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> I am sure many said something similar about housing prices in 2005. The difference is that the housing prices were clearly in a bubble and banks were intenti

by craigc 8y ago

> I am sure many said something similar about housing prices in 2005. The difference is that the housing prices were clearly in a bubble and banks were intentionally packaging subprime mortgages that they knew were bad and selling them as a low risk investment. This is much much different than Bitcoin. I would argue that Bitcoin is the only asset class that is not currently in a bubble. > The article doesn't prove the math is sound I suppose you are right, but I still think it brings up some good points. The Bitcoin market cap is minuscule compared to any other established market. What gives gold its value? It is not that it is used in jewelry. It is that there is a limited supply of it, it can’t be easily created/counterfeited/reproduced, it is divisible, and it can be used to store and exchange value. Bitcoin has the exact same properties, but is even easier to purchase, store, and exchange. I fully believe that Bitcoin and Gold market caps will reach parity some day. Maybe it will take 10 or 20 years, but I believe it will happen.

ggggtez 8y ago
>The difference is that the housing prices were clearly in a bubble The above article shows that Bitcoin was at the very least, in a bubble last year, and may still be one. >and banks were intentionally packaging subprime mortgages that they knew were bad and selling them as a low risk investment. And nearly every coin has an ICO which is a "sure thing". Everyone is selling their coin like it's a low risk investment. >This is much much different than Bitcoin. How? >I would argue that Bitcoin is the only asset class that is not currently in a bubble. So, you're living in denial then?
- craigc 8y ago
  > So, you're living in denial then? No, I believe that Bitcoin is going through a more general adoption wave. So yes, it was in a bubble last year, but it is all part of a larger adoption pattern. It is the same way Amazon stock was in a bubble from 1998 to 2000 when its value rose from $3 to over $100 and back down to $5, but where is it today?
sanderjd 8y ago
> The difference is that the housing prices were clearly in a bubble and banks were intentionally packaging subprime mortgages that they knew were bad and selling them as a low risk investment. That's exactly what Bitcoin looks like to me. Places like Goldman Sachs are getting involved in selling Bitcoin derivatives. These are akin to subprime mortgage derivatives; the bankers know their current value is inflated with respect to their fundamental value, but for the time being people clearly want to buy them, so they can make lots of money selling them. Once they are making money selling them, it behooves them to downplay the risk. They can point at a BTC graph, talk about it is the future, draw a line up and to the right, and make it seem like a no-brainer.
thisisit 8y ago
What you are quoting about banks and bubbles is all in hindsight. At that time everyone and their grandmother thought real estate could only go up. So, if you have data to backup the fact that bitcoin is not in a bubble, please show that. Until then it is just your gut feeling nothing more. > What gives gold its value? It is not that it is used in jewelry. But statistics disagrees with this point: https://www.statista.com/statistics/274684/global-demand-for-gold-by-purpose-quarterly-figures/ https://www.statista.com/statistics/274684/global-demand-for... I haven't calculated but quick eyeballing tells me jewelry beats investment by a far far margin. Additionally, gold for the most part is a risk-off (safe harbor) asset. As in people rush to gold when markets are crashing because it is supposed to be divisible etc. On the other hand people rush (and encouraged no less) to put money in bitcoin when markets are booming. So my gut feeling is that once we hit a rock in these booming times and S&P drops people will still prefer gold. But let's see how bitcoin performs during a market crash before we talk about it's investment potential in the same breath as gold.
- craigc 8y ago
  All valid points. I personally am very eager to see what happens to Bitcoin and crypto currencies during the next recession.
  - tomkarlo 8y ago
    It's an interesting question, but rationally it seems like BTC should decline during a market crash / recession. It's arguably a way to store value as other assets decline, but given that it has no yield, the rational thing to do after that decline is over would be to cash in your BTC and use it to purchase those other assets that have declined, such as real estate, bonds or stocks, and now have either attractive yield or a strong potential for future asset growth. (And you see this kind of rebalancing effect in general when a major asset class declines - eventually it pulls down other, unrelated asset types because as it goes down in price, it becomes a relatively more attractive investment.)
    - craigc 8y ago

by craigc 8y ago

ggggtez 8y ago

>The difference is that the housing prices were clearly in a bubble The above article shows that Bitcoin was at the very least, in a bubble last year, and may still be one. >and banks were intentionally packaging subprime mortgages that they knew were bad and selling them as a low risk investment. And nearly every coin has an ICO which is a "sure thing". Everyone is selling their coin like it's a low risk investment. >This is much much different than Bitcoin. How? >I would argue that Bitcoin is the only asset class that is not currently in a bubble. So, you're living in denial then?

craigc 8y ago
> So, you're living in denial then? No, I believe that Bitcoin is going through a more general adoption wave. So yes, it was in a bubble last year, but it is all part of a larger adoption pattern. It is the same way Amazon stock was in a bubble from 1998 to 2000 when its value rose from $3 to over $100 and back down to $5, but where is it today?

sanderjd 8y ago

> The difference is that the housing prices were clearly in a bubble and banks were intentionally packaging subprime mortgages that they knew were bad and selling them as a low risk investment. That's exactly what Bitcoin looks like to me. Places like Goldman Sachs are getting involved in selling Bitcoin derivatives. These are akin to subprime mortgage derivatives; the bankers know their current value is inflated with respect to their fundamental value, but for the time being people clearly want to buy them, so they can make lots of money selling them. Once they are making money selling them, it behooves them to downplay the risk. They can point at a BTC graph, talk about it is the future, draw a line up and to the right, and make it seem like a no-brainer.

thisisit 8y ago

What you are quoting about banks and bubbles is all in hindsight. At that time everyone and their grandmother thought real estate could only go up. So, if you have data to backup the fact that bitcoin is not in a bubble, please show that. Until then it is just your gut feeling nothing more. > What gives gold its value? It is not that it is used in jewelry. But statistics disagrees with this point: https://www.statista.com/statistics/274684/global-demand-for-gold-by-purpose-quarterly-figures/ https://www.statista.com/statistics/274684/global-demand-for... I haven't calculated but quick eyeballing tells me jewelry beats investment by a far far margin. Additionally, gold for the most part is a risk-off (safe harbor) asset. As in people rush to gold when markets are crashing because it is supposed to be divisible etc. On the other hand people rush (and encouraged no less) to put money in bitcoin when markets are booming. So my gut feeling is that once we hit a rock in these booming times and S&P drops people will still prefer gold. But let's see how bitcoin performs during a market crash before we talk about it's investment potential in the same breath as gold.

craigc 8y ago
All valid points. I personally am very eager to see what happens to Bitcoin and crypto currencies during the next recession.
- tomkarlo 8y ago
  It's an interesting question, but rationally it seems like BTC should decline during a market crash / recession. It's arguably a way to store value as other assets decline, but given that it has no yield, the rational thing to do after that decline is over would be to cash in your BTC and use it to purchase those other assets that have declined, such as real estate, bonds or stocks, and now have either attractive yield or a strong potential for future asset growth. (And you see this kind of rebalancing effect in general when a major asset class declines - eventually it pulls down other, unrelated asset types because as it goes down in price, it becomes a relatively more attractive investment.)
  - craigc 8y ago