Cool Timer and omt speaking truths. TS speaking ponzi, naturally.

Me? No. I'm just quoting these guys:

Yukun Liu
Department of Economics
Yale University

Aleh Tsyvinski
Department of Economics
Yale University

doing comprehensive research for NBER, who are saying this:

Listen or not...but I'm just providing the quote tags. If you're a bull because you believe you one of the three things they fairly robustly debunk in that paper, you might want to rethink it. well named linked an interesting paper and it's worth reading if you have one of the delusions above.

The mechanics aren't the same. Gold doesn't come out of the ground if you don't spend that money. Bitcoin comes into existence regardless. So fundamentally it creates a floor for the price of gold assuming there's more demand than can be satisfied by the existing supply, but with bitcoin the cost of mining is definitely not a floor since the cost of mining will just drop with the price of bitcoin.

The exact opposite of this has happened this year.

Because it's still early and the price of bitcoin and the cost of mining are really only starting to approach any correlation. The mining cost had nothing to do with the price during and immediately following the 2017 bull market

The price has little to do with cost. When someone prices a good [rationally], they price it at the level that will generate the most profit, which is based on demand. The best example is a $6 starbucks. Only competition can lower the price (through the agg demand being diverted to other goods.) It doesn't matter what the cost is (unless the cost is so high noone wants to buy it.) This is the same concept as it doesn't matter if dimes are made of silver or aluminum.

Ponzi argument is irrelevant - money itself is basically the biggest ponzi in the world. That is to say that if everyone stopped accepting cash tomorrow, then you would have a pile of worthless paper. This has happened many times throughout history. The reason you accept paper money is because of the reasoning that someone else will accept it later. Saying a new form money "acts like a ponzi" is irrelevant because that's how money works, especially in the early part.

Bitcoin itself, and many other cryptocurrencies, are not viable to be used for common payments (yet), and it is still unstable for large settlements. This is why there is still a long way to go. Of course most of the movement in price is speculation. However, eventually it [or some other form of cryptocurrency] will be used as the defacto world currency, *because* it isn't centrally controlled. That is the primary advantage of cryptocurrency. We can debate the merits of why central control of currency can be bad versus good, but one important point is that until now, people have never been free to choose.

Btw, BCH [with respect to BTC... so the ticker BCH/BTC] will **** the bed. I recently sold all of mine at 0.10. Absolutely no one uses this (transaction frequency + volume is laughable wrt market cap, like 50 txs /hour for almost no value) and it will not continue to be propped up anymore. If you have any BCH [and BTG, etc.] from holding BTC long term, I would advise leaving asap.

Au contraire, the price of most things is closely linked to cost. In fact, across practically every diverse industry the long term return on capital is roughly 10% and has been for 150 years. Thus cost is the cornerstone of pricing and you have the world completely upside down.

That's not what a ponzi is. And even if it was, money has value because it's a legally binding contract, enforced by the state. If someone gives me $50, it is a call on future economic output that the entire US police force will come and enforce if someone refuses to hand over their goods for my (worthless) dollars. Its value doesn't come through needing more people to buy in to pay off the early holders + exiters, it comes from the legal and economic system which supports it.
You're neither understanding the evidence laid out nor understanding how bitcoin is acting. I suggest reading the paper in question. Even as a growing currency bitcoin could act very differently. It acts precisely like a pure ponzi would.
Gold and silver have been around for 100 generations.

You also misunderstand people. People love central control. That's why every geographical region on Earth has a government. That's why nearly all the world's private wealth is in banks, or in real estate backed by paper documents from a centrally controlled force.

It depends how you look at it. Eventually people decide what they want to pay for a good/service. If people are willing to pay more than the cost, that's great for the producer, they can keep on producing. If not, they are at a loss and need to find a solution to it.

I've seen this argument a couple of times. How do you reconcile this with the history of states where money became useless. Where the states had a lot of guns/police/force/military to enforce their currency on the people. For example: Weimar republic, Zimbabwe, Venezuela and currently Turkey. To me your argument makes no sense at all and has zero evidence this is actually how it works.

This.

Of course this is how it works.

Money inflated in those countries because two things happened:

- The economy failed, meaning there was virtually nothing to buy and the same amount of money. Even bitcoin would massively inflate relative to a basket of local goods. How much is a dozen eggs in Venezuela vs a dozen in the US, priced in bitcoin (hint: it's 50x more bitcoin in Venezuela).

- The state de facto taxed the citizens by inflating the currency (it took citizen's money for its own). This is a form of robbery and breakdown of the state caused by breakdown of the economy. In a bitcoin world, the failing state would simple rob you or charge you exorbitantly for services. Without a state, local warlords would shake you down for protection money. The result would be the same - the loss of wealth due to the destruction of the economy

None of these have anything to do with fiat money. If anything, fiat money reduces the pain of what the alternatives would be if there was no fiat money.

I mean, look at the Weimar Republic. It ran completely out of gold (it was on a gold standard). It then started printing fiat. But first it ran out of gold. Had it not been able to print fiat and de facto tax its citizens, what would it have done? Dissolved the government and allowed conquest by foreign powers/creditors? Taxed/taken wealth from its citizens to survive (the same as inflation but far more sinister)?

Fiat hasn't failed here, economies have, and all things break down as stable purchasing power when economies fail - including bitcoin.

It's like they said in Game of Thrones: "Rich ladies would sell their lambo bitcoin stashes for a sack of potatoes".
In theory, yes. In practice in all industries, the cost of something hovers around the return on capital for holding the capital needed to produce the goods - around 10%/year.

The price of a good is nearly entirely its cost in the long run.

Cite?

This is true in the average sense, but you have causation confused for correlation. The price is based on demand, not on supply. This is why monopolies can charge more. For example selling life saving drugs for which there is only one producer.

Prima facie with one supplier and many buyers, the supplier will choose the price that maximizes profit, which is not related at all to the cost. The cost only comes into play when competition is involved. When there is no competition, there is no relationship between cost and price except for the trivial one (that the price must be at least the cost.)

This is also why "the cost to mine 1 BTC" doesn't mean jack **** (as mentioned by another poster here). This is similar to how it doesn't (really) matter what the cost to the treasury is for producing a $100 bill. Whether that is $0.10 or $0.01 has no bearing on the value.

Ok now for the discussion around the paper "Risks and Returns of Cryptocurrencies"

They show two points:
a. Crypto is it's own asset class (uncorrelated from other ones)
b. Crypto returns are predicted by time-series momentum and google searches.

These two points are uncontested by me. Of course the horse is pushing the cart, actual use of bitcoin is relatively small currently, compared to the level of hype.

Right. To be clear, I haven't looked at this closely yet (haven't had time) but I don't expect they say anything at all about BTC being a ponzi scheme, or really anything at all about what the value of BTC really is, other than that attempts to determine some long-run idea of valuation using pricing trends -- especially using methods analogous to those used for stocks or precious medals -- are probably flawed.

One of the reasons I thought it was interesting is because I saw the link right after some of the usual banter about TA. I'm quite skeptical of TA as a general rule, I was amused though because it sort of suggested to me that it might apply to BTC given those findings. I'm fairly ignorant of what TA folks really do though, so that might be wrong :P

I think maybe the data is not wholly inconsistent from what you might expect in the case where BTC ultimately ends up stabilizing at some dramatically lower price, with historical behavior being entirely a speculative bubble, but it's like you say, we already know the hype:use ratio is high, and that will have been true regardless of what happens in the future.

Why make this point when gold and Btc are bought, sold and mined by large numbers of independent actors?

Cost to mine simply defines the price ceiling at any given point. It could trade lower in which case no one mines. But if consumer preferences change or the supply is depleted by consumption, the price goes up and eventually may temporarily rise beyond the cost to mine in which case a large number of people mine until price = cost.

Cost will often not be = to price but it is one of the metrics that it’s tethered to given the large number of market participants.

and its gone

Looks like a big bloodbath weekend. When we look back in six months, this might be the summer where all markets started to get crushed. Only in hindsight do you know how it will be. When 2008 was a few months old, nobody thought it would be the year it was. There were rumblings, and bad things, but it wasn't "official" yet.

This summer could be a big one for all assets. We'll see. But it is good to see the scam coins getting crushed...XRP/Ripple, and Litecoin, to name a few. There are more scammy coins than that, for sure, but good to see these big ones going down for what probably will be "the count" as far as price goes. It is almost certain that Ripple, Litecoin, and even Bitcoin, will never see their highs again, and probably not even close.

I think if it hits 6048.57 it is going to drop below 6048.56.

But what about resistance? Lol.

Why is the price of a dozen eggs 50x in Venezuela? One would assume it's cost should be less in Venezuela.

Those lazy Venezuelan millennials wasting their money on egg toast instead of saving for houses.
Ruining the country

He's incredibly full of crap, as usual (hint: a recent interview with an actual bitcoin miner in Caracas said the proceeds of one S9 Miner could feed an entire family)

lol great post.

how is LTC a "scamcoin" btw?

This was back when there were food shortages and the president closed the borders to stop "smuggling". Looks like situation has eased now and food supply is ok again (hadn't checked in a while).

Point being that these huge price rises from shortages were not fiat-related, but economy related.