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Bank of America's Research Report on Bitcoin [pdf]
- codemac 13y agoThe actual pdf, as documentcloud was messing up the rendering of the graphs and spaces between letters: https://s3.amazonaws.com/s3.documentcloud.org/documents/885843/banks-research-report-on-bitcoin.pdf https://s3.amazonaws.com/s3.documentcloud.org/documents/8858...
- ryanjshaw 13y agoThanks. I really don't understand the purpose of these annoying poorly implemented document sharing sites when the original format is widely supported.
- WestCoastJustin 13y agoDocumentCloud was created to help journalists, researchers and archivists, by allowing them to embedded, annotate, and search PDF documents in news stories. Take this CBC new story for example [0]. This allows media outlets to publish the documents "inline" with their own content, rather than asking the reading to download something. DocumentCloud works with many major news outlets (NY Times, PBS, Associated Press, etc), and they are a major playing in this space, if not the biggest [1]. Their code is open-source too, so if you think something could be improved, send a pull request [2]. [0] http://www.cbc.ca/news/canada/nova-scotia/emc-wins-contract-dispute-with-n-s-paramedics-1.2440042 http://www.cbc.ca/news/canada/nova-scotia/emc-wins-contract-... [1] http://www.documentcloud.org/contributors http://www.documentcloud.org/contributors [2] http://www.documentcloud.org/opensource http://www.documentcloud.org/opensource
- weland 13y agoEven if their code could be improved, it's still obnoxious. Downloading something sucks if it's a weird format that requires users to hunt for an application to view it with, but these are PDFs.
- WestCoastJustin 13y agoChalk it up to personal preference I guess. DocumentCloud shows the document "inline", but you always have the option of downloading the original document too [1]. So, if anything, they are attempting to serve both categories. [1] http://i.imgur.com/Tl5QIiz.png http://i.imgur.com/Tl5QIiz.png
- raverbashing 13y agoI agree, but at the same time it's an added convenience And there may be some huge PDFs (think 100Mbs) that you might not want to download, just check some pages.
- gwu78 13y agoWhy should anyone create PDFs that are 100's of MBs in size? At some point "convenience" becomes annoyance. Because instead of encouraging people to do the sensible thing like breaking documents into smaller, digestible pieces (e.g. small PDFs, page images, etc.), they are encouraged to be lazy (e.g. throw a 500 page document in a scanner that outputs PDF, and upload the oversized result to one of these annoying sites). Then the average user tries to access it and she has to wait patiently while the browser tries to load this ridiculously large file, or her browser just chokes. So, "time saved" on the front end - easy scanning of docs to PDF - can often lead to "time spent" dealing with the mess on the receiving end. The uploader gets convenience, the user gets annoyance.
- weland 13y agoWhy the hell would a PDF for public use be more than a hundred megabytes? You'd think the solution to people being too retarded to properly use a PDF conversion tool is teaching them how to use it, not building a website that thrashes PDFs and hogs your computer to make sure they don't annoy anyone.
- ryanjshaw 13y agoThanks, I can see some value to it now, and it does have lower bandwidth requirements than the PDF. I think Scribd has completely switched me off to document hosting sites. That being said (1) the link you posted is not posted within an embedded context, so there's no benefit as you described, as far as I can tell; and (2) I can't zoom in properly since it's using GIFs, which is really annoying because now I have to click a link, visit it and wait for it to load just so that I can click the .PDF link -- I'd rather click a PDF link to begin with.
- jwr 13y agoI believe the purpose is to "drive traffic", "build user base", "engage users", and later "monetize". Without supplying much value in the process, which is why we are annoyed.
- ashray 13y agoThere is a purpose. Several sites that depend on document submissions of different formats (like pdfs, ppts, word docs, etc.) might need an efficient way to render these document previews on a page. Those sites can use an api from scribd, documentcloud, etc. to display these files inline. There is a certain very valid and extremely useful use case to sites like this, of course, linking random internet users to pdfs through them shouldn't be one of them ;) I am in no way affiliated with any of these services, just came across this use case while building something for someone in the past.
- eli 13y agoYou can't embed a PDF in a web page without some solution like this.
- mercer 13y agoI think that's not doing DocumentCloud justice. While I realize this is a precarious argument, I find it hard to believe that Jeremy Ashkenas, an active HN member, creator of Backbone and CoffeeScript, and someone I've come to respect, would work for a company that offers no value.
- jwr 13y agoI have a lot of respect for Jeremy, but respect (like trust) is not transitive. I see little value in taking a PDF and making it available as images online. Is there really a web browser that cannot display a PDF?
- mercer 13y agoMaybe you're right, but in this case I do think it is somewhat transitive. Based on what I know about Jeremy, I'm inclined to think he is successful enough work somewhere that he considers 'worthy'. But I'm not certain enough to strongly argue this point :-).
- Argorak 13y agoInteresting, it works fine for me. FF 26
- jliptzin 13y agoYou know this is HN when the top thread veers off on a tangent about the particular site used to display the article without a single comment about the actual content of said article
- netrus 13y agoMost interesting for me: They estimate the fair long-term value to be around 1.300 USD - indicating no more great rises will come.
- 1qaz2wsx3edc 13y agoWell, I have a feeling it will go higher. I've only been paying attention recently, but as I understand it, 30-40% of generated coins have been inactive since 2009-2010. If the market cap is 15bn, then we can assume 11538461.538 coins exist, but if say 8076923.076 coins (70%) then the value of a coin is 1857.14USD or the market cap is closer to 10b. Which is it?
- rebelidealist 13y agoIf most of merchants on the internet are willing to accept bitcoins, then a bitcoin can be worth 100x more than $1,300. It is a value of a finite resource like the value of a diamond.
- ekianjo 13y agoYeah, if Steam or even, let's dream a second, Amazon ever accepts Bitcoins, this will make the utility of Bitcoin explode, and its value should go up as a direct result.
- aianus 13y agoYou can spend all the bitcoins you want on Amazon right now and with 3% cashback to boot by going through gyft.com Maybe the media exposure would be great if Amazon accepted it directly but it wouldn't really change the utility of Bitcoin.
- ekianjo 13y agoThat's like saying "You can Convert your Gold Bar in Dollars and shop on Amazon so that doesn't change the utility of Gold" . This is wrong. If tomorrow my convenience store accepts Gold coins, of course it increases its utility because it removes time, effort, and additional steps (i.e. barriers) to use it.
- cfallin 13y agoThe bitcoin mining analogy on p. 2 is actually pretty good IMHO -- I've tried to explain Bitcoin to others before but it always gets a little abstract when explaining proof-of-work.
- cjaredrun 13y agosounds like somebody bought some bitcoins! It is more than common for banks to invest and hype markets (ie. chase artificially pumping the Facebook IPO). They can because of their sheer size, so why not?
- zodiac 13y agoTheir sheer size also represents two reasons against their investing significantly in bitcoin: one, any buying or selling on their part will significantly move the price of BTC because the markets are so thin, and two, there are regulations that force them to control risks, and I'm not sure what, if anything, such regulations have to say about buying cryptocurrencies.
- crdoconnor 13y ago>there are regulations that force them to control risks The fine is usually low enough that they treat it as a cost of doing business.
- rasengan 13y agoHow to curb speculative demand for Bitcoin in 3 easy steps: 1. Write paper saying Bitcoin will peak at 1300.00 when the price is nearly 1300.00 2. Publish 3. Profit ...
- ekianjo 13y ago:) At least for once we don't see an article saying that the BTC value is worth a big fat zero.
- cshimmin 13y agoI am surprised to learn there are only 2,100 trillion Satoshi (smallest unit of bitcoin, equal to 1e-8 coin). For comparison, the Gross World Product [0] is roughly $85 trillion, or 8,500 trillion pennies, and growing (almost) every year. I'm no economist, but wouldn't it be a long-term problem for bitcoin to not have enough units to represent the world's wealth? Or does the inherent deflationary nature of BC remedy this somehow? [0] http://en.wikipedia.org/wiki/Gross_world_product http://en.wikipedia.org/wiki/Gross_world_product
- ekianjo 13y agoIt depends a lot where the BTC value ends up being.
- cshimmin 13y agoBut this is just a question of granularity. When Zimbabwe hit hyperinflation they printed trillion-dollar notes because the 1-dollar note was too fine-grained to be feasible. Conversely, Britain used to circulate half-pennies, because there was a time when a penny was too large a unit to represent realistic transactions. In other words, as the world's wealth grows, won't we need a currency with greater range than "on a scale from 0-2,100 trillion, how valuable is X"?
- yason 13y agoIt's just decimal numbers and not written in stone. I guess you could divide it further down to smaller units if needed, probably with some upgrades to the current protocol.
- josephagoss 13y agoIn the reference client it's represented as a whole number and infact the denomination Bitcoin is an abstraction on top. They may have changed this recently but I was under the impression the units are not represented as a decimal number.
- 13y ago
- goggles99 13y agoInteresting, but how do we know it is genuine (not counterfeit)? Where is the press release from BofA?
- phyalow 13y agoIt's from a FICC research team - you don't issue a press release (albeit this is initiating coverage).
- debugunit 13y agoThey quote a "Maximum fair market value" of $1300 based on a couple of different methodologies. In my (limited) experience, when banks forecast prices (for stocks, indices, FX rates etc) they always quote a number within a reasonable-sounding percentage of the current price, because not to do so risks being wrong and looking stupid. This means that most of the time they are not far out, and when it really matters (eg 2008) they are miles out (and so is everyone else). So even if BofAML actually thought that the "maximum fair market value" was significantly higher than $1300, I doubt they'd have said so, simply to avoid the reputational risk.
- jsmcgd 13y agoTotally agree. This figure is ridiculous. I actually laughed out loud when I read it. Like anything the price is based on supply and demand. The supply is fairly predictable. The demand is a complete guess at the moment. A maximum market capitalization of $15Bn? Why? The 100 fold increase risks getting ahead of its fundamentals. What fundamentals? The nature of Bitcoin since its inception has been expotential growth. I'm not saying that will continue forever - it can't - but there's nothing to suggest that this rate of growth will stop when that value of a bitcoin reaches $1300. Anyone can predict a change of a few percent in the short term and be correct to within 10%. But where does that get you? Which one of these financial analysis publications told their readers something useful, like in 2007 there's a financial crash coming or 2009 invest heavily in bitcoin? None. Sorry, that was a bit ranty.
- james1071 13y agoSupply is not predictable as there will be substitutes.
- adamcanady 13y agoAs in, other digital currencies or transactions? I think he was referring to the known supply produced by mining.
- simplemath 13y ago
- phyalow 13y agoI think the sheer fact that this exists, BTC is on BBG and regularly mentioned in FT etc means the only way is up.
- deleted 13y ago[deleted]
- phyalow 13y agoThe two are not mutually exclusive but in fact highly correlated. I would argue adoption is a function of market cap, volume and price. Stability will come, but BTC has a lot of appreciation to get through which will not be easy.
- davidw 13y agoDo you foresee a permanent plateau at some point, or just up and up?
- phyalow 13y agoBTC will become the global CONSUMER method of exchanging value. Up and only up (of course volatility will persist during the initial stages of breakout). Exciting times are ahead.
- peteretep 13y agoWhen I can get a government-recognized financial product - 401k, ISA, current account, whatever - that is linked to BTC, in most major developed countries, insured against theft, the market-distorting factors should be gone.
- k__ 13y agoI read about having multiple adresses for payments. Does this mean I have to create a new wallet for every transaction I'm doing? Wouldn't lead to end up with a hundret wallets after a few years?
- narcissus 13y agoNo, you end up with a single wallet with multiple addresses. FWIW, by default, every time you make a transaction you send the change to a new address, too.
- salient 13y agoYou can use just one. Some like to play it safe, though, and keep an "active wallet", where they have a small portion of their money (especially if they have a lot of Bitcoins), and they keep the rest backed-up (and encrypted) and somewhere safe, locally, to protect themselves against hacks.
- k__ 13y agoIs the wallet just a local concept? The understanding I got after reading those guides online is like this: the addresses are public keys the blockchain knows how much money every address owns the wallet holds the public and privat keys is this right?
- javert 13y agoPrecisely. Although a public keys can be re-created from the private key, so the wallet doesn't have to store that. And the address is actually a hash of the public key, to make it shorter and more readable.
- AlexanderDhoore 13y ago"As Bitcoin becomes more popular, competitors will face higher barriers to entry, making it less likely they will be successful in supplanting Bitcoin’s market share. Several other digital currencies with similar features to Bitcoin have been introduced with limited success." They think it's a “Winner Takes All” system. I completely disagree. If one cryptocurrency gets accepted, others will be right behind it. It's all automated, it's all decentralised. There's zero reason bitcoin should be the only one.
- leovingi 13y agoYeah, except, you know, the infrastructure behind it which is getting harder to replicate by each passing day, the amount of money being invested in Bitcoin companies, the first-mover advantage, the fact that no other alt currency is being accepted by merchants and the fact that most of these alt coins offer 0 advantage over Bitcoin, with the exception of namecoin, for example, which is unique in it's own way.
- AlexanderDhoore 13y agoMaybe, maybe not. I'd like to compare it to social media. Facebook has a massive user base and is very hard to defeat, because there's no way in for competitors. But Bitcoin has no central servers, no one company calling the shots. Someone, somewhere could decide to exchange Bitcoins for Xcoins. Then Xcoins could exist next to Bitcoin, no problemo.
- leovingi 13y agoI agree, they could exist. But why would anyone want Xcoins, Ycoins or Zcoins instead of Bitcoins? It's not a choice between meaningless desktop wallpapers or your favourite cheeses - this is a currency. And for that you need faith that other people will accept it.
- betterunix 13y agoWhy would people want Bitcoins in the first place? Whatever the source of demand for Bitcoin was in 2009 (when it was monopoly money) should be equally applicable to competing systems today.
- waqasx 13y agoAnd now we see banks buying into the latest Ponzi Scheme. When the BTC bubble bursts, now it wil take banks down with it. I guess they'll never learn.
- TomGullen 13y agoWrong. The only thing worse than losing money in a bubble from a banks point of view is missing out on a rare explosive paradigm shift. It makes perfect strategic sense for banks to invest in Bitcoin.
- waqasx 13y agoyeah, downvote the messenger.
- Aqueous 13y agoWhen is the bubble going to burst? I'm just asking because I've been told it's been coming for years, yet BitCoin is now many thousands of percent more valuable than it was when I was first told that it was another tulip bulb. In fairness to you it is very difficult to distinguish an Internet-style network effect, where there is exponential growth, and a bubble. But it's not impossible. This is exponential growth due to a network effect because BitCoin represents real value and is not a bubble.
- atmosx 13y agoInteresting reading, coming from BoA, but nothing really new there, except from a rough estimation that BTC's intrinsic value is/will-be ~ 1300 USD, which could be way off the mark. So nothing new anyway.
- dgregd 13y agoThese all Bitcoin PR actions are quite similar to situation on gold market few years ago. And we know what happened with gold prices. US is exporting "green paper" and importing physical goods. Do you really believe that the US government and banksters will opt out of all fiat currency benefits? It is interesting that China government is honest enough to tell the people what Bitcoin really is.
- nly 13y ago> And we know what happened with gold prices. Still 3 times what they were 10 years ago. It seems unlikely at this point Bitcoin will collapse back to the $10 it was a year ago, even if there's a massive crash. For whatever reason, this year was a turning point.
- aestra 13y ago>For whatever reason, this year was a turning point. There's a few reasons for that. The banking crisis in Cypress The opening of BTCChina The US Senate hearing on Bitcoin The explosion of price caused by the above caused it to be in the press, which acted as a positive feedback loop and caused further explosion of the price.
- cs702 13y agoInteresting. I used essentially the same methodology nearly three years ago to estimate the potential maximum price of Bitcoin over time, but I reached a different conclusion: http://cs702.wordpress.com/2011/05/29/on-the-potential-adoption-and-price-appreciation-of-bitcoin-in-the-long-run/ http://cs702.wordpress.com/2011/05/29/on-the-potential-adopt... The main difference between BofA's analysis and mine is that I see Bitcoin as a far superior alternative for many financial and other types of applications. For one, Bitcoin as a platform provides a global, decentralized, irreversible log of programmable transactions. For another, bitcoins as "money" are easier to secure, transport, hide, and backup than all prior forms of money ever used by civilization. (Actually, no prior form of money ever used – whether made of bank credits, paper, metal, or other substances[1] – could be backed up like a Bitcoin wallet.) Therefore, if Bitcoin continues to work as intended (i.e., proves immune to attacks) and gets easier and safer to use (for non-technical people), it will slowly gain credibility in the public’s mind, not just as medium of exchange and store of value, but also as application platform. Over a period of many years or even decades, as the world gradually learns via trial-and-error how to use it, becomes familiar with its properties, and ultimately comes to trust it, nothing can prevent Bitcoin from gaining as much credibility as other alternatives, including gold. -- [1] I highly recommend Nick Szabo's essay on the origins of money: http://szabo.best.vwh.net/shell.html http://szabo.best.vwh.net/shell.html
- 3pt14159 13y ago(If you didn't read the article, cs702 thinks bitcoin could hit $90k.) I still think you are off. The fractional reserve system warps incentives too much. 1. The world needs more than $600 of float. And most people think they have that. The difference is that its wrapped up in the fractional reserve banking system. 2. Due to inflation uninformed people are bullied into investing in mutual funds, stocks, housing, etc. with their savings. Just the existence of bitcoin as a major worldwide currency could transform the traditional saving model. If a 30 year old puts a days wages into an account and can expect a days wages out when he's 80 years old then he can drastically simplify his retirement. He can avoid speculative bubbles and bad mutual fund managers. 3. National currency reserves are currently done with sovereign debt - with the idea being that if a nation goes bankrupt they'll just inflate their currency anyway and the currency reserve may as well be in bonds. If Bitcoin were to become a major world currency, the reserves could be in actual Bitcoins. All of this to say I still think that there is a 90+% chance that bitcoin will fail, but on that remaining percent, the limit higher than 100 times today. I've done the math a couple ways and I end up with $100k to $10m as my outliers given that bitcoin becomes a world currency.
- mcculley 13y agoThese recent analyses, even if correct, attempt only to compare bitcoin to currencies or commodities. They are not addressing the potential of new functionality enabled by features of bitcoin such as multisignature transactions and the nascent payment protocol. They don't address the network affects either. Bitcoin only has to get a toehold on a class of transactions and will then start to become more valuable.
- nhaehnle 13y agoWhat I find interesting is the chart where they estimate daily mining revenue to be on the order of $10 million/day, assuming current prices. Probably, that computation should be easy to verify using the various Bitcoin websites. Fundamentally, Bitcoin is a transaction ledger. I suspect a ledger supporting the same volume of monetary transactions could be implemented using a single moderately sized server. Even if you calculate with decent margins and fail-overs, the true cost of providing most of the functionality of Bitcoin is more like $1000 per year. (I'm not calculating software development, since the Bitcoin software development also doesn't figure into those $10 million / day). How valuable is the fact that Bitcoin is decentralized and therefore very difficult to control for governments? Is that worth $3000 million per year or more? And is there truly no alternative way to get there that is cheaper in terms of computing power? If you're long BTC, it seems to me that that's what you're betting on. If the answer were No to either of these questions, there would eventually be a correction.
- james1071 13y agoYes, you have got it in one.
- modeless 13y ago$3000 million is certainly a lot less than the cost of a military powerful enough to defend such a centralized system from government takeover. Also, I think the right comparison is not a hypothetical single server handling transactions, but the current bloated global financial industry. I'll bet $3000 million doesn't even cover the air conditioning bills for the offices of the financial institutions whose jobs would be better handled by Bitcoin.
- nhaehnle 13y agoAs for the military: That may well be true, but who is willing to spend that kind of money in a sustained fashion just to have a system that is safe from government takeover? Libertarian ideology only gets you so far. Will libertarians put their money where their mouth is? As for the bloated global financial industry, there are two points. First, it does more than just a simple ledger (think the overhead of dealing with fraud in a way that people are willing to accept). Second, it's plausible that Bitcoin will help de-bloat the financial industry, at least the payment services part, and that would certainly be welcome. That doesn't mean that Bitcoin will survive in the long run, though.
- tpeng 13y agoMy thoughts on the BAML report: The calculation of BTC's value as a currency uses the correct methodology, which I had previously outlined in this post: https://news.ycombinator.com/item?id=6829518 https://news.ycombinator.com/item?id=6829518 BAML uses M1 (cash + checking accounts) instead of M2 (M1 + savings accounts + time deposits). Using M2 is a lot more aggressive but it also captures the "store of value" value. M2 is really a best case scenario for BTC owners, as it assumes that users will hold their savings in BTC. BAML is fine to be conservative with this. BAML's inclusion of Bitcoin's value as a money transmission business is absurd. While transfer fees accrue to the shareholders of Western Union, the transfer fees of BTC transfers do not accrue to BTC owners. In fact, the transfer fees are quite small to zero and they accrue to the miners. So if BTC does take share from WU, etc., it only shrinks the pie. Some posters on HN and elsewhere are saying that BAML is "too conservative", but they have not posted their own numbers and assumptions. The reality is that BTC's current real economy is nowhere near the size needed to justify the current BTC price, and enormous growth of this economy is already baked into the price. While it's not impossible that this growth can occur, there are real reasons to believe that it won't.
- james1071 13y agoThe analysis is a joke.
- onebaddude 13y agoAs opposed to the depth of your comment.
- james1071 13y agoMiaow! The analysis is absurd because it treats Bitcoin as the only representative of an asset class (crypto currency), rather than one of possibly hundreds.
- simplemath 13y agoThere are dozens of altcoins now but LTC is the only one with any real cap - and its purely a speculatve vehicle, whereas while BTC is mostly speculative, you _can_ actually exchange BTC directly for goods and or services in a rapidly increasing number of ways. The ecosystem and brand awareness is novel for BTC, so in that respect I don't disagree with the analysis having focused solely on it - however, I do find their number (remarkably close to current price) a bit leading.
- james1071 13y agoThe analysis assumes a demand for such a currency and assumes that Bitcoin will have 100% market share. That is not going to happen.
- mkramlich 13y agoThought experiment: Pretend it is 1 year go. Assume at that time that BTC was trading for 50 USD. (I pulled this out of thin air, somebody can look up the real historical rates at that time, if curious. But I know it was much much lower than present.) Pretend that BoA came out back then with a fancy serious official "expert judgment" report saying that the maximum fair market value of BTC would be 70 USD/BTC. Now let this digest in your mind. And that this type of thing is happening all the time in the "serious" financial/business/entrepreneurial world. Nobody's an expert about the future. (Nor on the present.) It's an unknown country. It doesn't exist yet. I won't say that literally anything could happen in the future. But there are so many things that can, and so many variables and moving parts, and so many unknowns, that it's often effectively equivalent to that. If a man steps out of a Time Machine from the Future, and tells me the maximum value is 1300 USD, then, maybe I'll believe him. But I'd still want some independent verification that his box can truly travel in time. And these BoA folks aren't even claiming they have that.
- ryguytilidie 13y agoThis feels like just maybe a slight bit of a conflict of interest...
- kyleblarson 13y agoThe only piece of information that I take away from this is that BofAML has likely already entered a large short position in BC.
- tobias2014 13y agoWhat is the source? How can we make sure that this is not a hoax to manipulate bitcoin rate? The analysis seems quite superficial.
- brokentone 13y agoI heard from a friend at BofA it's legit. So, there is that...
- FeeTinesAMady 13y agotpeng: you're hellbanned. You'll have to create a new account.