An article on Ars Technica notes the continuing slide downward of Bitcoin prices (down below $9,000 per coin from a December peak of $19,500). It also notes some recent news about Facebook ads and crypto, SEC Action against a different cryptocurrency project, and rumors about a still different coin's possibility of insolvency.
Meanwhile, rumors are swirling about Tether, a cryptocurrency whose value is pegged to the United States dollar. Tethers are supposed to be redeemable for dollars at any time, but in recent months Tether has struggled to gain access to the conventional banking system and has failed to produce a financial audit demonstrating its solvency.
I'm not sure if the article is connecting unconnected stories of problems or if the theme of trouble in crypto-land generally is valid. But this quote got me to thinking how much the state of cryptocurrency may be like the Free Banking Era in the United States in the 1800s and the Wildcat Banking that signaled its demise. We discuss cryptocurrency a lot on Soylent, but are the troubles of various operators all linked or is it unrelated coincidence?
[Ed. Note: The linked story at Ars Technica was updated to report that the price of one BitCoin dropped below $7000. As of this writing, coinbase reports the price dropped to about $6400 (Javascript required). Note this price is still $5500 ahead of where it was this time last year when it had just inched above $1000.]
(Score: 2, Insightful) by tftp on Tuesday February 06 2018, @03:22AM (20 children)
(Score: 1) by tftp on Tuesday February 06 2018, @03:24AM (1 child)
(Score: 2) by c0lo on Tuesday February 06 2018, @03:30AM
Oh, is it? I wasn't aware the guvernator being in a constant state of rotation.
https://www.youtube.com/@ProfSteveKeen https://soylentnews.org/~MichaelDavidCrawford
(Score: 2) by takyon on Tuesday February 06 2018, @03:25AM (5 children)
HODL
HODL
LDOH
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 0) by Anonymous Coward on Tuesday February 06 2018, @08:28AM (4 children)
It goes right/down/backwards
Or other combinations as whitespace alignment allows.
(Score: 2) by maxwell demon on Tuesday February 06 2018, @08:58AM (3 children)
OHLD
DLHO
LDOH
The Tao of math: The numbers you can count are not the real numbers.
(Score: 2) by FatPhil on Tuesday February 06 2018, @09:10AM (2 children)
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 3, Funny) by maxwell demon on Tuesday February 06 2018, @09:33AM (1 child)
That's the problem with HODLCoin: Nobody will sell it to you, they are all HODLing it.
The Tao of math: The numbers you can count are not the real numbers.
(Score: 2) by FatPhil on Tuesday February 06 2018, @09:51AM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 1, Insightful) by Anonymous Coward on Tuesday February 06 2018, @03:29AM (2 children)
As soon as the media started talking up BitCoin, anyone with half a brain stayed in for just a couple more days to make sure they could take the money from the next schmo... then they got out because the game was up. Anyone pouring their money in because they heard about it on the telly basically was being had.
It's like that with everything: as soon as everyone else starts pouring in money and savings, you know the game/good time is about to end.
(Score: 2, Touché) by tftp on Tuesday February 06 2018, @03:32AM (1 child)
(Score: 0) by Anonymous Coward on Tuesday February 06 2018, @04:08AM
BitCon, where the fact that you were being had, has been immutably recorded in the blockchain forever...
(Score: 5, Insightful) by Thexalon on Tuesday February 06 2018, @03:57AM (6 children)
That's just it: There has almost never been a currency based on intrinsic value. It's almost always based on social value, because the whole concept of currency is a social concept.
Yes, even when it's been based on precious metals. Gold and silver have substitutes that aren't as good as gold and silver for what they do, but are about 1000 times cheaper. For practical applications like tools, they're actually worse than most other metals because they're too soft and hard to come by. And governments could and did debase the currency even when the coins in question were gold and silver. Basically, they're valuable because they're pretty and stay pretty over time.
BitCoins, like all other currencies, have value because people believe they have value. Unlike currencies with government backing, that's all they have going for them. By contrast, currencies with government backing have guys with guns who will come explain that you do in fact need to come up with a certain amount of that currency for the tax man if you know what's good for you.
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 0) by Anonymous Coward on Tuesday February 06 2018, @05:23AM
Bitcoin, like other currencies, had value because people believed it provided a functional means of exchange that got around issues presented by conventional currencies.
At this point, just about all of those issues are worse with Bitcoin than they are with other currencies (it's slow, it's expensive to transact, at this point everyone realizes it's anything but private, etc).
Cryptocurrency has a future. Bitcoin MIGHT...but it really depends on how the rollout to the Lightning network fares. Even if it goes well, there are projects like Monero that do mostly what it does, but with added functionality (with monero, that functionality being fungibility, or as some like to think of it, a "built in laundry service"). I will not be surprised if we turn out to have seen Bitcoin's highest peak.
That said, I won't be shocked if it breaks its record again. After all, Dogecoin spiked despite having been abandoned for over a year in the clamor to a market cap of $2 billion. People are crazy, and markets are people. Hail Eris, All Hail Discordia.
(Score: 0) by Anonymous Coward on Tuesday February 06 2018, @05:37AM (3 children)
gold and silver have value because they don't degrade.
"noble" metals they are called, because they generally don't do chemical reactions.
this makes them ideal for coins because the coin won't change much over a hundred years or so.
(Score: 2) by maxwell demon on Tuesday February 06 2018, @07:44AM
Of course numbers don't degrade either. The medium they are stored on can, of course, but you can back it up. If you desire so, you can even engrave your offline wallet in stone.
However, unlike gold, you'll need a working infrastructure (electricity, internet) to spend your bitcoins.
The Tao of math: The numbers you can count are not the real numbers.
(Score: 2) by Thexalon on Tuesday February 06 2018, @01:04PM (1 child)
Except of course for nobody hanging onto actual coins for over a century. The Romans, for instance, had fairly sophisticated banking systems, which meant the rich folks didn't have to actually lug around hard cash when they, for instance, went to Egypt to conduct business.
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 0) by Anonymous Coward on Tuesday February 06 2018, @02:30PM
the point is that it's a reasonably small thing that can be easily exchanged between people, and it will stay more or less the same for generations.
and you can make a crown from gold and then it will be the same crown "forever". as well as various religious stuff.
(Score: 2) by crafoo on Tuesday February 06 2018, @05:29PM
Not quite right. Currency has value because people believe that they can exchange them for real goods and services at some later date. It's not some blind belief in a social idea. They work how much faith they have that the currency will be worth goods and services into their valuation of the currency.
(Score: 2, Informative) by Anonymous Coward on Tuesday February 06 2018, @04:02AM (1 child)
Did anyone else read Cringely's prediction?
https://www.cringely.com/2018/01/24/prediction-4-bitcoin-crashes-booms-crashes-booms-2018-traders-figure-not-currency/ [cringely.com]
(Score: 2) by crafoo on Tuesday February 06 2018, @05:33PM
Nope. It's not misunderstood. Saying a currency is "backed by XXX" is just a factor into each individual's calculation of how probable it is they can exchange it for real goods and services in the future. It may stabilize the value over time, which makes them somewhat more sure that they can get a dozen eggs next week with it. The value of currency is what people believe they can exchange it for at some later date. That's it.
Cryptocurriencies are volatile because of their relatively low total capitalization and the ease at which people are speculating and manipulating the value. People with real money and power are extracting capital from idiots. However, as long as they can be exchanged for goods and services, they will always retain some amount of value.
(Score: 0) by Anonymous Coward on Tuesday February 06 2018, @03:46AM (1 child)
Oh no! What does this mean for Michael David Crawford's cryptocompany, Soggy Blockchain?
(Score: 2) by MichaelDavidCrawford on Tuesday February 06 2018, @11:55PM
Real Soon Now
Yes I Have No Bananas. [gofundme.com]
(Score: 2) by JoeMerchant on Tuesday February 06 2018, @03:48AM (2 children)
I got a bitcoin (actually .9986 BTC) back in 2010 when it was "worth" about $4, hardly worth thinking about cashing in.
Then in ~2013, it was spiking around $200, so I bothered to figure out how to get somebody to give me spendable money for this bunch of numbers in my computer.
Whoever paid $200 for that BTC is still doing pretty good today at 8000 (if they HODLed).
The whole thing could evaporate back down to $3 per BTC and I would still think they're over-valued.
🌻🌻🌻🌻 [google.com]
(Score: 2) by maxwell demon on Tuesday February 06 2018, @07:39AM (1 child)
Given that in December it peaked at above $20000, yes, $8000 is down.
OTOH if you've bought earlier last year, you're still up.
The Tao of math: The numbers you can count are not the real numbers.
(Score: 2) by JoeMerchant on Tuesday February 06 2018, @12:46PM
To get a trading price of 20, somebody (with a lot of faith) was buying, it's a volatile issue and now its down to 8... that's kind of par for the course in volatile issues. The number of 0s following the prices doesn't change the volatility at all.
🌻🌻🌻🌻 [google.com]
(Score: 0) by Anonymous Coward on Tuesday February 06 2018, @03:56AM (2 children)
With all that confirmation lag in the network, how fast can the price drop? It is faster to drive to a gold coin dealer, wait for the store to open, buy some gold eagles, and drive home with a meal stop than to buy these bitcoins.
(Score: 2, Informative) by Anonymous Coward on Tuesday February 06 2018, @05:27AM
You sound like you're thinking of a price drop the wrong way. When the price is falling, it's not necessarily being transacted at each step along the way. Someone is making an offer to sell, and then before it is purchased, someone makes another offer, lower. Meanwhile, sales aren't going through, or they're going through slower than people are scrambling to sell. When people see the price is falling, those few remaining buy offers tend to dry up, and the drop accelerates.
Basically, there's not much of an upper limit on how fast the price can fall, because the price falling doesn't require a single transaction to actually take place...they just usually do in practice.
(Score: 2) by TheRaven on Tuesday February 06 2018, @10:46AM
sudo mod me up
(Score: 2) by krishnoid on Tuesday February 06 2018, @05:27AM (3 children)
I thought derivatives were supposed to help prevent wild swings in underlying financial instruments. Do these not exist or is this not happening for bitcoin?
(Score: 3, Interesting) by maxwell demon on Tuesday February 06 2018, @07:35AM (1 child)
Weren't derivatives the source of wild swings ever since the Great Depression?
Also, was it a coincidence that the Bitcoin course went wild right after Bitcoin futures were allowed on Wall Street?
Anyway, currently we don't have a wild swing, but a very steady downwards trend since roughly the beginning of the year. Which isn't the first time BTW, it also happened in the second half of 2014 (in the first half of 2014 it also was going down, but not as steadyly). You can explore it here; [coinmarketcap.com] unfortunately I couldn't find a way to link to specific date range selections, so you'll have to set the date ranges yourself.
The Tao of math: The numbers you can count are not the real numbers.
(Score: 2) by FatPhil on Tuesday February 06 2018, @09:27AM
Quite the opposite, the way I look at it - it had started going parabolic (log curve has +ve 2nd derivative) before futures appeared. The futures did appear to temper the growth. I presume that was because some were now betting against it.
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 2) by FatPhil on Tuesday February 06 2018, @09:20AM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 3, Interesting) by bradley13 on Tuesday February 06 2018, @09:27AM (1 child)
It will be interesting to see what happens in the next few months. Personally, I expect that this is just a "correction". I mean, Bitcoin is currently down at the same level it was two entire months ago. Really, that's not any sort of big deal.
The reason for this seems to be the recent spate of news, where governments are beginning to take notice of Bitcoin, and expressing their discomfort with it. Which was only to be expected - I mean, digital currencies provide a mode of payment that is currently beyond the purview of routine government surveillance (no bank automatically reports your Bitcoin transactions to your government, whereas they certainly do report all of your ordinary financial details). This was not a surprise; rather, it was entirely expected.
There are still people in totalitarian places who want to have some assets outside of their governments' reach. There are still speculators. There are still the gray and black markets. And there are still all of us who support financial vehicles that governments don't (yet) have their hooks in, just out of the principle of the thing.
For all of these reasons, I think the correction will soon be over, and the demand for digital currencies will continue on unabated.
Everyone is somebody else's weirdo.
(Score: 0) by Anonymous Coward on Tuesday February 06 2018, @11:49AM
The Chinese are hard at work trying to make a global sino-dollar(?). From start to possible finish this will take 50 years. Backed by the second biggest economy in the world.
They want it to rival the dollar mind you. So trade is done worldwide in sino-dollars.
Many countries have local currency that is largely worthless out its own borders. Useful within. Nada without. The concept here tied to a bigger concept.
Once the sino-dollar takes hold the euro and usd will combine to thwart this? Perhaps why Russia is hard at work trying to fuck up these old ally relations from within
Destroy key concepts of societies; destroys those societies money. Etc.
Bitcoin is strange for this concept. It has no country to back it. As we see not many currencies are worth much outside the country’s borders. But bitcoin is global. So must reach a level of trust that the sino-dollar has been working decades to bring about. And it is still not there. Bitcoin will need decades too. To be trusted and not risk sell off issues. Who wants to be left holding a worthless bag. Needs to rise and crash a good number of times more before the real masses believe it has value. All while many will try to short it etc. and governments still haven’t weighed in on it.
(Score: 2, Insightful) by Anonymous Coward on Tuesday February 06 2018, @10:54AM
The price went up so fast in the past few months, it was hard to safely trade against that. Now the price is dropping it's IMHO much easier to make money out of it and the huge volatility is awesome. All the fear that it causes with the wanted-to-get-rich-quick-crowd is a bonus.
(Score: 2, Funny) by Anonymous Coward on Tuesday February 06 2018, @12:55PM (2 children)
... way before the internet or smartphones, we had these things called John Bull printing sets.
They were fun. You had a little rack and rubber letters that you could slide in and make your own badges with a stamp pad; the bigger ones even had pictures you could print too.
One day we had the bright idea of printing our own money with it. This soon caught on at school and we managed to persuade the younger kids to sell us stuff for it. Soon we had accumulated a large pile of other kids' stuff, while they ended up with all the 'money'. We then realised we could print more, and we did - lots more - causing rampant inflation and rendering most of the other kids' 'money' worthless.
The Headmaster got wind of all this, and it didn't end well. He confiscated all the 'money', made us give back all the stuff to the kids we had 'bought' it from, put us in detention and wrote to our parents.
Kids, eh?
(Score: 2, Insightful) by Anonymous Coward on Tuesday February 06 2018, @03:09PM
In doing so, you probably learned more about how money works than most other people.
(Score: 0) by Anonymous Coward on Wednesday February 07 2018, @01:59PM
Wow.
That's just how things are going in Argentina.
Except it is the starving military just taking the "stuff" for themselves, instead of giving it back to the "kids."
If your headmaster had a bit of prescience, he would have turned it into an economics/government lesson.
Perhaps it could have spread worldwide and we wouldn't have such messed up economies in the world.