"People who do math don't have credit card debt."

[gone-ot]

Originally Posted by jamesqf

Not obsession, simply pointing out that the recent extreme rise in bitcoin price bears all the classic signs of a bubble.

There might be some underlying worth to bitcoins, just as there is to tulip bulbs, but that worth is irrelevant in the current market. The price is being driven upwards by speculation.

Manipulation more so than speculation? Those who know "How To" gaming the system?

[freebeard]

Limited Supply and escalating demand. Corrupt politicians fleeing the scene of their crimes.

[freebeard]

...bubble...

...bubble...

...bubble...

If you'd like to go beyond the knee-jerk reaction:

Bitcoin Futures Tumble As Spot-Arbitrage Collapses | Zero Hedge

The true bubble is in Bitcoin futures — a financial shennanigan of the highest order. A derivatives market that's not tied to Bitcoin! It deserves to fail and it's going down.



If you look into it, the futures market expects to stabilize, and the big holders are moving from the miners in China, to the 'Mrs. Watanabe' traders in Japan.

As for ground zero - Japan - nobody appears worried:

Supply seems to come from Chinese bitcoin miners and a few early holders. “People who’ve owned them for a long time and have made a fortune. They have ¥10bn and they’re selling a little,” he said. Trading on bitFlyer is roughly 25% in actual bitcoin and 75% in derivatives, where customers make leveraged sidebets with each other on the bitcoin price. “We don’t take any risk. The trading is between our customers,” Mr Kano said. Arbitrageurs link the derivatives market to trading in underlying bitcoin.

Perhaps they have good reason for this: BitFlyer automatically closes client positions when they lose half their initial margin. For example, a customer who used ¥10,000 to buy ¥150,000 of bitcoin would be forced to sell if its value fell to ¥145,000, a drop of slightly more than 3 per cent, something futures traders in the US will find out soon enough.

So this 'bubble' thing might be like putting a pin-prick in a Zepplin. Maybe they arbitrage with real Bitcoin, I still don't like derivatives. Money for nuttin' and the chicks are free.

[jcp123]

The fact that bitcoin trades almost as a stock, is fronted as a currency, and has little more than security and a vague difficulty by bitcoin miners going for it as some sort of value measure or floor leaves me pessimistic about bitcoin.

But then, I admit I have a real gap in my knowledge of bitcoin. Try as I might, the blockchain thing still flies over my head.

[freebeard]

I know. I read the whole Satoshi Nakamoto white paper back when. I don't have those powers of concentration today. The reason I came back to the thread an hour later?? I'm obsessed.

It sounds to me, reading Zero Hedge, that the real bubble is in fiat currency:

Deutsche: "We Are Almost At The Point Beyond Which There Will Be No More Bubbles" | Zero Hedge

This is mind-numbing, so I ran it through Mac OS Summarize Text:

While a passage like that is far more likely to have been taken from a book by Lacan, Derrida, Deleuze and Guattari, Foucault or any other prominent POMO-ists, in this case it comes from Kocic' year end outlook which encapsulates many of the themes we have covered recently, most notably his recent take on the interplay between volatility and leverage, a topic which anyone who has read Minsky is quite familiar with, yet which Kocic decided to give it his unique post-modernist spin with the following "spiraling leverage" chart from one month ago...


...Well, considering that years and decades of endless political lies that "the future is brighter" is the reason why the world finds itself on the edge of a social, political and financial catastrophe, and which has made a handful of people richer than their wildest dreams while pushing the vast majority of the population into considering that socialism - and even communism - may be a wise alternative to capitalism, perhaps it is not so bad that for once the truth will be told and someone will have the temerity to admit that no, the future will not be better, especially when one admits that after the next crash - and the wars that follows - the future, or as it will be known then, the present, will be the worst since the world wars.

A post-modernist facing the end of post-modernism. His spiraling line on a Cartesian grid speaks volumes. It's hard for him to imagine a world without him.

Meanwhile back at the ranch...

Bipartisan 'Cryptocurrency Fairness Act' Moves to Congress | Zero Hedge

First, it creates a de minimis exemption for cryptocurrency transactions for goods or services.

Today, if you buy a cup of coffee with bitcoins, you’ll have to calculate and report any gains that you experienced and pay tax on any gains. Under the bill, any transaction under $600 would be completely exempt, so you’d neither have to worry about keeping track of gains on all the little purchases you make, nor would you owe taxes on those small gains. This mirrors the same kind of exemption that foreign currency enjoys today and we think it’s a simple and fair way to avoid discouraging the use of cryptocurrency.

Now, there are many other transactions above $600, such as getting in and out of investment positions, on which capital gains tax will be owed. Today, you are responsible for keeping track of and accurately reporting every cent of gain. This is in contrast to your stock broker, who provides you and the IRS with a 1099-B form accounting all your gains and losses. Indeed, in answering Coin Center’s amicus brief opposing the IRS’s unprecedented and overbroad John Doe summons against Coinbase users, the Department of Justice noted that, “If Congress had subjected bitcoin exchanges like Coinbase to similar reporting requirements as those imposed on an online stock broker or a barter exchange, no John Doe summons to Coinbase would likely have been necessary[.]”
[snip]
Whatever the case, the other thing the Cryptocurrency Tax Fairness Act would do is require the Treasury Department to issue guidelines for informational reporting on digital currency transactions for which capital gains is due.

A de minimis exemption that completely excludes all small transactions, as well as clear IRS guidance and informational reporting, would be a lifesaver at tax time for cryptocurrency users.

[redpoint5]

Originally Posted by freebeard

Bipartisan 'Cryptocurrency Fairness Act' Moves to Congress | Zero Hedge

How in the heck are you supposed to enforce a tax on untraceable currency? Why does it talk about transactions of $600 or more when no dollars are being exchanged?

This is one of the reasons I don't see Bitcoin taking off; the government is going to make it illegal since it represents the end of taxation.

I imagine some form of decentralized block-chain ledger e-currency will be the future standard, but not Bitcoin. Transactions will still be tracked for tax purposes.

[oil pan 4]

If the government can't control it or doesn't understand it, they will make it illegal.

[Fat Charlie]

What if one of their donors sees it as competition?

[freebeard]

We shall see.

I imagine some form of decentralized block-chain ledger e-currency will be the future standard, but not Bitcoin. Transactions will still be tracked for tax purposes.

Agreed. I hold no Bitcoin at this time. I like Ethereum. It's following a similar trajectory.

Banks report cash transactions above $10K, do they not? Self-reporting above $600 sounds like ratcheting down to me.

The blockchain (the real value, not the 'coins) is pseudonymous. Good luck using it for your life of crime.

[redpoint5]

I still don't know how I'm living in a world where money is exchanged from one computerized bank account to another with a piece of paper, which is electronically read (checks).

I've never written a check in my life (used cashiers checks and money orders a couple times).

Regarding credit cards, the new chip ones are stupid. They are slower to authenticate, make an error sound when the transaction is successful, and don't provide any more security because anyone can still use the numbers to make online transactions.

The existing magnetic strip cards would be fine if they also employed a PIN for all transactions. I've heard the majority of the transaction cost with a CC is to cover fraud. If you drastically reduce fraud, transaction costs could be very reasonable.