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Thread: Bitcoin and Poseidon.

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    Senior Member Yelta's Avatar
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    Bitcoin and Poseidon.

    Bitcoin! today's price has broken through $17000 US dollars.

    Brings to mind the Poseidon boom of the late 70's, and the Dot-Com bubble of the 90's, accompanied by a similar mind set, what could possibly go wrong? plenty, and it will happen fast.

    We will wake one morning to find someone has bailed out of their Bitcoin position and dumped an enormous holding at or just below the market high, this will induce panic among smaller investors and the rush will be on, sell at any price, the smarties who sell near the top will make a fortune, the rest will see the investment turn to crap within a very short time.

    Of course I could be wrong, however it's the people who have never seen a market or stock crash who are most at risk, the prevailing mindset among younger investors is "this time it's different" it's not, the same rules apply, what go's up must come down, and a meteoric rise will culminate in an equally spectacular demise.

    This article provides interesting reading.

    Three Australian Asset-price Bubbles
    https://www.rba.gov.au/publications/.../pdf/simon.pdf


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    Site Sponsor Casa Espresso's Avatar
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    I'm with you Yelta.

    I hope I am wrong but history tells us rapid rises like this often lead to rapid falls.

    Certainly interesting to watch from the side lines and what a ride for those that got in early!

    cheers

    Antony

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    Senior Member WhatEverBeansNecessary's Avatar
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    Quote Originally Posted by Yelta View Post
    Bitcoin! today's price has broken through $17000 US dollars.

    Brings to mind the Poseidon boom of the late 70's, and the Dot-Com bubble of the 90's, accompanied by a similar mind set, what could possibly go wrong? plenty, and it will happen fast.

    We will wake one morning to find someone has bailed out of their Bitcoin position and dumped an enormous holding at or just below the market high, this will induce panic among smaller investors and the rush will be on, sell at any price, the smarties who sell near the top will make a fortune, the rest will see the investment turn to crap within a very short time.

    Of course I could be wrong, however it's the people who have never seen a market or stock crash who are most at risk, the prevailing mindset among younger investors is "this time it's different" it's not, the same rules apply, what go's up must come down, and a meteoric rise will culminate in an equally spectacular demise.


    Yelta,
    What you have described is classic herding behavior and is very well documented in classical economic psychology and is one of the most interesting phenomenons of speculative investors.

    What investors in bitcoin need to remember (or investors in anything really) is that to take a position in the market means there is someone betting the opposite to you - ie you want to buy because you think the price will go up means someone else has to sell because they think the price will go down. If the market does indeed tumble (and it will inevitably at some point large or small) you need to have someone willing to buy what you have which is tough when the pool of investors becomes increasingly certain the ride is over. If you invest and you hear the market has already spectacularly tumbled - it's probably too late to cash out.

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    Senior Member Yelta's Avatar
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    Quote Originally Posted by Casa Espresso View Post


    Certainly interesting to watch from the side lines and what a ride for those that got in early!

    cheers

    Antony
    Agreed, speculators would do well to bear in mind that the profit doesnt exist until the cash is in the bank.

    We had a neighbor during the Poseidon boom, a working man who invested in the IPO in late 1969, within a short space of time he was a millionaire (on paper) despite urging from his wife he failed to lock in at least some of his paper profits, you guessed it, by Feb 1970 he was back to being a working man with his Poseidon share worthless, they crashed overnight.

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    Senior Member Yelta's Avatar
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    There is already short selling talk.

    https://www.thestreet.com/story/1441...g-bitcoin.html

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    Did you know it takes the equivalent amount of electricity to run the country of Japan to what it takes to manage bitcoin. Bitcoin will be around for some time though it is predicted to hit 65,000 next year but I think it will stay around the 15,000 or so mark.

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    Super Moderator Javaphile's Avatar
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    Quote Originally Posted by Lootee View Post
    Did you know it takes the equivalent amount of electricity to run the country of Japan to what it takes to manage bitcoin.
    What's your source for that claim? The only mention of Bitcoin's energy consumption that I'm aware of is the one by Digiconomist which states the current consumption is equivalent to what Serbia uses. I'm guessing that the source for the Japan equivalent claim is an analysis by Citigroup that found at the current growth rate it will match Japan's energy consumption by 2022.


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    I am a very conservative investor. My dad told me a few things that I repeat:

    The easiest way to double your money is to fold it in half and put it back in your pocket.

    Don't bet what you can't afford to lose.

    When mums and dads are buying shares, make sure to sell them yours. He was meaning that whatever investment is being touted to the masses, that they are believing and buying into, its already overpriced, and ready to pop.

    I think..
    There is always someone smarter than me, who is trying to get me away from my savings (divorce lawyers currently..). Keep clear of their schemes and don't buy into the hype.
    A full days pay will take a full days work. So if you want to make 100k pa on stocks it will take 50hrs pw to do it.
    My mate rang this morning, told me his 5yr plan to be able to take 2k PW wages out of his bitcoin investment (of $2500 in august). I told him just don't put any of your super into it.
    Workmate 3 weeks ago was leveraging bitcoin. 4 margin calls in 4 days saw him lose twice his initial investment as he tried to keep it afloat. Once he took the loss, he leveraged a short to win it all back. Bitcoin stopped dropping, and went back up, he got burnt again! I felt sad for him that he had to ring his wife and tell her he had lost his wages as quick as he had earnt them.

    This year I had a awesome return from Melbourne cup. I bought a beer and I drank it. Most of the pub patrons were worse off than me.

    My2c anyway.
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    Senior Member Yelta's Avatar
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    From the ABC this morning.
    Bitcoin: What the bubble tells us about ourselves - ABC News (Australian Broadcasting Corporation)

    "For not since the dotcom boom, or our very own housing market, has there been a better opportunity to abandon any form of common sense.
    Maybe that's a bit harsh. Lots of people make a great deal of money out of trading on the stupidity of others. And perhaps there is an element of rational thought in trying to capitalise on an asset bubble.

    You just don't want to be caught holding the fireworks when the fuse runs out, when everyone realises at pretty much the same time that they've been stupidly paying way over the odds."

    I've done quite a bit of reading on booms/busts over the years, the one thing they all have in common is the strongly held, irrational belief held by the young Turks that "this time it's different" trust me, it's not

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    Senior Member Yelta's Avatar
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    Gotta smile, now the me too claim is that Bitcoin "mining" "likely uses more energy than it takes to keep New Zealand's lights on"
    http://www.abc.net.au/news/2017-12-1...ricity/9246888
    Wonder how much energy is used in a year by people browsing porn?
    Last edited by Yelta; 12th December 2017 at 12:56 PM.
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    Senior Member flynnaus's Avatar
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    Bitcoin futures

    Bitcoin has landed on Wall Street.

    Futures on the world's most popular cryptocurrency surged as much as 26 per cent in their debut session on Cboe Global Markets' exchange, triggering two temporary trading halts designed to calm the market. Initial volume exceeded dealers' expectations, while traffic on Cboe's website was so heavy that it caused delays and temporary outages.
    .
    .
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    Futures are financial contracts where a buyer purchases an asset or a seller sells an asset at a predetermined future date and price.

    The launch of futures on a regulated exchange is a watershed for bitcoin, whose surge this year has captivated everyone from mom-and-pop speculators to Wall Street trading firms. The Cboe contracts, soon to be followed by similar offerings from CME Group and Nasdaq, should make it easier for mainstream investors to bet on the cryptocurrency's rise or fall.

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    Super Moderator Javaphile's Avatar
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    Quote Originally Posted by Yelta View Post
    Gotta smile, now the me too claim is that Bitcoin "mining" "likely uses more energy than it takes to keep New Zealand's lights on" http://likely uses more energy than ...39;s lights on

    Wonder how much energy is used in a year by people browsing porn?
    There's no link there.


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    Senior Member Yelta's Avatar
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    Thanks JP, must have made a mistake posting, all OK now, I think!

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    Senior Member Rocky's Avatar
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    I'm way too conservative for the stockmarket, let alone Bitcoin.
    I'm happy for the risk-takers to gamble on their commodity of choice.
    If they make a fortune, good luck to them.
    I'm really only unhappy when their actions have a negative impact on the rest of the community/world - as in the GFC.

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    Senior Member Yelta's Avatar
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    Grist for the mill!
    'Riskiest investment you can make': bitcoin.com co-founder has sold all his bitcoin'

    'Riskiest investment you can make': bitcoin.com co-founder has sold all his bitcoin

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    No one knows what's going to happen with Bitcoin and anyone who thinks they know is just another speculator. Blockchain is definitely transformative and cryptocurrency is here to stay. It wouldn't surprise me if Bitcoin was worth $100k by this time next year - there's limited supply and it's hitting the mainstream. But it could also crash and a lot of people will lose money.
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    Senior Member Yelta's Avatar
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    "Bitcoin has no natural intrinsic value. Can you buy a house with it? Can you use it for daily interactions? It may be valued at $US18,000 ($23,477) right now but what I want to know is how you convert it into fiat currency and realise that value. The risk comes at the moment of conversion," he told London's The Daily Telegraph.
    The lapidary verdict on the Bitcoin craze carries some weight. Singapore's city-state is the leading fintech hub in Asia. The MAS is currently carrying out the most far-reaching research into blockchain and distributed ledger technology by any central bank or monetary authority in the world."
    Central bank chief warns over Bitcoin valuations

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    Mal Dimal's Avatar
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    Yep, BlockChain is excellent, no doubt about it but it's not the only game in town, so to speak...
    https://www.technologyreview.com/s/6...rform-bitcoin/

    Mal.

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    Senior Member trentski's Avatar
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    Quote Originally Posted by Yelta View Post
    "Bitcoin has no natural intrinsic value. Can you buy a house with it? Can you use it for daily interactions?
    Saw a restaurant with a sign stating they accept bitcoin just last week

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    Senior Member level3ninja's Avatar
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    Someone in NSW recently sold a house for only Bitcoin

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    Site Sponsor Casa Espresso's Avatar
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    8 % fall in bitcoin today. Letís see what it looks like tomorrow morning with the overseas trade while we are asleep in Australia .

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    There is a fundamental need for an untraceable, irreversible currency with a solid backend (i.e. can't be diluted by the issuer). Drug dealers, terrorists, ransomware writers, tax evasion... plenty of demand. You can even use it for fraud - see most Initial Coin Offerings. And you want to mine it or sell "stuff" for it directly, because the blockchain makes it easy to trace back to the original transaction where other currencies, linked to your name, have been exchanged for the cryptocurrency.

    Question is whether BTC is the right implementation (scalability, transaction costs, 51% attacks, personal safety, etc.). Enough people believe so to have driven the price sky high, and the numerous exchanges allow for relative liquidity for quite large transactions. I personally prefer the backing of the law which guarantees my government-backed cash at the well regulated bank with whom I have entered into a contractual arrangement I can fully understand and that has been tested for decades.

    The worst aspect of BTC to me is that to some extent you are putting gold under your mattress and relying on the lock on your door instead of the protection of the courts and the security of the banks, except your mattress is your computer and gold is weightless, easily copyable information. I'm a tech professional, have run machines on a number of operating systems including the very manual Arch linux, my company offers (amongst other things) security hardening, and I still don't feel safe enough to have any assets protected only by my understanding of security.

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    Quote Originally Posted by dan333 View Post
    No one knows what's going to happen with Bitcoin and anyone who thinks they know is just another speculator. Blockchain is definitely transformative and cryptocurrency is here to stay. It wouldn't surprise me if Bitcoin was worth $100k by this time next year - there's limited supply and it's hitting the mainstream. But it could also crash and a lot of people will lose money.
    Very well said, speculation up or down is speculation.

    I will say that Bitcoin is not something I would invest in but I love the new bandwagon jumpers, Bitcoin has been around for many years now and the bandwagon negative/positive people are only just posting about it on blogs or forums.

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    Super Moderator Javaphile's Avatar
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    And then of course there's this to worry about: Bitcoin Cash deals frozen as insider trading is probed - BBC News


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    Senior Member Yelta's Avatar
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    Worth keeping in mind.
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    Senior Member Yelta's Avatar
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    This today,
    Bitcoin plunges below $US13,000, heads for worst week since 2013

    "London/Tokyo: Bitcoin plunged below $US13,000 on Friday after losing around a third of its value in just five days, with the digital currency on track for its worst week since 2013 after a blistering ascent to a peak close to $US20,000 on Sunday."

    Bet them that bought at $20,000 last week are crapping themselves, as usual the smart operators know when to pull the pin.
    Bitcoin plunges below $US13,000, heads for worst week since 2013

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    Nah, word on forums, Telegram boiler rooms and the like is "look at the last 3 times when I told you the same, after a crash is the best time to buy!"

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    Super Moderator Javaphile's Avatar
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    And it now has been the worst week since 2013 with the price now below $US12,000: Bitcoin loses more than a third of value over a week


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    Senior Member Yelta's Avatar
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    Quote Originally Posted by apicius View Post
    Nah, word on forums, Telegram boiler rooms and the like is "look at the last 3 times when I told you the same, after a crash is the best time to buy!"
    Forums and the like are notorious sources of investment misinformation, everyone has an axe to grind.
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    I think Bitcoin is one thing you should only bother with if itís at less than $1 and you limit your purchase of it to $20 or so. Itís not based on any real thing of value we are now seeing further proof of itís volatility.

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    Only time will tell, its volatility is due to bandwagon jumpers, I wonder how many know the history of Bitcoin?

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    Quote Originally Posted by Lootee View Post
    Only time will tell, its volatility is due to bandwagon jumpers, I wonder how many know the history of Bitcoin?
    I know about the history of bubbles. Plus Bitcoin itself is not based on anything of value, itís dependant on finding a bigger fool to sell it to.
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    Senior Member Yelta's Avatar
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    Quote Originally Posted by pamount View Post
    I know about the history of bubbles. Plus Bitcoin itself is not based on anything of value, itís dependant on finding a bigger fool to sell it to.
    Not much new about the phenomena (greed) even back in 1636/37 we had tulip mania.

    "Tulip mania was a period in the Dutch Golden Age during which contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels and then dramatically collapsed in February 1637"

    https://en.wikipedia.org/wiki/Tulip_mania
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    Senior Member Barry O'Speedwagon's Avatar
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    Quote Originally Posted by pamount View Post
    I know about the history of bubbles. Plus Bitcoin itself is not based on anything of value, it’s dependant on finding a bigger fool to sell it to.
    The idea that something is 'not based on anything of value' is a touch misleading. You could apply a similar argument to most currencies. This is is without doubt a bubble, but bitcoin does entail a set of rights that people find valuable. There's just a stupid amount of speculation and counter-speculation about what those rights are worth, and there'll be a lot of people looking stupid when the music stops
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    Quote Originally Posted by Barry O'Speedwagon View Post
    The idea that something is 'not based on anything of value' is a touch misleading. You could apply a similar argument to most currencies. This is is without doubt a bubble, but bitcoin does entail a set of rights that people find valuable. There's just a stupid amount of speculation and counter-speculation about what those rights are worth, and there'll be a lot of people looking stupid when the music stops
    As far as I know, Bitcoin is not backed by any government as a form of currency. Bitcoin really is not based on anything of value, it's supposed "value" is purely based on speculation and the concept of find a bigger fool than you to sell it too. I will not spend my money on Bitcoin, unless it falls to below $1.00 and even then I'd only spend no more than about $20 on it.

    As to any "rights" Bitcoin may have, I find that idea to be laughable. The sole consideration for Bitcoin is the fact it is a bubble.

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    The idea of cryptocurrencies is not unsound. Think of gold. It has no intrinsic value except being shiny and malleable and not oxidising, which makes it easy to make jewelry out of. But it is quite rare, and nobody has found a mountain made of it yet (closest might be the silver mines in Latin America that sank the Spanish after they flooded the market with it). So gold has preserved its value as a "store of value" for millennia and across all types of civilisations.

    The problem is that today, it's relatively easy to track movements of physical gold and other commodities that can be used as stores of value. Having an e-gold would be very valuable to a lot of people who don't want or can't deal with the physical thing. If you're doing legal things, or you don't live in a country that periodically steals from its citizen (like Argentina) then you can use the USD, which is backed by the American empire and its carrier groups. It's not perfect, but it's not as inflationary as any other currency and is accepted globally. USD has sort of become the new gold of our era.

    However, you might be an Argentinian citizen who wants to avoid getting your savings halved every few months; or you might be a 21st century Pablo Escobar or Osama, and you need to get paid for your activities without governments noticing. That's where the cryptocurrency comes in - as long as someone accepts your worse quality currency (be it heroin or pesos) you can keep this invisible, anonymous, impossible to inflate currency forever and get some USD with it when you need to do anything in the real world like buy weapons or bribe customs officials. And yes, those people don't care about high transaction costs or slow-to-clear transactions.

    The "impossible to inflate" bit is the most important. You can't use something where someone else can suddenly print themselves a ton of money, as governments like to do. You could say that's the only value proposition for bitcoin, as the rest gets eroded away. It's also one of the risks - if Satoshi's maths is wrong...

    Bitcoin is just the earliest implementation that fully worked; there is a great bubble as everybody tries to come up with a better version because whoever does will be richer than Satoshi. I know a couple people who made tens of millions (personally, in hard, usable USD) from just writing a 2 pager on their version of a cryptocurrency - they haven't even implemented it yet. Sometimes you see an ICO for 100 million followed by the hiring of a couple junior developers who definitely don't have the chops to build what they're supposed to. But Bitcoin is fallible as are all the others so far, so nobody knows who will win yet. Who predicted that Amazon would take over e-commerce or Boeing aviation, at the time of their respective bubbles? You can't know ahead of time.

    As for governments, Estonia has issued an "estcoin" so technically there IS a "bitcoin backed by government". An interesting discussion followed about whether this was in breach of European monetary policy (by definition, if you use the euro you should not be printing your own money as well). We live in interesting times.
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  37. #37
    Senior Member Barry O'Speedwagon's Avatar
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    Quote Originally Posted by pamount View Post
    As far as I know, Bitcoin is not backed by any government as a form of currency. Bitcoin really is not based on anything of value, it's supposed "value" is purely based on speculation and the concept of find a bigger fool than you to sell it too. I will not spend my money on Bitcoin, unless it falls to below $1.00 and even then I'd only spend no more than about $20 on it.

    As to any "rights" Bitcoin may have, I find that idea to be laughable. The sole consideration for Bitcoin is the fact it is a bubble.

    Currencies are worth what people in the market are prepared to trade them for (most governments do not 'back' them anymore...they may intervene to temporarily prop up a currency). The very fact that you can use Bitcoin to settle an obligation at many vendors makes it quite obvious that rights are entailed. You can find that laughable if you like, but I respectfully suggest you think about that a touch harder. In what way do you think that governments back currency?

    As per my earlier post, I agree entirely that the Bitcoin market is currently a bubble. But the 'currency' has a practical usage that people find useful. It is not the nature of the good that is the problem, it is the market for that good that has become the potential problem.

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    Apicius and Barry O' Speedwagon, I strongly suggest you read this article on why Warren Buffett wont buy Bitcoin

    https://www.msn.com/en-au/money/mark...cid=spartandhp

    This discussion is getting to the point where I have to say I wouldn't be acting like a friend to you both if I didn't point out you are talking in a delusional manner. If you have more than a couple of hundred dollars of your personal money invested in Bitcoin I strongly urge you to sell your Bitcoins now.

    This Bitcoin bubble will end in tears. You need to think of how this will affect your relationships with your friends and your families. I don't want to see you both get hurt.

    If you don't like the way I'm talking then that's not my problem. I will continue to talk like this (and stronger) in answer to anybody who supports the buying of Bitcoins. Anybody who supports spending more than a couple of hundred dollars on Bitcoin is being deluded and they are being lied too.
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    Quote Originally Posted by pamount View Post
    Apicius and Barry O' Speedwagon, I strongly suggest you read this article on why Warren Buffett wont buy Bitcoin

    https://www.msn.com/en-au/money/mark...cid=spartandhp

    This discussion is getting to the point where I have to say I wouldn't be acting like a friend to you both if I didn't point out you are talking in a delusional manner. If you have more than a couple of hundred dollars of your personal money invested in Bitcoin I strongly urge you to sell your Bitcoins now.

    This Bitcoin bubble will end in tears. You need to think of how this will affect your relationships with your friends and your families. I don't want to see you both get hurt.

    If you don't like the way I'm talking then that's not my problem. I will continue to talk like this (and stronger) in answer to anybody who supports the buying of Bitcoins. Anybody who supports spending more than a couple of hundred dollars on Bitcoin is being deluded and they are being lied too.
    The problem here is that both yourself or Warren have no idea which way Bitcoin is going to go, could be up, could be down. Would I invest in Bitcoin, no, but no one has become a millionaire without taking risks.

  40. #40
    Senior Member Barry O'Speedwagon's Avatar
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    Quote Originally Posted by pamount View Post
    Apicius and Barry O' Speedwagon, I strongly suggest you read this article on why Warren Buffett wont buy Bitcoin

    https://www.msn.com/en-au/money/mark...cid=spartandhp

    This discussion is getting to the point where I have to say I wouldn't be acting like a friend to you both if I didn't point out you are talking in a delusional manner. If you have more than a couple of hundred dollars of your personal money invested in Bitcoin I strongly urge you to sell your Bitcoins now.

    This Bitcoin bubble will end in tears. You need to think of how this will affect your relationships with your friends and your families. I don't want to see you both get hurt.

    If you don't like the way I'm talking then that's not my problem. I will continue to talk like this (and stronger) in answer to anybody who supports the buying of Bitcoins. Anybody who supports spending more than a couple of hundred dollars on Bitcoin is being deluded and they are being lied too.
    Could you please do me the honour of actually reading all of the text in my posts? I have never said that anyone should buy Bitcoin (I certainly wouldn't). I have said in each one that it is presently a bubble. I have simply said that the nature of the asset is not problem, it is speculative trading that is occurring that is the problem. You don't seem to be capable of reading a whole post.

    Please show me where I advocated the buying of Bitcoin, or apologise. Just one instance? If you can't, please apologise and do not infer that I am a liar.

    You might also choose to answer the question I asked you when I said'In what way do you think that governments back currency?' Rather than addressing the substance of my posts, you continue talking at crossed premises.

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    Senior Member Yelta's Avatar
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    Interesting piece on Buffet Pamount, you can say or think what you like about him, he didn't get where he is by being careless with his cash.

    Would certainly value his opinion a whole lot more than those of some snotty nose know it all kids who were probably too young to even recall the dot-com crash.

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    Quote Originally Posted by Barry O'Speedwagon View Post
    Could you please do me the honour of actually reading all of the text in my posts? I have never said that anyone should buy Bitcoin (I certainly wouldn't). I have said in each one that it is presently a bubble. I have simply said that the nature of the asset is not problem, it is speculative trading that is occurring that is the problem. You don't seem to be capable of reading a whole post.

    Please show me where I advocated the buying of Bitcoin, or apologise. Just one instance? If you can't, please apologise and do not infer that I am a liar.

    You might also choose to answer the question I asked you when I said'In what way do you think that governments back currency?' Rather than addressing the substance of my posts, you continue talking at crossed premises.
    OK. I apologise if I misunderstood what you said.
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  43. #43
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    I wont get into the buy/don't buy argument, my only advice would be don't invest/gamble funds that you cant afford to lose.

  44. #44
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    Quote Originally Posted by Lootee View Post
    The problem here is that both yourself or Warren have no idea which way Bitcoin is going to go, could be up, could be down. Would I invest in Bitcoin, no, but no one has become a millionaire without taking risks.
    It is true that risks need to be taken but you don't just throw all your savings into a roulette wheel and take your chances. Financial decisions need to be based on research.

    I'd have to say investment in Bitcoin is too risky. It is not based on anything that produces value, it is just some invisible thing that people are betting on.

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    Here's a relatable way to think about this invisible value thing.

    To most people, instant coffee or Nespresso is nice. It suits their caffeine requirements. To these people, we are nuts for paying so much money not just for coffee but for grinding, roasting and brewing equipment, and spending so much time obsessing about it. At most they'll detect that instant is a bit more bitter and pungent than a Geisha on the V60 a few days after the roast. I know many who prefer that strong, stale taste when cut with milk and sugar - I mean, look at how popular Starbucks is.

    But... this site exists, and Andy moves tons of coffee every month (or year, I can't remember). So clearly, there is a subset of people, presumably including everybody reading this, that do value good coffee and are willing to invest in it.

    Do the reasons matter? What is the intrinsic value in good coffee or food? At least with food you can argue the health angle, but with coffee, is there really much of a difference between your average Nespresso and what members here brew in the morning, health-wise? as far as I know nobody has proven that watery, stale, low quality coffee harms anything but your taste buds (and mood).

    Recognising this does not mean that you are a "coffee snob", it means recognising that there are a lot of people out there with different needs and personal experience might not be enough to be able to figure out what is going on (Rumsfeld's "unknown unknowns"). What I pointed out is that there are people who have a need for what cryptocurrencies offer, that they are numerous and well funded, and that this gives some kind of long term "intrinsic value" to the asset class. Doesn't mean I'll spend a cent in it personally, just as I'm not touching Australian real estate which is truly bewildering.
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  46. #46
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    Quote Originally Posted by apicius View Post
    Here's a relatable way to think about this invisible value thing.

    To most people, instant coffee or Nespresso is nice. It suits their caffeine requirements. To these people, we are nuts for paying so much money not just for coffee but for grinding, roasting and brewing equipment, and spending so much time obsessing about it. At most they'll detect that instant is a bit more bitter and pungent than a Geisha on the V60 a few days after the roast. I know many who prefer that strong, stale taste when cut with milk and sugar - I mean, look at how popular Starbucks is.

    But... this site exists, and Andy moves tons of coffee every month (or year, I can't remember). So clearly, there is a subset of people, presumably including everybody reading this, that do value good coffee and are willing to invest in it.

    Do the reasons matter? What is the intrinsic value in good coffee or food? At least with food you can argue the health angle, but with coffee, is there really much of a difference between your average Nespresso and what members here brew in the morning, health-wise? as far as I know nobody has proven that watery, stale, low quality coffee harms anything but your taste buds (and mood).

    Recognising this does not mean that you are a "coffee snob", it means recognising that there are a lot of people out there with different needs and personal experience might not be enough to be able to figure out what is going on (Rumsfeld's "unknown unknowns"). What I pointed out is that there are people who have a need for what cryptocurrencies offer, that they are numerous and well funded, and that this gives some kind of long term "intrinsic value" to the asset class. Doesn't mean I'll spend a cent in it personally, just as I'm not touching Australian real estate which is truly bewildering.
    This is a false example. Coffee is something I can see, touch, smell and taste its sale brings value to the seller. Cryptocurrencies are invisible and have no physical form plus they are not controlled by governments (I know one government has been listed as an example but this is hardly a major power). The ATO has defined Bitcoin as an asset, not a currency.

    Yes, we have electronic transactions that represent the equivalent of physical money. But, again, this form of currency is controlled by government.

    I don't know how much you have spent on cryptocurrency but you should sell the lot now and get your money back.

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    Quote Originally Posted by pamount View Post
    This is a false example. Coffee is something I can see, touch, smell and taste. Cryptocurrencies are invisible and have no physical form.
    But you would agree that instant coffee massively outsells craft coffee? Therefore, the majority of coffee customers can't touch, smell or taste the difference. Therefore, this difference does not exist. What is wrong with this reasoning?

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    Quote Originally Posted by apicius View Post
    But you would agree that instant coffee massively outsells craft coffee? Therefore, the majority of coffee customers can't touch, smell or taste the difference. Therefore, this difference does not exist. What is wrong with this reasoning?
    The majority of people still have the opportunity to look for and see craft coffee. Nobody has the opportunity to see cryptocurrency in physical form, because it does not exist in physical form.

    I don't know how much money you have spent on cryptocurrency but you should think about the risk you are taking. It seems like you are simply rationalising your poor decisions. Take note of what Warren Buffett has said in that article I linked too.

  49. #49
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    Quote Originally Posted by pamount View Post
    The majority of people still have the opportunity to look for and see craft coffee. Nobody has the opportunity to see cryptocurrency in physical form, because it does not exist in physical form.

    I don't know how much money you have spent on cryptocurrency but you should think about the risk you are taking. It seems like you are simply rationalising your poor decisions. Take note of what Warren Buffett has said in that article I linked too.
    Anybody with a maths background can check the design of cryptocurrencies. Or you can trust someone with a maths background to have done the checking for you. Mathematics underpin the world around us. Ideas that were in the realm of abstract mathematics 150 years ago are now the basis of very real, physical things that allow the modern world to operate. Banks these days hire theoretical physicists and it is not to put them on their "About us" page to show how smart their staff is...

    I've actually physically visited data centers where there were large whizzing racks full of bitcoin mining rigs (confirmed by the DC owner to be bitcoin mining rigs) so I have also seen the "physical" bitcoin. (now if you are talking about other currencies, such as the one that was a PDF, raised hundreds of millions in "donations" then watched as the foundation director they trusted to buy back their dev shop decided to keep the money, that's another matter)

    I've said twice already on this thread that I haven't invested a cent in bitcoin or any other cryptocurrency and given my reasons.

    Don't trust everything you read on the web, particularly mainstream media (where 95% of the content is press releases). Most of what Buffett says publicly is PR. This article specifically misunderstands where Berkshire's investment style has drifted. It has been a very long time since he has done Graham style deep value investing, if he ever did. What Berkshire does today and what people think Buffett does are as distantly related as a Red Bull and Mecca's espresso. Technically both are caffeinated drinks.

    For example, the Goldman trade was very sophisticated, very well timed and involved an area Buffett has had issues with before (Solomon Brothers being his first foray in it) and officially doesn't touch. Kind of like going from smoking the leftover cigar butts dropped on the floor for one last smoke, versus knowing precisely where a just lit top quality Montecristo* is about to be accidentally dropped and materialising a robotic hand in precisely the right position to catch it in mid-air. I imagine this article was pushed by Berkshire because Bitcoin is in the public mind and therefore they can piggyback some branding for cheap on it.

    * I know nothing about cigars. I imagine this is the cigar world's version of a Geisha coffee from having heard the name before. You get the idea.

  50. #50
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    Quote Originally Posted by apicius View Post
    I've actually physically visited data centers where there were large whizzing racks full of bitcoin mining rigs (confirmed by the DC owner to be bitcoin mining rigs) so I have also seen the "physical" bitcoin. (now if you are talking about other currencies, such as the one that was a PDF, raised hundreds of millions in "donations" then watched as the foundation director they trusted to buy back their dev shop decided to keep the money, that's another matter)
    This is BS. You did not see the "physical" Bitcoin, what you saw was what was purportedly the hardware the Bitcoin is sitting on. If they showed you any screens with Bitcoin activity that doesn't mean anything.

    Well, you may claim to have not spent money on Bitcoin but for somebody who has not spent money on any cryptocurrency you seem to be a cheerleader for cryptocurrency.

    Cryptocurrency is BS. Bitcoin is in a bubble and no amount of smoke and mirrors will change that. Plus I have to think Warren Buffett is much smarter than you concerning financial matters.

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