tag:blogger.com,1999:blog-8702840202604739302.post8101315261190154634..comments2024-03-28T03:38:53.734-07:00Comments on MacroMania: Is Bitcoin a Safe Asset?David Andolfattohttp://www.blogger.com/profile/12138572028306561024noreply@blogger.comBlogger40125tag:blogger.com,1999:blog-8702840202604739302.post-81474797891647803882016-07-22T09:31:04.629-07:002016-07-22T09:31:04.629-07:00This comment has been removed by the author.David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-90875538470138924782016-06-28T12:49:16.063-07:002016-06-28T12:49:16.063-07:00This: https://eightateeight.wordpress.com/2016/02/...This: https://eightateeight.wordpress.com/2016/02/05/what-is-a-safe-asset/Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-36566279039312680172016-04-17T21:24:04.473-07:002016-04-17T21:24:04.473-07:00https://bitconnect.co/bitcoin_news/bitcoinfront/de...https://bitconnect.co/bitcoin_news/bitcoinfront/details/113<br /><br />2014 was a rough year in Bitcoin’s history, maybe the worst ever. The official collapse of Bitcoin’s largest exchange, Mt. Gox started the year. Bitcoin market values dropped like a rock for the next year, spilling into early 2015. And the ball- and-chain to beat all regulatory ball-and-chains, BitLicense, hit Gotham, destroying any hopes of New York becoming a 21st-century fintech hub, like London aims to. The executioner who spearheaded this death blow was Benjamin Lawsky, former head of New York States' regulation of financial services. Since his detonation of BitLicense, he has left the state of New York and the digital currency limelight, until now.Floydvancehttps://www.blogger.com/profile/02008858769411357147noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-68362353536048573932016-04-02T08:51:42.666-07:002016-04-02T08:51:42.666-07:00Is this about bitcoin core or bitcoin classic?
Is...Is this about bitcoin core or bitcoin classic?<br /><br />Is this pre or post China having > 50% of blockchain hash power?Zachhttps://www.blogger.com/profile/01115366572915518720noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-73186577229746785262016-03-30T09:19:14.242-07:002016-03-30T09:19:14.242-07:00The greatest difference in the asymmetry of bitcoi...The greatest difference in the asymmetry of bitcoin vs that of crude oil, for example lies is their supply. It is known by all that only 21 million bitcoin will ever exist. Insiders in the crude oil industry have greater information about the supply, which includes things like reserves, extraction tech, storage levels and tech, etc. Alex Millar (@bitcoin3000)https://www.blogger.com/profile/11673636763801835349noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-43568976596424049412016-03-29T16:56:12.604-07:002016-03-29T16:56:12.604-07:00Gotcha. Lemons problem.Gotcha. Lemons problem.Prof Jhttps://www.blogger.com/profile/16539902592080231165noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-57043025436598835672016-03-29T15:48:04.066-07:002016-03-29T15:48:04.066-07:00Sean, I encourage you to read up on Bitcoin, what ...Sean, I encourage you to read up on Bitcoin, what it is and how it works. You may as well start with the original Satoshi white paper. I provide a link to it in my post. David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-29414190470451760612016-03-29T15:45:03.932-07:002016-03-29T15:45:03.932-07:00Prof J,
I think JP is referring to the fact that ...Prof J,<br /><br />I think JP is referring to the fact that technically, each "bitcoin" is *defined* by its entire transaction history (from wallet to wallet) since the day it was created. Bitcoins with a long history have a better chance of being linked to specific identities. "Virgin" (newly issued) coins have no such history and so may trade at a premium.<br /><br />Whether they do or not is an open question. I have heard that they do, but that the premium is small. But mostly they all trade at par, I think. David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-23962968861715430902016-03-29T15:22:00.441-07:002016-03-29T15:22:00.441-07:00Sorry also meant to say... My hypothetical in whic...Sorry also meant to say... My hypothetical in which it was "illegal" was meant to be illustrative. Trading "illegal" for "impossible" makes my point more clearly. I just dont see how the value is sustainsble outside of people's, in my opinion misguided, perception. The strength of bitcoin seems to rely entirely on marketing prowess, and value fluctuations will probably continue to be highly volatile. Anonymoushttps://www.blogger.com/profile/10793676289088418590noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-36409530957156177622016-03-29T14:11:38.544-07:002016-03-29T14:11:38.544-07:00Falling to zero may have been an exaggeration. I k...Falling to zero may have been an exaggeration. I know my mom was selling her old beanie babies for a quarter a piece recently so yeah there would always be some price. Im kidding but also dont think the comparison is really that far off. Do bitcoins have some sort of utility outside being a unit of account and a more anonymous payment system (I genuinely don't know)? I personally see the utility of a currency and the utility of a payment system as independent concepts... Would bitcoin theoretically be any different than someone setting up a spreadsheet that tracks who has how much of any unit and saying there will only be 1000 of such units? They then sell entries on the spreadsheet into the market, meanwhile they profit from appreciation (i.e. ponzi scheme)I can see how someone could convince people to purchase these units through marketing/sales, but I dont see how the the actual units would have any tangible intrinsic value. I guess it just depends on if you believe money has value due to people needing it to pay taxes and "derivatively" speaking private debt, or if it is valuable simply because we simply accept it is. I know there is not universal agreement on this issue.Anonymoushttps://www.blogger.com/profile/10793676289088418590noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-15926200952976205592016-03-29T13:19:12.026-07:002016-03-29T13:19:12.026-07:00JP,
Can you explain your last paragraph more? I&#...JP,<br /><br />Can you explain your last paragraph more? I'm just learning about the blockchain, so I'm not clear how one can identify if a bitcoin has been used for a nefarious purpose.<br /><br />Also, I'm from SK. Between you, me, and David, we have all of Western Canada! Or at least the part that counts. Manitoba has always been that weird cross-over province.Prof Jhttps://www.blogger.com/profile/16539902592080231165noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-77470444531020298142016-03-29T11:19:35.447-07:002016-03-29T11:19:35.447-07:00You're right that lumber isn't super simpl...You're right that lumber isn't super simple; I'm from Alberta so I know that there are many different grades of crude oil too. <br /><br />I think what your talking about is a combination of fungibility and verifiability. <br /><br />Even bitcoin isn't entirely fungible. Virgin coins that haven't been used yet may attract a premium since their source isn't dubious. Anyone who accept bitcoin that has been used in a nefarious manner could be on the hook for returning it to its original owner. I suppose there are degrees of fungibility/verifiability with central bank cash probably possessing those features more than most. JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-77776593632968859102016-03-29T10:51:05.033-07:002016-03-29T10:51:05.033-07:00I am an academic and my only loyalty is to the tru...I am an academic and my only loyalty is to the truth. <br />As for your $15T figure, you are just making numbers up.<br />Yes, just look at the Fed's balance sheet: $4T of interest-bearing assets making a nice profit for the US taxpayer. <br /><br />As for your imagination, try not to let it run wild! :)David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-59396190948067825412016-03-29T10:19:10.876-07:002016-03-29T10:19:10.876-07:00David, great write-up. The part where you say &quo...David, great write-up. The part where you say "possession is ownership" is a very important insight that isn't widely understood. I would go further and say "possession" of bitcoin (i.e., knowledge of the secret key) is even more powerful than possession of cash. It's conceivable that a person could find a pile of cash and be deprived of it by legal channels because it is clearly not their cash. With bitcoin, on the other hand, if an owner is sufficiently diligent they can prevent any kind of transfer of their bitcoins, even under duress (using e.g., dual signature). In a sense, "ownership" of bitcoins is ownership in its purest sense. It is ownership that does not require a legal framework or apparatus of coercion (typically the state), to enforce.Vijayhttps://www.blogger.com/profile/12376645525363126901noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-70688148257666629602016-03-29T09:23:14.941-07:002016-03-29T09:23:14.941-07:00The Federal Reserve is constrained? I understand ...The Federal Reserve is constrained? I understand you may feel obligated to be loyal but nobody believes the Fed is constrained.<br /><br />$15T to bail out European banks? Just look at the Fed's balance sheet. What is the Fed levered at currently anyways, about 90/1? That is only using what is available for public use. I can only imagine what is really under the hood. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-5904336216320456672016-03-29T09:18:19.074-07:002016-03-29T09:18:19.074-07:00"Private" and "Permissioned" b..."Private" and "Permissioned" blockchains will all fail miserably. It is merely more of the "extend and pretend" strategy deployed by the status quo. Can JP Morgan throw around $20M in FRN debt notes to try and create fear and uncertainty over Bitcoin? Of course they can.<br /><br />Time will show that Bitcoin is the Blockchain. The banks want to distract the masses and make them believe that Bitcoin has little value but that "blockchain technology" as displayed in their consortium's offering is "awesome" . . . . . . as long as the bankers get to make it centralized and under their control. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-40675788549537011052016-03-29T05:17:38.954-07:002016-03-29T05:17:38.954-07:00It appears you did not read my post. We all create...It appears you did not read my post. We all create promises "out of thin air" all the time. That's a red herring. <br /><br />You also do not understand how the FOMC works, how it is constrained by the FRA put in place by your elected representatives. <br /><br />How much can a USD be worth you ask? Look around. It seems to be in high demand as far as I can tell.David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-28005934493653884352016-03-29T03:03:39.370-07:002016-03-29T03:03:39.370-07:00In this sense when I refer to counterfeit I am not...In this sense when I refer to counterfeit I am not just focusing on the physical construction and creation of additional notes (though that is certainly much easier than duplicating the same Bitcoin already mined). I refer to the insane status quo where twelve humans can sit in the Ivory Tower and with a click of the mouse create new "money" out of thin air. I toss this back to you. If a small, select group of humans can print trillions of new FRN as they please at any time then how much can they be worth?<br /><br />Only Bitcoin has all of these properties:<br /><br />Medium of Exchange<br />Unit of Account<br />Store of Value<br />Fungible<br />Portable<br />Divisible<br />Easy to Store<br />Hard to Counterfeit<br /><br />Granted it is not THE unit of account currently but is fully capable of filling that role over time. Same with medium of exchange.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-86650563142040720152016-03-28T18:44:10.756-07:002016-03-28T18:44:10.756-07:00Dont forget 1 bitcoin is divisible to 8 decimal
po...Dont forget 1 bitcoin is divisible to 8 decimal<br />points, therefore there is lots of room in the system <br />for it do be used as money.Anonymoushttps://www.blogger.com/profile/03394484534246843382noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-68831100319758419522016-03-28T17:45:03.956-07:002016-03-28T17:45:03.956-07:00> Imagine if it became illegal to convert bitco...> Imagine if it became illegal to convert bitcoin into any form of legal currency? Wouldnt the value instantly fall to 0?<br /><br />Only if the technology is no longer useful or scarce (here referring to "bitcoins" - the internal unit of account).<br /><br />Take the American "Underground Railway" as a decentralized, old school example. If it were marked "illegal", did it no longer have utility? Pragmatically speaking, not idealism. <br /><br />If something is both useful and scarce, it will also command a price in the market. You can debate *what* that price should be, but not that there exists some price, and that it's greater than 0.Anonymoushttps://www.blogger.com/profile/13481987946393238250noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-40998946943349798912016-03-28T15:54:03.425-07:002016-03-28T15:54:03.425-07:00Excellent article David.
The 'value' of ...Excellent article David. <br /><br />The 'value' of bitcoin is essentially that its verification of provenance and authenticity is confirmed by the consensus process of Proof of Work, which gives massive financial disincentive to try and 'game the system' <br />The Rat is genuinely puzzled as to why Banks are looking at creating private blockchains, which re-introduce human fallibility and the ability for a bad actor to try and corrupt the system, with no financial cost disincentive. <br /> Anonymoushttps://www.blogger.com/profile/01213741273864625226noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-34704897244745987922016-03-28T15:19:38.938-07:002016-03-28T15:19:38.938-07:00Thanks for your comment.
Fed notes are hard to c...Thanks for your comment.<br /> <br />Fed notes are hard to counterfeit because if they weren't, they'd be worth nothing. <br /><br />See also: http://andolfatto.blogspot.com/2011/03/out-of-thin-air.htmlDavid Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-9877471732087124402016-03-28T15:14:52.430-07:002016-03-28T15:14:52.430-07:00Alexandre, thanks for the kind words. :)
I'm ...Alexandre, thanks for the kind words. :)<br /><br />I'm not exactly sure why my notion of "simplicity" irked you (even mildly). It's neither a necessary or sufficient condition for an asset to be considered "safe" in the sense I defined. For example, Robert Mugabe had a very simple and transparent monetary policy: hyperinflation.<br /> <br /><i>The Bitcoin development ecosystem is one concerned with hard science of cryptography, system engineering & computer science. A very healthy meritocracy.</i> <br /><br />You forgot to include economics (more precisely, game theory). :)<br /><br /><i>More importantly that is achieved in absence of any counterparty risk whatsoever. </i><br /><br />Well, this is an assertion that may or may not be true. It's very hard for the uninitiated to know whether it is true. Only experience (reputation building) will tell.<br /><br />In any case, I think there are counterparties involved--the miners. They may have incentives in place to keep them well-behaved, but this is not something that is God-given. Also, to the extent that people find it more convenient to use intermediaries like Coinbase, there is counterparty risk associated with the endeavor. I'm not saying it's big, just saying that any system has it's vulnerabilities.<br /><br />In terms of the "danger" of centralizing authority of validation, I'm not so concerned. I trust my bank to keep a good record of my accounts. I may not always like what they charge me for the service, but I trust them to keep my money safe, process my transactions, etc. <br /><br />Whether or not one trusts the monetary policy rule is another matter. But again, I think that trust comes with a record of good performance. The USD is high demand today in large part because people trust the Fed to keep inflation low and stable.<br /><br />Having said this, I think it's great that there are competing monetary systems out there. I don't see this as an either or situation. The history of money and payments is one of mutual coexistence. For example, there are presently thousands of local currencies in circulation. Of course, there are hundreds of national currencies. I think that Bitcoin is a valuable addition to this club. If it ends up being dominant because of its superior qualities, I'll be the first one to be asked to be paid in the stuff! <br /><br /><br /><br /><br />David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-21139023528059612652016-03-28T15:00:20.523-07:002016-03-28T15:00:20.523-07:00Interesting to see this from a Fed staffer. I am ...Interesting to see this from a Fed staffer. I am actually pleasantly surprised in a positive way he recognizes the value proposition as a store of value.<br /><br />I disagree on his view with respect to money mainly because I disagree with how he defines money. Are Federal Reserve note debt instruments hard to counterfeit? Hell no. Twelve Fed members can print new ones whenever they please and who knows what happens behind the scenes. Nonetheless, I appreciate his contextual argument vis a vis Visa (no word pun intended).<br /><br />Bitcoin has a long way to go. It is like a vacuum cleaner sucking up the global aggregate amount of Money of Exchange. If it's market cap ever exceeds this amount then perhaps it is a bubble. However, at that point who cares??? Just use Bitcoin for a store of value and day to day living. <br /><br />What's the eit strategy for gold? If gold bugs get their day and it costs $10,000 Federal Reserve note debt instruments to buy one ounce of gold then why on earth would one want to "cash out" back into FRN? <br /><br />Save the time and just buy Bitcoin now.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-17621607423931282632016-03-28T14:52:01.881-07:002016-03-28T14:52:01.881-07:00A superficial payment layer the likes of Lightning...A superficial payment layer the likes of Lightning will eventually bootstrap the use of Bitcoin as money and eventually enshrine it as a unit of account. That will be long after Bitcoin has appreciated enough to satisfy the liquidity needs and mitigate its fluctuations. Alexandrehttps://www.blogger.com/profile/10543913518595981920noreply@blogger.com