Author Topic: Bitcoin-too late to the party?  (Read 4671 times)

rkbabang

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Re: Bitcoin-too late to the party?
« Reply #10 on: December 15, 2017, 05:04:27 AM »
There's an interesting phenomenon in bitcoin where the bulls generally have an intricate understanding of the value proposition and underlying aspects of the technology (and breakthough) and bears have very limited understanding largely due to kneejerk reactions.

Maybe a very small % of the bulls actually understand the technology.
Most people are just jumping on the hype... recently had a friend (kind of a stoner, never invested in his life, does some football gambling) tell me he's concidering going into bitcoin as it seems like a guaranteed investment.  ;D

Based on the number of investors many of which just jumped in the last month and own very little you are correct, but weighted by the number of coins owned SnarkyPuppy is correct.


SnarkyPuppy

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Re: Bitcoin-too late to the party?
« Reply #11 on: December 15, 2017, 05:12:31 AM »
There's an interesting phenomenon in bitcoin where the bulls generally have an intricate understanding of the value proposition and underlying aspects of the technology (and breakthough) and bears have very limited understanding largely due to kneejerk reactions.

Maybe a very small % of the bulls actually understand the technology.
Most people are just jumping on the hype... recently had a friend (kind of a stoner, never invested in his life, does some football gambling) tell me he's concidering going into bitcoin as it seems like a guaranteed investment.  ;D

This is a very recent group of people who have joined post $10k+.   It's fine if you don't buy it, it's inherently speculation given there is no margin of safety.  I just wouldn't be as proud as some who think they're Ben Graham by yelling the word bubble without any actual analysis other than looking at a historical squiggly line.   
« Last Edit: December 15, 2017, 05:14:22 AM by SnarkyPuppy »

mattee2264

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Re: Bitcoin-too late to the party?
« Reply #12 on: December 15, 2017, 11:06:41 AM »

  Given the concentration of users as well as the lost coins what is a rough estimate of the number of free floating bitcoins? I would imagine that the institutionalization of bitcoin would make it a lot easier for large holders to unload their coins onto the market and this supply response would weaken the bull case of increased institutional demand driving the price up a lot higher.

 

 

SnarkyPuppy

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Re: Bitcoin-too late to the party?
« Reply #13 on: December 15, 2017, 01:06:47 PM »

  Given the concentration of users as well as the lost coins what is a rough estimate of the number of free floating bitcoins? I would imagine that the institutionalization of bitcoin would make it a lot easier for large holders to unload their coins onto the market and this supply response would weaken the bull case of increased institutional demand driving the price up a lot higher.

 

I disagree

JimBowerman

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Re: Bitcoin-too late to the party?
« Reply #14 on: December 15, 2017, 01:54:09 PM »
Well there is no way to value it, so basically you are trying to estimate demand, hence it is Keynes's beauty contest problem.

In that case you are not judging what contestant you think is beautiful rather, you are try to guess what contestant other judges will deem beautiful, then trying to assess what they assess others will find beautiful, and so on recursively. In hindsight everything is of course is obvious, but prospectively....

something like other forms of M1 or M2 money supply i'd argue would let us get an approximate value.  I think MV =PQ gets you close.  If you told me that the entire world was using bitcoin as a currency, i could get a pretty accurate fair value.  Next step is to guess what the final number is for "% of world using btc" and chances of that happening. 

it won't be exact but you'll get the right order or magnitude

wachtwoord

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Re: Bitcoin-too late to the party?
« Reply #15 on: December 15, 2017, 02:17:19 PM »
The problem with that is that it's much less a currency than it is a store of value comodity such as gold. I don't think your formula applies to such a situation or does it?

Replacing gold is the only true target. Perhaps one order of magnitude higher due to the benefits it has over gold. Then apply a probability of that happening and calculate your EV (there is a margin of safety in this calculation as we are disregarding all situations in which it only partially offsets gold). Think the probability is extremely low? Then this is probably a bad bet and vice versa.
« Last Edit: December 15, 2017, 02:19:35 PM by wachtwoord »
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SnarkyPuppy

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Re: Bitcoin-too late to the party?
« Reply #16 on: December 15, 2017, 05:29:17 PM »
The problem with that is that it's much less a currency than it is a store of value comodity such as gold. I don't think your formula applies to such a situation or does it?

Replacing gold is the only true target. Perhaps one order of magnitude higher due to the benefits it has over gold. Then apply a probability of that happening and calculate your EV (there is a margin of safety in this calculation as we are disregarding all situations in which it only partially offsets gold). Think the probability is extremely low? Then this is probably a bad bet and vice versa.

Ding ding ding

JimBowerman

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Re: Bitcoin-too late to the party?
« Reply #17 on: December 16, 2017, 08:43:24 AM »
The problem with that is that it's much less a currency than it is a store of value comodity such as gold. I don't think your formula applies to such a situation or does it?

Replacing gold is the only true target. Perhaps one order of magnitude higher due to the benefits it has over gold. Then apply a probability of that happening and calculate your EV (there is a margin of safety in this calculation as we are disregarding all situations in which it only partially offsets gold). Think the probability is extremely low? Then this is probably a bad bet and vice versa.

Donít disagree with you on the store of value calculation though Iíd be curious why you think bitcoin canít eventually become a currency?   Skabo and other have written about how medium of exchanges (bitcoin now or bitcoin when lightening is implemented) can gradually and eventually become a unit of account.  Unit of account is in my thinking a bit of a spectrum.

http://www.konradsgraf.com/blog1/2013/9/14/bitcoin-as-medium-of-exchange-now-and-unit-of-account-later.html

https://twitter.com/NickSzabo4/status/936361211280502784
« Last Edit: December 16, 2017, 10:30:38 AM by JimBowerman »

RichardGibbons

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Re: Bitcoin-too late to the party?
« Reply #18 on: December 16, 2017, 11:29:16 AM »
Donít disagree with you on the store of value calculation though Iíd be curious why you think bitcoin canít eventually become a currency?

Bitcoin can't even process 10 transactions per second.  (In contrast, Visa has processed 47,000 transactions per second.)  To actually do a transaction, it costs $6-20.

If the network can't handle people purchasing stuff with bitcoin, and people get charged huge amounts to actually make a purchase, it seems unlikely to ever be a currency.

JimBowerman

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Re: Bitcoin-too late to the party?
« Reply #19 on: December 16, 2017, 01:01:27 PM »
Donít disagree with you on the store of value calculation though Iíd be curious why you think bitcoin canít eventually become a currency?

Bitcoin can't even process 10 transactions per second.  (In contrast, Visa has processed 47,000 transactions per second.)  To actually do a transaction, it costs $6-20.

If the network can't handle people purchasing stuff with bitcoin, and people get charged huge amounts to actually make a purchase, it seems unlikely to ever be a currency.

Have to skate to where the puck is going on this one.  Lightening network and/or sharding, etc make 100k tx/s fairly easy.  We are a long way from bitcoin being needed to buy a cup of coffee.  But technically itís not a big problem