5 ms·

Bitcoin is a bubble, no plans to short-sell: Japan Post Bank CIO

32 points by mbgaxyz 9y ago

alexasmyths 9y ago
I'd like to know how on god's green earth they did the 'valuation'. Because there are certainly no generally accepted ways of doing that - hence the volatility. "Here are a set of numbers that you can own and rigorously control (i.e. establish ownership). You can possibly exchange them as value, like a currency, but not many people will do that. Start the bidding!" It's the most pure form of speculation imaginable. Most other forms of speculation are derived, yes, from what we think 'others' will pay, but what 'others' will pay is usually derived from some economic value: i.e. a home is a place to live, a building a place to work, shares are rights to future profits, bonds get 'repaid' and pay 'coupons' ... so you can try to figure out 'what they are worth'. BTC ... it's literally just worth what some other guy will pay - and that's 100% of the story. That's a difficult thing to predict :)
- nullnilvoid 9y ago
  Bitcoin is no more speculation than gold. Gold has its price. It is rarely used (I have not seen anyone exchanging value using gold). It cannot be eaten, drunk, lived in, or used as a tool (I guess you can use it as a weapon like a brick). Yes, it is used to make jewelries because it is expensive not because its intrinsic usability or functionalities (there are other metals or plastics that look better and weigh lighter than gold). Yet it is expensive. As a matter of fact, it is harder to use gold to exchange value than Bitcoin because you have to weigh gold and test its purity.
  - proee 9y ago
    Our entire high-tech industry relies on gold because of its amazing physical properties. To say it's rarely used is not accurate. If gold was less expensive, I'd use it for a roof on my house! http://www.usesof.net/uses-of-gold.html http://www.usesof.net/uses-of-gold.html
    - indubitable 9y ago
      And of all gold that's mined, what % of it goes towards industrial usage for its amazing physical properties?
    - nullnilvoid 9y ago
      Before high-tech industry even existed, gold was expensive. Clearly, the demand from high-tech industry did not make it expensive.
      - alexasmyths 9y ago
        It's a metal that does not tarnish, which makes it good for making pretty things, like monuments and Jewelry. That it is rare, gives it's high price.
  - alexasmyths 9y ago
    "It is rarely used " ??? If you walk down the street you will see literally hundreds of people wearing it on their fingers as Jewelry. BTW - it even has a high degree of utility as Jewelry because it does not tarnish. Also - it has some industrial use. And yes, it's highly speculative, but nowhere near BTC. And finally - it's use as a currency predates recorded history, across countless civilizations and cultures. Which counts for a lot of credibility.
    - paxpelus 9y ago
      If you walk down the street you will see literally hundreds of people owning it as an asset. BTW - it even has a high degree of utility as an asset because it cannot be tampered or destroyed. Also - it has some real life uses (Everledger, MiVote etc.) And yes, it's highly speculative. Imagine the first people using gold as a currency - crazy right?
      - dragandj 9y ago
        If you walk down the street of my city (population close to 2 million, outside US) you will probably see zero people using Bitcoin. If you are extremely lucky to find one that uses it, it is someone that speculates in it, and never ever thought of using it for "real" transactions.
      - AstralStorm 9y ago
        Gold can be tampered with. Debasing gold currencies (and other precious metal ones) has a long tradition. Likewise producing jewellery from cheap substitutes as opposed to 24k. As has plating with it.
  - tryingagainbro 9y ago
    All other things aside, gold has a several thousand year history as being used as currency. To pay for grains, hostages, to buy protection, raise armies, pay people etc etc. Bitcoin on the other hand...
- hackinthebochs 9y ago
  The way I see it is that bitcoin's potential value is the share of the economy it will manage when bitcoin adoption is widespread. Then the current value is some fraction of this potential value, the product of the likelihood that the state of widespread usage comes to pass. As more people become aware of bitcoin and buy it, that future becomes more likely, and so the current value increases.
  - alexasmyths 9y ago
    "the share of the economy it will manage when bitcoin adoption is widespread" Nobody will use BTC as a currency. It's too volatile and has no underpinning. Much for the same reason Gold is not used as a currency. Currencies are designed and managed for economic zones. Having a second currency for any zone is unwieldy. Think: you sell Milk and Bread. You make 5% margins. You sell in USD. Now - if you price in BTC - the price of BTC is fluctuating all day! So how do you even do that? You don't. You could 'accept' BTC and just do the calculation on the spot - as many Canadian stores accept USD at some specific exchange. But - with 5% margins - you can't afford to hold on to those BTC, quick, you have to convert to local currency. So the whole BTC thing is a useless exercise. Granted - there are some business entities that could use BTC, but again, they'll almost always have a local currency problem and given the inherent volatility of BTC ... it will never go away. The 'more people that hear about BTC buy it' - true for now, but has nothing to do with economics. It's just a speculative mania.
ThrustVectoring 9y ago
Bitcoin cannot be expected to be priced "correctly" (whatever that means) since there's no practical way to short it.
- mbgaxyz 9y ago
  Bitcoin Futures start trading on the CME in the next few weeks: http://www.cmegroup.com/bitcoin http://www.cmegroup.com/bitcoin However the largest electronic brokerage in the US considers it unwise: https://cointelegraph.com/news/cme-clearing-member-to-regulator-bitcoin-futures-impossible https://cointelegraph.com/news/cme-clearing-member-to-regula...
  - panarky 9y ago
    Peterffy's letter to the CME is short and fun reading. https://www.interactivebrokers.com/download/11-IB17-1145-tp-letter-to-futures-trading-commission.pdf https://www.interactivebrokers.com/download/11-IB17-1145-tp-... [PDF] His doomsday scenario is based on the Bitcoin price rising rapidly. The CME's volatility limits would kick in, preventing shorts buying to cover their positions. This leads to "ruin" for them and the CME, and contagion for the real economy. He has a good point, since losses on short positions are theoretically infinite, there's no way to put up enough margin for perfect safety.
  - thisisit 9y ago
    Then this has happened - https://www.bloomberg.com/news/articles/2017-11-15/bitcoin-exchange-that-cme-plans-to-use-for-futures-is-down https://www.bloomberg.com/news/articles/2017-11-15/bitcoin-e... So it will be interesting to see how the pricing really works.
- panarky 9y ago
  You can short bitcoin just like you can short gold or yen or pork bellies or Treasury bonds. Be prepared to put up some hefty margin, though, because shorts have a tendency to get eaten alive. And you can still sell cryptocurrencies that you own, why exactly is shorting an asset required to value it fairly? Does anyone argue that difficulty in short-selling residential real estate prevents it from being fairly valued?
panarky 9y ago
I remember analysts and experts in 2004 sneering at the thought that Google might be worth $23 billion at the time of their IPO. The pundits and talking heads gravely warned that investors were crazy to pay 230 times the prior year's net income. They said Google was a "one-trick pony". They said Google could never grow into that insane valuation. It was a bubble, they said. Why didn't foolish speculators learn from the dot com crash, or from the Dutch tulip mania? Maybe today's wise men are right, and the cryptocurrency bubble will burst in a spectacular bonfire of hubris. Or maybe they aren't really wise. Maybe they only know what they know, and can't understand what's right in front of their faces, just like they couldn't understand what Google could become.
- rtpg 9y ago
  To that point, from the article: >“During the information technology bubble, we saw a rally in dot-com company shares. But at least at that time, there were people using Yahoo or (Japanese internet firm) Rakuten -- people were using their services,” he said. >“But this time, I see quite a lot of people doing crypto-currency businesses in my circle of friends. But I hardly know anyone in person who is trading crypto-currencies and I haven’t seen anyone using them in real life,” he said. Google is a real thing. The impression from a lot of people isn't that Bitcoin is "actually" worthless, but that it's not currently being used in society in a way that validates the high numbers we're seeing. Shorter thesis: Bitcoin right now is fueling Bitcoin startups, but not much else. Google was search.
  - panarky 9y ago
    In 2004, analysts and pundits acknowledged that Google had some utility, but they had great certainty that Google's potential was far too small to justify the valuation. Today, almost everyone accepts that the blockchain is a disruptive and valuable innovation and that cryptocurrencies have some utility -- just far too little to justify the valuation. They could be right. It's just not obvious to me that the potential isn't there, and I question how they can be so certain.
    - rtpg 9y ago
deleted 9y ago
[deleted]
holyheifer 9y ago
“During the information technology bubble, we saw a rally in dot-com company shares. But at least at that time, there were people using Yahoo or (Japanese internet firm) Rakuten -- people were using their services,” he said. -> People ARE using Bitcoin's services, notably Venezuela now after the default. Argentinians have been using it to escape the terrible inflation that plagues their peso. “But this time, I see quite a lot of people doing crypto-currency businesses in my circle of friends. But I hardly know anyone in person who is trading crypto-currencies and I haven’t seen anyone using them in real life,” he said. Just because you are living in a bubble doesn't mean people don't use it. TenX's cards have been around for a while and they can be used quite seamlessly. i have also paid my friend for lunch using Bitcoin just to test it out. Heck there are even bitcoin atms in Japan. I think this speaks more about the quality of their leadership than about cryptos tbh. That said, I am not claiming the currency will go up or down. As noted by some other users, the value is quite arbitrary, and like gold this is a market that is sentiment driven. But if he understood the theory and tech behind it, he wouldn't have made the $100 claim, really makes him look like a joke.
hw 9y ago
The price of bitcoin may be bubbly but the tech isn't. Most of the people buying in to bitcoin and crypto right now are chasing $ and are mostly driven by speculation instead of an understanding of the tech behind it and its potential. Regardless if the price doubles in the next year or corrects 30% in a few days, there's a ton that's going on in the blockchain space (if you look past a lot of the get-rich-quick/scammy ICO companies). Payments, cross border transactions, IPFS, security, voting, etc are all things that are being or could be disrupted by the blockchain tech
- deepsun 9y ago
  With abandoning of segwit, Bitcoin will step away to other coins, because of the high transaction fee. It's already too high, so only large sums make sense.
  - lug0r 9y ago
    Good thing noone is abandoning it.
- thisisit 9y ago
  This guys says as much towards the end - ""Sago noted that blockchain is a great technology and one day bitcoin could become a major means of settlement. “But that will be years away, possibly more than a decade -- so there’s no need to buy bitcoin now. Since no one knows when the bubble will burst, the best thing to do here is to stay away from it,” he said."
- ruvis 9y ago
  >or corrects 30% in a few days, Didn't it just do that?
  - kss238 9y ago
    It was more like a 20% correction but it's already is back up and higher than pre drop.
- NicoJuicy 9y ago
thisisit 9y ago
"Sago said bitcoin’s rally could end after its price hits the $10,000 mark or right before the CME Group launches bitcoin futures some time by the end of this year." Given the fact this happened yesterday: https://www.bloomberg.com/news/articles/2017-11-15/bitcoin-exchange-that-cme-plans-to-use-for-futures-is-down https://www.bloomberg.com/news/articles/2017-11-15/bitcoin-e... It will be interesting to see how things pan out once the future contracts are released.
Taniwha 9y ago
In other news "emperor naked"

32 points by mbgaxyz 9y ago

I'd like to know how on god's green earth they did the 'valuation'. Because there are certainly no generally accepted ways of doing that - hence the volatility. "Here are a set of numbers that you can own and rigorously control (i.e. establish ownership). You can possibly exchange them as value, like a currency, but not many people will do that. Start the bidding!" It's the most pure form of speculation imaginable. Most other forms of speculation are derived, yes, from what we think 'others' will pay, but what 'others' will pay is usually derived from some economic value: i.e. a home is a place to live, a building a place to work, shares are rights to future profits, bonds get 'repaid' and pay 'coupons' ... so you can try to figure out 'what they are worth'. BTC ... it's literally just worth what some other guy will pay - and that's 100% of the story. That's a difficult thing to predict :)

nullnilvoid 9y ago
Bitcoin is no more speculation than gold. Gold has its price. It is rarely used (I have not seen anyone exchanging value using gold). It cannot be eaten, drunk, lived in, or used as a tool (I guess you can use it as a weapon like a brick). Yes, it is used to make jewelries because it is expensive not because its intrinsic usability or functionalities (there are other metals or plastics that look better and weigh lighter than gold). Yet it is expensive. As a matter of fact, it is harder to use gold to exchange value than Bitcoin because you have to weigh gold and test its purity.
- proee 9y ago
  Our entire high-tech industry relies on gold because of its amazing physical properties. To say it's rarely used is not accurate. If gold was less expensive, I'd use it for a roof on my house! http://www.usesof.net/uses-of-gold.html http://www.usesof.net/uses-of-gold.html
  - indubitable 9y ago
    And of all gold that's mined, what % of it goes towards industrial usage for its amazing physical properties?
  - nullnilvoid 9y ago
    Before high-tech industry even existed, gold was expensive. Clearly, the demand from high-tech industry did not make it expensive.
    - alexasmyths 9y ago
      It's a metal that does not tarnish, which makes it good for making pretty things, like monuments and Jewelry. That it is rare, gives it's high price.
- alexasmyths 9y ago
  "It is rarely used " ??? If you walk down the street you will see literally hundreds of people wearing it on their fingers as Jewelry. BTW - it even has a high degree of utility as Jewelry because it does not tarnish. Also - it has some industrial use. And yes, it's highly speculative, but nowhere near BTC. And finally - it's use as a currency predates recorded history, across countless civilizations and cultures. Which counts for a lot of credibility.
  - paxpelus 9y ago
    If you walk down the street you will see literally hundreds of people owning it as an asset. BTW - it even has a high degree of utility as an asset because it cannot be tampered or destroyed. Also - it has some real life uses (Everledger, MiVote etc.) And yes, it's highly speculative. Imagine the first people using gold as a currency - crazy right?
    - dragandj 9y ago
      If you walk down the street of my city (population close to 2 million, outside US) you will probably see zero people using Bitcoin. If you are extremely lucky to find one that uses it, it is someone that speculates in it, and never ever thought of using it for "real" transactions.
    - AstralStorm 9y ago
      Gold can be tampered with. Debasing gold currencies (and other precious metal ones) has a long tradition. Likewise producing jewellery from cheap substitutes as opposed to 24k. As has plating with it.
- tryingagainbro 9y ago
  All other things aside, gold has a several thousand year history as being used as currency. To pay for grains, hostages, to buy protection, raise armies, pay people etc etc. Bitcoin on the other hand...
hackinthebochs 9y ago
The way I see it is that bitcoin's potential value is the share of the economy it will manage when bitcoin adoption is widespread. Then the current value is some fraction of this potential value, the product of the likelihood that the state of widespread usage comes to pass. As more people become aware of bitcoin and buy it, that future becomes more likely, and so the current value increases.
- alexasmyths 9y ago
  "the share of the economy it will manage when bitcoin adoption is widespread" Nobody will use BTC as a currency. It's too volatile and has no underpinning. Much for the same reason Gold is not used as a currency. Currencies are designed and managed for economic zones. Having a second currency for any zone is unwieldy. Think: you sell Milk and Bread. You make 5% margins. You sell in USD. Now - if you price in BTC - the price of BTC is fluctuating all day! So how do you even do that? You don't. You could 'accept' BTC and just do the calculation on the spot - as many Canadian stores accept USD at some specific exchange. But - with 5% margins - you can't afford to hold on to those BTC, quick, you have to convert to local currency. So the whole BTC thing is a useless exercise. Granted - there are some business entities that could use BTC, but again, they'll almost always have a local currency problem and given the inherent volatility of BTC ... it will never go away. The 'more people that hear about BTC buy it' - true for now, but has nothing to do with economics. It's just a speculative mania.

ThrustVectoring 9y ago

Bitcoin cannot be expected to be priced "correctly" (whatever that means) since there's no practical way to short it.

mbgaxyz 9y ago
Bitcoin Futures start trading on the CME in the next few weeks: http://www.cmegroup.com/bitcoin http://www.cmegroup.com/bitcoin However the largest electronic brokerage in the US considers it unwise: https://cointelegraph.com/news/cme-clearing-member-to-regulator-bitcoin-futures-impossible https://cointelegraph.com/news/cme-clearing-member-to-regula...
- panarky 9y ago
  Peterffy's letter to the CME is short and fun reading. https://www.interactivebrokers.com/download/11-IB17-1145-tp-letter-to-futures-trading-commission.pdf https://www.interactivebrokers.com/download/11-IB17-1145-tp-... [PDF] His doomsday scenario is based on the Bitcoin price rising rapidly. The CME's volatility limits would kick in, preventing shorts buying to cover their positions. This leads to "ruin" for them and the CME, and contagion for the real economy. He has a good point, since losses on short positions are theoretically infinite, there's no way to put up enough margin for perfect safety.
- thisisit 9y ago
  Then this has happened - https://www.bloomberg.com/news/articles/2017-11-15/bitcoin-exchange-that-cme-plans-to-use-for-futures-is-down https://www.bloomberg.com/news/articles/2017-11-15/bitcoin-e... So it will be interesting to see how the pricing really works.
panarky 9y ago
You can short bitcoin just like you can short gold or yen or pork bellies or Treasury bonds. Be prepared to put up some hefty margin, though, because shorts have a tendency to get eaten alive. And you can still sell cryptocurrencies that you own, why exactly is shorting an asset required to value it fairly? Does anyone argue that difficulty in short-selling residential real estate prevents it from being fairly valued?

panarky 9y ago

I remember analysts and experts in 2004 sneering at the thought that Google might be worth $23 billion at the time of their IPO. The pundits and talking heads gravely warned that investors were crazy to pay 230 times the prior year's net income. They said Google was a "one-trick pony". They said Google could never grow into that insane valuation. It was a bubble, they said. Why didn't foolish speculators learn from the dot com crash, or from the Dutch tulip mania? Maybe today's wise men are right, and the cryptocurrency bubble will burst in a spectacular bonfire of hubris. Or maybe they aren't really wise. Maybe they only know what they know, and can't understand what's right in front of their faces, just like they couldn't understand what Google could become.

rtpg 9y ago
To that point, from the article: >“During the information technology bubble, we saw a rally in dot-com company shares. But at least at that time, there were people using Yahoo or (Japanese internet firm) Rakuten -- people were using their services,” he said. >“But this time, I see quite a lot of people doing crypto-currency businesses in my circle of friends. But I hardly know anyone in person who is trading crypto-currencies and I haven’t seen anyone using them in real life,” he said. Google is a real thing. The impression from a lot of people isn't that Bitcoin is "actually" worthless, but that it's not currently being used in society in a way that validates the high numbers we're seeing. Shorter thesis: Bitcoin right now is fueling Bitcoin startups, but not much else. Google was search.
- panarky 9y ago
  In 2004, analysts and pundits acknowledged that Google had some utility, but they had great certainty that Google's potential was far too small to justify the valuation. Today, almost everyone accepts that the blockchain is a disruptive and valuable innovation and that cryptocurrencies have some utility -- just far too little to justify the valuation. They could be right. It's just not obvious to me that the potential isn't there, and I question how they can be so certain.
  - rtpg 9y ago

deleted 9y ago

[deleted]

holyheifer 9y ago

“During the information technology bubble, we saw a rally in dot-com company shares. But at least at that time, there were people using Yahoo or (Japanese internet firm) Rakuten -- people were using their services,” he said. -> People ARE using Bitcoin's services, notably Venezuela now after the default. Argentinians have been using it to escape the terrible inflation that plagues their peso. “But this time, I see quite a lot of people doing crypto-currency businesses in my circle of friends. But I hardly know anyone in person who is trading crypto-currencies and I haven’t seen anyone using them in real life,” he said. Just because you are living in a bubble doesn't mean people don't use it. TenX's cards have been around for a while and they can be used quite seamlessly. i have also paid my friend for lunch using Bitcoin just to test it out. Heck there are even bitcoin atms in Japan. I think this speaks more about the quality of their leadership than about cryptos tbh. That said, I am not claiming the currency will go up or down. As noted by some other users, the value is quite arbitrary, and like gold this is a market that is sentiment driven. But if he understood the theory and tech behind it, he wouldn't have made the $100 claim, really makes him look like a joke.

hw 9y ago

The price of bitcoin may be bubbly but the tech isn't. Most of the people buying in to bitcoin and crypto right now are chasing $ and are mostly driven by speculation instead of an understanding of the tech behind it and its potential. Regardless if the price doubles in the next year or corrects 30% in a few days, there's a ton that's going on in the blockchain space (if you look past a lot of the get-rich-quick/scammy ICO companies). Payments, cross border transactions, IPFS, security, voting, etc are all things that are being or could be disrupted by the blockchain tech

deepsun 9y ago
With abandoning of segwit, Bitcoin will step away to other coins, because of the high transaction fee. It's already too high, so only large sums make sense.
- lug0r 9y ago
  Good thing noone is abandoning it.
thisisit 9y ago
This guys says as much towards the end - ""Sago noted that blockchain is a great technology and one day bitcoin could become a major means of settlement. “But that will be years away, possibly more than a decade -- so there’s no need to buy bitcoin now. Since no one knows when the bubble will burst, the best thing to do here is to stay away from it,” he said."
ruvis 9y ago
>or corrects 30% in a few days, Didn't it just do that?
- kss238 9y ago
  It was more like a 20% correction but it's already is back up and higher than pre drop.
NicoJuicy 9y ago

thisisit 9y ago

"Sago said bitcoin’s rally could end after its price hits the $10,000 mark or right before the CME Group launches bitcoin futures some time by the end of this year." Given the fact this happened yesterday: https://www.bloomberg.com/news/articles/2017-11-15/bitcoin-exchange-that-cme-plans-to-use-for-futures-is-down https://www.bloomberg.com/news/articles/2017-11-15/bitcoin-e... It will be interesting to see how things pan out once the future contracts are released.

Taniwha 9y ago

In other news "emperor naked"