Trig Discipline posted:

Oh yeah I saw a really interesting paper on this in the International Journal of Complete Bullshit I Just Made Up.

Pardot posted:

idk what everyone is freaking out about, price has barely moved in the last 180 days according to this handy chart

Computer Serf posted:

reminds me of this

http://cseweb.ucsd.edu/~mbtaylor/papers/Taylor_Bitcoin_IEEE_Computer_2017.pdf

which is basically:

comedyblissoption posted:

it's really weird to me that people worship currency or gold or cryptos or whatever and believe that they are the source of material wealth instead of human labor

you'd think puritan work ethic might translate into worship of labor, but instead the puritan work ethic is used to worship submitting to wage slavery

I feel like I'm taking crazy pills

Dmytri Kleiner posted:

Ironically, while libertarian capitalist theories of money can not account for Bitcoin, Marxist theories of money can. The face value of Bitcoin represents a certain worth in terms of the labour time embedded in the computation power used to mine it. The Marxist theory of money is a Proof of Work theory.

For Marx, the value of all commodities is not subjective, but objective; all commodities have a value that is created by the labour required to produce them. The reason that money can be used as a way to express the price of other commodities is because it represents a certain amount of labour, which is also what the worth of the other commodities is based on. As Marx states in Grundrisse “1/x ounce of gold is in fact nothing more than 1/x hours of labour time materialized, objectified.”

Marx illustrates that the face value of money is a rational number. It always represents a specific ratio. In the case of gold, Marx employs the ratio between the amount of gold and the amount of labour, the work:gold ratio. The value of the total volume of gold is derived from the amount of work required to produce it.

Take for example an economy that produces apples, oranges and coconuts, you could have a table of prices that lists apples and oranges in terms of coconuts, oranges and coconuts in terms of apples, and apples and coconuts in terms of oranges. You could not have a price of apples in terms of apples, nor oranges in terms of oranges, nor coconuts in terms of coconuts, or rather that price would always be 1.

If we chose to use coconuts as money, presumably because we’re coocoo for them, how many apples are worth a coconut? How many oranges are worth a coconut? The value of the coconut is its socially necessary labour time. Say that is 10 hours. Therefor a coconut is “worth” 10 hours. Say an orange is worth 2 hours and apple is worth 5 hours, the price of the orange is 0.20 coconuts (20 cococents), and the apple is 1/2 a coconut.

As coconuts are money, more are produced than are used, since once you use it to make a chutney, you can’t spend it as money, and you can’t save it. So its original use value as food is replaced by its new use value as money.

Yet, the value of a coconut is still rooted in socially necessary labour time, like the commodities that are priced in it, this is why it can be used to compare all the other commodities, because its value is rooted in the same thing: labour.

If there are not enough coconuts for the savings needs of the economy, demand for coconuts will go up. The exchange value of coconuts will temporarily rise, but will fall back to its value as more labour is drawn into coconut production, and away from the production of the other commodities. The market regulates the value of coconuts.

Money can express the value of commodities, because both money and the commodities priced in it can be reduced to a ratio of work to supply.

While the libertarian capitalist theory is not useful in determining the value of Bitcoin, Marxist theory is. Bitcoin does not need to be backed or collateralized in any reserve of useful commodities, but instead in the labour time required to produce it. Proof of work.

The Bitcoin software employs an algorithm that increases the difficulty of the work needed as more mining capacity is added to the pool to keep the rate at the current limit that is configured in the software. This means that while the face value of Bitcoin represents a certain worth in terms of labour, this worth is not consistent. There is no fixed ratio between work and coin. More work creates more LESS value, but instead of creating more coins with the same value each, it creates the same number of coins. Each coin has less value.

As more computational power, representing ever greater amounts of labour, is employed in Bitcoin mining, the number of Bitcoins produced does not go up, instead, the value of each Bitcoin goes up, creating a positive feedback loop. The more Bitcoin goes up, the more people are attracted to mining it, the more it goes further up.

The Bitcoin creators model Bitcoin as a kind of paper money with an arbitrarily fixed supply and therefore an irrational value, attempting to follow Austrian theory, rather than model it as a money commodity according to Marxist theory, which is regulated by the market.

While at first Bitcoin’s exchange rate was only of interest to the economy of enthusiasts who are attracted to its intrinsic decentralized features, eventually investors and speculators took notice, and Bitcoin become the purely speculative asset Tymoigne accuses it of being. The positive feedback loop quickly became a short circuit, and kick-started an asset bubble.

As the bubble grows, the capital gains from Bitcoin become larger, and exceed returns from other forms of investment. Investment portfolios will over time start to carry a larger portion of Bitcoin, squeezing out other investment options.

During a bubble, It becomes perfectly rational for investors to pay a foolish price for an asset if they are certain that it can be sold for a higher price to a greater fool. The exchange rate of Bitcoin become detached from the labour time embedded in the computational capacity of the mining pool and become underwritten instead by the supply of the greater fool.

This turns the bubble investor into a judge in a kind of a beauty contest described by Keynes as not being one where we choose the prettiest option, but where “we devote our intelligence to anticipating what average opinion expects the average opinion to be.”

Like a game of betting on the answers of the contestants on Family Feud, so long as the investors believe that the average opinion expects the average opinion to be that Bitcoin will go up, Bitcoin will win the Keynesian Beauty Contest and the bubble will continue to inflate. However, the greater fool regularly has a crisis of confidence, which causes frequent crashes during the rise.

So long as exchange rate doesn’t stay below the cost of mining Bitcoin for very long, the bubble won’t pop and Bitcoin’s positive feedback loop will quickly begin to push the exchange value up again. So long as the capital gains are still better than returns on other investments, portfolio compositions will continue to shift to holding more Bitcoin.

At the same time, as long as the return on capital gains of Bitcoin are greater than real interest rates, portfolios will become more leveraged. Investors will borrow more and more, as the payment of the interest is less than the expected return from the Bitcoin exchange rate going up.

Hyman Minsky describes three kinds of investors, “hedge” investors, which have enough income to pay both the interest and principal on their loan, “speculative” investors, that can pay the interest but not the principle, and “Ponzi” investors, investors who can not pay either the principal or the interest, and depend on the assets that they own to increase in exchange value.

As returns on Bitcoin continue to be greater than other investments, Bitcoin will become a larger portion of investment portfolios, as Bitcoin does not pay interest or dividends, this means that the income of investors will go down as a result. While returns on Bitcoin are be greater than real interest rates, investors take on more and more loans. As a result, more and more investors will “go Ponzi.”

Every time there is a crisis of confidence of the greater fool, the Ponzi investors will go bust, as they can’t pay their loans, even after they sell off all their Bitcoin. As more investors go Ponzi, these will cause deeper and deeper crashes in Bitcoin, each crash will make Bitcoin a little less pretty, eventually Bitcoin will start losing the Keynesian beauty contest, perhaps to other alt-coins, perhaps to other investments completely, and the supply of the greater fool will dry up.

As the bubble bursts, Bitcoin will quickly become a toxic asset, with many holders wanting to sell, but finding few buyers. Miners will begin to abandon Bitcoin, and the positive feedback loop will begin to operate in reverse. Less miners will not mean less Bitcoin being produced, but instead the proof of work will become less difficult and the same number of Bitcoins will be produced. The value of each Bitcoin will fall. Eventually, falling to its “fair price” of zero, as Eric Tymoigne determined, or close enough to it. It will go back to simply being the in-game currency of libertarian capitalist fantasies.

The Austrian idea of money needing to be in fixed supply, drawing inspiration from “the gold standard,” is the undoing of Bitcoin. The coding of this bad idea into the Bitcoin software means, ironically, that the market can’t regulate Bitcoin. As more people invest in mining operations and the mining pool grows, the supply of Bitcoin doesn’t go up, so return on investment can’t regulate its exchange value.

Meanwhile, the bubble in the exchange rate of Bitcoin has made it useless as money. Price instability and high transaction costs have forced many vendors and payment processors who accepted it as payment to drop it as an option. This includes most of its most prominent mainstream supporters, like the digital distribution platform Steam or the payment processor Stripe.

As Bitcoin is still a relatively small part of overall investment portfolios, it’s impossible to know when exactly the bubble will burst. It’s likely that the libertarian capitalist bent of the community will actually work to delay this, as this community is a rich source of the greater fool, and probably is less likely to take on loans. We are very likely a long way away from a “Minsky Moment,” where a large number of Ponzi investors going bust causes a meltdown.

Not only has Bitcoin failed as money, but the asset bubble it has created has diverted investment from real production of goods to speculation, and the mining process consumes a phenomenal amount of energy, with catastrophic environmental effects. Meanwhile, it has done nothing in terms making the economy more fair or reducing the power of either governments, banks or any of the intermediaries it was meant to displace. There is no question that Bitcoin is a failure, a rather disastrous one, even if some speculators have been spectacularly enriched by it.

If there is value in the original vision of Bitcoin, to have a form of money that can be used to make payments across the internet in a way that makes government unnecessary and doesn’t reveal real names or physical location, it needs to be programmed differently. Such a currency would need to work in such a way that the supply of the currency increases when more mining capacity is added to the pool. This allows the market to regulate its exchange value by the natural increase and decrease of investment in mining relative to demand for the currency.

It is possible to create a cyptocurrency with a with a stable value by simply eliminating the feedback loop, creating a rational cryptocurrency with a consistent work:coin ratio. Bitcoin could be made rational by increasing and decreasing the number of Bitcoins produced per block along with the increase and decrease of the difficulty of the proof of work. This way, the number of Bitcoins produced would scale in proportion with the investment in mining.

However, there may not be much interest in doing this. As miners would need to choose to use their hashing power to make a standard rate of profit mining the rational cryptocurrency instead of chasing speculative returns by mining bubble-prone, intentionally irrational cryptocurrencies. Another obstacle would be get attention for it, as a rational cryptocurrency would not attract hype, because it would not have fantastically skyrocketing exchange rates.

Bitcoin was intended to be digital money for an ideal perfect market for libertarian capitalists, instead Bitcoin has turned out to primarily benefit bankers and speculators at the expense of the environment and the real economy.

For any that remain committed to the original vision of Bitcoin, a decentralized money that one could use with out revealing their real name and location, the path forward lies in creating a rational cryptocurrency, based on the Marxist and not the Austrian theory of money.

Yet, even with a rational cryptocurrency, it is unlikely to play a major role in the global monetary economy, given that governments are not constrained by reserves, crypto or otherwise. Even with a “gold standard” governments can still spend more by securitizing future tax obligations. Banks are likewise constrained only by qualified demand for their loans, not their own reserves. This means that the money in the global economy will remain government and bank money at the macro level.

Even if a rational cryptocurrency can not play the sort of revolutionary role that animates the dreams of libertarian capitalists, it can still provide a payment option that is international, convenient and privacy respecting, which remains worthwhile.

However, the institutions that would most likely create a rational cryptocurrency would be the banks or a fintech startup seeking to disrupt payment processing. While hardly heralding in a libertarian capitalist paradise, this would certainly be a better use of work than the misguided and harmful bubble Bitcoin is today.

Computer Serf posted:

thats funny because bitcoins are the product of labor, what do you think proof of work actually does!? it doesn't do anything, its just a computer asking for an increasingly random number that takes more billions of guesses

https://blog.p2pfoundation.net/face-value-bitcoin-proof-work-labour-theory-value/2018/02/01


fixed a word for the author because it's a insanely huge mistake to pretend an algorithm that grows more inefficient over time as more work is wasted on it some how equates that work is "valuable" or that the same product produced by more (increasingly inefficient and unnecessary and wasted) labor some how means the product is changed by the labor - especially when most of the supply in circulation was produced with the "more efficient" labor of during the early stage of mass produced hyper inflation

Computer Serf posted:

https://blog.p2pfoundation.net/face-value-bitcoin-proof-work-labour-theory-value/2018/02/01

joats posted:

“I think it could get stuck at this price due to regulations and lack of scaling,” he said—though he provided a much more optimistic view for an end-of-year goal if Bitcoin can successfully navigate its short-term woes. “Once regulations are in place and if scaling is achieved, then $50,000 or more by December 2018 could be feasible.”

“Bitcoin has now experienced a correction period that has lasted as long as most of the previous correction periods. From history, it may now take us most, perhaps all, of February to climb back to the all-time high,” Raphael Rottgen, partner and head of research at Q2Q Capital, said. “Once we surpass the all-time high, history tells us that the price may rally 50 percent [or higher] before going into another consolidation period.”

Alpha Mayo posted:

My argument is that below the green line, we are in crash mode that takes a pump to temporarily delay. And these are real fiat pumps in GDAX and the KRW exchanges. I don't know if Bitfinex crew makes money overall on them, but probably not much considering they also have to eat the real sells from miners at inflated prices. Pretty sure the exit is coming soon.

They also have to pay real money for Tether on Kraken, which while doesn't have a huge volume I'm sure they'd rather not.

Alpha Mayo posted:

If we break the green trendline, it plummets IMO. If not, we bounce back to the red line.

Trig Discipline posted:

Oh yeah I saw a really interesting paper on this in the International Journal of Complete Bullshit I Just Made Up.

lazorexplosion posted:

Computer Serf posted:

reminds me of this

http://cseweb.ucsd.edu/~mbtaylor/papers/Taylor_Bitcoin_IEEE_Computer_2017.pdf

which is basically:

Alpha Mayo posted:

My argument is that below the green line, we are in crash mode that takes a pump to temporarily delay. And these are real fiat pumps in GDAX and the KRW exchanges. I don't know if Bitfinex crew makes money overall on them, but probably not much considering they also have to eat the real sells from miners at inflated prices. Pretty sure the exit is coming soon.

They also have to pay real money for Tether on Kraken, which while doesn't have a huge volume I'm sure they'd rather not.

Alpha Mayo posted:

My argument is that below the green line, we are in crash mode that takes a pump to temporarily delay. And these are real fiat pumps in GDAX and the KRW exchanges. I don't know if Bitfinex crew makes money overall on them, but probably not much considering they also have to eat the real sells from miners at inflated prices. Pretty sure the exit is coming soon.

They also have to pay real money for Tether on Kraken, which while doesn't have a huge volume I'm sure they'd rather not.

a hot gujju bhabhi posted:

serious question, does anyone know how to actually access a stream of the blockchain transactions programmatically?

Sentient Data posted:

The Bitcoin price is not falling our us currency and other fiats are loosing value paper is becoming less and less valuable,

temple posted:

"Success so clearly in view... or is it merely a trick of the light?"

quote:

Battlemech7 - Today at 7:57 AM
People are screaming and crying? Lol. If you invested more then you could afford to loose you need to be removed from the gene pool.
Tesla Nguyen - Today at 7:58 AM
https://hapskorea.com/college-student-commits-suicide-mounting-cryptocurrency-loses/
Haps Magazine
College Student Commits Suicide After Mounting Cryptocurrency Loses
A 20-year-old college student from Busan committed suicide this week after losing nearly 200 million won in cryptocurrency.
Battlemech7 - Today at 7:58 AM
Bahaha what a loving idiot. Just wait a year and it will be worth more.(edited)
sloopy - Today at 7:59 AM
I'm going to loving scream into a bag
sloopy - Today at 7:59 AM
Ban me from this chat
bruno - Today at 8:00 AM
life is a bubble
xscn - Today at 8:00 AM
i highly doubt he took his life because of crypto
Crypto Puppy - Today at 8:01 AM
we are at fault
xscn - Today at 8:04 AM
honestly though, that just sounds like mainstream fud to me
xscn - Today at 8:04 AM
they love a story of someone who killed themself and traded crypto
xscn - Today at 8:05 AM
correlation... causation?
Battlemech7 - Today at 8:05 AM
BTC will probably hit 5/6k but by eoy will probably be back up to 15k+
Just rough start to the year
Just keep holding. Don't sell at a loss.
xscn - Today at 8:06 AM
why would you 100% hold if you expect 5/6k
Battlemech7 - Today at 8:06 AM
Because I am devoid of weak hands

Double Bill posted:

Stop trying to predict crypto markets, it's not possible.

This guy would probably match the best crypto analyst in the world:

Sentient Data posted:

The Bitcoin price is not falling our us currency and other fiats are loosing value paper is becoming less and less valuable

Enchanted Hat posted:

"The US dollar is becoming less valuable, and that is why it is possible to buy bitcoin for fewer dollars" - an economist

Enchanted Hat posted:

"The US dollar is becoming less valuable, and that is why it is possible to buy bitcoin for fewer dollars" - an economist

TraderStav posted:

Wouldn't that make BTC/USD increase?

bobfather posted:

Instead of attempting technical analysis on the current market, please try to describe what factors have led to the sharp drop in price since December. Obviously I’m not looking for the one true answer, so feel free to include as many relevant factors as you can.

If you finish with that and get bored, please go back further and try to describe what factors have led to the severe price increase that took place between summer of 2017 and winter of 2017. Again, if there’s not one true answer, fine, so feel free to include all relevant factors.

History is already written. All data that can be available, are available. Should be a piece of cake to analyze those data and give a list of reasons why the market reacted in the ways it has.

TraderStav posted:

Wouldn't that make BTC/USD increase?

salt shakeup posted:

itotally forgot people used to mine bitcoin on usb sticks

Enchanted Hat posted:

The weak hands thing is the most annoying of all the bitcoin memes. "You haven't made a loss unless you sell" is just a mind-bogglingly stupid thing to genuinely believe in.