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Cryptocurrency and Economic Importance


Guest Cameron
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Guest Cameron

Figured I'd throw this out there, but at what overall market cap do you think Cryptocurrencies have to hit before wealth loss as a result of a significant drop in price has an effect of the overall economy like a mild recession to something worse. Tech bubble wiped out something like $6.5 trillion in wealth as did the housing crisis. Overall Crypto market is currently $300B and bitcoin is around half of that. For bitcoin to hit $3T it's price would only need to 143,000 (assuming there is 21 million bitcoin in circulation?) which doesn't seem impossible with how euphoric people seem over these magic beans coins. That would also assume alt-coins reach a market cap of $3T.

 

Just a fun thought experiment.

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There are currently something like 16.7 million bitcoin in circulation, and a decent percentage of those bitcoins have been lost permanently (estimated to be roughly 25% or something like that). So the effective market cap of bitcoin is lower than you would think, and prices need to go up even higher before you can have a huge loss of wealth.

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I'm a Bitcoin noob. How can you tell if/how many of these transactions we see on Bitcoin exchanges are "real", as in arm's-length transactions?

 

I'm pretty sure there is a ton of fraud in the ICO space from the few things I've seen there and this makes me question cryptocurrency pricing as well.

 

There are a lot of exchanges trading BTC for USD, as well as foreign currencies, as well as other cryptocurrencies.  I'm not saying fraud can't take place, but it would take hundreds of millions if not billions of dollars spread across multiple currencies (both fiat and crypto) in dozens of exchanges to fix the price of BTC right now.  I think what you are seeing isn't fraud, but simply increased demand.

 

https://coinmarketcap.com/exchanges/volume/24-hour/all/

 

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There are currently something like 16.7 million bitcoin in circulation, and a decent percentage of those bitcoins have been lost permanently (estimated to be roughly 25% or something like that). So the effective market cap of bitcoin is lower than you would think, and prices need to go up even higher before you can have a huge loss of wealth.

 

Even the high estimate is under 25%.

 

http://fortune.com/2017/11/25/lost-bitcoins/

 

"3.79 million bitcoins are already gone for good based on a high estimate—and 2.78 million based on a low one. Those numbers imply 17% to 23% of existing bitcoins"

 

AND:

 

"both estimates make a critical assumption that coins belonging to bitcoin’s inventor, Satoshi, are gone for good"

 

Take Satoshi's coins out of the estimates and you get 2.75M to 1.73M lost coins or 10% to 16%

 

And these estimates are considering a large amount of coins which haven't moved in a while to be lost (30-50%), no one really knows which are lost and which are simply being held.

 

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Guest Cameron

more to the point of what I was getting at, what scares me is the "no rules" atmosphere.

 

Is bitcoin trading regulated the same way stocks are? What stops one of these platforms offering 10 to 1 leverage to trade with. One example BitMex they are offering Bitcoin derivatives with 100x leverage. Plus500 allows 1:20 margin accounts. 

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more to the point of what I was getting at, what scares me is the "no rules" atmosphere.

 

Is bitcoin trading regulated the same what stocks are? What stops one of these platforms offering 10 to 1 leverage to trade with. One example BitMex they are offering Bitcoin derivatives with 100x leverage. Plus500 allows 1:20 margin accounts. 

 

Don't make trades that scare you.

 

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Guest Cameron

more to the point of what I was getting at, what scares me is the "no rules" atmosphere.

 

Is bitcoin trading regulated the same what stocks are? What stops one of these platforms offering 10 to 1 leverage to trade with. One example BitMex they are offering Bitcoin derivatives with 100x leverage. Plus500 allows 1:20 margin accounts. 

 

Don't make trades that scare you.

 

I'm not talking about me making trades.

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more to the point of what I was getting at, what scares me is the "no rules" atmosphere.

 

Is bitcoin trading regulated the same what stocks are? What stops one of these platforms offering 10 to 1 leverage to trade with. One example BitMex they are offering Bitcoin derivatives with 100x leverage. Plus500 allows 1:20 margin accounts. 

 

Don't make trades that scare you.

 

I'm not talking about me making trades.

 

Well yes, anyone who buys bitcoin (or any of the others) needs to understand volatility could be extreme at times.  If you are holding for the long term that shouldn't matter, you might get nice buying opportunities from time to time.  However if you are 100x leveraged....good luck.

 

 

I'm not too worried.  If my cryptocurrency portfolio drops by 95% tomorrow I'll still be in the black.

 

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  • 2 weeks later...

more to the point of what I was getting at, what scares me is the "no rules" atmosphere.

 

Is bitcoin trading regulated the same what stocks are? What stops one of these platforms offering 10 to 1 leverage to trade with. One example BitMex they are offering Bitcoin derivatives with 100x leverage. Plus500 allows 1:20 margin accounts. 

 

Don't make trades that scare you.

 

I'm not talking about me making trades.

 

Well yes, anyone who buys bitcoin (or any of the others) needs to understand volatility could be extreme at times.  If you are holding for the long term that shouldn't matter, you might get nice buying opportunities from time to time.  However if you are 100x leveraged....good luck.

 

 

I'm not too worried.  If my cryptocurrency portfolio drops by 95% tomorrow I'll still be in the black.

 

Mortgage the house to buy Bitcoin, max out your credit cards buying Bitcoin. Find a platform that lets you use 20:1 leverage to "invest" your mortgage and credit card proceeds. Then either become rich enough to never have to work again in a short period of time, of file for bankruptcy and start over like every average schmuck citizen not gambling on cryptos. Surprised more people arent doing this.

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Guest Cameron

more to the point of what I was getting at, what scares me is the "no rules" atmosphere.

 

Is bitcoin trading regulated the same what stocks are? What stops one of these platforms offering 10 to 1 leverage to trade with. One example BitMex they are offering Bitcoin derivatives with 100x leverage. Plus500 allows 1:20 margin accounts. 

 

Don't make trades that scare you.

 

I'm not talking about me making trades.

 

Well yes, anyone who buys bitcoin (or any of the others) needs to understand volatility could be extreme at times.  If you are holding for the long term that shouldn't matter, you might get nice buying opportunities from time to time.  However if you are 100x leveraged....good luck.

 

 

I'm not too worried.  If my cryptocurrency portfolio drops by 95% tomorrow I'll still be in the black.

 

Mortgage the house to buy Bitcoin, max out your credit cards buying Bitcoin. Find a platform that lets you use 20:1 leverage to "invest" your mortgage and credit card proceeds. Then either become rich enough to never have to work again in a short period of time, of file for bankruptcy and start over like every average schmuck citizen not gambling on cryptos. Surprised more people arent doing this.

 

They are, sort of

 

https://www.cnbc.com/2017/12/11/people-are-taking-out-mortgages-to-buy-bitcoin-says-joseph-borg.html

 

3:36 if you want to skip the other non sense.

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The very funny part of this are the 1,041,715 Satoshi coin that are supposed to be 'lost'.

At today's close of USD 17,369, they are worth just over USD 18 Billion.

 

Find a way to borrow against them, & we'll find out if they really are lost  ;)

 

SD

 

 

My feeling is that they are really lost.  Satashi is either really patient and really believes in bitcoin, or he’s already extremely rich enough that billions of dollars doesn’t tempt him at all.  I know I would have sold some by now if I were him.  The other 2 possibilities are that he lost the keys or he is dead.

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The very funny part of this are the 1,041,715 Satoshi coin that are supposed to be 'lost'.

At today's close of USD 17,369, they are worth just over USD 18 Billion.

 

Find a way to borrow against them, & we'll find out if they really are lost  ;)

 

SD

 

 

My feeling is that they are really lost.  Satashi is either really patient and really believes in bitcoin, or he’s already extremely rich enough that billions of dollars doesn’t tempt him at all.  I know I would have sold some by now if I were him.  The other 2 possibilities are that he lost the keys or he is dead.

 

Satoshi Nakamoto is the 'pen name' of the people who wrote the seminal paper on Bitcoin and the distributed ledger. We understand that they were at least 4 individuals, and we're pretty sure they're still alive. Give the ethos of time; they probably put their private keys on a USB stick and tossed it into the ocean - to permanently remove all temptation. Leaving the ultimate 'golden acorn' ! - as per the kids movie 'Ice Age'

 

SD 

 

 

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I'm a Bitcoin noob. How can you tell if/how many of these transactions we see on Bitcoin exchanges are "real", as in arm's-length transactions?

 

I'm pretty sure there is a ton of fraud in the ICO space from the few things I've seen there and this makes me question cryptocurrency pricing as well.

 

There are a lot of exchanges trading BTC for USD, as well as foreign currencies, as well as other cryptocurrencies.  I'm not saying fraud can't take place, but it would take hundreds of millions if not billions of dollars spread across multiple currencies (both fiat and crypto) in dozens of exchanges to fix the price of BTC right now.  I think what you are seeing isn't fraud, but simply increased demand.

 

https://coinmarketcap.com/exchanges/volume/24-hour/all/

There seem to be some questions about the printing of Tether to inflate the price of Bitcoin: https://www.bloomberg.com/news/articles/2017-12-05/mystery-shrouds-tether-and-its-links-to-biggest-bitcoin-exchange

 

“There’s a fear going on that the recent price rise was helped by printing of USDT (Tether) that is not backed by USD in a bank account.”

 

Little public information exists about how tether is created, fueling questions, said Barry Leybovich, a product manager at IPC System who creates risk and compliance products for financial institutions interested in blockchain applications. The market believes that each tether is worth $1, even if they’re not actually backed by that money, and trades of tether for bitcoin at Bitfinex are helping drive up the price of bitcoin, he said.

 

Whatever is going on at Bitfinex, it looks very shady to me. And this is a major exchange, so any manipulation could affect pricing on other, smaller exchanges I'd think, inflating the "bubble".

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Guest Cameron

The very funny part of this are the 1,041,715 Satoshi coin that are supposed to be 'lost'.

At today's close of USD 17,369, they are worth just over USD 18 Billion.

 

Find a way to borrow against them, & we'll find out if they really are lost  ;)

 

SD

 

 

My feeling is that they are really lost.  Satashi is either really patient and really believes in bitcoin, or he’s already extremely rich enough that billions of dollars doesn’t tempt him at all.  I know I would have sold some by now if I were him.  The other 2 possibilities are that he lost the keys or he is dead.

 

If you read some of the code and the messages that he had on forums I have no reason to believe that he would sell any of it, he talks a lot about the bailouts of certain banks within the code. What would be the point of creating bitcoin to become a decentralized currency just to become cash rich. He seems like a textbook Austrian.

 

"Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible."

 

 

 

 

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The very funny part of this are the 1,041,715 Satoshi coin that are supposed to be 'lost'.

At today's close of USD 17,369, they are worth just over USD 18 Billion.

 

Find a way to borrow against them, & we'll find out if they really are lost  ;)

 

SD

 

 

My feeling is that they are really lost.  Satashi is either really patient and really believes in bitcoin, or he’s already extremely rich enough that billions of dollars doesn’t tempt him at all.  I know I would have sold some by now if I were him.  The other 2 possibilities are that he lost the keys or he is dead.

 

If you read some of the code and the messages that he had on forums I have no reason to believe that he would sell any of it, he talks a lot about the bailouts of certain banks within the code. What would be the point would be of creating bitcoin to become a decentralized currency just to become cash rich. He seems like a textbook Austrian.

 

"Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible."

 

 

He/they could sell $10M worth today to live off of in the meantime and not even make a dent in the size of the holdings.

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The very funny part of this are the 1,041,715 Satoshi coin that are supposed to be 'lost'.

At today's close of USD 17,369, they are worth just over USD 18 Billion.

 

Find a way to borrow against them, & we'll find out if they really are lost  ;)

 

SD

 

 

My feeling is that they are really lost.  Satashi is either really patient and really believes in bitcoin, or he’s already extremely rich enough that billions of dollars doesn’t tempt him at all.  I know I would have sold some by now if I were him.  The other 2 possibilities are that he lost the keys or he is dead.

 

If you read some of the code and the messages that he had on forums I have no reason to believe that he would sell any of it, he talks a lot about the bailouts of certain banks within the code. What would be the point would be of creating bitcoin to become a decentralized currency just to become cash rich. He seems like a textbook Austrian.

 

"Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible."

 

 

He/they could sell $10M worth today to live off of in the meantime and not even make a dent in the size of the holdings.

 

There are so many possibilities here that any speculation about his coins has to be taken with a big grain of salt.

For instance, it's possible that money is not important enough to him, and that his pre-Bitcoin lifestyle and income suits him just fine.

Alternatively, it's also possible that he began mining (or buying) Bitcoins in later years to an address that no one knows about and has been selling and living off of those.

These are just two possibilities (and we don't even know if the guy is alive or dead).

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There are currently something like 16.7 million bitcoin in circulation, and a decent percentage of those bitcoins have been lost permanently (estimated to be roughly 25% or something like that). So the effective market cap of bitcoin is lower than you would think, and prices need to go up even higher before you can have a huge loss of wealth.

 

Even the high estimate is under 25%.

 

http://fortune.com/2017/11/25/lost-bitcoins/

 

"3.79 million bitcoins are already gone for good based on a high estimate—and 2.78 million based on a low one. Those numbers imply 17% to 23% of existing bitcoins"

 

AND:

 

"both estimates make a critical assumption that coins belonging to bitcoin’s inventor, Satoshi, are gone for good"

 

Take Satoshi's coins out of the estimates and you get 2.75M to 1.73M lost coins or 10% to 16%

 

And these estimates are considering a large amount of coins which haven't moved in a while to be lost (30-50%), no one really knows which are lost and which are simply being held.

 

Stupid question - how can bitcoins get lost, just by losing the digital keys?

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Guest Cameron

There are currently something like 16.7 million bitcoin in circulation, and a decent percentage of those bitcoins have been lost permanently (estimated to be roughly 25% or something like that). So the effective market cap of bitcoin is lower than you would think, and prices need to go up even higher before you can have a huge loss of wealth.

 

Even the high estimate is under 25%.

 

http://fortune.com/2017/11/25/lost-bitcoins/

 

"3.79 million bitcoins are already gone for good based on a high estimate—and 2.78 million based on a low one. Those numbers imply 17% to 23% of existing bitcoins"

 

AND:

 

"both estimates make a critical assumption that coins belonging to bitcoin’s inventor, Satoshi, are gone for good"

 

Take Satoshi's coins out of the estimates and you get 2.75M to 1.73M lost coins or 10% to 16%

 

And these estimates are considering a large amount of coins which haven't moved in a while to be lost (30-50%), no one really knows which are lost and which are simply being held.

 

Stupid question - how can bitcoins get lost, just by losing the digital keys?

 

yes, if you lose your flash drive, but I think you can recover your wallet if you remember your key.

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There are currently something like 16.7 million bitcoin in circulation, and a decent percentage of those bitcoins have been lost permanently (estimated to be roughly 25% or something like that). So the effective market cap of bitcoin is lower than you would think, and prices need to go up even higher before you can have a huge loss of wealth.

 

Even the high estimate is under 25%.

 

http://fortune.com/2017/11/25/lost-bitcoins/

 

"3.79 million bitcoins are already gone for good based on a high estimate—and 2.78 million based on a low one. Those numbers imply 17% to 23% of existing bitcoins"

 

AND:

 

"both estimates make a critical assumption that coins belonging to bitcoin’s inventor, Satoshi, are gone for good"

 

Take Satoshi's coins out of the estimates and you get 2.75M to 1.73M lost coins or 10% to 16%

 

And these estimates are considering a large amount of coins which haven't moved in a while to be lost (30-50%), no one really knows which are lost and which are simply being held.

 

Stupid question - how can bitcoins get lost, just by losing the digital keys?

 

yes, if you lose your flash drive, but I think you can recover your wallet if you remember your key.

 

Yes the only way to access a wallet is to know the private key. And it is a long hexadecimal number which is pretty much impossible to memorize.  Most modern HD wallets derive the keys from a hash of 12 words which can be memorized, but that didn’t exist back when the first wallets were created by Satashi.  There is no way he has his key memorized. It has to be saved electronically or printed on paper.  If it is lost, then it is lost forever.

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