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How to know when bitcoin has bust and what replaces is
it had value in the past, that was to 'park' wealth outside the system
but big brother started to understand that and is closing the doors
- china : ban
- russia : regulate
- USA : analyse the ledgers and anonymous was not so anonymous
so the big 'value', from the start has be largely eroded
and for what is left, i couldn't agree more with @Pedro40
The issue of manipulation is a great reason why a pure programmed price stream would be so useful.
Here is a measure that would be useful:
Measure the actual dollars that have flowed into and out of Bitcoin since inception. For example, the price doesn't tell us the dollars that have flowed into Bitcoin.
For example, imagine a hypothetical market where the price is $200 and imagine that there are 10 coins/shares in this market. And imagine that 5 were bought at $100, 3 were bought at $150, and 2 were about $200 then we can see that $200*10 or the market value is not the amount of money that came in. The money that came in was actually only about half that.
Note: Agree it makes little sense to me how/why Bitcoin managed to obtain value. Disclaimer have est. a micro position for speculation purposes.
The main cost component of mining is energy, second is tech. That's exactly why some of the largest BTC mining
complexes are spread across Asian regions where energy is dirt-cheap and many GPUs are snapped up in bulk at
factories before trading markups, transportation, taxes etc. add up.
There is another way to value Bitcoin. Let's just assume that there are 4 participants but only 3 that really matter:
1. Miners
2. Holders
3. New holders
4. Traders
Now let us assume the following:
1. Miners always sell Bitcoin to pay their mining cost.
2. Holders always hold Bitcoin (or if they sell they will always buy back in).
3. New holders always buy and hold Bitcoin.
4. Traders only either increase or decrease volatility but have no effect on the long term price. We also assume users are similar to traders because transfer into bitcoin to make a purchase and then the retailers transfers right back out.
Next let us assume Bitcoin is fairly priced at current level. The growth rate of Bitcoin is a function of the money supply of the new holders able to flow into Bitcoin. Bitcoin increases in value when their are more holders buying then miners selling.
It is reported 1800 Bitcoin are created per day by miners. At current levels, you need appx 6.5 million to flow into Bitcoin per day to maintain current levels. Assuming the average holder buys between $500 and $1000 per day, you need from 6,000 to 13,000 new holders per day.
Next let us assume that Bitcoin is owned by 1% or 2.5 million US citizens. And let us say that Bitcoin is growing at 20% per year, you get 500,000 users per year yields 1400 new users per day.
We can also just ask if all miners sell their bitcoin at market, what the total new money needs to come into system to maintain levels: 1800 bitcoin mined per day * 3600 *365 = 2.3 billion dollars.
What's wrong with this analysis? The biggest question is regarding the last part. 6-7 million dollars flowing into Bitcoin seems like too much. Another buyer might be hedge funds and other institutions. Assuming they'd like to own just 1%-2% of Bitcoin then the math might change dramatically.
Update:
There are some rumors that China's ban might extend to the network. The accepted outlook is negative. However, if we assume miners are the primary sellers then blocking miners could lead to a sharp price increase. Not so sure of this logic.
1) As long as there is not a real time volume with the price it is the same as for trading Forex.
The missing part in Bitcoin et al. is a large handicap for a trader. Apart of the large volatility implied.
2) Growing number of banks creating own coins right now are a danger to trade only one coin comp.
Of course the banks see their transactions fading - so they are forced to invest into new possibilities.
Have you heard of FileCoin? It's not your 'ComputeCoin' but its the closest I can think of, based on distributed storage instead of compute cycles. It recently had its ICO which was closed to only mukkety-muk Silicon Valley venture capital firms. They raised several hundred million in hours. They are also attempting to make it as legit as possible by proposing ICO transparency guidelines and following them.
In general, part of what makes cryptos so interesting is that they represent a direct challenge to the authority of the nation-state. Almost reflexively, governments will attempt to assert control over the space. Even worse, they might appropriate and morph the technology into some kind of financial surveillance mechanism whereby every transaction made is immediately known to them.
Another possibility is the weaponization of cryptos. Russia, China, et al might realize that the best way to supplant the US dollar as a world reserve currency is to promote internationalized digital currencies.
As for the inherent value of the cryptos, in some sense, they are an appropriate response to a world of central banks furiously creating money out of thin air. The question is which has more value, less maniputable cryptocurrency or fiat currency backed by nothing.
Money is confidence. How confident are you in fiat money these days? Yes, there's gold, but can that not be manipulated as well? Governments control most of the supply, anyway.
R.I.P. Roy Goldberg (srgtroy), 1965-2023.
Please visit [url="https://nexusfi.com/off-topic/60226-srgtroy-r-i-p-brotha.html[/url] for more information.
I think with the ICO's it is less about fiat and more about whether or not they've created a more efficient way of raising investor capital. In that way, it more closely resembles the stock market of the 1920's and in fact there are other similarities in politics and other areas (perhaps a 100 year cycle). Yes, after I wrote that I did a 10 minutes of search and found FileCoin but also there is another distributed super computer project which is even more similar.
But, a reason the banks have reason to be worried is that the ICO is more democratic, more accessible, potentially more efficient. The old mentality was about who you know. The new mentality is about breaking down barriers. A quick 30 second assessment will show you who will be more likely to survive: businesses that talk about getting in via working in the back office, businesses that talk about the importance of networks represent the old mentality. They are on the way out. A good example is the prop trading-- OneUp is shifting toward the new mentality but it can shift in that direction even more so. The networks can shift to programmed contracts.
For example, let's say as a business you want to start and use some copyrighted software. Depending on the business model, the software might represent a significant investment. In the future, you just sign some keys or "programmed contracts" and you have access to the software. If your business does well then your income can be automatically debited from your future income tokens.
GDAX shows volume and price. But, it is a single network. I do agree, however, there is significant risk of gaming. Coinbase charges high fees, as well. Well, that's why I like the pure programmed price stream. It also does away with having to pay the exchanges for real market data.
