the same way you value Bitcoins we would be looking at a $9000 an ounce price with the same starting point.
Bitcoin site is hacked, with $1million of the virtual currency stolen. Claims: Bitcoin Is Broken.
There will be a lot of opinions about Bitcoin and its stratospheric rise. Its wild gyrations of valuation show the appetite for the alternatives to FIAT currencies and ... another Ponzi Scheme in the making fuelled by speculators. Do not be too alert on this one thou: as FED's issued US Dollars are maybe even worse. Everything will be ended in a bubble one day - before it you can play and make some money. But we definitely have a very big problem when somebody is coming out - as ZeroHedge reports - with valuations for Bitcoin based on comparing Gold vs Monetary Supply in existence and then compares the potential "Bitcoin fair value" to 700 of ounces of Gold!? You can not compare Bitcoin and Gold on basis of its limited supply and quantity vs FIAT Currencies in existence, this is where the intrinsic value of Gold is coming from. Gold is the accepted Money for thousand of years with all its qualities, including the Limited Supply guaranteeing its place in the vaults of The Asian Central Banks. (The vaults of Western Central Banks are most definitely empty and they are waiting for its Gold to be returned for years from US like Germany or from leasing like Finland and others.) The recent distortion of this physical principle of Limited Supply - the scam run by LBMA as Fractional Gold Reserved System with 60 owners per one ounce of Gold registered at COMEX and Leasing of Gold by the Western Central Banks - are suppressing the price of Gold and pushing people to seek alternatives like Bitcoin. Bitcoin is not the only available electronic currency, even if it is the most popular one. Tomorrow Goldman Sachs will sponsor the new one, if they are not already behind this one. There are already reports on hacking and claims that Bitcoin system can be potentially compromised with unfair use by miners. The main problem here is that Bitcoin is Part of The Grid, everything people have control over will be compromised in the end. It could be just outlawed at any moment with Ponzi Scheme and consumer protection reasoning by the FED as competition. Until China, India, Russia, Turkey and Thailand among other countries will start to buy Bitcoin as Central Bank Reserves, please, be careful in counting your Bitcoin in ounces of Gold. Report: Bitcoin Is Broken List of Cryptocurrencieshttp://sufiy.blogspot.co.uk/2013/11/bitcoin-site-is-hacked-with-1million...
"Someone stole gold out of a safety deposit box. Claims: Gold is broken."
How we all love to talk about money stuff, while most of us don´t even know what money SHOULD be to preserve its immutable value. www.perfectedeconomy.org
Problem with his analysis is there are many alternatives to Bitcoin (litecoin, ripper etc), so there is an infinite supply of virtual coins out there, not so with gold.
Holy shit! Many places no longer accepting Federal Reserve Notes??
http://www.youtube.com/watch?v=SML_pBhaPLM
That's it -- I"m stocking up on bitcoins...
Whoever mined the bitcoins before the first run up control over 50% of the bitcoins. Sounds like a pump and dump.
Also, people aren't buying this for a store of wealth. People are buying this based on pure speculation and euphoria. They aren't buying bitcoins to pay taxes, labor or bills. When the euphoria ends in a huge crash bitcoins will be worth the grain of salt they are made out of. Nothing.
wow, reading articles like this leaves no doubt that bicoin is digital tulip mania... ZH should filter out BS like this or nobody will take this site seriously.
Bitcoin is nothing more than a pyramid scheme where insiders and early adopters are getting rich off of suckers who join in late. If someone would wante to create REAL alternative currency to fight establishments FIAT, then its value would be tied to basket of goods and services... but all bitcoin hypers oppose this because they hope to get rich quick by doing nothing, but real wealth dont come from doing nothing, you either produce something of real value or you transfer/steal wealth from somebody else, when one day you are poor shmuck and then you become "bitcoin millionaire" then somebody lost that wealth that you gained, dont forget that next time you start to hype bitcoin as next best thing since sliced bread.
I have been reading ZeroHedge since it was a blog about high frequency trading. There have been some amazing revelations put forth on this blog, then web site, about the machinations of the money masters.
However this fascinates me more than any charts, price manipulation, or serial bubbles. Bitcoin is truly one of the most profound mindfucks I can remember in my lifetime. This is the first time I ever even thought about commenting here.
The proponents of bitcoin say they are "Fightin' the Bernank! Powa to da people!". But what they are really doing is trying to BE Bernanke. Instead of bankers printing/typing up dollars and purchasing real goods and labor, some guy wants to run a computer for a while then use the 0s and 1s to buy up real goods and labor.
Some kid runs a computer rig in his basement, and I am supposed to want to turn over my harvest for his 0s and 1s? The inputs, sometimes backbreaking work, to get those potatoes ready to feed people is just the equivalent of some dork running a computer for a few hours?
This is what fighting the money masters is about? The fuck?
This is the thread winning post right here.
Though, to be fair to bitcoin, money creation is decentralized (for now, though even that is rapidly being centralized due to the high cost of bitcoin miners) whereas the Bernank's money creation is centralized.
Yea well there is no justice in the value of labor. Consider Blankfein or Dimon and their true "value".
True enough. Blankfein and Dimon are truly worthless douchebags, living off the productivity of others.
So the bitcoin movement is designed to create more worthless douchebags? Or to spread the douchebaggery around in a more uncentralized manner?
The kid in his basement isn't. Instead it's 40-something goldbugs running $10,000 ASIC-based mining supercomputers running code that enforces accounting rules on a 100% transparent ledger.
When the Bernank's ledger is opened to the world, we can talk about bitcoiners being the Bernank.
50-something goldbugs (the ones I know) are not yet ready to mine... :)
No need to mine, just check your wallet ;)
That's an extreme waste of $10,000.
Adding in the heat exchange needs & electric draw just to run it a person would be much better off having stored food, tools & silver and a near-term supply of paper cash.
What a waste. The almost quintessential story of misallocation of investment capital from a mania.
You got it.
A friend of mine's dad invested as much as I have metals, but his was in woodworking tools. Every last tool has more than paid off as he produces desired wood items, from bowls & chairs to cabinets and fancy pens.
He's retired now so this is his retirement hobby. He's in profit & will continue to be as long as his hands can work and the tools, while eventually wearing out, have more than repaid their intrinsic value.
My gold & silver (a portion of which was sold into the 1900/50 peak) has profit for me but doesn't produce anything.
Real investing should have real production of real goods needed by one's self or others (a market).
Gold's a good store of value but this man made from from his tools (literally & financially) than I did from my gold & silver (which I'm now stacking more up again)
You just described the Stock and Bond markets.
Bitcoin is nothing more than a pyramid scheme where insiders and early adopters are getting rich off of suckers who join in late.
no, there are many differences between pyramid scheme and valid company that produces real goods or services and is traded on the stock market. if you really cant see the difference then that speaks volumes about your intelligence.
1. Nothing has instrinsic value. All value is subjective. This includes bitcoins, gold, and FRNs.
2. Bitcoin's value lies mainly in it's scarcity, resistance to tampering/tracking by central authorities, and ease of transfer.
3. Some people will subjectively value #2 more or less than others. That does not make bitcoins a ponzi or pyramid scheme.
4. People who "mine" bitcoins are doing work for the system; mining is the process by which transactions are validated.
WRONG.
All properties of physics are INTRINSIC value, value that is derived from nature NOT by opinion.
ALL such properties include malleability, rarity/scarcity, conductivity, density, etc., and that's why gold & silver have intrinsic value devoid of belief or opinion. You can't change gold or silver's real value using emotions or guessing or marketing.
Physical properties are not the same as value. Some things with physical property are valueless to me (the garbage I put out by the curb), other things without physical properties at all have great value to me (love, respect, etc.). Some things in each category are tradeable goods, and some are not.
As an example: If you were drowning in the ocean and I offered to chain a crate full of gold to your feet, would you accept?
To you, at that point in time, gold would have less than zero value. All value is subjective and exists only in the minds of people. It is not context independent.
all market value comes from physical properties, just not all physical properties lead (at this time) to market value (but could, depending on changing needs).
There is a context but with no physical properties which can give value there's nothing at all. Bitcoin has one positive: transmissibility without more mass than is needed for photons or electrons (radio or wires). It's just not a useful enough property since it can be used at most as a claim marker on other goods & I could just as easily use non-btc methods to do the same as claims for dollars, gold or goods. I need only a trusted source of a gpg/pgp signature or other way of verifying the message content (value) and source (trust). btc offes me none of that: it's not enough to be assured all btc are valid btc, the trading source itself is still in question (robber?).
Thanks, though.
"all market value comes from physical properties"
All market value comes from expected utility. Nothing about utility implies a tangible, physical presence. If you offered to go around saying good things about me, I would find that to be valuable, even if there exists no tangible representation of my public reputation.
Good convo, by the way.
What kind of utility is not tangible?
Anything with electric flow, magnetic fields, mass, friction, various mechanical properties of rotation or inclined planes, etc., that's all tangible & utility.
Sure, you might think yourself a clever trader of such things or paper promises or leverage of it but none of these things can have any "utility" (in trade) without the baseline tangible physical utility of a thing (or a series of things, or a coordinated effort of a person or people who are physical tangible things in the material world, chemicals & mass).
Very, very few things are completely intangible, just promises for debt really. They get temporary value & have high risk because to pay them requires tangible loss on the part of the debtor and that party may fail to pay by choice or perhaps by other events (e.g. dying before being able to repay in full).
Of course market-mispricing with time-volatility exists for a reason: errors in perception & prediction of future outcomes seems as good a reason as any. If one's perceptions are blurred, or lies are involved, or if one's expectation of the future are far out of line of reality to come because of poor reasoning skills or a willingness to bet too much... future actual value could be far off from future expected utility of a tangible thing.
Rather than to dismiss intrinsic value I'd say this dismisses the absolute of total value at a given moment in the future though that total value is always inclusive of the intrinsic value plus... something else.
It is a good conversation, hashing out the real details of what brings value & why, different perspectives of it.
If you went around saying good things about me, but those good things were too good to be true & locked me into a reputation / situation where I could not meet what was then expected of me... that 'good' value could be short-lived, followed by 'negative value' upon seeing that results didn't match expectations.
That's just another way of looking at it of course but I'd like to be in control of what others perceive of me. Sure, is a side-train to the conversation but I think setting expectations of future value that are far off the mark (better or worse) has negative consequences most of the time.
we shouldn't filter, nor stop the stupid from throwing money at garbage.
However I did already get it at work: I mentioned that gold & silver are real money.
One girl, amazingly, didn't say "what's a gold" but actually said "hm, and bitcoin?" (sarcastically).
I said, of course, "no way, not for me" but the fact she even expected that shitcoin to go along with actual gold & silver just shows how bitcoin is trying to gain reputation. On the coat-tails of stackers.
I can't believe I haven't read it here, but obviously the thing to do is start a paper bitcoin market, and a bitcoin ETF, and then control the bitcoin prices through the derivatives market, while the general public buys the 'paper bitcoins' via the ETF, in the full assurance that if its just as good as having bitcoins but at a more reasonable cost. We leverage the shit out of real bitcoins, smash the paper bitcoin market on a regular basis and buying up the physical during the selloffs.
Fuck, who's with me on this - our window of opportunity on this is closing fast, as I'm sure the bullion banks have similar plans in the works.
ICBIT, MPEx. Good luck with that.
I am an idiot.
I bought a pretty small (by most estimates) group of bitcoins last week.
I sold them yesterday during the drop from $340 down to $289.
I bought several thousand dollars worth of gold and silver today with the profit.
As long as this thing yo-yo's up and down, I could not care less what its perceived worth is. Its REAL worth to me is a several thousand dollars worth of gold, and now I am playing with the "house's" money.
It could go back to $50, I dont care. It could go to a million...then I would have a million in gold.
Isnt that what this shit is all about?
You did no work. You invested in literally nothing and some future or present loser financed your PM purchase. That ain't right but good for you. My G-d damned lotto tickets never hoit a winner.
He did what Wall Street does every day with people's 401K's, I.R.A.'s, and Pension Funds.
This is why Bitcoin will eventually be crushed, it competes with the bigger Ponzi of the Stock Markets.
That, or it will be incorporated into the dark cube of the Financiers and used to rake money away from the naive.
> You did no work.
You've obviously never tried to get bitcoins.
He helped make a market. It's not heavy lifting, but he put his capital at risk, timed his transaction right, and made a profit.
Capital at risk get rewarded.
I just wish the equity markets still operated by the same rules.
I stand corrected. he did some work. he made a market.
Cool article.
MUST SEE VIDEO BELOW: "JIM CRAMER'S TERRIBLE/BAD STOCK PICKS"
https://www.youtube.com/watch?v=Lhwplunz7-I
I think it's time someone emailed / called Cramer to tell him bitcoin is the hottest, hotter than penny stock, investment, evarrrr.
I guess my post lastnight stating (be careful) didn't resonate enough caution.
Mine either, just a lot of indignant scorn.
These are not the droids you'r looking for.
Rofl
Consider what value should BTC be when it is incapable of being capital controlled, when it is secure and when it is without counterparty risk: priceless.
Owning a BTC is like owning a share in the BTC network and the only thing that could stop people from transacting in BTC would be the loss of the internet but then there would be much bigger issues to deal with in such an event than BTC.
and we are expecting those outcomes which means BTC is a non-solution.
For a mere 0007% monthly interest charge. Atomizer will hold your money. No strings attached. No playing with your money under fractional reserve banking practices. Same day deposit and withdrawal, no additional banking fees.
Contact Atomizer to park your money in a safety vault..
That's what I don't like about Gold, BTC, and Real Estate; why do the first in get a free ride? At least with fiat, if it was backed by past, present, or future work, it would be fair. Don't tax my labour, tax the land. Yes I'm a commie and I've read Marx.
The early adopters where in the right place at the right time with the right background to know what they were looking at. Then they took the next step and spent their time and energy to realize an idea that probably wouldn't fly but it did. That could have been you, but you where obviously off doing something else much more important, right? The early adopters didn't have a worldwide megaphone to announce their idea to everybody simultaneously but they weren't keeping it a secret either.
Haha, wow. They are following the boiler room pump 'n dump method to a T.
Tyler loves posting these bitcon pieces.
Stirs up lots of controversy and replies... and hopefully, ad clicks.
Moar, moar, MOAR!
I wrote about all of this multiple times in my blog Knowmadic Life. Assuming equalized demand, the existing supply of 11 million bitcoins and $11 trillion USD M2 money supply, the par value of one bitcoin is $1,000,000.
And, for you naysayers saying bitcoin is not sound money, it is:
http://knowmadiclife.com/blog/2013/4/3/is-bit-coin-sound-money
And for you futher naysayers out there who say bitcoin does not meet Mises' regression theorum of money, it does:
http://knowmadiclife.com/blog/2013/10/4/bitcoin-lives-to-die-another-day...
And for those of you who keep thinking bitcoin is a bubble. it is not. How can something be a bubble when 99.9999% of the global human population are not even aware it exists yet?
http://knowmadiclife.com/blog/2013/11/6/bitcoin-hits-new-record-high-bub...
A properly managed Medium of Exchange (MOE) puts BitCoin out of business instantly. A properly managed MOE is one where money (a promise to complete a trade) is in free supply everywhere always and inflation is zero everywhere always and where responsible traders enjoy zero interest everywhere always.
In all of history there is no evidence of a properly MOE having ever existed. This is because it puts the money changers out of business ... and that will not stand.
So BitCoins are probably pretty safe as long as the politicians can never bring it under their control (e.g. outlaw it).
Todd Marshall
Plantersville, TX
Agreed, and I have written many times bitcoin is more likely to be killed by the central planners than not. The problem is, how? How can they kill it? If they are going to kill it I cannot yet think of any way possible. Can you? Until then, more and more people will begin to see it as a SUPERIOR money over gold and silver beause it comes with all the qualities of sound money: scarcity, divisibility, durability, portability and value in the mind of the actor, without all of the headaches that come with gold and silver. ie Comex and LMBA leveraged market price manipulation. The wise investor seeking to diersify it's wealth outside of the central banking fiat empire wil diversify it's money holdings among all three.
"...more and more people will begin to see it as a SUPERIOR money over gold and silver beause it comes with all the qualities of sound money..."
I beg to differ. At Bitcoin's current nascent stage, it is vastly inferior to PMs for a variety of reasons, not least of which is that it has no history as a store of wealth. PMs, and gold in particular, not only have thousands of years of such history, but have intrinsic value that is deeply understood by the vast majority of the human population.
Countless generations of humans have held and passed gold down, whether some of it was exchanged for other things of value or not. It was, and continues to be understood that PMs are intrinsically valuable, and almost universally perceived to be so. Bitcoin is so far removed from evoking that sort of near-instinctive confidence that your assertion strikes me as being ludicrous.
I would also argue that only fools will ultimately perceive ones and zeros to be a more secure form of money than PMs. It's a mystery to me how anyone could consider "wealth" stored on the interenet, with no tangible backing, to be superior to physical stores of wealth that have been used as money for thousands of years.
Now, had you substituted the word "currency" for "money", I would have responded somewhat differently.
Too bad there isn't enough gold to use for money (only 1oz per person on Earth ... now less than $1,300). Too bad changing its relative value doesnt remove this problem since it will always take a little less than an ounce of gold to produce an ounce of gold. Too bad it can't maintain the perfect balance between supply and demand for the media itself. Too bad its varying intrinsic value influences trading decisions which incorporate it in exhcange. Too bad the production of it is a pure waste of time and energy (a properly managed MOE has zero cost of the media itself). Too bad the market for it can be cornered and those gaining that state of control thus have the entire economy by the short hairs. Too bad it's damn heavy when you have it in your pocket.
I am amazed that you were able to pack such a tremendous amount of nonsense into a single paragraph.
Money, currency, coin, ledger entries, gold, silver, large stone wheels ... all are the same thing in the marketplace ... items of barter. The marketplace determines their value as it does all items of barter.The key is how they come into existence in trade (by certifying a real trader's real trading promise) and how they are extracted from the marketplace (real traders delivering as promised in exchange for them and then returning the certificates which are extinguished).
A good example is purchasing a house. You make a promise to pay for it in 100 monthly payments. You are given certificates which the owner of the house accepts in exchange. He accepts them because he can freely use them as barter in trade. Each month you return 1/100th of the certificates you "borrowed" and the MOE manager extinguishes them. At the end of 100 months all the certificates have been extinguished. You have delivered on your trading promise.
If you fail to keep your trading promise, you DEFAULT. The MOE manager collects an amount of INTEREST equal to the DEFAULT from the next several traders requesting certification of their trading promise. This recovers the DEFAULTed certificates from the marketplace. This assures that INFLATION is zero at all times everywhere by the relation: INFLATION = DEFAULT - INTEREST. Really very very simple.
The devil as usual is in the details ... and they are dealt with actuarially. The concepts are pretty much identical to managing insurance of risk.
The integrity of the whole process is guaranteed simply by transparently demonstrating that the MOE manager has properly monitored all DEFAULTs and collected an equal amount of INTEREST.
As an aside, a rollover is a DEFAULT. And also notice, there is no need for a "state" in the process. There is no need for "capital" in the process. There is a huge need to protect the process against counterfeits which must also be extracted by INTEREST collections.
Todd Marshall
Plantersville, TX
In practical terms, BitCoins must be exchanged for some more conventional MOE to be of use. Some people can sell their services for BitCoins, but not many. Some people can purchase some things they need with BitCoins ... but not many. So, the points where BitCoins interface with conventional MOE is where they will be stopped.
Define sound money ... or maybe use mine: Sound money (i.e. a properly managed MOE) is "a promise to complete a trade". It is in free supply everywhere all the time. Supply and demand for it are in perfect balance all the time eveywhere. It enjoys zero inflation all the time everywhere. Interest collected from responsible traders is zero.
BitCoin has "none" of these attributes. Thus, it is far from being money, let alone sound money. The attributes for money which you enumerate are archaic.
Fuck Bitcoin. Shut down all networks.
BitCoin, like communism and capitalism, will fuck itself. Just give it a little time.
https://bitcoinpaperwallet.com/
Politicians should like BitCoin a lot because once adopted they will no longer be limited to taking bribes from Central Bankers in the form of insider trading and a forever increasing S&P 500 index. Instead the entire world would be able to offer them fees for service. A much more democratic way, true to their hearts, of doing business on behalf of their American constituents.
Also by the looks of things the S&P and the Central Bankers are about to be offering Washington D.C. politicians a lot less.
you do know they should all be shooted. I'd rather live in g-d damn Somalia then future America.
Let's not forget the poor fuckers who were lured in at $400. It reminds me of all that Gold chatter; we never get to hear about the poor bastards who get skinned alive when the price tumbles. Everybody has deep pockets; everybody wins.
Viva la revolución.
As long as they didn't sell, I'm of the opinion they'll be quite happy by this time next year. And the year after. And . . .