The economics of BitCoin

MobileSaver

RandomDaveKingOfTheLand wrote: »

If it were a 50% chance it goes 20x and a 50% chance it goes to zero it makes sense to invest.

Er, no it doesn't.

A 50/50 chance of winning big or losing everything is not investing, it's gambling plain and simple.

RandomDaveKingOfTheLand wrote: »

If a traditional bank shuts down and takes customer funds we dont blame the fiat currency associated, why is bitcoin different?

Bitcoin is different because there are few if any safeguards. If a traditional bank shuts down you could recover as much as £1,000,000 deposited with them and would get back up to £85,000 in as little as 7 days. Compare that with Mt Gox where, three years on, you and tens of thousands of others haven't recovered a penny!

RandomDaveKingOfTheLand wrote: »

Hmmm maybe but that seems too convenient

The simplest explanation is usually the right one.

Occam's razor

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chucknorris wrote: »

There is no way that there is a 50% chance of bitcoin going up 2,000%!

The chance of that happening is probably about the same as the chance of house prices dropping 50% by Christmas...

RandomDaveKingOfTheLand

GreatApe wrote: »

So stop with this nonsense about the new Internet. It isn't comparable and within five years it will be clear these coins are for gambling not much more. They will still retail a lot of value hundred of billions but it will just be for gambling

Ok so its a gambling chip but if it holds steady at a few hundred billion marketcap for many years doesn't it then become another legit store of value? then more money comes in because of a new use case? and off we go again up ?

RandomDaveKingOfTheLand

chucknorris wrote: »

There is no way that there is a 50% chance of bitcoin going up 2,000%!

No way? i'd feel more confident in your prediction if you said, i dont think so or its unlikely. I think its 50% 20x though personally, by 2021, 1 year after next halving. Anyhow its debatable i wont deny.

RandomDaveKingOfTheLand

MobileSaver wrote: »

Er, no it doesn't.

A 50/50 chance of winning big or losing everything is not investing, it's gambling plain and simple.

ok lets say its not investing. If it were even 20% chance of going 20x and 80% chance of going zero its a positive expected value bet so makes sense to "gamble" on that occasion if that were indeed the odds.

RandomDaveKingOfTheLand

MobileSaver wrote: »

Bitcoin is different because there are few if any safeguards. If a traditional bank shuts down you could recover as much as £1,000,000 deposited with them and would get back up to £85,000 in as little as 7 days. Compare that with Mt Gox where, three years on, you and tens of thousands of others haven't recovered a penny!

Yeah safeguards aren't free and mean having a gov to enforce them which you have to pay more tax for that service and trust the gov to do its job - ok for us in UK maybe since we have a pretty decent gov.

chucknorris

RandomDaveKingOfTheLand wrote: »

No way? i'd feel more confident in your prediction if you said, i dont think so or its unlikely. I think its 50% 20x though personally, by 2021, 1 year after next halving. Anyhow its debatable i wont deny.

How can the probability of it going up 2,000% be anywhere near 50%? have you heard of normal distribution:

https://en.wikipedia.org/wiki/Normal_distribution

There is no way that that is correct probability, think about what you are saying!

EDIT: It might well go up 2,000% by 2021 but the probability of that event would be far more remote than 50%, by guesstimate would be far less than 1%. If the odds were evens that it went up by 2,000%, the odds for it going up by 100% would be something in the order of 1/20 (over 95%)! Don't you think that is tad over optimistic?

economic

chucknorris wrote: »

How can the probability of it going up 2,000% be anywhere near 50%? have you heard of normal distribution:

https://en.wikipedia.org/wiki/Normal_distribution

There is no way that that is correct probability, think about what you are saying!

EDIT: It might well go up 2,000% by 2021 but the probability of that event would be far more remote than 50%, by guesstimate would be far less than 1%. If the odds were evens that it went up by 2,000%, the odds for it going up by 100% would be something in the order of 1/20 (over 95%)! Don't you think that is tad over optimistic?

The beauty about opinions is that they are cheap.

MobileSaver

RandomDaveKingOfTheLand wrote: »

If it were even 20% chance of going 20x and 80% chance of going zero its a positive expected value bet so makes sense to "gamble" on that occasion if that were indeed the odds.

It only makes sense if you are a high risk gambling addict and can afford to lose every penny you put into Bitcoin.

The important point is that no-one should kid themselves that they're investing in some sort of high-tech payment system... you are simply gambling that at a later date someone else ("a greater fool") will come along and pay you more than you paid...

RandomDaveKingOfTheLand

MobileSaver wrote: »

It only makes sense if you are a high risk gambling addict and can afford to lose every penny you put into Bitcoin.

The important point is that no-one should kid themselves that they're investing in some sort of high-tech payment system... you are simply gambling that at a later date someone else ("a greater fool") will come along and pay you more than you paid...

You could also just as easy say if everyone in the world kids themselves then we have more safety in numbers. Its just like 1 perspective vs another.