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Doesn't most of this apply to financial markets in general, not just specifically bitcoin? The only obv exception being that they are "regulated" although that

Doesn't most of this apply to financial markets in general, not just specifically bitcoin? The only obv exception being that they are "regulated" although that is also arguable.

bduerst 10y ago
I think you answered your own question with the obv answer - most financial markets are regulated. We can argue that the market price of something is already reflective this risk from regulation (or lack thereof) but that would require everyone in the market to be perfectly informed. As this person said, there is plenty misinformation being spread by rational actors who stand to benefit from Bitcoin price manipulation. In other financial markets there are at least some restrictions on this type of behavior, like insider trading, etc.
- problems 10y ago
  The sheer unpredictability of Bitcoin even bites those who try to use price manipulation to their advantage though at times. Look at what happened with pirateat40, the "bitcoin savings and trust" ponzi scheme king who couldn't pay out one time and decided to try to try his hand at market manipulation instead.
- ChemicalWarfare 10y ago
  sure, there is some regulation (definitely more than in the btc world), but even that doesn't prevent things like the goldman sachs deal back in 2008 from happening. the point I'm trying to make - financial markets in general are volatile and largely unpredictable with plenty of fud and disinformation floating around, not that different from the "bitcoin world".
  - bduerst 10y ago
    I'm not saying regulation is working exceedingly well, just that some regulation is still better than none.
- lend000 10y ago
  What "regulation" would prevent Bitcoin's volatility? The fact of the matter is that most of Bitcoin's value is speculative, and therefore extremely volatile, and it will be that way until large numbers of things can be bought at static Bitcoin prices (not converted Bitcoin at the current BTC/USD exchange rate). Tying assets to tangible value is the only way to add price hysteresis to any fiat instrument, including fiat currencies like US dollars. If there weren't millions of things you could buy for a fixed price in USD, you had better believe it would show the same volatility. People like to throw around the talking point that "markets need to be regulated", but the analysis stops there. Don't be so quick to regulate without an idea of why/if it's necessary, or what the true effects of the regulation would be. A regulation should be a response to a well-defined problem (defined as an encroachment of someone's liberty, whether specific or the public at large) with a known cause, such that the regulation maximizes overall freedom. At least, in a fair system.
  - bduerst 10y ago
    Regulating the supply so that it's not a deflationary currency would solve some of Bitcoin's volatility issues. You can counter by saying, "It's not designed that way" but Bitcoin is designed to accept whatever forks a concensus of miners accept, so it is possible.
    - lend000 10y ago
      > Regulating the supply so that it's not a deflationary currency would solve some of Bitcoin's volatility issues. Please elaborate/provide evidence. I have never heard of such a link or economic property that would demonstrate that volatility is impacted by the sign of the inflation rate. And of course, miners already influence the money supply by choosing to sell or hold their supply, so they act as a decentralized form of the ECB/Fed/etc. Their less influential 'monetary policy' is probably much less harmful as well. And it's important to understand what deflation is -- Bitcoin only appreciates when people assign more value to it. All things being equal, Bitcoin is NOT deflationary, whereas the USD is inflationary, because even with 100% adoption the USD supply is artificially increased, and the value eroded.
bdamm 10y ago
Especially the part about people with no actual knowledge of a stock making guidance regarding its future, and people who want to manipulate the price of a stock incentivizing people who know nothing about a stock.

Doesn't most of this apply to financial markets in general, not just specifically bitcoin? The only obv exception being that they are "regulated" although that is also arguable.

bduerst 10y ago

I think you answered your own question with the obv answer - most financial markets are regulated. We can argue that the market price of something is already reflective this risk from regulation (or lack thereof) but that would require everyone in the market to be perfectly informed. As this person said, there is plenty misinformation being spread by rational actors who stand to benefit from Bitcoin price manipulation. In other financial markets there are at least some restrictions on this type of behavior, like insider trading, etc.

problems 10y ago
The sheer unpredictability of Bitcoin even bites those who try to use price manipulation to their advantage though at times. Look at what happened with pirateat40, the "bitcoin savings and trust" ponzi scheme king who couldn't pay out one time and decided to try to try his hand at market manipulation instead.
ChemicalWarfare 10y ago
sure, there is some regulation (definitely more than in the btc world), but even that doesn't prevent things like the goldman sachs deal back in 2008 from happening. the point I'm trying to make - financial markets in general are volatile and largely unpredictable with plenty of fud and disinformation floating around, not that different from the "bitcoin world".
- bduerst 10y ago
  I'm not saying regulation is working exceedingly well, just that some regulation is still better than none.
lend000 10y ago
What "regulation" would prevent Bitcoin's volatility? The fact of the matter is that most of Bitcoin's value is speculative, and therefore extremely volatile, and it will be that way until large numbers of things can be bought at static Bitcoin prices (not converted Bitcoin at the current BTC/USD exchange rate). Tying assets to tangible value is the only way to add price hysteresis to any fiat instrument, including fiat currencies like US dollars. If there weren't millions of things you could buy for a fixed price in USD, you had better believe it would show the same volatility. People like to throw around the talking point that "markets need to be regulated", but the analysis stops there. Don't be so quick to regulate without an idea of why/if it's necessary, or what the true effects of the regulation would be. A regulation should be a response to a well-defined problem (defined as an encroachment of someone's liberty, whether specific or the public at large) with a known cause, such that the regulation maximizes overall freedom. At least, in a fair system.
- bduerst 10y ago
  Regulating the supply so that it's not a deflationary currency would solve some of Bitcoin's volatility issues. You can counter by saying, "It's not designed that way" but Bitcoin is designed to accept whatever forks a concensus of miners accept, so it is possible.
  - lend000 10y ago
    > Regulating the supply so that it's not a deflationary currency would solve some of Bitcoin's volatility issues. Please elaborate/provide evidence. I have never heard of such a link or economic property that would demonstrate that volatility is impacted by the sign of the inflation rate. And of course, miners already influence the money supply by choosing to sell or hold their supply, so they act as a decentralized form of the ECB/Fed/etc. Their less influential 'monetary policy' is probably much less harmful as well. And it's important to understand what deflation is -- Bitcoin only appreciates when people assign more value to it. All things being equal, Bitcoin is NOT deflationary, whereas the USD is inflationary, because even with 100% adoption the USD supply is artificially increased, and the value eroded.

bdamm 10y ago

Especially the part about people with no actual knowledge of a stock making guidance regarding its future, and people who want to manipulate the price of a stock incentivizing people who know nothing about a stock.