BITCOIN

Scottex99

Aegis said:

Scottex99 said:

We’re all adults here, you’d probably find the odd tongue in cheek comment about how rich we’re making it on the pro-crypto side but nobody is angling to get their bags pumped by a £100 buy from John on the MSE forum.

Price is just one aspect and probably the most boring one too.

A critical eye is fair enough, that’s one of the reasons I like the thread, calling it a ponzi isn’t IMO.

Everyone is free to make their own choices and figure out their own tolerance to risk, I guess I told you so’s will come either way 

I'm sure Bernie Madoff would have hated having his investment business called a Ponzi scheme too, and would undoubtedly have shouted to anyone listening that it most definitely wasn't one. It was.  Fact is, all cryptocurrencies are functionally identical to chain letters or pyramid schemes, in that price rises come approximately logarithmically from increasing the user base.  At best, they end up being equivalent to Multi-Level Marketing schemes, where there is some argument of utility, but it's very much ancillary to the recruitment of new distributors and converts. Eventually you get to a point where there are no more users coming in to drive the price up, and at that point people realise that the gravy train has come to an end and the price collapses.

You’re wrong, In my humble opinion.

But let’s agree to disagree and save ourselves the time and energy.

I think it’s absolutely crazy not to have some exposure to crypto at this present time, at whatever % of your overall portfolio.

Each to their own

Aegis

Scottex99 said:

Aegis said:

Scottex99 said:

We’re all adults here, you’d probably find the odd tongue in cheek comment about how rich we’re making it on the pro-crypto side but nobody is angling to get their bags pumped by a £100 buy from John on the MSE forum.

Price is just one aspect and probably the most boring one too.

A critical eye is fair enough, that’s one of the reasons I like the thread, calling it a ponzi isn’t IMO.

Everyone is free to make their own choices and figure out their own tolerance to risk, I guess I told you so’s will come either way 

I'm sure Bernie Madoff would have hated having his investment business called a Ponzi scheme too, and would undoubtedly have shouted to anyone listening that it most definitely wasn't one. It was.  Fact is, all cryptocurrencies are functionally identical to chain letters or pyramid schemes, in that price rises come approximately logarithmically from increasing the user base.  At best, they end up being equivalent to Multi-Level Marketing schemes, where there is some argument of utility, but it's very much ancillary to the recruitment of new distributors and converts. Eventually you get to a point where there are no more users coming in to drive the price up, and at that point people realise that the gravy train has come to an end and the price collapses.

You’re wrong, In my humble opinion.

But let’s agree to disagree and save ourselves the time and energy.

I think it’s absolutely crazy not to have some exposure to crypto at this present time, at whatever % of your overall portfolio.

Each to their own

You've said this many, many times, but I still haven't seen a reason to hold crypto from a fundamentals perspective. Largely because I don't believe any such fundamentals exist.  So to you I will continue being crazy.

User232002

MeteredOut said:

As usual with these threads across the internet, as soon as a statement challenged, the ad-hominem attacks appear. 

As usual with these threads across the internet, as soon as [actual quantitative data is presented], the users [conveniently find a reason to disengage from the discussion]. 

MeteredOut said:

the ad-hominem attacks 

You made a really rather obvious error between A|B and B|A. This is Statistics 101. Thats not hyperbole; Bayes Theorem is literally taught in Stats 101 and this will be one of the first things that will be discussed. Its the type of error that nobody who has actually studied Statistics at a reasonable level would make, and so it immediately identifies you as being someone that lacks technical knowledge here.

As it said, its not a case of 'its not quite right, but its near enough.' Its flat out wrong. And its very relevant to casual observers of this thread that the people dismissing Bitcoin are not actually technically capable. 

MeteredOut said:

And, in the noise, the underlying question "What percentage of people who have ever owned bitcoin are in profit, or have sold with a profit?" remains unanswered.

Do you really believe it to be 50%? Or even worse, under 50%? Its a rather trivial thought experiment to show that its > 50%.

Person A buys Bitcoin at $10k
Person B buys Bitcoin from A at $70k
Person C buys Bitcoin from B at $44k (current price).

Then, A is in profit, B is at a loss and C is break even whilst looking for a greater fool to bag dump on. This is the ponzinomics that many on this thread would have us believe exist in Bitcoin. However, if we roll this clock back in time, we begin to see the problem with this. If we divided all the prices by 10, but current price is still $44k then both A and C are in profit, whilst B locked in a loss. Thus the percentage of wallets in profit is now 67%. 

This occurs simply as a result of price moving upwards. If the price of Bitcoin has gone up, it doesn't make any sense to say that the mean average returns of someone buying Bitcoin is 0. It has to be greater than zero. And if the mean average return of an underlying asset is > 0, then the number of people in profit from that asset will be > 50%. Further, the longer the asset exists and continues to go up in price, the closer to 100% that number becomes. TL;DR This shouldn't be rocket science - its exactly what happens in the stock market and we see it every time in Bitcoin bull runs that the number of wallets in profit goes up. For the avoidance of doubt, this even includes those wallets that have locked in their loss long ago never to touch Bitcoin again. Because the number of wallets that have done this is fixed and as price appreciates it can only convert currently underwater wallets in to profitable wallets and therefore the percentage must trend upwards. In our example, if Bitcoin goes to $50k and C sells at a profit to D and then Bitcoin goes to $60k, we now have 75% of wallets in profit. Mathematically, if price is going up, the number of people in profit is an increasing function.

You might want to argue that the long term return of Bitcoin is 0, even if the current observable mean return is > 0. Its a frequent belief of many here that Bitcoin will eventually crash, go to zero or whatever else and at that point people will realise that it was a zero sum game. The problem with this argument is threefold;

(1) If you assume a mean return of zero for Bitcoin at inception, it gets pretty impossible to argue for any standard deviation value that would get us to the price levels that we have observed in a random walk. Or, if you put in a reasonable value for the standard deviation, the outcome we are witnessing is something almost impossible. Occams razor leads us to conclude then that the mean can't be zero.

(2) When you model ponzi's (yes, this is done), one of the variables that makes a crucial difference is the interest rate paid out to the participants. Pay 5% and your ponzi will last longer than one that pays 15%. Well, Bitcoin has been paying out a CAGR of 100% for 13 years. That should not be mathematically possible, which again must lead to the conclusion that the premise (its a ponzi) is flawed.

(3) Ponzi's implode quickly. They do not go through cycles and reinflate over and over again. There is no model for a reinflating ponzi in a closed monetary system because untapped capital decreases geometrically. Now, you might, might be able to argue that the first say two Bitcoin cycles were small and thus the awareness of the third cycle constituted an increased in untapped capital for the ponzi. But really, in 2017 Bitcoin was mainstream news and in 2021 the worlds richest man was on prime time TV shilling a dog token. I think the argument is dead on this ground alone, but if we hit another new ATH you have to start to question your premise. 


I'm also ignoring, in this post, the rather obvious argument that its not a ponzi because it provides value, as has already been pointed out several times in the last few pages. My point here is that its simply mathematically very difficult to fit a model that explains Bitcoin price that fits in with the beliefs many people have here. When your model doesnt fit the facts, its time to change the model, not the facts.

Cus

'Person A buys Bitcoin at $10k
Person B buys Bitcoin from A at $70k'

So person A now has more rubbish $, but A used to own a bitcoin but now doesn't have it anymore. And it would cost him $70k if he wanted it back. So is he really up?

User232002

Absolutely not in my opinion. But sometimes you need a measuring stick, even if its flawed.

There is a number in my head where I sell some Bitcoin. You can attack the currency in other, more traditional, ways where you can still be wrong and make money.

zagfles

Cus said:

'Person A buys Bitcoin at $10k
Person B buys Bitcoin from A at $70k'

So person A now has more rubbish $, but A used to own a bitcoin but now doesn't have it anymore. And it would cost him $70k if he wanted it back. So is he really up?

Depends. If A is a true believer that bitcoin is the future then what's he doing converting it back to worthless $? If he was a true believer he'd want the price of bitcoin to fall so he can fill his boots with more bitcoin for his rubbish fiat. So he's a loser for selling out. B is the winner as he's the one owning the future.

But if A never really believed in bitcoin and just wanted to make a quick profit in boring old fiat, he's well up. Well done to him. He might have spent every day on the interweb desperately trying to convince gullible fools like B that bitcoin is the future, how it'll make them big profits, how it'll give them financial freedom, using carefully selected statistics in the same way politicians do, in order to ramp up the price so he could sell his bitcoin for more. So a stunning success for A, bad luck to B. Unless of course B manages the same and sells to C for $500k. It could go on for ever, right?

thegentleway

User232002 said:

MeteredOut said:

the ad-hominem attacks 

You made a really rather obvious error between A|B and B|A. This is Statistics 101. Thats not hyperbole; Bayes Theorem is literally taught in Stats 101 and this will be one of the first things that will be discussed. Its the type of error that nobody who has actually studied Statistics at a reasonable level would make, and so it immediately identifies you as being someone that lacks technical knowledge here.

As it said, it’s not a case of 'it’s not quite right, but it’s near enough.' It’s flat out wrong. And it’s very relevant to casual observers of this thread that the people dismissing Bitcoin are not actually technically capable. 

I love stats. Would you be so kind as to explain to me how you can do a Bayesian inference without any conditional probabilities? Because I’ve never seen that before! I thought that from Bayes’ theorem you needed p(A), p(B) *and* p(B|A) to calculate p(A|B).

For the casual observer: From those two statements you can’t infer the % of addresses in profit. You may dispute @MeteredOut’s assumption but given his assumption the % is correct.

User232002

thegentleway said:

I love stats. Would you be so kind as to explain to me how you can do a Bayesian inference without any conditional probabilities? Because I’ve never seen that before! I thought that from Bayes’ theorem you needed p(A), p(B) *and* p(B|A) to calculate p(A|B).

So, you completely missed the point I was making but instead of stopping to think that it might be you who is indeed incorrect, you thought I needed to know the variables involved in Bayes? The arrogance on this forum really is insufferable.

thegentleway said:

For the casual observer: From those two statements you can’t infer the % of addresses in profit. You may dispute @MeteredOut’s assumption but given his assumption the % is correct.

I would dispute his assumptions, but even if I allowed them to be correct his conclusion is absolutely bogus. And you stating this shows that you don't understand it either. 

Here were the original assumptions and conclusion;

MeteredOut said:

So, if 90% of bitcoins are in profit, and 1% of addresses hold 90% of bitcoins, it doesn't take too much stretching of the imagine to think that approaching 99% of people who own bitcoins are not in profit. 

So let me make this rather obvious;

Suppose we have 100 Bitcoins and 100 people with 1 wallet each. The probability of any individual Bitcoin, or fraction of a Bitcoin, being in profit is 0.9

1 Wallet holds 90 Bitcoins
99 wallets hold 0.1 Bitcoin each

The question is; What is the expected number of wallets that are in profit?

If you think the answer here is 1%, you are completely incorrect. Its also not 'nearly 1%.'  I'm not going to calculate it, but my gut feel says the expected value is probably around 80%.

The hint is that there is no fundamental difference between the permutation where the 1 big wallet has all the profitable Bitcoins, and the permutation of of all 99 wallets being in profit and about 80 of the Bitcoins in the big wallet being in profit. As well as all the other permutations in between. 

One aside is that it is possible for 90% of Bitcoins to be in profit, but 100% of wallets to be in profit too.

MeteredOut said:

(I know the maths doesn't strictly give us that, eg we can't assume the 1% holding 90% is hold the same 90% that is in profit, and a single person can own multiple addresses)

There's at least an awareness that this isn't strictly correct. But, the problem is that the effect is massively understated. This is exactly the same error as you get shown in Bayes 101 when they give you a sensitivity/specificity problem. Its always about a false positive drug test and doctors always make the exact same mistake illustrated above when given the same problem by stating that a 1% false positive means that if someone tests positive then there is a 99% chance they have the disease. In other words, the difference between A|B and B|A - which is why this gets taught in Bayes. So yes, its a common fallacy and doctors are smart people - but doctors aren't in online forums trying to convince people that their calculated statistics are correct either.

User232002

User232002 said:

As usual with these threads across the internet, as soon as [actual quantitative data is presented], the users [conveniently find a reason to disengage from the discussion]. 

As I mentioned earlier, its depressing that the wallet distribution / Gini correlation data that I addressed earlier has been ignored, just as it was when it was first posted in this thread. As has the mathematical discussion as to why Bitcoin can't be a ponzi because the accepted mathematical models for ponzis do not fit its history.

Instead we get some asinine replies; Can't disprove a statistic? Just say that politicians make stats up all the time, so this one must be made up too. An especially ironic statement given the talk of A|B & B|A on this very page. Like, what kind of argument is this? From someone who has 20k posts on an internet forum. Less quantity, more quality please. Or how about we just throw the claim out there again that people in this thread are desperately trying to get people to buy a few hundred quid of Bitcoin? It trades tens of billions every day, but yes that few hundred quid is vital to support the price.

This is always the way in this thread. And now the actual data posted and the actual arguments presented will be buried and forgotten about, only for another poster to repeat the same nonsense in 10 pages time. 

Honestly, I'm a bit bored. I think I will, very conservatively, 5x my portfolio over the next 18 months. Continuing to post here will cost me money as it just takes too much time, as it did in 2021. Goodbye.


1. 9b7b7b170fa725e2b0c36c750f9cb055a8d81e0b4f3bae84f53c60c60209263a

2. 6034a8267b1308f8fe9bd862d614a839ecdd38285307a1eeeb0c3b21826dd7e9

3. d9ff2bae721942f76bd6171bc0041e3d039d2cb28fd2f1402148fee7ce5fbf9f

4. c4bd35b30452073c988ebc6acf6f4f9d62fa3fe78a33dfa2daf63d6b5016bd10

mooneysaver

thegentleway said:

User232002 said:

MeteredOut said:

the ad-hominem attacks 

You made a really rather obvious error between A|B and B|A. This is Statistics 101. Thats not hyperbole; Bayes Theorem is literally taught in Stats 101 and this will be one of the first things that will be discussed. Its the type of error that nobody who has actually studied Statistics at a reasonable level would make, and so it immediately identifies you as being someone that lacks technical knowledge here.

As it said, it’s not a case of 'it’s not quite right, but it’s near enough.' It’s flat out wrong. And it’s very relevant to casual observers of this thread that the people dismissing Bitcoin are not actually technically capable. 

 I thought that from Bayes’ theorem you needed p(A), p(B) *and* p(B|A) to calculate p(A|B).

This is a very common error, it's more commonly referred to as the 'No true Scotsman' fallacy (https://en.m.wikipedia.org/wiki/No_true_Scotsman).