7 ms·

This finance expert thinks Bitcoin will fall 99 percent by June

12 points by xmpir 13y ago

ekianjo 13y ago
Quote: Optionality [Bitcoin could drop to zero]. I view that there's always a chance that a Bitcoin could be adopted. Could be used potentially as a basis for virtual currency. And so that would have some upside. An option premium of $5, $7, $10 seems reasonable. This guy is a quack. There's no way he could define where is the "reasonable" point for Bitcoin to be in terms of value vs the Dollar. If he were indeed an expert in Finance, he should know that the value is driven by demand and supply, and not by what one guy thinks it's reasonable. There's many ways Bitcoin may fall and drop in value, but just saying that it's because it's backed by nothing but confidence is really a wrong argument. Confidence is everything, and this is valid for both Bitcoin and fiat currencies alike. The key difference is that the supply of Bitcoin is limited, and that, inherently, ensures a better long lasting value vs fiat currencies on the long term as long as the utility/confidence remains there.
- arethuza 13y ago
  I'm not saying you are wrong, but to me the tone of your comment reminds me a lot of the comments people used to make back in 2000 when some "finance experts" pointed out that a lot of .com companies were going to implode fairly soon.... [NB I have no stake in Bitcoin financially but I do think it is technically very neat and potentially game changing but having a few scars on my back from the .com crash I do tend to worry when I hear arguments that amount to "you don't understand, this time it's different!"....]
  - ekianjo 13y ago
    I'm not saying this time it's different. Did you read my comment properly? I'm saying Bitcoin can crash. But not for the reason that it inherently has no value. This guy's argument is really shallow, because tons of things start by having no value and simply gain it because people use them.
    - arethuza 13y ago
      I was noting the familiarity of the tone of your response - nothing else.
  - pyalot2 13y ago
    On the 3rd of january 2009, satoshi nakamoto did an extraordinary thing. He put online an invention unlike any invention before in the history of mankind. The invention is a solution to a supposedly intractable problem that defeated the brightest minds of the information era for more than 30 years. The invention is about how to keep an accurate accounting ledger, such that no two accounts can end up deriving their balance from the same source twice or more, yet have it be run in a fashion that does not require to trust anybody to keep it accurate. Those are already two intractable problems down namely the problem of double spending and the problem of counterparty risk. But satoshi didn't stop there, he also combined this core idea with a protocol and software of extraordinary quality where it mattered, making it possible to use this system in a secure and decentralized fashion. That are two more problems taken care of, which are security and centralization. But satoshi didn't stop there, he also made sure to squash another intractable problem that is how an essentially worthless representation of an account can be protected from the centralized issuance of the units of account. Trough the ages all societies have struggled with that problem where governments invariably started to mint/print their own currency issuance into oblivion to the great detriment of the society they where to "govern". But satoshi didn't stop there either, he also made sure that the rules of the system incentivize people to provide the network to keep this accounting secure and running and provide the necessary resources to do it. Now, I understand when you hear things that seem to sound like "this time is different" that it makes you suspicious. But that's not what what most people who know bitcoin say. What they say is, this is a thing, unlike anything that has come before or since. There's no comparing it to anything that existed so far, because nothing like it existed before it. You should be drawing your own conclusion about how significant an invention bitcoin represents. You might be of the opinion it isn't worth half of the valuation of twitter, which is essentially a non invention to begin with. Or you might be of the opinion it's a substantial invention, worth more than google.
- coldtea 13y ago
  >If he were indeed an expert in Finance, he should know that the value is driven by demand and supply, and not by what one guy thinks it's reasonable. And if you have given it ten seconds of thought, you would have understood that demand and supply are not arbitrary ranged values, and that their levels can be estimated just like anything else, given enough information.
  - ekianjo 13y ago
    If that was true, this guy would have predicted that Bitcoin would reach 1000 USD 6 months ago and be awesomely rich. He did not, and he just looks like someone who missed the party and who's bitching about it.
    - coldtea 13y ago
      >If that was true, this guy would have predicted that Bitcoin would reach 1000 USD 6 months ago and be awesomely rich. For one, not every estimation is equally possible at all times. As I wrote above, "given enough information". Also, some things (like the eventual failure of something) might be easier to estimate than others (price spikes). If I spin a spin top toy I can easily predict it will reach a rest state, but not what it's movements will be before that. Second, he might had invested in bitcoin, for all we know. Third, he might be incompetent in his predictions -- which only speaks about him, and says nothing about if it's possible to estimate the supply and demand of something (and thus it's eventual price).
stingrae 13y ago
Everything is speculation. I am not sure why "finance experts" bother stating their opinion on bitcoin. It is still too early to tell whether it will succeed or fail. If it ever stabliizes it opens huge possibilities to dramatically change banking as we know it.
userulluipeste 13y ago
"Initially Bitcoin was supposed to be a very democratic process. We could just open our laptop and start mining Bitcoins. Now to mine Bitcoins after 11 million have been mined, you have to have super computing power." For the record, it's not the quantity of the already mined Bitcoins that determines the further mining requirements, it's the mining competition. If back then there would have been so much mining activity as there is today, a laptop would have been as useless as it is today.
- meric 13y ago
  https://www.cex.io https://www.cex.io Go mine to your heart's content.
- kolinko 13y ago
  This. What kind of an expert is he, if he doesn't understand how Bitcoin works?
pyalot2 13y ago
How to spot people who are talking out of their armpit? They're engaging in prophecy about the future, that's how. Nobody has any clue what the future holds, let alone the one of bitcoin. Everybody has a guess of course, but that's it, a guess. Now some guesses are more educated, and others are less so, but that doesn't make them any less or more likely to come to pass. But somebody will incidentially be right. Now it could be this guy, or it could be not. Nobody really knows. As to when it comes to guesses about bitcoin, it'd be particularly important not to play the blind & elephant game (it's a commodity! No, it's a currency! No, it's a payment system! No it's a store of value! No it's an accounting ledger! No, it's a p2p network! No, it's a protocol! etc.). That is, you can't comment on an aspect of bitcoin and derive your entire guess from that, while ignoring all other aspects of bitcoin. You're free to base your guess upon that basis, but it's quite likely that in this case, your guess does indeed have a lower likelyhood to hit the mark.
- kolinko 13y ago
  Well, sure, you can't predict future with 100% certainity. But sometimes you have to make an educated guess. If you have a million dollars to invest, you have to speculate - put that into dollars, into some "safe stock", into properties, or at least a small part into Bitcoin? At least this guy sets himself up to be accountable, compared to a bunch of experts who give vague statements like "Bitcoins are tulips, they will crash!", and then, once Bitcoins fall from $20k to $5k apiece 5 years later, they'll say: "see? I told you!"
  - pyalot2 13y ago
    I actually suspect that the accountable game doesn't work. Have you ever heard of that guy? Nope. Will you ever hear of him again? Well only if he was right... The game works essentially like this. Create N identities for a topic, at each junction of the topic (substantial news, price developments, what have you) you'll have one of the identities make up a prediction that's exactly opposite of another identity. If an identity is now straying into the clearly "wrong" territory, discard it, continue with the identities which have turned out to incidentially make a right prediction. You continue this until you've weeded out all identities but one, which is now endowed with a streak of having made the right predictions. That's when you strike, now it's time to monetize on that belief that you're an expert in some or another fashion.

12 points by xmpir 13y ago

Quote: Optionality [Bitcoin could drop to zero]. I view that there's always a chance that a Bitcoin could be adopted. Could be used potentially as a basis for virtual currency. And so that would have some upside. An option premium of $5, $7, $10 seems reasonable. This guy is a quack. There's no way he could define where is the "reasonable" point for Bitcoin to be in terms of value vs the Dollar. If he were indeed an expert in Finance, he should know that the value is driven by demand and supply, and not by what one guy thinks it's reasonable. There's many ways Bitcoin may fall and drop in value, but just saying that it's because it's backed by nothing but confidence is really a wrong argument. Confidence is everything, and this is valid for both Bitcoin and fiat currencies alike. The key difference is that the supply of Bitcoin is limited, and that, inherently, ensures a better long lasting value vs fiat currencies on the long term as long as the utility/confidence remains there.

arethuza 13y ago
I'm not saying you are wrong, but to me the tone of your comment reminds me a lot of the comments people used to make back in 2000 when some "finance experts" pointed out that a lot of .com companies were going to implode fairly soon.... [NB I have no stake in Bitcoin financially but I do think it is technically very neat and potentially game changing but having a few scars on my back from the .com crash I do tend to worry when I hear arguments that amount to "you don't understand, this time it's different!"....]
- ekianjo 13y ago
  I'm not saying this time it's different. Did you read my comment properly? I'm saying Bitcoin can crash. But not for the reason that it inherently has no value. This guy's argument is really shallow, because tons of things start by having no value and simply gain it because people use them.
  - arethuza 13y ago
    I was noting the familiarity of the tone of your response - nothing else.
- pyalot2 13y ago
  On the 3rd of january 2009, satoshi nakamoto did an extraordinary thing. He put online an invention unlike any invention before in the history of mankind. The invention is a solution to a supposedly intractable problem that defeated the brightest minds of the information era for more than 30 years. The invention is about how to keep an accurate accounting ledger, such that no two accounts can end up deriving their balance from the same source twice or more, yet have it be run in a fashion that does not require to trust anybody to keep it accurate. Those are already two intractable problems down namely the problem of double spending and the problem of counterparty risk. But satoshi didn't stop there, he also combined this core idea with a protocol and software of extraordinary quality where it mattered, making it possible to use this system in a secure and decentralized fashion. That are two more problems taken care of, which are security and centralization. But satoshi didn't stop there, he also made sure to squash another intractable problem that is how an essentially worthless representation of an account can be protected from the centralized issuance of the units of account. Trough the ages all societies have struggled with that problem where governments invariably started to mint/print their own currency issuance into oblivion to the great detriment of the society they where to "govern". But satoshi didn't stop there either, he also made sure that the rules of the system incentivize people to provide the network to keep this accounting secure and running and provide the necessary resources to do it. Now, I understand when you hear things that seem to sound like "this time is different" that it makes you suspicious. But that's not what what most people who know bitcoin say. What they say is, this is a thing, unlike anything that has come before or since. There's no comparing it to anything that existed so far, because nothing like it existed before it. You should be drawing your own conclusion about how significant an invention bitcoin represents. You might be of the opinion it isn't worth half of the valuation of twitter, which is essentially a non invention to begin with. Or you might be of the opinion it's a substantial invention, worth more than google.
coldtea 13y ago
>If he were indeed an expert in Finance, he should know that the value is driven by demand and supply, and not by what one guy thinks it's reasonable. And if you have given it ten seconds of thought, you would have understood that demand and supply are not arbitrary ranged values, and that their levels can be estimated just like anything else, given enough information.
- ekianjo 13y ago
  If that was true, this guy would have predicted that Bitcoin would reach 1000 USD 6 months ago and be awesomely rich. He did not, and he just looks like someone who missed the party and who's bitching about it.
  - coldtea 13y ago
    >If that was true, this guy would have predicted that Bitcoin would reach 1000 USD 6 months ago and be awesomely rich. For one, not every estimation is equally possible at all times. As I wrote above, "given enough information". Also, some things (like the eventual failure of something) might be easier to estimate than others (price spikes). If I spin a spin top toy I can easily predict it will reach a rest state, but not what it's movements will be before that. Second, he might had invested in bitcoin, for all we know. Third, he might be incompetent in his predictions -- which only speaks about him, and says nothing about if it's possible to estimate the supply and demand of something (and thus it's eventual price).

stingrae 13y ago

Everything is speculation. I am not sure why "finance experts" bother stating their opinion on bitcoin. It is still too early to tell whether it will succeed or fail. If it ever stabliizes it opens huge possibilities to dramatically change banking as we know it.

userulluipeste 13y ago

"Initially Bitcoin was supposed to be a very democratic process. We could just open our laptop and start mining Bitcoins. Now to mine Bitcoins after 11 million have been mined, you have to have super computing power." For the record, it's not the quantity of the already mined Bitcoins that determines the further mining requirements, it's the mining competition. If back then there would have been so much mining activity as there is today, a laptop would have been as useless as it is today.

meric 13y ago
https://www.cex.io https://www.cex.io Go mine to your heart's content.
kolinko 13y ago
This. What kind of an expert is he, if he doesn't understand how Bitcoin works?

pyalot2 13y ago

How to spot people who are talking out of their armpit? They're engaging in prophecy about the future, that's how. Nobody has any clue what the future holds, let alone the one of bitcoin. Everybody has a guess of course, but that's it, a guess. Now some guesses are more educated, and others are less so, but that doesn't make them any less or more likely to come to pass. But somebody will incidentially be right. Now it could be this guy, or it could be not. Nobody really knows. As to when it comes to guesses about bitcoin, it'd be particularly important not to play the blind & elephant game (it's a commodity! No, it's a currency! No, it's a payment system! No it's a store of value! No it's an accounting ledger! No, it's a p2p network! No, it's a protocol! etc.). That is, you can't comment on an aspect of bitcoin and derive your entire guess from that, while ignoring all other aspects of bitcoin. You're free to base your guess upon that basis, but it's quite likely that in this case, your guess does indeed have a lower likelyhood to hit the mark.

kolinko 13y ago
Well, sure, you can't predict future with 100% certainity. But sometimes you have to make an educated guess. If you have a million dollars to invest, you have to speculate - put that into dollars, into some "safe stock", into properties, or at least a small part into Bitcoin? At least this guy sets himself up to be accountable, compared to a bunch of experts who give vague statements like "Bitcoins are tulips, they will crash!", and then, once Bitcoins fall from $20k to $5k apiece 5 years later, they'll say: "see? I told you!"
- pyalot2 13y ago
  I actually suspect that the accountable game doesn't work. Have you ever heard of that guy? Nope. Will you ever hear of him again? Well only if he was right... The game works essentially like this. Create N identities for a topic, at each junction of the topic (substantial news, price developments, what have you) you'll have one of the identities make up a prediction that's exactly opposite of another identity. If an identity is now straying into the clearly "wrong" territory, discard it, continue with the identities which have turned out to incidentially make a right prediction. You continue this until you've weeded out all identities but one, which is now endowed with a streak of having made the right predictions. That's when you strike, now it's time to monetize on that belief that you're an expert in some or another fashion.