Bitcoin is too volatile to be taken seriously

Pekelo,

Reading back my last post, I meant: "I give up the Ponzi discussion".
And about "how to value bitcoin" I like to add:

I read somewhere that WesternUnion will not exist in 4 year (protocol-property of transporting money fast and for free). So if someone thinks that this will happen, then he can value Bitcoin similar to WesternUnions current market-cap.
I myself think it will not kill WU, but that they will join Bitcoin in their business model somehow.

A commodity valuation could be that someone values it as 1% of the Gold-markets-cap. Which would be 7000 dollar per coin. The Chinese really think that this is a fair price (I do as well).
 
Quote from Pekelo:

I will admit that certain aspects of bitcoin doesn't fit the ponzi description. But it is very ponzi-esque, and certainly people getting into this not for the advancement of new technology or stick it up to the man, but for the quick 100% per month return doesn't help the case.

The problem is evaluation of the coins. It can be 50 cents or 5K dollars and anything in between. With a stock we at least have revenues, profits, or P/E ratio or whatever. Here we have people's feelings.... :)
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I agree, we need something much more solid to evaluate like say TWTR shares! At least there is a way of getting a logical valuation for those. (I guess I just don't know the proper method to use.)

Most of the best traders I know have long ago realized that the short term market is driven by emotion. That is one reason (of many) why there are no magic beans. All systems work until they don't. If anything logical did work every time, then we would just bet 100% every time a setup happened. And then, wonder of wonders, we would not be able to get filled!
 
Quote from stevegee58:

There's not an infinite amount of gold in the world either and yet many are clamoring for a return to the gold standard.

You're right it's not the way the banking system operates but maybe that's a good thing. The only real "backing" in any modern currency today is debt - promises to repay loans with interest.
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As I mentioned in other threads, government can be destroyed by the internet's destruction of distribution systems and intermediaries. Since money is how the government taxes people's labor and corporations, how does the government finance itself in the future?

Governments have attacked offshore havens, corporation legal manoeuvers to pay less taxes, black markets, and other socialist issues. Lol and behold, a competitor to control through debt slavery (Bitcoin) has appeared. Remember store of value is not the only threat. Capital controls are designed to allow the government to do anti-market manipulations. The ability to transfer money could have a destructive effect, as just a temporary store of value. The NSA needs to spy on every thing for control, not really terrorists, global warming and other such silly fears. Slavery works because of threats and resulting fear in some senses.

All of this from unintended consequences of QE over-usage, government mismanagement, incompetent leaders, slow inaccurate responses, corruption, the inability of government to dictate what you will see, hear, read, believe. Make no mistake this is a big threat to certain governments.
 
Quote from Pekelo:

Well, I don't. The gold standard has the exact same problem, the gold supply isn't flexible.

With virtual currencies though, there could be a system made that is somehow more flexible, but that would require some kind of authority to issue/withdraw the coins. Also I don't like the way how Bitcoin was originally distributed (first come first rich scenario).
I guess the bottomline is that it is a pretty decent first try, but there are plenty of things to tweak and maybe the next one is going to be a much better version...
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Isn't the authority distributed - like the internet? Middlemen like banks and representatives are no longer needed.

Government has to be centralized due to its overuse of force and control with its carefully designed legal system that keeps things in order - obey the constitution when it suit them but ignore it when it doesn't? I don't have a better solution for the inequities that exist today, but I doubt that centralized government is it based on the examples I see today.
 
Quote from sle:

This statement is equally applicable to gold. Even without reading the wiki page, I could tell you that one of the key characteristics of a ponzi scheme (unlike any other "perscieved" value product) are the unlimited "on-demand" nature of the asset in question. In case of a limited-supply asset, there is no opportunity to payoff the initial investors by creating and selling more of the asset.

A limited-supply asset could have a bubble, but it's not going to be a ponzi scheme. Gold is not a ponzi scheme, while a start-up that keeps issuing more stock as the prices are going up could certainly be.
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If the store-of-value asset is centrally controlled, corruption is possible by that controller. If the asset is created, then excessive creation leads to inflationary effects and mis-use of the power. A hard to find, unchanging metal like gold was an attempt at both, but I think it will not work this time. But I have been wrong before ....

The entire problem, could be solved with a store of value that couldn't be increased and couldn't be corrupted. A free market economy has been corrupted by collusion and force in the past once or twice before. An equal system, where citizens make the decisions was tried, but that was also corrupted slowly but surely. And here we are today.
 
You guys responded to my posts but since there was really no question there, I don't have an answer either.

So I am going to switch the topic, and try to predict the next top/crash. First let's look at the previous crashes, and let's have a definition of crash as 50% or more drop in price. Apparently with bitcoin 20-30% drops are just pullbacks...

I am just going to count the last 3 tops when price went parabolic, they were 32, 266 and currently 900. Does it tell us anything about the next one? We shall see...

Well, until a month ago I was very cautious about bitcoin, but 2 major things happened. One was the US Senate hearings, that went rather well for bitcoin and if we add that the Germans and the Chinese also kind of OKed it, that means that the fear of a government action is out of the at least near future.

The other thing was China taking over the trading volume. That also means 2 things:

a/ Even if the US bans bitcoin, the Chinese (or non-US) population can still keep it alive.
b/ Knowing how much Asian people like to gamble, now there is an almost unlimited supply of suck... er I mean users or hoarders.

So in the short term, price can only go in one direction. Also the way how the 50% crash rebounced in hours showed that there are plenty of capital there to suck up any coins with a discounted price.

What most people don't realize that bitcoin is the first very truly global fad, beside other things. It is way bigger a scheme than cabbage kids, baseball cards, tamagochi or Liberty dollars or any other thing that stops at the national level. It is and will be a global mania. So I think we are not done with the all time highs and volatility isn't going to die down anytime soon.

So the next top/crash? Maybe at 1200???

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From an NPR interview:

Tom Ashbrook: "Robin you are with the Wall Street Journal; are wall street guys stacking up Bitcoin fortunes betting on its future?"

Robin Sidel (WSJ senior special writer): "They sure are. They are trying to figure out how. I was speaking with someone who told me that everyone he knows at Goldman Sachs is trying to figure out how they can make money at this."
 
Quote from Baron:

The volatility is exactly what makes it great to trade. There's a million other things to trade out there which barely move if watching paint dry is what you really want.
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only problem is you can't trade it ! This thing can be cut in half by the time you buy order gets settled. And what's your upside from here ? Not much if any .
 
Quote from Pekelo:

So I am going to switch the topic, and try to predict the next top/crash.
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I think you shouldn't try to daytrade this thing (the exchanges are not yet ready for that). Swingtrading (over several days/weeks) might be profitable, but for me (and 90% of Bitcoin owners) it's buy-and-hold.

It's an S-curve investment, and because of this you need a Logarithmic chart (see attached).
We are now at $900. Running up to a logarithmic $1500 doesn't look that odd... Of course there will be a logarithmic down leg somewhere next year with a "maybe bottom" of $300 (which will hurt many), but the up leg thereafter will be huge (some predict $40.000 or more in 4 years).
Anyway: I will hold my coins in a cold-wallet, and don't touch them until we reach $7000 (or are worthless).
 

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Quote from Pekelo:

So the next top/crash? Maybe at 1200???
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It did make up to and slightly over to 1200$ and now the price has been stalling in this area... So I will chalk this up to the good calls....
 
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