BITCOIN as an alternative to regular currency

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Euler
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Euler
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SEC Halts a Silly Initial Coin Offering

https://www.bloomberg.com/view/articles ... n-offering
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Euler
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According to my spreadsheet and the latest market price, Bitcoin's in circulation are now worth more than the GDP of 150 of the 191 countries in the world that I have data on.
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Euler
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I've just learnt that you no longer need to worry about the future of Bitcoin because the future has been told right here: -

https://www.reddit.com/r/Bitcoin/commen ... re_to_beg/
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northbound
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Just read that Reddit story, quite thought provoking.

Meanwhile, this month the Waves blockchain project will update its blockchain software to support a whopping 100 transactions per second, compared to the 5-10 that Bitcoin and Ethereum currently support.

Crypto is not all about Bitcoin, it seems.
Zenyatta
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It seems that if you're going to get some crypto-, Ether is the one to pick. At least that does have some slight actual value, with a potential for more in the future. Ether doesn't pretend to be a currency...instead, it's a token that grants you access to a network of 'Smart Contracts' - apps built on the blockchain technology. So it seems like there's some potential for real value there, unlike Bitcoin, which has none.

Therefore, I've decided to sell my Bitcoin, gambling that it's close to it's peak, and I'm converting the lot to Ether, which I'm gambling will replace Bitcoin. My gamble is for an eventual Bitcoin crash to zero, and everyone to pile into Ether.
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northbound
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Zenyatta wrote:
Sat Dec 09, 2017 10:23 am
My gamble is for an eventual Bitcoin crash to zero, and everyone to pile into Ether.
Ether is a great project indeed.

As for Bitcoin price crashing, it will be interesting to see whether the predicted massive shorting will occur once Bitcoin futures are launched.
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Orixian
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Zenyatta wrote:
Sat Dec 09, 2017 10:23 am
It seems that if you're going to get some crypto-, Ether is the one to pick. At least that does have some slight actual value, with a potential for more in the future. Ether doesn't pretend to be a currency...instead, it's a token that grants you access to a network of 'Smart Contracts' - apps built on the blockchain technology. So it seems like there's some potential for real value there, unlike Bitcoin, which has none.

Therefore, I've decided to sell my Bitcoin, gambling that it's close to it's peak, and I'm converting the lot to Ether, which I'm gambling will replace Bitcoin. My gamble is for an eventual Bitcoin crash to zero, and everyone to pile into Ether.

I would not recomend you do this. Whilst I genuinely like crypto and the solutions many of the blockchains offer to real problems I think at current price of bitcoin when its bubble bursts everything goes. That is to say the risk in the short to mid term is the same accross all cryptos regardless of what they are trying to do. I would suggest , this being the case, that you pick the crypto with the highest potential for reward as the risk is the same. Id suggest something with real utility but with a lot of news flow over the next 6 months. Pick the right one and you could genuinley make 10x your money should the combination of bubble and news flow continue. Even with the unfathomable rise of btc over the last 6 months I have done better following the stratgey of picking more obsucre coins with a possible real use case scenario in the future than just holding btc.

If anything the case for holding btc is diminished in my mind as although its on its way to being a better version of gold in terms of its value storgare capability it is now clear it will never be a currecny as it can't get the transaction time down and everytime it implements a solution it causes half the network to split off. It also shows zero price stability. It needs to either stay where it is for a year or plumet and stay put for a year or two after that before it can be a decent value store but it will get there I think.
Zenyatta
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Orixian wrote:
Sat Dec 09, 2017 10:59 am
I would not recomend you do this.
Trade completed! I just exchanged all my Bitcoin for Ether using Blockchain, took about half an hour. Fingers crossed :P
Zenyatta
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I'm good! :D I think I correctly picked the Bitcoin high, and the crash has started. Bitcoin futures markets going live now, making it much easier to short Bitcoin - 'the big short' has indeed started.
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marksmeets302
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GXBT, CBOE's future on bitcoin is trading now. It will be interesting to see how much their prices differ from CMEs future. They have the same underlying (bitcoin) but one is settled at the level of the Gemini bitcoin exchange, the other on a mix of exchanges including Kraken. I guess we'll see how easy it is to manipulate them.

Apparently the CEO of interactive brokers has sent a letter to the CFTC asking the bitcoin futures to be cleared separately. https://www.businessinsider.nl/interact ... =true&r=US He seems to fear that a crash in bitcoin will hurt the financial stability of the system. The maintenance margin requirement is currently at 35% (initial something like 40%). In light of bitcoins volatility that doesn't seem overly excessive.
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Euler
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I also think there is a risk of Bitcoin infecting the real markets if they start linking them. Needs to be a safeguard or we end up repeating the same mistake of the past only quicker and on a larger scale.
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marksmeets302
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Slashdot has a nice article on bitcoin https://news.slashdot.org/story/17/12/1 ... g#comments
The gist: Do you have any idea what it costs, on average to make a bitcoin transaction? In dollars it's about $20-$26. That's right: buy a $5 pizza online and it will set you back $30. For any bitcoin transaction you initiate you can set the fee for validating it. Too low, and nobody will be interested and your transaction will expire. Now imagine what happens if bitcoin starts to crash: people will want to get out fast but in order to do so they will need to offer higher fees in terms of bitcoins just to get in front of the queue. This will only make sense if you have lots of btc in your wallet. Therefore, the people with small transactions will never get them validated.

Euler is right, you will not be able to get out once the bubble bursts. For more than one reason!

(Still I'm fighting the temptation to buy one or two bitcoins and sell an equal amount of futures. There's $1000 between the front month future and the spot price. Very easy money... until the exchange gets hacked)
xitian
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I think even if you had a large amount of bitcoins to sell to overcome the transaction cost, you’d need a counterparty wanting to buy that large amount of bitcoins at the same time, which is going to be unlikely during a crash.

The thing I’d like to know is the distribution of coins over the number of addresses. I’m guessing the majority of coins is owned by a small percentage of addresses who probably have enough external wealth to prop up the price during wobbles to maintain confidence. After all it seems there’s actually very little liquidity on the book from that link that LinusP posted.

Re: Futures, I wonder how they go about pricing such a thing. Is there much of a bid/offer spread? I would have thought it would have to be massive for something so volatile and unpredictable.
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marksmeets302
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xitian wrote:
Tue Dec 12, 2017 11:13 am
I think even if you had a large amount of bitcoins to sell to overcome the transaction cost, you’d need a counterparty wanting to buy that large amount of bitcoins at the same time, which is going to be unlikely during a crash.
True, those people are screwed too.
xitian wrote:
Tue Dec 12, 2017 11:13 am
The thing I’d like to know is the distribution of coins over the number of addresses. I’m guessing the majority of coins is owned by a small percentage of addresses who probably have enough external wealth to prop up the price during wobbles to maintain confidence. After all it seems there’s actually very little liquidity on the book from that link that LinusP posted.
I don't have the link to back it up, but read somewhere that the distribution is very pareto-like; eg 90% of all coins is owned by 10% of the people, 99% by 1% etc.
xitian wrote:
Tue Dec 12, 2017 11:13 am
Re: Futures, I wonder how they go about pricing such a thing. Is there much of a bid/offer spread? I would have thought it would have to be massive for something so volatile and unpredictable.
Currently the bid/ask is 17800 - 17850. Both for size 1. Volume is only 453 today. I guess that's disappointing for the cboe.
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