BITCOIN

Aegis

Malthusian said:

Ah, this old chestnut again. Bitcoin isn't zero sum and just because you keep repeating it doesn't make it so. The code, the network, the asset all provide real economic value. Good money is something that makes everyone better off.

Feel free to tell everyone where the money comes from when Punter A sells BTC that does not come from Punter B buying their BTC.

Paying a slice of that transaction to Punter C and calling it a "transaction fee" doesn't turn it into external revenue.

Seriously, how can anyone know anything about investments and not conclude that bitcoin must be zero sum?  Possibly even negative sum because of unknown numbers of tokens going into permanent inactivity entirely unofficially (if it were official, I'd argue that this would keep the system as a whole zero-sum, but as it stands it's a little like a house edge, but with "the house" being an unknown).

User232002

Malthusian said:

The FTSE was 21800 in late February, which seems a reasonable place to take a 'pre-march' number from.

Which would be fine and dandy if you'd taken pre-March numbers for all three assets.

I've literally just posted a picture showing that BTC was $8500 / £6800 on Feb 29 / Mar 1st. Is Feb 29th pre-March? 

You've also ignored the point made above as usual when you're wrong. You stated;

Malthusian said:

It was only entertaining in this specific case because you overreached and quoted a price for the FTSE 250 that quite clearly dated from the pre-crash period in February 2020, while the Bitcoin price was picked from the post-crash period in March 2020, which anyone can trivially verify.

Again, would you like to point out where Bitcoin was trading at $8500 in the 'post-crash period in March 2020.' I even posted the price data for you above. Of course you can't, because it didn't happen. But you've stated you did some research in to this and 'anyone can trivially verify' this. Which shows how competent you are.

Malthusian said:

When the FTSE 250 was 21,800, i.e. late February, Bitcoin was around £9,600, not £6,800. Anyway, bored now. Anyone can check the numbers for themselves.

In March 2020, the GBP / USD exchange rate was 1.28 which means £9600 was equal to $12300. Below is the price history data for Bitcoin from February 2020 - y'know so that we can all check the numbers for ourselves...

Can you please point out where exactly in late February Bitcoin was trading at or around $12300 during this time per your prior post. 

Of course, you can't. Which again speaks volumes about the veracity of the material you post.

Malthusian said:

Paying a slice of that transaction to Punter C and calling it a "transaction fee" doesn't turn it into external revenue.

Congrats. You've just determined that Western Union, Paypal et al have essentially no real revenue. I wonder if their shareholders are concerned. Probably not.

Not to mention that some of the protocols in that graph don't generate revenue from transaction fees either. 

Malthusian said:

So the answer to your question is "El Salvador and the seller who took a haircut". The more you know!

Incorrect. El Salvador pay precisely zero extra compared to what they originally agreed to pay the initial holder. El Salvadors liability is unchanged throughout the sale of the bond from the purchaser to you.

Your yield comes from the holder sacrificing some value in return for liquidity. The extra value over and above their normal bonds you are talking about is coming from the people that initially bought the bond, not El Salvador itself.

User232002

Aegis said:

Seriously, how can anyone know anything about investments and not conclude that bitcoin must be zero sum?  Possibly even negative sum because of unknown numbers of tokens going into permanent inactivity entirely unofficially (if it were official, I'd argue that this would keep the system as a whole zero-sum, but as it stands it's a little like a house edge, but with "the house" being an unknown).

Yawn. October 7th 2021. Oh, look - its the same person making the same points...

darren232002 said:

Malthusian said:

The argument is essentially equivalent to saying that a game of roulette must be a positive sum game, because the casino always makes a profit.

When you point out the profit comes from punters' money, and punters' money in still == punters' money out, the response is "but it's not because we call it something different".

There are plenty of ponzi's in crypto, but there are plenty of value creating protocols all over the place as well. AAVE takes in capital from A and loans it out to B. It charges B 6% interest and gives A 4% interest. It does all this without the need for a city centre HO and an army of employees but simply by using open source code. This is the business model of, like, every bank in existence. I think we can agree that making capital available to other people in society is a value creating process, and not a zero sum game. I think we can all agree that being able to deliver a product that the market clearly needs whilst drastically reducing the costs (HO/Employees) creates value via reduced costs, and is not therefore a zero sum game.

You're the type of person that thinks international trade is zero sum. It isn't. A rising tide lifts all boats.

As to the last point, the Bitcoin network can have properties that make it more or less efficient than current means of transferring value and that can provide an economic benefit to participants.

And of course, the utility of it can provide value in and of itself.

lozzy1965

Hey guys, the above series of posts really smacks of lies, damned lies and statistics!  Am I the only one who thinks this?

Thrugelmir

lozzy1965 said:

Hey guys, the above series of posts really smacks of lies, damned lies and statistics!  Am I the only one who thinks this?

Sounds like a desperate King Canute trying to stop the waves coming up the beach. While many people cut their losses and sell out having got their fingers seriously burnt. 

User232002

lozzy1965 said:

Hey guys, the above series of posts really smacks of lies, damned lies and statistics!  Am I the only one who thinks this?

Fair point. I'll summarise;

Equities crashing back to the levels they were at 2 years ago. Bitcoin still up 3x.

Thrugelmir said:

Sounds like a desperate King Canute trying to stop the waves coming up the beach. While many people cut their losses and sell out having got their fingers seriously burnt. 

My god. How many times does it need to be pointed out that posts in this forum don't affect an asset that trades tens of billions daily.

Michael121

BTC is not up 3x it depends what you bought in at. Some of you jumped on at 20k after seeing it going parabolic and was saying were see you at 100k. Others said they was in since 2018 if i remember correctly so more than likely have a cost average above 10k.

Compare the market to BTC from buying in 2018 and the risk reward don't look so great anymore. Of course a nice lump sum at the bottom of 2020 has seen a very nice return, but you could have done that in individual stocks as well. 

Its like you lot like to quote how BTC was more than a 100% annualized return, at the end of the day none of you were in it to capture those returns until long after everyone's nan heard about it.

Frequentlyhere

Just to add a voice to the chorus, calling Bitcoin zero sum is doing it a favour. Even if we ignore the impact of the miners and permanently lost tokens, it's clearly not going to add a net benefit to market participants.

There's no money coming in aside from greater fools. There's no yield. If you need some sort of external validation of this though, the FT have comprehensively debunked the notion:

https://www.ft.com/content/26283f09-c3df-4c7e-814c-65083b063d8a
https://www.ft.com/content/83a14261-598d-4601-87fc-5dde528b33d0

The 'argument' against of "The code, the network, the asset all provide real economic value. Good money is something that makes everyone better off" just doesn't make any sense. It's not debunkable because it's not even addressing the point, it just calls it 'good'.

I don't know why this is a contentious point, Well, I suppose it isn't for anyone who's looking at this rationally. It doesn't itself make bitcoin a bad thing as all FX trading is zero sum. I can only make money trading GBPUSD if someone else is losing, and the real winners, as with crypto, are the ones facilitating the trading.

Adyinvestment

Frequentlyhere said:

There's no money coming in aside from greater fools. There's no yield.

I get 6% yield on my Bitcoin - I could get more but I prefer the safer options

Malthusian

mooneysaver said:

Wish I had some more fiat to take advantage of Terra giving away free money!

For those who don't know UST is a algorithmic stablecoin pegged to the USD, which has dropped in value due to a glitch. Currently you can buy it at 90cents, although it has been under 70cents. Even though its guaranteed to be redeemable for a dollar.

This is the crypto equivalent of buying a £10 note for £5.

So how's that free money working out?

"Stablecoin" brodollar TerraUSD dumps to 20 cents (although it's recovered to 68 cents at time of writing, not that that helps those who sold their "free money" at 20 cents)

In addition to popcorn, the Terra collapse provides a valuable lesson in economics.

While some stable tokens, like Tether and USD Coin, are meant to be backed by assets to maintain their peg, Terra relies on financial engineering.

The Terra protocol allows traders to take advantage of an arbitrage opportunity when TerraUSD weakens below the value of a dollar. They can “burn” one TerraUSD for $1 worth of Luna, making a profit and taking a TerraUSD out of circulation when the token’s price slips below the dollar, or do the reverse when the TerraUSD strengthens.

To those who were distracted during their A-level Economics lessons by the girl with the close-fitting white shirt, this appears to make sense. Price is a function of supply and demand. Supply down = price up. Therefore, if you can create a mechanism that rewards people for reducing the supply (burning tokens) until the price reaches the desired level, the price is guaranteed to go up. What could go wrong?

If you answered "that price is a function of supply and demand", have an 8-bit picture of a cookie. Unlike sheeple paper dollars, which are backed by the fact that they can be used to pay a US tax bill and the US courts treat them as valid payment of a US debt, Terra brodollars are backed purely by the hope that some unspecified person will pay you 100 real cents for them later, who in turn is hoping the same thing. Greater Fool Theory doesn't just apply to trying to hodl Bitcoin to $400,000. It still applies if you are trying to sell a "stablecoin" you bought at 99 cents for 100 cents.

Somewhere up the line, someone handed over 100 cents or close enough for tokens that were generated for near-free by pushing a button. (Certainly for less than $1 worth of electricity or Luna wouldn't exist.) That money taken off the table has to be balanced by money put on the table. Where does it come from? Well, until this week, TerraUSD hodlers would have said "nowhere because new people are always being born". Reality has just shown that it comes from people dumping TerraUSD that they bought at ~$1 for whatever they can get after the bottom falls out. 

The future of money!

"But we have also," continued the management consultant, "run into a small inflation problem on account of the high level of leaf availability, which means that, I gather, the current going rate has something like three deciduous forests buying on ship's peanut."
"So in order to obviate this problem," he continued, "and effectively revalue the leaf, we are about to embark on a massive defoliation campaign, and...er, burn down all the forests. I think you'll all agree that's a sensible move under the circumstances.”