Our risk-free forever-surging stocks are too tame? Chase “blockchain” and cryptocurrencies, even if it’s just a name.
The thinly traded shares of On-line Plc [LON:ONL] spiked 528% Friday morning in London, after it announced on Thursday that it plans to change its name to On-line Blockchain Plc, explaining that “blockchain technology and cryptocurrencies are a new and exciting area we have been working on for some time.”
As its shares were exploding higher on Friday, the company came out with a statement cautioning that its blockchain product is just at an early stage, upon which shares collapsed two-thirds of the spike, then re-spiked before tapering off and closing up 165% for the day.
This is how hot the money is around “blockchain” and cryptocurrencies. The temptation to make huge amounts of money in hours on nothing – even if it ends in tears – is just too big.
Why bother making 10-30% per year in our risk-free stock market these days, when you can make that much or more in a day or a week with the blockchain hype and cryptocurrencies?
That’s what Bill Miller, who runs the $2.3-billion investment firm, Miller Value Partners LLC, must have been thinking. Among the funds at his firm is MVP1, a hedge fund with $154 million in assets. According to Miller’s latest letter to the hedge fund’s investors, cited by the Wall Street Journal, the fund has a stunning 30% of its assets in bitcoin.
He paid an average price of about $350 for the bitcoin, he said in the letter. Currently, bitcoin is at around $5,800. The fund is up 72.5% so far this year, he told the Wall Street Journal in an interview. But he isn’t buying more bitcoin at these prices, he said.
In the letter, Mr. Miller pointed out that a “Murderers’ Row” of revered investors have been declaring that bitcoin is overpriced or a “bubble,” including Berkshire Hathaway Inc.’s Warren Buffett, James Dimon of J.P. Morgan Chase & Co. and Laurence Fink of BlackRock Inc., Bridgewater Associates’ Ray Dalio and Howard Marks of Oaktree Capital Management.
But his hedge fund just rode the momentum. It’s about making a quick buck, not about some philosophical or technical theme on changing the world or destroying fiat currencies or whatever. He doesn’t appear to fall for all the hype surrounding bitcoin. In fact, he’s brutally realistic about it in his letter:
“My view on bitcoin is that it is a technological experiment that may or may not prove to have any long lasting value.”
“Bitcoin has a market capitalization greater than 90% of the companies in the S&P 500, but it still might fail. I don’t know and neither does anyone else, no matter how certain they are of their opinion.”
“I believe there is still a nontrivial chance bitcoin goes to zero, but each day it does not, that chance declines as more venture capital flows into the bitcoin ecosystem and more people become familiar with bitcoin and buy it.”
The last statement is particularly fascinating, not only for explaining the risks – that bitcoin might still go “to zero” – but also the notion of what might keep it from going there: The principle of artificial demand by “venture capital” and other big-money elements chasing after a digital entity whose very design includes the notion of artificially limited supply.
But this artificial demand can disappear without notice – when interest wanes for whatever reason. And there is now an ever growing pile of cryptocurrencies out there, showing that even if the supply of bitcoin is artificially limited, the supply of cryptocurrencies is endless.
So far this year, there have been over 200 Initial Coin Offerings (ICOs), where various outfits sell new crypto-coins to the public. There are no regulations. Anything goes. It’s easy to do. Over $3.25 billion have been extracted from the public so far this year. And there are now about 1,000 cryptocurrencies out there, many of them already worthless.
The promotional efforts are visible in the media, including the mainstream media where reporters fawn over the big moves.
Those that promote these ICOs and cryptocurrencies send me their promo articles all the time, to publish on my site to get me to drum up support for their thingy. They have “Buy Now” websites that, among other things, usually offer a “white paper” that explains in carefully written gobbledygook how their thingy is the greatest thingy since sliced bread.
This has been going on in my inbox for years. At first it was just bitcoin promoters with all their promo-theories. Now it’s everyone else. This is how this works. The last article by an ICO promoter that has been dogging me for weeks to publish their stuff explained just how easy it is to “build a blockchain cryptocurrency.” Anyone can do it, they said. And clearly, anyone is doing it.
So there will be endless supply of cryptocurrencies and limited or waning demand. And it’s just a matter of collecting as much money as possible before speculators – such as Mr. Miller’s hedge fund – start taking profits and bailing out.
It shows how daring speculators have become in chasing profits, in a world where all risks appear to have been removed by years of central-bank liquidity that is trying to find a place to go.
Why trying to bet against this madness is a widow-maker trade. Logic has nothing to do with it. Read… Einhorn Vents his Frustrations about the Crazy Markets
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.
Scott Adams devotes his blog today to a “white paper” that explains in carefully written gobbledygook how his blockchain app thingy is the greatest thingy since sliced bread. Buy now!
Scott Adams AKA The Dilbert Guy, has made a tidy living off of some rudimentary drawing skills and re-hashing jokes and situations people mail in to him. And he *did* work for AT&T way back when (he drew the comic incognito while working there and didn’t leave until the cartoon took off. I admit I admire that; quietly working away, taking the mail-order Art Instruction School course, and publishing the cartoon while working fulltime) but this does not necessarily make him an expert on Bitcoin, or dating, or politics …
With this madness extending into everything, the downfall will be magnitudes worse. The small investors, with little wealth jumping into this, as well as the overvalued stock, housing and asset market, will never be the same again, after the fall.
“With this madness extending into everything…”
It doesn’t extend into everything!
To tell you the truth: I got a bitcoin wallet and considered buying a few but decline the downside risk when the price jumped from fifty to ninety dollars. Am I sorry? No!
Downside risk aversion has been a way of life for me for 65 years (I’m 86 now) and it kept me safe, solvent and financially comfortable in old age.
I feel like a combination of a voice crying in the wilderness and a self-promoting, self-anointed paragon of virtue.
RD – I don’t think you are a “lonely” voice crying in the wilderness as you appear to be a kindred spirit to many on this site. If people follow the “series to success” of get an education, get a job, get married, get kids, save for retirement all the while avoiding the downside risk then their probability of success has been proven to be higher. And at each step live life every day, hour, minute and second to the fullest because wealth and health can be fleeting. No need to chase bitcoins or speculative stock market periods.
Sounds like a life wasted and not truly lived.
Amen. And thanks, TX.
Thank you for judging TXRancher with your values.
In case there’s any question, I’m with TXRancher (I’m 71). I’ve found it deeply satisfying to have lived a productive life that provided for me & my family, and currently provides for my very enjoyable retirement (visited 80+ countries so far, Guadalcanal in November), and allows me to support charities.
You don’t have to party and puke all day to “have truly lived”.
I find it ironic that a largr-than-it should-be subset of millennials, who strongly reject this demonstrated “series to success”, then waste considerable energy trying to get my money to fund their (unearned) education, BMW, spring breaks & other travel, Starbucks coffee – you name it.
Being able to provide for myself means not having to beg others to do it for me…
Hear hear, TXR.
RDB, I’d love to count the furrows in your forehead – knowing that you’re too polite to curse – when some young knob-head tells you with a tone of disdain that “It’s different this time”.
You are a voice of reason and a treasure, Sir.
But it’s not different this time. That’s the point. Decentralisation is nothing new. Often people mention gold and its longevity but decentralization has been used for centuries. A recent example – well, a couple of hundred years ago – are split tally sticks in England prior to capitalism. Split tally sticks were a decentralized ledger between two parties. Peer to peer. Split tally sticks were used as money (alongside gold and silver), it represented a contract between two parties, and nature’s algorithms provided consensus via wood grain if the two pieces fitted together – proving the contract. For the wood grain (nature’s algorithms), for today’s equivalent read the BTC / crypto algorithms. This tally stick monetary system lasted a full 700 years – from the 1100s to 1826 and tally sticks were considered valuable enough to be used as collateral in the formation of the Bank of England. Today – this decentralised concept is digital, secure, built atop software protocols (as are the applications behind most of today’s most valuable stocks), and global – which is an infinitely more powerful proposition. History, at the very least – rhymes…..
I recently saw the guy from Overstock.com talking about his investments in a few of the new digital crypto currencies. I think he said he was invested in 6 or 7 of them. He said Overstock was an early adapter to Bitcoin as a payment for merchandise. It occurred to me that I don’t know anybody who ever bought anything on Overstock.com.
Petunia, I did – I paid $13 to Overstock.com for one of those little half-headset earphones you stick in your ear.
Put it in my half-dead ear first when I crank up the CPU, in case I got the volume set too high.
Haha I remember when mentioning Overstock dot com on the Ebay discussion boards would get you banned for a day. Try it again and you’d get banned for a week. So we’d call it “the big O” and stuff. Amazon was “the river”.
That being said, I think I heard about someone buying something from Overstock back in 1998?
This technology is about freeing economics from central banks, which cannot control it or escape from it
This is the cryptoconomy, and its enemy is the kleptoconomy. Central banks are merely one tentacle of the kleptoconomy.
That which is not the cryptoconomy is the kleptoconomy, and vice versa.
Anyone who opposes the cryptoconomy is rent-seeking–and doomed. Let’s see you disagree.
Decentralisation is a double-edged sword. Cybercriminals and those demanding ransomware use Bitcoin.
Yeah, right. They also drive cars and wear blue jeans.
You pay ransom in pairs of jeans? Good to know.
Yea, but try laundering $10,000,000 of illegal money using blue jeans…
Drug traffickers use US dollar. So what? Get rid of it now?
Law firms who own plenty of dollars are opening bitcoin accounts to be prepared in case of ransomware attacks. Yes, criminals use dollars too, but cybercriminals prefer bitcoin.
Not a bad idea end the petrodollar linked to dyibg reserve, no worry about that dollar debt and qe
Our society would be much better if our leaders had the gutts to let private enterprise fail when the recession hit in 2008.
Instead, moral hazard has become a permanent feature of our daily lifes with government choosing winners and losers, punishing some, rewarding others, without any real accountability to the public.
I have no doubts, that if enough big banks, investors start speculating on bitcoin, they will be bailed out again when this comes crushing down, all under the guise of financial stability. Such is the nature of moral hazard.
LOL. Leaders can do it, but the hidden question is more can society stomach the consequences of failing private enterprises?
This is Murica, where people hate negative consequences. Heck the TRUE American Dream is to live life with no consequence.
*The thinly traded shares of On-line Plc [LON:ONL] spiked 528% Friday morning in London, after it announced on Thursday that it plans to change its name to On-line Blockchain Plc*
There is one born every minute…
Same sort of action 99-2001 when .com added to company names. Result will be the same this time too.
As long as the stock market stays 500 plus percent overvalued the smart money will flow into Bitcoin.
Because bitcoin is infinitely overvalued?
I’d be interested I hearing your description of how bitcoin (et al) is a store of value (skip the speculative “find the greater fool” stuff).
I’d also like to hear your opinion of what will happen when a cryptocurrency goes bust.
Possibility of being more accurate than most realise.
Don’t forget the dot com boom left behind the structure of the internet we have today. The blockchain could easily be the next internet of course bitcoin could be pets.com
Blockchain is real and could be the next major protocol since TCP/IP. However, Bitcoin could be more like Netscape, the original browser that got supplanted by Internet Explorer and then Mozilla and Chrome.
Maybe they can call their investment offerings “Strategically User Connected Keyword Energized Reward Savings”? (SUCKERS)
While Block Chain technology is here to stay, it is difficult to understand how Bitcoin or other Cryptos could survive as a private enterprise as the PTB need to collect taxes to run Governments. We can already see the early beginnings of control in Russia and China.
Besides, is it even conceivable that Central Bankers will merely give up their stranglehold on the population and let these privately run Cryptos rule the day? It is quite possible that are working towards some coin of their own and when ready, Bitcoin and others will probably be outlawed.
“Bitcoin and others will probably be outlawed.”
As is happening in steps ion china NOW.
Most crypto currencies will die, about 90% or more.
Bitcoin will probably stay mostly healthy until the year is set to expire.
Also when everyone is crazy to invest about something is time to sell, because that’s when saud investment is gonna sink. Take a look at how volatile crypto currencies are.
You honestly are safer investing in Netflix junk bonds, that’s how volatile this crypto manure thing is.
Not that I say you should invest on Netflix. Just pointing out how unsafe crypto currencies are.
All value in the financial system is based on perceived need. Right now Wall Street perceives the need for all things blockchain and/or crypto, but it might just as well be needy for Tesla-like, or Apple-like, or Google-like things, or for that matter gold- or oil- or wind/solar-like things. Bitcoin is as real as any of them. It’s the real blockchain-crypto thing! It’s new, and it’ll “outperform” and outlast some of those other perceived needs/needed thingies. :-)
We can talk about real need vs psycho-financial need if you want…
Blockchain sounds like the latest buzzword frenzy, reminiscent of the “dot com” boom, when anything with “on-line” in the business plan sparked a stampede of buyers. Yes, blockchain will be useful at some point, but the cryptocurrencies are all computer-based. This means that they are vulnerable to anything which disrupts the Internet., such as a ransomware attack on your bitcoin vault.
All it takes is a flaw to be spotted, or a more stylish pseudo-currency to become stylish, and everyone will run for the exits. Remember barter tokens in the 1980s?
You are right. Its just like the dot com or railroad manias. The technology will be here to stay but a lot of these coins will not be.
That being said, the public at large is not invested in crypto (yet) and this has all the looks of a global mania at a time when trust in fiat currency will be moving to global lows.
I think there is potential to still make a lot of money in cryptos. I have put some money into the space, particularly in some of the smaller coins that have unique technical attributes. That being said, it remains a very small percentage of my portfolio.
My concern would be that if the governments stop printing money, it will stop flowing into crypto and into productive assets that have depreciated in value.
Exactly, everyone must remember the “internet” hype back in the 90s?! Geeks running out to buy “modems” logging on to the “worldwide web”. What ever happened to that great idea?
The internet (routers, Ethernet cabling,servers,NICs,TCP/IP protocol did not get the hype and no product no profit no revenue no problem investment s the dot.com companies did. Even if bitcoin crashes and burns, will still have blockchain’s Cisco and IBM
It is not based on percieved need. It is based on speculators hoping to reap capital gains.
It ia just a pump and dump operation. Once insiders are able get the money and run, they will let the fed know that it’s time to raise rates and everything will crash, BC too.
Big banks will take a hit and be UBERIZED when their cross border transaction revenue is decimated by crypto and blockchain.
Bitcoin couldn’t last if big banks saw it as a threat – they have way too much political sway for that. It’s still just an unregulated field for hedge funds to speculate and manipulate, similar to the way the stock market was overtly manipulated before regulations kicked in during the Great Depression. In other words, the financial sector guys still see crypto currencies in the light of money to be made rather than a threat to business.
I’m certainly a gold bug, but I’m very skeptical about about the future of crypto currencies. They’ve proven vulnerable to hacking, and they seem much more vulnerable to price manipulation than gold or silver. Gold and silver are heavily manipulated in the paper markets, but that takes huge resources of bullion banks and central banks that still run into physical limitations. By contrast any crypto currency including bitcoin is small enough with thin enough trading to be vulnerable to a classic pump-and-dump scheme done by any small to moderate sized hedge fund. The lack of regulations and easy cross-border flows mean there isn’t even a hope of legal recourse when such schemes are exposed.
What is bitcoin?
I’ll up the ante. What is “real”?
Quite obviously, the answer to that last question should be a very important thing for every human being to know. The question is so important that it even appears in movies. For example, Morpheus asks and answers it at 1:30 into the following short clip from “The Matrix”.
Would Morpheus define bitcoin as “real”? Further, if we believe really, really hard that bitcoin is real, will that make it so? (If we believe in our heart of hearts that America is exceptional over all other nations, does that make it so, or do we have to continue to prove it to the other nations of the world by more and more bombing?)
Karl Rove is a very influential person in contemporary America.
Rove is at least associated with a fairly famous quote that perhaps unintentionally reveals to the bewildered herd something important about the way the Elite think of their herd and their world.
From the above link:
“The aide said that guys like me were ‘in what we call the reality-based community,’ which he defined as people who ‘believe that solutions emerge from your judicious study of discernible reality.’ I nodded and murmured something about enlightenment principles and empiricism. He cut me off. ‘That’s not the way the world really works anymore.’ He continued ‘We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality—judiciously, as you will—we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors … and you, all of you, will be left to just study what we do.’ ”
If something that humans define as an empire can in reality exist, the Fed, BoE, BoJ, BoC, ECB, Bundesbank, etc. are in just about every way possible the new-age empire, because when they act in secret, amongst themselves, they create their own, and our own, reality. Could anything be more empire-like than that?
People like Wolf and many others judiciously study the reality created by the empire — studying all the rules that the empire tells us it follows, and the empire’s supposed reasons for doing what it is doing in near-perfect secrecy.
But, and it’s a very big but, “…. while you (Wolf, etc.) are studying that reality—judiciously, as you will—we’ll act again (as this empire did in 2008), creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors … and you (Wolf, etc.), ALL of you, will be left to just study what we do.”
And, again, just exactly WHAT IS the ultimate purpose of this empire, this economic system in which a microscopic percentage of human beings owns the vast majority of wealth and capital equipment? Hint: what is the purpose of life? The answer is simple–to keep itself alive and replicate itself by, as Draghi put it, “whatever it takes”.
And THAT must be our answer to the question “what is reality?” Our reality is right at this moment, and will continue to be in the future, whatever the TBTF banks decide it will be…………….. unless and until someone says “no” to whatever it is that the Elite and their TBTF banks and corporations have in store for us as the “solution” to their NEXT crisis.
Do YOU want to continue to live in the Elite’s “whatever it takes” (fly-by-the-seat-of-Their-pants) reality?
If you do, prepare for a steadily-decreasing standard of living along with more and more war.
If you don’t, what are you and other like-minded individuals going to do about your situation?
You seem to suggest that the only alternative is to play the game that they are playing. But you see, when nearly everyone has joined that game, the elites pack up and leave. They start other games, and you are left holding the bag.
When people look at the Roman situation with regards to currency manipulations, they see a game that lasted a very long time. But what people don’t realize is the misery that existed as the empire rotted from the inside out.
One of the most feared punishments was the designation of tax collector. In school they teach you that the feudal system came from the collapse of Roman Empire. Truth is people abdicated (or at least tried) citizenship in favor of serfdom. It was a way people used to excape crushing taxes.
With all the financial problems Rome faced, they didn’t have a massive national debt. If I remember the figure correctly 6% of the federal budget services the debt. Every kid growing up in America should be stark mad. Imagine if someone came to your door and asked you for 6% of your earnings to cover the cost of things he bought yesterday. That is exactly what is being done, yet the same people who clamored for these massive programs are enjoying their fat pensions off of the backs of people working today.
Everyone who was in favor of enacting SS, should be making up the shortfall. Even with IOU’s it was never a sustainable system. Any system that requires a population growth is not fiscally sustainable. But here we are- no wiser than the Romans.
You can play the game of the greater fool if you wish. But that game wasn’t meant for damn near everyone on this board. When the power brokers see there is nothing left to be extracted, they are out. The question is how much is left to be extracted?
“Truth is people abdicated (or at least tried) citizenship in favor of serfdom. It was a way people used to excape crushing taxes.”
That makes no sense. It is far more logical to think that extreme polarization between creditors and debtors finally led to debt bondage and serfdom: here you have your transition to feudalism.
I’m calling BS on that trivial (not even) analysis..
Almost all US adults are both debtors & creditors. Don’t think so? You are a creditor of Social Security (and Medicare) plus any pension plan you may have.
(yes, I’m aware technically the US Gvmnt does not recognize your future “ownership” of SS & Medicare).
The funny thing is that this page shows me two ads for different ICOs. Both promise 15% bonus, for whatever it means. I realize that the website doesn’t control which ads it shows, but it definitely shows the point of the article.
Bill Miller? The same guy who loaded up on Bear Stearns, Countrywide Financial and Yahoo in 2007?
Yup, his fund lost over 50% during the financial crisis. So he’s loading up on risk again. He probably knew Bear Stearns and AIG were iffy propositions, but he was going to ride the momentum all the way to the top, but then couldn’t get out in time.
“Couldn’t get out in time.” That’s momentum for you. Back in physics where these ideas live, momentum and inertia are the same thing.
Sorry. Meaningless. Couldn’t stop myself. Momentum.
The big surprising thing about Miller is that he is best known for his pursuit of fundamental value for two decades…and not chasing the growth….yet he is now heavy into bitcoin (and was heavy on the financial flyers of 2007-2008)??
Talk about a flip….similar to Warren Buffett….who can’t seem to miss with his “weapons of financial mass destruction” (i.e. derivatives) these days.
Of course the lack of any investigation into his insider trading might have something to do with his change of heart.
Bring back some memories of the late nineties. The company I worked for, a boring backend software maker, announced that it is also a .net. The stock went through the roof. Nobody checked the facts.
When sarcasm start creeping into the site like Wolf Street, it is a sure sign of the top.
You missed your grand opportunity by not ICOing WolfCoin.
I know. It was an unforgivable oversight. It seems I might be about $250 million poorer because of it :-]
Sudden Clarity Clarence has a revelation: What if Bitcoin was just another way to stop people from buying gold?
How many more publicly traded companies are going to be jumping on the “blockchain” bandwagon to create “shareholder value” while adding a new and even more manic dimension to the Fed’s Ponzi markets?
Bitcoin could never be used as a serious medium of exchange in the US. The IRS treats each bitcoin as investment property, so every time you buy something with bitcoin you have to know what you paid for that bitcoin. The required recordkeeping is near impossible if bitcoin transactions are frequent.
As long your taxes are paid in US dollars, your bitcoin transactions will be a huge recordkeeping nightmare if you conduct numerous bitcoin transactions.
I’m not sure that bitcoin brokers are required to compute your tax basis, like investment companies are required to do on the Form 1099. I doubt it.
In Switzerland you can pay your taxes in bitcoin
Does anybody know if it is possible to create more bitcoin through fractional reserve banking? In other words, could there be bitcoin “banks” that take bitcoin deposits and loan them out? If so, the supply of bitcoin may not be so limited.
Yes. Definitely. Bitcoin was designed to do all the things that gold-backed money can do. While the actual number of bitcoins is limited, bank lending could allow people to time-share them to get more purchasing power out of that fixed supply.
For it to work, all the banks would have to do it together, so everybody’s claims on the bitcoins would net out to a number the system could handle. (Every person’s expense is some other person’s income.)
Craig Murray wrote a piece on competition between banks, that’s informative, and there’s a big long quote from Adam Smith’s Book II explaining how it worked with gold.
If there is “banking” of bitcoin, you then have multiple claims on the same bitcoin, like other fiat currencies. With bitcoin, however, there will be no FDIC or government insurance, so there would be chronic runs on the bitcoin banks.
This may mean bitcoin can never be a mainstream store of value. There will never be government backing to insure deposits.
Yup. I suppose that back in the day, the stability was provided by the Big Operators, Andrew Carnegie, the in-person J.P.Morgan, etc. Of course if you got your stability from them, you played the game their way; that was power.
Also, there were a lot of bank failures under gold.
“Also, there were a lot of bank failures under gold.”
YUP all caused by EXCESSIVE LEVERAGE, on poor quality assets.
When an over-leveraged bank, with poor quality assets, suffers a cash call.
With out a FED, FDIC, to assist it
It must fail, as it can not satisfy the depositors cash demands. And other banks will not aid it on reasonable terms, as it has poor assets.
It dosent matter if the currency is gold, or baked beans.
The bank can NOT satisfy its currency liability’s, to is depositors, so must fail..
Hard money is only a problem. If you, or you competitors, want higher and faster growth, obtained by running a juiced up/credited up system.
The problem with “juiced up systems” can be seen in the Economic conditions we have today in, America, Europe, and china, in Particular.
That higher and faster growth, comes from next decades spending, now. China and segments of the west have issues, as they have forward spent. More than the lifetimes earning capacity, of the next two generations.
Unlike china America is/was still growing its population through immigration. Expanding a population through immigration can help alleviate a credit based society’s problems, only if the society, changes its over-leveraged ways.
American based Globalised Vampire Corporates allied with china have no intention of allowing America to chage its over-leveraged ways.
Credit, is a highly destructive, and highly addictive, DRUG.
America, Europe, and Defiantly china, are highly and heavily, addicted to it.
Bitcoins can be divided down to an extremely large number, 10^8.
Pet, one-hundred-million (10^8) is not such a big number, these days.
“The supply of bitcoin is not limited.”
The math challenged, computer illiterate crowd peddles this idea. Computers can divide to almost any number of decimal places, so if a pin cost 1c US, it can cost say 0.0000000001. The monetary space is huge.
I see Bitcoin as only a speculation, at $50, $500, or $5000, much like going to a Casino. If one throws some money in those directions, fasten seat belt, it may be gone at anytime.
If Bitcoin blows up the players will tell stories of great trades and profits, just like gamblers. And there aren’t Comps to brag about in the meantime.
Puerto Rico, enough said.
How to spend your electronic coin when infrastructure barely exists?
Cash is still king, heck even gold may be useful.
I recently returned from Japan, and cash is a way of life there and it worked well enough. Safety issues? LOL.
While in Japan did you see many people using cryptos. Most proponents of crytpos keep telling me that Japan is big into cryptos.
Trading cryptos, yes. After all Mt Gox, was based there. Using cryptos for day to day stuff? Zero. At least in Portland I saw a place openly advertising (a sign in their place of business) that they receive Bitcoins as payment.
Then again, I don’t navigate Japanese cyberspace so maybe the usage of Bitcoin is more frequent there?
Actually in a sense although Japan has this image of being technologically advanced, the Chinese are ahead when it comes to using tech as payment. Nowadays it’s not fashionable to pay things using cash in China. Using smartphones is the order of the day and that’s even true for restaurant payments i.e. it’s even more advanced than the US. Even then I’ve never heard of restaurants, etc accepting bitcoins as payment.
A sector off it is, many of them seem to have parts of fingers missing, also.
For a currency to be viable it needs to be stable, secure, and backed by a credible institution.
For the latter as much as readers might distrust the FED, they are still the financial arm of the greatest military (country) the world has ever known.
In terms of secure, please tell me how long before somebody figures out how to counterfeit it, and then it will be worthless.
It terms of stable, no rational businessman will transact in a currency which can destroy his profit margin (labor) in one afternoon.
Its pure tulip bulbs circa 2017
“For a currency to be viable it needs to be stable, secure, and backed by a credible institution.”
Yes, and it also has to accepted by a sovereign state as payment for taxes, which, since it’s defined as an investment asset by the IRS, Bitcoin is not.
In Switzerland you can pay your taxes in bitcoin, pretty sure Switzerland counts as a sovereign state
Bitcoin is still cheap compared to U.S. stocks. Unless another alternate investment comes along money will flow out of the U.S. stock market into Bitcoin as well as gold and silver. The big risk is in U.S. stocks not Bitcoin.
Bitcoin has no earnings, so there is no PE ratio … there’s nothing, no cash flow, no dividend, no book value, no revenues. You cannot even measure “overvalued” with bitcoin.
“You cannot even measure “overvalued” with bitcoin.”
BTC can be traded long/short on some FX platforms. Some traders enjoy that level of volatility.
Most of the associated charts place it in WAY OVERBOUGHT territory.
Those charts also show it as a massive pump dump/scam as it does not follow normal rhythm’s, (Test, bottom, top, channels, Etc) Clear pump buys can at times be observed just like buying/selling by china russia and the arab states in the Euur/$ DNT bands.
What would remain from Bitcoin after a widespread EMP attack or a catastrophic solar flare?
This would depend on wallets and full nodes. It would actually be more likely to survive than your bank fiat records because of its decentralised nature . The more copies of the ledger that survive the better the odds.
Wallets stored in optical discs would be immune, as would any copies in isolated areas Faraday cages for employment, other hemisphere for a flare. (It’s operating the equipment
during a the flare that I is the problem emps can kill until replacement arrives but are far more localised. Post flare Youve not even got to wait for Australia to wake up and send backups, maybe 40 minutes for Aussie nodes to repopulate and your back in business (since it is a distributed ledger you could even work out what has been lost where and recover ) in fact it went through am event which from a technical standpoint is virtually the same as this. Compare to the single point of failure your bank may well have for a it’s 1s and 0s.
Depends how secure and multiple the backups are. (if they even have multiple backups for most cryptos/tulip bulb systems.
israel has EMP proof backups for a lot of things, probably as they were the main Developers/Drivers of the EMP/Nutron weapon system’s. If your backup/ups is/are in a hardened and shut down facility’s it/they will live.
Unlike Tsar Bomb and most of the American chinese russian nuclear arsenal, EMP/Nutron weapons are useable.
There are more than 9,000 Bitcoin nodes located all over the world. Each node maintains a complete and current ledger of the whereabouts of each and every BTC. So basically, to “turn off” Bitcoin even temporarily, the entire global internet would need to be shut off and all the computer servers wiped clean. If this were to occur, we are all dead.
The hucksters -errrr, people claim Bitcoin has a value because people believe it to have one.
But, per these once/present/future gold-stackers, you should just discount the fact that people believe the stock market is a good proposition because clearly it is incorrect to ascribe “value” to something that is so obviously overpriced by traditional metrics.
Which is it, then? Traditional metrics do apply to bitcoin but not equities?
Is bitcoin sufficiently liquid/frictionless in order to be able to deftly get in an out? That’s a rhetorical question, as at the first real difficulty these exchanges will freeze like so many puddles of water.
This, to me, is always the advantage of equities. When things go to hell it’s pretty easy to move into cash and then into trades pointing the other way.
Bitcoin = Tulip Mania
My issue with Bitcoin and other blockchain currencies is their distribution of ownership. While the number of outstanding Bitcoins and their value is completely transparent, concentrations of ownership for these currencies are not. It’s not clear how Bitcoins and other blockchain currencies were allocated when they were first issued, and what ownership distributions look like now. I have a nagging feeling that 100 or so individuals own more than half of Bitcoin. If this is the case, there is probably a limit to how widely these currencies can be adopted without greater transparency to assure they are not being hoarded.
Jim, walk right up to the front desk and collect your winnings ……….of bitcoin, of course.
” I have a nagging feeling that 100 or so individuals own more than half of Bitcoin.”
So do I, but only because for a long time I’ve had this nagging feeling that 100 or so individuals own more that half of the world, and gitcoin would be just par for the course.
Now, Jim, here’s a question for you. When Some One fianlly “wins” this gigantic, real world game of Monopoly, do you think we’ll know who owns all things and, therefore, all their profit, or will we be as in-the-dark ignorant on VW Day as we are today?
I strongly suggest that bitcoin-etc. lovers and droolers see the 1948 classic movie “The Treasure of the Sierra Madre”. After you watch it, you should know exactly why I recommend it. If you don’t……….. “you can’t win if you don’t play!!”
It’s time to re-read Charles Kindleberger’s book, “Manias, Panics and Crashes”. Of course after the crash most former participants will dust themselves off, develop amnesia, and start looking for the next get rich quick scheme.
Bitcoin is doomed in the long run because Governments will not allow competition of the currency. Not under any circumstances. It will be easy to shut it down because all financial transactions are recorded, and that’s aside from the vast surveillance state that now exists. At some point you need to switch bitcoin to an established currency, to into a good, or vice versa, in order to be able to do anything with it. Those branches are easy for large government to snap off.
In the short term for sure bitcoin can carry on rallying – governments are historically slow to react – But it’s threat to the fiat money system gets big enough govt will shut them down in the end.
You all believe the economic system of today is thuroughly Funked. Yet here is the new paradigm chomping market cap like a sperm whale eating a Pequod and you cant even be bothered to do some basic homework.
Gershon: How many more publicly traded companies are going to jump on the blockchain bandwagon?
A: All of them
Silly Me: What would remain of Bitcoin after a widespread EMP?
A: The entire network save one can be destroyed and so long as that node remained the miners could come back online exactly where they left off.
Enrique Bermudez: Is Bitcoin sufficiently liquid?
A: All you need to get In and Out of bitcoin is a computer and an internet connection. No exchanges necessary.
Bobber: Is it possible to create more Bitcoins through fractional reserve banking?
A: No. Creating a Bitcoin is only possible by solving one of the hardest computational challenges known to man in 10 minutes.
Wolff: Bitcoin has no earnings
A: Bitcoin is a distributed network. Miners put money in and gain a return on this investment.
The famous DAO attack on the Etherium network stands for Distributed Autonimous Organization. The Corp’s of the future will require no CEO no Accountants, no Payroll Dept, potentially not even HR, just log in and you got the job. The Gig economy come Gigawatt.
If there is a future it is blockchain.
IMHO opinion much of this does not make sense.
The whole mining concept is a big, big waste of energy from what I can tell. There should be a better way to distribute crypto currencies. If the computation is so hard how was Satoshi was able to mine about 2 bitcoins a minutes in beginning. Now it takes 10 minutes. For Satoshi to mine 1,000,000 bitcoins at one per 10 minutes, it would have taken him 19 years.
Clearly this is like a multi-level marketing scheme where those who get in at the begging are at the top of the pyramid. This is a true fact with as the top 1% own 90% of the the wealth. The whole thing is silly. It is a distribution of wealth from the few to the many.
But like any pyramid scheme it could keep going up.
Now that being said, block chain is a disruptive technology.
Wait for it, the bitcoin bubble and the student-loan bubble. Toot toot, annnnnnd pop! pop!
Bitcoin futures contract coming to the CME by the end of the year.
Bitcoin to 10k then 25k by end of 2020
I believe the bitcoin blockchain ledger is maintained by all the users and miners. It is decentralized. What happens when the limit is hit for the number of bitcoins mined? Wouldn’t these miners turn off? What happens to the ledger?
Charles, Miners make money not only by mining but also by processing Bitcoin transactions. Each transaction requires a small processing fee. As Bitcoin gains mass adoption, the number of transactions increases. Plenty of money to be made by simply processing transactions.
“Plenty of money to be made by simply processing transactions.”
So therefore the difference between a coin miner/transaction processor (AKA Money launderer).
And a wall street banker.
Is that coin miners are more blatant criminal launders than bankers, as both make obscene amounts of money “processing transactions”. And bankers are TRANSPARENT compared to miners.
So apart from transferring real money, from fools, to criminals why do we need to replace real money with scam coins???
What the article shows is that Mr. Miller doesn’t really understand what is going on in terms of blockchain and cryptography and how it is in the process of completely revolutionizing the financial world. That he thinks that bitcoin could potentially go to zero is breathtaking in showing how clueless he is. The ecosystem being built on top of blockchain and cryptography is unstoppable. Not only can people be their own bank but exchange value in a peer to peer manner across an ever increasing number of cryptocurrencies and fiat currencies. As well, cryptocurrencies are being linked to assets creating a market that will be worth around $5 trillion in 2025 based on research from LAT Crypto Research. As well that will represent around $40 trillion in trading volumes daily. None of which will be required to traded via “trusted” third parties. And we are at the stage where all of these cryptocurrencies are being tied together. And Mr. Miller thinks that bitcoin, the reserve currency of all cryptocurrencies is going to go to zero!?!
I would say you have less of a handle on the scam coins than miller does.
as he understands the Chain is going somewhere and is worth something, separate from the scam coins, which at some point, are all going to 0.
The question is has miller learnt from last time to get out before the top, or is he again going to try and pick it as an exit point.
Which is a loosing game which he should have learnt last time.
It is still big risks with Bitcoin like regulation and technical issues like the fork that is comming up November 18th. However in the long term Bitcoin is a good lottery ticket if it replace the USdollar as a world currency.