3 ms·

While I won't argue with most of that and in reality it's the most likely scenario. > Its not a big problem because only a fraction of all people will get this

While I won't argue with most of that and in reality it's the most likely scenario. > Its not a big problem because only a fraction of all people will get this kind of gold fever for a long period of time. When I see Tesla, one of the largest company in the US, buying 1.5B in Bitcoins. It goes a bit beyond a normal "fever". Now if this is just an isolated incident we should be in the clear. If this is the start of a trend for businesses, I can imagine a scenario where businesses add more and more Bitcoins to their balance sheet over some years which makes the price gradually go up, after years of prices going up, businesses start believing it's an always growing asset and over-weight their portfolio with it. Banks and financial institutions get in on the fun and eventually load up too. Now it's 2029 and we have lots of organisations with political power having incentives to keep this going and they also now have arguments that it's a new fundamental technological part of the financial system and it's systemically dangerous to let it become unstable. So instead of fixing the problem, the government caves, and against expert advice, tries to stabilize and prop up cryptocoins when corrections seem imminent. In doing so they severely destabilize the rest of the economy. I mean it's low probability, but there were experts who knew better in 1929 too and politics meant they did the wrong things anyways.

noxer 6y ago
Far more likely is that these businesses like Tesla would be the very first to dump and probably make good profit on it. They have zero incentives to keep it running if they are informed in advance that the goal is to crush the price. I have no doubt that most banks and large business will know when its time to get out. the gov has no intention to damage them and they are a the key part in crushing the price. They only have to get the large holders to sell an not buy anymore the small ones dont matter much anyway. Also truly believe the Tesla bought BTC as a PR gimmick. Elon Musk for sure know that no one really want to be paid with it or buy a Tesla with it. Also very likely its directly related to the expected inflation spike. several % inflation on 1.5B is kinda a lot money and in the current market situation its hard to protect that money from inflation. Everything seems to be a bubble. BTC might actually be a good bet. It survived the bear market the mining is very very profitable now so it aint gonna die anytime soon. It should be around 1 year until the next cycle starts and BTC crashes like in 2018. if they sell before that they might perfectly avoid the turbulent time that is expected in the traditional markets.
- BenoitEssiambre 6y ago
  >if they are informed in advance that the goal is to crush the price. Ok but the scenario was what if bitcoin holders convince the government to support price instead of crush it? The Bitcoin "fever" is already starting to spread from individual speculators to large businesses, already a jump that I didn't expect. If the fever spreads: individual speculators -> large businesses -> financial institutions -> government? This is when we could be in trouble. I hope the Tesla purchase is a gimmick like you said. But what if it's the start of a trend? You provided the justification yourself? "Everything seems to be a bubble. BTC might actually be a good bet." > It should be around 1 year until the next cycle starts and BTC crashes like in 2018. Yes that would be the best scenario, but what if large institutions are on a multi year trend of adding Bitcoins to their portfolio which prevents this crash? I can still see a non negligible probability of the fever going: individual speculators -> large businesses -> financial institutions -> government, then, great depression II -> WWIII -> sticks and stones etc.
  - noxer 6y ago
    The governments sole purpose is to benefit the people (yes I know that far from reality) But which gov would endorse the use of BTC knowing that it harms the people, removes their own power and if we go back to sticks and stones would even removed the gov itself. At some point self preservation would kick in. Before we go to WWWIII an bomb each other because of buttcoin, someone would bomb the mining farms ryt? If the gov wont do it I'm sure we find some environmental terrorist.
    - BenoitEssiambre 6y ago
      I mean this is not unprecedented (tying the economy to gold caused the great depression). A surprisingly large amount of people, even sometimes otherwise smart ones, can't seem to wrap their head around the fact that having a widespread deflationary token can destabilize the whole economy. Their blindness to this fact will be amplified if they own a lot of such tokens and stand to lose in the short term if the deflationary cycle is broken. Plus there is a prisoner's dilemma of standing to lose more if you sell too early before the peak which causes people to hodl further. What if these people are large corporations and leaders of large financial institutions that have a lot of political influence? The misguided token stabilizers often also seem to be democratically backed by the population that tends to equate tokens losing value to increasing cost of living instead of to market adjustments necessary for people to have jobs. I can see it right now. If cryptocoins become widespread, we will start seeing articles in the press about how they are an integral part of the financial infrastructure now, an evolution of technology and the government should play a role in insuring their stability. If a consensus forms around these dangerous ideas, smarter voices could be drowned.

noxer 6y ago

Far more likely is that these businesses like Tesla would be the very first to dump and probably make good profit on it. They have zero incentives to keep it running if they are informed in advance that the goal is to crush the price. I have no doubt that most banks and large business will know when its time to get out. the gov has no intention to damage them and they are a the key part in crushing the price. They only have to get the large holders to sell an not buy anymore the small ones dont matter much anyway. Also truly believe the Tesla bought BTC as a PR gimmick. Elon Musk for sure know that no one really want to be paid with it or buy a Tesla with it. Also very likely its directly related to the expected inflation spike. several % inflation on 1.5B is kinda a lot money and in the current market situation its hard to protect that money from inflation. Everything seems to be a bubble. BTC might actually be a good bet. It survived the bear market the mining is very very profitable now so it aint gonna die anytime soon. It should be around 1 year until the next cycle starts and BTC crashes like in 2018. if they sell before that they might perfectly avoid the turbulent time that is expected in the traditional markets.

BenoitEssiambre 6y ago
>if they are informed in advance that the goal is to crush the price. Ok but the scenario was what if bitcoin holders convince the government to support price instead of crush it? The Bitcoin "fever" is already starting to spread from individual speculators to large businesses, already a jump that I didn't expect. If the fever spreads: individual speculators -> large businesses -> financial institutions -> government? This is when we could be in trouble. I hope the Tesla purchase is a gimmick like you said. But what if it's the start of a trend? You provided the justification yourself? "Everything seems to be a bubble. BTC might actually be a good bet." > It should be around 1 year until the next cycle starts and BTC crashes like in 2018. Yes that would be the best scenario, but what if large institutions are on a multi year trend of adding Bitcoins to their portfolio which prevents this crash? I can still see a non negligible probability of the fever going: individual speculators -> large businesses -> financial institutions -> government, then, great depression II -> WWIII -> sticks and stones etc.
- noxer 6y ago
  The governments sole purpose is to benefit the people (yes I know that far from reality) But which gov would endorse the use of BTC knowing that it harms the people, removes their own power and if we go back to sticks and stones would even removed the gov itself. At some point self preservation would kick in. Before we go to WWWIII an bomb each other because of buttcoin, someone would bomb the mining farms ryt? If the gov wont do it I'm sure we find some environmental terrorist.
  - BenoitEssiambre 6y ago
    I mean this is not unprecedented (tying the economy to gold caused the great depression). A surprisingly large amount of people, even sometimes otherwise smart ones, can't seem to wrap their head around the fact that having a widespread deflationary token can destabilize the whole economy. Their blindness to this fact will be amplified if they own a lot of such tokens and stand to lose in the short term if the deflationary cycle is broken. Plus there is a prisoner's dilemma of standing to lose more if you sell too early before the peak which causes people to hodl further. What if these people are large corporations and leaders of large financial institutions that have a lot of political influence? The misguided token stabilizers often also seem to be democratically backed by the population that tends to equate tokens losing value to increasing cost of living instead of to market adjustments necessary for people to have jobs. I can see it right now. If cryptocoins become widespread, we will start seeing articles in the press about how they are an integral part of the financial infrastructure now, an evolution of technology and the government should play a role in insuring their stability. If a consensus forms around these dangerous ideas, smarter voices could be drowned.