5 ms·

So what happens if/when the market crashes? Worse than subprime mortgages? Will it be 2007/8 all over again?

rothbardrand 9y ago
Early on, I expect that Bitcoin will have lower prices when the Fiat market crashes, because people will sell assets to raise money to cover margin calls. However, Bitcoin generally has rallies whenever government tries to control markets in a crisis-- for example Cypress forcing everyone to take a haircut -- a lot of people moved to bitcoin to protect their assets. As governments continue to mismanage their economies and their currencies, this is bullish for bitcoin because it was designed to solve these problems once and for all, or at least try to.
- sova 9y ago
  What do you mean when you say the crash of the Fiat market? Could you give me an example to help understand?
  - rothbardrand 9y ago
    Probably easiest to read that as "the stock market" but I mean stocks, bonds, treasuries and other assets. We had market crashes in 2001 and 2008, and there is another one likely in the next couple of years, I expect. Quantitative Easing has given us a fiat bubble across many asset classes, and I expect it will crash, and Bitcoin will be hurt in the short term and then rally in the medium term as the crash continues... Hope that makes it clearer.
    - sova 9y ago
      That makes it very clear, thank you. So, let's say the Fiat markets go down holistically and people have assets in the Fiat markets like stocks. The market trends downward for a while and people sell their assets to avoid the "crash" or potential "forever loss" of assets. So, people will also likely sell their bitcoins off at this time, and in general the price will be lower for a good sprint. Thanks for clarifying, I believe I caught your gist.
      - rothbardrand 9y ago
        I expect bitcoin will crash in the early days as well... but it's unclear how long that will be, or whether it will become a safe haven that people start buying again. Bitcoin is literally a response to the 2008 crisis-- the genesis block has a quote about bank bailouts.
sova 9y ago
Subprime mortgage is very different my friend. A mortgage is basically a long-term loan that you get to buy a house. You pay it off monthly, and if for some reason you don't make payments for a long time, well, the house goes back to the person who lent you the money to get it (usually the bank). With Bitcoins, people mine them for themselves (like finding a valuable mineral) or they buy them on an exchange. If the price of the coin goes way low, people who have a lot invested in it may not be able to sell it for a while, but hopefully nobody is getting kicked out of their house over it.

Early on, I expect that Bitcoin will have lower prices when the Fiat market crashes, because people will sell assets to raise money to cover margin calls. However, Bitcoin generally has rallies whenever government tries to control markets in a crisis-- for example Cypress forcing everyone to take a haircut -- a lot of people moved to bitcoin to protect their assets. As governments continue to mismanage their economies and their currencies, this is bullish for bitcoin because it was designed to solve these problems once and for all, or at least try to.

sova 9y ago
What do you mean when you say the crash of the Fiat market? Could you give me an example to help understand?
- rothbardrand 9y ago
  Probably easiest to read that as "the stock market" but I mean stocks, bonds, treasuries and other assets. We had market crashes in 2001 and 2008, and there is another one likely in the next couple of years, I expect. Quantitative Easing has given us a fiat bubble across many asset classes, and I expect it will crash, and Bitcoin will be hurt in the short term and then rally in the medium term as the crash continues... Hope that makes it clearer.
  - sova 9y ago
    That makes it very clear, thank you. So, let's say the Fiat markets go down holistically and people have assets in the Fiat markets like stocks. The market trends downward for a while and people sell their assets to avoid the "crash" or potential "forever loss" of assets. So, people will also likely sell their bitcoins off at this time, and in general the price will be lower for a good sprint. Thanks for clarifying, I believe I caught your gist.
    - rothbardrand 9y ago
      I expect bitcoin will crash in the early days as well... but it's unclear how long that will be, or whether it will become a safe haven that people start buying again. Bitcoin is literally a response to the 2008 crisis-- the genesis block has a quote about bank bailouts.

sova 9y ago

Subprime mortgage is very different my friend. A mortgage is basically a long-term loan that you get to buy a house. You pay it off monthly, and if for some reason you don't make payments for a long time, well, the house goes back to the person who lent you the money to get it (usually the bank). With Bitcoins, people mine them for themselves (like finding a valuable mineral) or they buy them on an exchange. If the price of the coin goes way low, people who have a lot invested in it may not be able to sell it for a while, but hopefully nobody is getting kicked out of their house over it.