Texas Prophet:
It was nice to see the second video, in which Schiff had to bounce his ideas off someone who is also very intelligent and articulate about the speculation subject. Even though neither of them claim to be very technically sophisticated, their discussion highlights various mainstream fears. The public can only handle so much technicality, anyhow. BTW - it seems to me that Molyneux had many better and more sophisticated arguments as compared with Schiff – because in essence Molyneux was able to articulate the grey areas about this, and Schiff seemed to be advocating in a more black and white manner – like he wants to be right. Sure, Schiff is smart, but frequently these kinds of market speculations are NOT black and white. Schiff seems like a smart enough guy, and I wonder if he may be investing a little on the side in Bitcoin? He talks as if he is NOT, even though since he argues so intensively, he seems knowledgeable enough that he should invest at least a little.
Quote: (11-30-2013 07:37 AM)LÉtranger Wrote:
I repeat I love the idea of bitcoin in theory, but in practice its not working, and let me explain you why.
L’Etranger:
I am going to go through several of your points – NOT to argue with you, but to highlight areas in which it seems to me that you are being too NEGATIVE – in a sort of absolutist way, and really you probably could concede that NONE of us really know where this is going or the future of Bitcoin or other cryptocurrencies.
Case in point. You keep saying that Bitcoin is NOT working – and that language is just TOO strong for the situation. Surely, Bitcoin is a very young concept / investment – but to assert that it is NOT working – takes away from your claims. Maybe you really mean that you want to state that you have a lot of problems with it and that you want to predict its downfall, which is probably more accurate description of what you are saying. At this point, it is very difficult for anybody to claim either that Bitcoin is or is NOT working, and likely the more persuasive arguments is that Bitcoin IS working because a lot of people are getting rich – and it is funny that the fraud and corruption claims have NOT been more widely spread – especially given the amount of money and/or profits involved.
Quote: (11-30-2013 07:37 AM)LÉtranger Wrote:
First, lets look about the practical application.
-People are buying for the wrong reason = speculation. Just look at the title of the thread "bitcoin up 60% for the month". I am not buying gold to become rich, all I want, is to protect my capital. Agaisnt USD devaluation or the recent Euro crisis. If the current western economy goes worst and worst, I dont want loose all my capital because my US, Euro or Japanese Yen bank account is worth nothing.
People are buying for both speculation and hedging against these other currencies. I don’t think that this is an all or NOTHING investment because it is very doubtful that any of those other currencies are going to implode all together in a major catastrophe – until various alternatives are present to take their place… and the crypto currency world seems to be allowing for some channeling of that hedging.
Quote: (11-30-2013 07:37 AM)LÉtranger Wrote:
-Secondly, as I said, I want protect the money I made by my hardwork. But with the current bitcoin volatility, how can I sleep well knowing that everyday, my hard earned money fluctuate 10-20-30% ????
I think that this kind of volatility is more stressful when a guy is NOT sufficiently diversified in his investments. NO ONE should invest too much of his assets into volatile assets – unless he wants to go crazy or unless he is especially tolerate of extreme risk. Sometimes if a guy does NOT have anything then, he is more willing to put all into volatile assets. My personal strategy is to invest ONLY as much as I am willing to lose in volatile assets – and FEW of us probably can rest assured that we are completely secure or diversified…. And personally, the richer a guy is the more comfortable he can feel about the extent to which he is able to diversify his assets.
Quote: (11-30-2013 07:37 AM)LÉtranger Wrote:
-Thirdly, as Peter said, bitcoin is after all a currency, for people to buy and sell. Again with the high current volatility, you cannot even use it as currency! Let say I want to buy a classic car from somebody by using bitcoin, because it is indeed a safest transaction than just handing over cash or wiring money. Well because of volatility, there is something we call spread, its simply the difference between the price to buy bitcoin (ask) and the price to sell (bid). So if I want make a transaction today, I might have to buy bitcoin at 1300$ because thats what the seller ask. 5 minutes later, when I want send that money to the car seller, he might have to sell that same amount to 1200$, so we just lost almost 10% just by buying and selling!
Again, a guy is NOT going to want to deal exclusively in something that is volatile; however, as Bitcoin becomes more stable, it will be easier to deal with it. Certainly there are ways to agree upon how to lock in the price at a given time, and likely one of the parties will feel that he lost when the price is fluctuating so much. All asset classes are somewhat volatile, and certainly a large majority of assets are NOT as volatile as the current state of crypto currencies.
Quote: (11-30-2013 07:37 AM)LÉtranger Wrote:
Now you asked about the video I just posted, wich covers the most important factor in the difference between Gold and Bitcoin = intrinsic value. You see gold as value for itself for many different reasons. Because there is demand for jewelery. For electronic. For chemical reasons. And also because it has historical value, Gold was deemed as valuable for thousand years.
Now where is the bitcoin instrisic value? It is a completly digital invention, its not backed by anything. The only difference with the Dollar, is that there is not a Federal Reserve who can print it freely. So yes its better than the Dollar, but that pretty much ends here.
I think this is where the second video above (posted by Texas Prophet) of Schiff and Molyneux illustrates that Schiff is being a bit dogmatic about this intrinsic value question.
First of all Schiff is talking as if we live in a world in which currencies are backed by gold and silver and other tangibles, when in fact world currencies have NOT been backed by gold for about 40 years. Surely, when currencies are drawn into question, then there is some value in their being backed by something. Currently, various world currencies are ONLY backed by the full faith and credit of each of the governments that back their currencies – which also goes to the overall assets within the control of the government, and surely, the US military amongst other factors plays some backing role regarding the US currency.
Second, Molyneux articulated a few intrinsic value aspects of Bitcoin that is NOT possessed by gold or by other government backed currencies, such as open source, transparency, mobility, verification, escrow and a few others. In essences, there are shades of gray in the various intrinsic values of these various currencies (whether crypto or hard currencies), and while we are transitioning between these various asset classes, the extent to which they are valued is going to fluctuate.
Third, you say bitcoin is NOT backed by anything, which is too simplistic. Currently, bitcoin is backed by a bunch of geeks, an open source backbone of scarcity and nearly $14 billion in market cap value (and currently, the 26th largest currency in the world, which certainly is subject to change)
Quote: (11-30-2013 07:37 AM)LÉtranger Wrote:
EDIT: lets not forget about the recent bitcoin troubles :
-Hacking. I can mention dozens of cases where people or business lost all because of a digital security breach. Just google "bitcoin hacked". Or read about Bitcoinca. Or BIPS. Or Tradefortress. Or Bidextreme. Or Bitcash.cz. Or Instawallet. Or Mybitcoin.
-Panic drops: did everybody already forget about the crash that occured in April ? Bitcoin was at 260$, and dropped instantly to a below 80$ after some dude started giving away bitcoins on reddit.
These are all good to know and shed light on potential downsides to value, and so far NONE of these troubles have been so severe as to crash the value because this week Bitcoin is still rising (along with almost all of the other 30+ crypto currencies).
Quote: (11-30-2013 10:20 AM)Ensam Wrote:
The problem is that until you can pay your taxes in bitcoins you'll always have to convert a portion of your transactions in bitcoins to dollars to pay local taxes. Also any court judgements will be denominated in the local currency. As others have pointed out the volatility of bitcoins means that even if both parties are willing to conduct the exchange entirely in bitcoins at least one party is going to be taking a currency risk when they convert bitcoins to sovereign currency in order to pay taxes.
This transferring back and forth is a transitional issue. At this point, there seems to be NOT a lot of ways to spend Bitcoins, and they are NOT easy to get, either. I find this a very BIG pain in the ass and a big learning curve is fairly steep. These technical and transferring back and forth issues may or may NOT get resolved, but it is NOT necessarily a permanent problem – especially if more Bitcoin payment systems evolve. Govt entities could choose to accept payment by other means, eg. Bitcoin – even though that day is likely far into the future, if it were to take place. It used to be that Govt.s would only take checks, and then converted to online payments, including credit cards, in many cases. Someday, I may be able to pay my parking ticket in bitcoins or my parking meter..
![[Image: smile.gif]](https://rooshvforum.network/images/smilies/smile.gif)
Quote: (11-30-2013 12:26 PM)Fathom Wrote:
Quote: (11-29-2013 03:20 PM)JayJuanGee Wrote:
Fathom: I caution you NOT to let the cost of each coin affect which of the crypto-currencies that you decide to invest - b/c all of them seem to be considerably divisible.
Thanks for that mental correction, JJG, I hadn't thought of that. I think I'll put most of the money in Bitcoin and leave a small percentage to play around with.
I find a lot of this dealing with exchanges and various currencies to be frustrating as fuck to try to figure it out. I ONLY have so much time, and it is moving so fast and it is NOT easy to tread. There may be the ideal world and the practical world of just too difficult to figure it out. I barely have my toe in the door (which is a little over $2000), and I have a little more than 50% in Bitcoin and the other 45% or so spread evenly through 7 other crypto currencies). I am considering continuing $1,000 a week for the next 8 weeks - and possibly longer and hopefully some kind of similar distribution of the investment – but who knows.. At this point, I am just attempting to establish a diversified cryptocurrency portfolio and to learn more about cryptocurrencies along the way. Even at my projected rate, I should only have about $10,000 into crypto currencies by the end of January. I do have more dollars that I could invest, but I am planning to start out in a paced manner. Some people prefer to go all in, but currently, I do NOT have that much confidence in this whole situation, and I would be comfortable (though still a bit upset) with losing all of my investment, if it were to come to that.
Quote: (11-30-2013 12:54 PM)reaper23 Wrote:
in order to conduct real transactions you'll need a hedging intermediary to facilitate the transaction it seems. once you agree on a price you have certain time period to conduct the transaction and the hedger takes the vol risk for a fee.
i bought something this way however and it didnt work out for me
Yeah, this is bullshit, and hopefully these kinds of matters get worked out.
I do NOT like the inconvenience of having to plan to meet someone, but with localbitcoins, I found someone that I can meet, and so far, we have agreed to go with whatever is the current price at the time of our meeting. Even though I live in LA and there are a quite a few local buyers and sellers, there is still some inconvenience and scammers and logistical issues.
Quote: (11-30-2013 12:54 PM)reaper23 Wrote:
after i received the shipment i disputed it and my money was returned. except what was returned was equivalent USD of the purchase price not absolute BTC. at current levels that works out to a $1900 discrepancy.
I think that this can be even bigger bullshit, yet I think that is part of the explanation why people can get scammed, but legitimate buyers and sellers want to make the transaction fairly quick and irreversible. Hopefully, better systems are going to develop to deal with these problems;however, in the short term, there are probably going to be a lot of scammers because the money is getting really big.
Quote: (11-30-2013 01:26 PM)phoenix101 Wrote:
Quote: (11-30-2013 10:05 AM)friheten Wrote:
It's better than the dollar so that is enough for most people. It is built on the fact that it never will be more than 21 millions, so it will always have a value. Because its unique like gold. There is other coins out, but it's only copies with modifications.
USD is also "backed" by natural resources and (taxing powers over) a massive, productive workforce. BitCoin in it's current incarnation to me seems to be the tulip craze for our time.
![[Image: 280px-Tulip_price_index1.svg.png]](https://upload.wikimedia.org/wikipedia/commons/thumb/a/ac/Tulip_price_index1.svg/280px-Tulip_price_index1.svg.png)
Phoenix:
I like the graph that you provide, and I agree that you are correct that USD is backed in those various ways. However, Bitcoins and other crypto currencies are much more sophisticated than tulips.
