Cryptocurrency Crash

[Laughing]

It's a bit of a strange term isn't it, and I use it too

I suppose it's money left over after people have done what they want to do, some might count a Ferrari payment as disposable income, some might just count that in their normal expenditure. Same with boozing, some people might count that money spent as disposable income, but for some going out with their mates is one of their only joys, so their mental health probably relies heavily on that income more than some other things they don't count as disposable income.

I'm sure most would try and dispose it into something which would get them some gains, but then that's not really disposing, it's just moving it somewhere else and hoping it goes up (or goes down less).

If people had to dispose of it, then it's not really disposable, and they wouldn't be all too happy about it.

To me it's something I wouldn't have a breakdown over if I lost it, as my life would not currently change, albeit I would be pretty annoyed, and it would certainly effect my retirement.

A tramp once asked me if I had any spare change. I replied "I have no way of knowing I haven't finished living" the man swore at me and my wife bashed me.

So I have no idea what disposable income is either, apparently.

 

[HundredRoom]

You're trying to tell people crypto is codswallop and you don't even know what disposable income is? Jesus Christ.

I hope your parents let you stay up late to watch the match tonight

 

[Gains]

Yes I agree . The fact that something has gone down does not make it codswallop

But these sentences do which was more or less all of it

"Ive doubled what I've put in so far, but I think I could end up x10, by when is the unanswerable question but I'm pretty convinced it'll happen"
.
"The bottom is somewhere near"

"The big holders of the strongest tokens (known as Whales) around the world are still accumulating"

"but I'm pretty convinced it'll happen"

"There is absolutely no doubt in my mind buying now will generate profit."

"I only use disposable income to buy,"

A lot of that is opinion, some of it is fact. We spoke about you being a c**k when people give opinions you don't agree with, I thought we'd got somewhere?

You're claiming 50% down in the last 2 months. What about 2500% up in the last 5 years?

 

[WilliamMunny]

This is where the confusion lies between the difference between cryptocurrency and blockchain technology.

BTC will never be a mainstream currency around the world, the stock market will never replace USD with BTC, and we'll never be walking into Tesco paying for our weekly shop with BTC. These are pretty much facts.
We'll probably be able to do it as a novelty, PayPal accepts BTC now, but it will never be our mainstream currency.

Most people will probably find this analogy insane... "Why BTC?" is the same question as "Why Gold?".
Who decided gold was worth more than silver and other elements all those 1000s of years ago? It's just supply and demand, if people want it, the price will go up...

Cryptocurrency's have massive risk, but BTC is seen as "the safest", the entry-level, and a lot of the time BTC is used to purchase other currencies, so it's "needed".

I'm not saying it'll always be the largest going forward, but for the last 10 years you've essentially needed BTC (or ETH) to even purchase other cryptocurrencies, which has made the price of those two rise more sustainably than others, because it was always being purchased.

The comparison between gold and BTC is somewhat spurious IMO. There is a similarity in that they are both scarce, but that's about as far as it goes. You can actually see and touch gold and it is both attractive to humans and unique - no other element is that colour and therefore it can easily be identified. Also it doesn't tarnish like silver does, or corrode like copper and iron, which makes it the best element to represent value is a physical form.

I just don't see the uniqueness in BTC or any other cryptocurrency. If you can't smell it, touch it or taste it, what is to stop people from replicating BTC? Indeed, do we not have c.8,000 variations on the same theme already? Why can't the US Federal Reserve launch a $ equivalent of BTC using the same/similar technology and if they did, why would the majority not use that instead of BTC? After all, how many of us still pay for things with gold in the modern world?

It also shouldn't be overlooked that $1,000 of gold in 1922 would now be worth c.$86,000 whereas $1,000 invested in US equities 100 years ago would now be c.$13m. That's because gold and other "currencies" are more a store of value than an investment per se. I don't see why crypto should be any different and therefore I cannot see the case for exponential increases in price over the long term.

 

[Andy_W]

I think in this crypto context it means its money that they can afford to lose. But its absolutely the wrong mindset when it comes to investment

A lot of the best gains are from some which take big hits, and some even go to zero but the gain or loss is usually always very relative to the risk.

For an example (not saying this is accurate) Bitcoin might have a 1 in 3 chance of going to zero within 3 years (or near zero) and a 2 in 3 of doubling someone's money which could mean it's a good option for some, but for most it's too much risk. For others it depends on the timeframe, as with some other investment getting 26% relatively safely each year (by comparison) would end up with the same outcome over three years.

Having cash in the bank is a loss when inflation is high, and banks could also go broke, albeit some of that is protected to a degree. A lot of people don't realise this and think the bank is safe, it's not, it's practically a guaranteed loss, albeit a minor loss.

This is how I roughly understand it, but I only really bother with the middle two quarters in bold, so concentrate on that the most, which isn't even a great deal of time.

Crypto/ own trading in small number of random individual stocks, with poor diversification, trying to get rich quick
Own trading in a portfolio of risky stocks (learned my first lesson quickly on this one, and lost about 50%)
Own trading in a portfolio of growth/ semi reliable stocks (albeit how these are valued is debatable, which is why I don't do it, I don't know enough)
Tech funds/ investing in traders
Index funds S&P 500, FTSE 100, managed funds (after fees are accounted for)
All world funds on vanguard or whatever (low fees)
Property when the market isn't in a boom
Property when the market is in a boom
Cash when inflation is high and interest rates are low (I keep about 3 months current salary in cash, but could make this last 6 moths quite easily)
Pensions/ Bonds/ treasury bills etc (the only pension I've got is one which I can't get at, but would get this out if I could)
Cash when inflation is low and interest rates are high (doesn't currently apply)

 

[Andy_W]

The comparison between gold and BTC is somewhat spurious IMO. There is a similarity in that they are both scarce, but that's about as far as it goes. You can actually see and touch gold and it is both attractive to humans and unique - no other element is that colour and therefore it can easily be identified. Also it doesn't tarnish like silver does, or corrode like copper and iron, which makes it the best element to represent value is a physical form.

I just don't see the uniqueness in BTC or any other cryptocurrency. If you can't smell it, touch it or taste it, what is to stop people from replicating BTC? Indeed, do we not have c.8,000 variations on the same theme already? Why can't the US Federal Reserve launch a $ equivalent of BTC using the same/similar technology and if they did, why would the majority not use that instead of BTC? After all, how many of us still pay for things with gold in the modern world?

It also shouldn't be overlooked that $1,000 of gold in 1922 would now be worth c.$86,000 whereas $1,000 invested in US equities 100 years ago would now be c.$13m. That's because gold and other "currencies" are more a store of value than an investment per se. I don't see why crypto should be any different and therefore I cannot see the case for exponential increases in price over the long term.

Gold has a long track record too, and some use that as a wealth store, which people don't do for Bitcoin (or shouldn't do if thy have other options). They're not comparable mind, and the only way they are comparable is that they're "mined". The cost to do both is going up, and there is a finite amount of both, when we run out of both gold will probably stay where it is and when the miners lose interest in bitcoin then people generally might too.

Cash and Cards are a good system, and the way I see it the only people who tend to not want this system regulated/ backed by the FCA etc are people who are hoping to get rich quick, are generally up to no good, or who want to manipulate the system. It doesn't make sense for the world to have the same currency, as too much changes too quickly in different areas, and some areas are very different to others. The world will never agree on a unified single currency either, as half the world is competing with each other, and those who are going through a bad time would not want their currency valued against the norm at that time, everyone would want to get in at their peak, and that's not possible.

There is a cost to the regulation, but the relative safety net of it is worth it's weight in gold, literally.

 

[Ash88]

The comparison between gold and BTC is somewhat spurious IMO. There is a similarity in that they are both scarce, but that's about as far as it goes. You can actually see and touch gold and it is both attractive to humans and unique - no other element is that colour and therefore it can easily be identified. Also it doesn't tarnish like silver does, or corrode like copper and iron, which makes it the best element to represent value is a physical form.

I wasn't comparing BTC and gold. I was comparing the question a previous poster asked "Why BTC in comparison to others?" to asking "Why gold in comparison to others?"
Thousands of years ago, someone essentially decided gold looks pretty and therefore should be valuable, and the world agreed, and continues to agree.
In the modern day, someone has essentially decided BTC is valuable (admittedly that decision may change), but right now... it will continue to be valuable because people want to buy it.

I just don't see the uniqueness in BTC or any other cryptocurrency. If you can't smell it, touch it or taste it, what is to stop people from replicating BTC?

It's impossible to replicate BTC, the entire point of blockchain technology is that each transaction is completely unique.

Indeed, do we not have c.8,000 variations on the same theme already?

We don't have 8,000 variations of BTC. We have 8,000 cryptocurrencies.
I agree 99.99% of them are absolute rubbish, but that's because anyone can essentially make one.
In the same way I can start using paper clips as currency...
If I'm using my paper clip to buy an item and someone is willing to sell their item to me for my paper clip, my paper clip becomes a currency, it doesn't become the US dollar.

Why can't the US Federal Reserve launch a $ equivalent of BTC using the same/similar technology and if they did, why would the majority not use that instead of BTC? After all, how many of us still pay for things with gold in the modern world?

The US can make their own cryptocurrency if they wanted to, I believe the Marshall Islands already have.

 

[WilliamMunny]

I wasn't comparing BTC and gold. I was comparing the question a previous poster asked "Why BTC in comparison to others?" to asking "Why gold in comparison to others?"
Thousands of years ago, someone essentially decided gold looks pretty and therefore should be valuable, and the world agreed, and continues to agree.
In the modern day, someone has essentially decided BTC is valuable (admittedly that decision may change), but right now... it will continue to be valuable because people want to buy it.

It was me that asked "why BTC?" There are many more reasons that gold is valuable than it looks pretty. Ultimately it boils down to every other element being an inferior candidate for a store of value.

It's impossible to replicate BTC, the entire point of blockchain technology is that each transaction is completely unique.

So it is impossible for somebody to create BTC2 for example? Why can't somebody use blockchain technology to create something similar to Bitcoin, but perhaps even better? That's a genuine question that nobody I ask can ever answer to my satisfaction.

Also, nobody will ever tell me why a United States backed cryptocurrency, or an EU one, or a Chinese one, etc, etc, etc, etc, would not be more popular than BTC. I asked you that very question Ash but it was the only part of my post you chose not to respond to, which is in itself interesting.

 

[Ash88]

It was me that asked "why BTC?" There are many more reasons that gold is valuable than it looks pretty. Ultimately it boils down to every other element being an inferior candidate for a store of value.

But storing value in the form of gold was a decision made by a person thousands of years ago.
Gold is only valuable because we deem it valuable. The same as BTC is only valuable because people deem it valuable.
If everyone sells their gold and never wants to buy it again, it becomes worthless, the same as cryptocurrencies do.

So it is impossible for somebody to create BTC2 for example? Why can't somebody use blockchain technology to create something similar to Bitcoin, but perhaps even better? That's a genuine question that nobody I ask can ever answer to my satisfaction.

Technically somebody can create a cryptocurrency and name it BTC2, and use the same algorithm to mine more BTC2s, etc...
The uniqueness doesn't come from BTC itself - GBP is exactly the same as the USD, or the EUR, or YEN, etc...
However, the concept of "money" in unique, the same way the concept of "cryptocurrency" is unique.
The uniqueness comes from the way every transaction throughout the history of BTC is recorded, tracked, stored, etc...

Also, nobody will ever tell me why a United States backed cryptocurrency, or an EU one, or a Chinese one, etc, etc, etc, etc, would not be more popular than BTC. I asked you that very question Ash but it was the only part of my post you chose not to respond to, which is in itself interesting.

The whole purpose of a cryptocurrency is that it's decentralised; no one entity (like the federal reserve) can "own BTC" or print more BTC.
The purpose of it's invention was so central financial corruption like what's happened in Zimbabwe, Venezuela, etc... cannot happen.

So to answer your question... The US can technically create a cryptocurrency, and if more people buy it than BTC it would technically become more popular... but the US wouldn't "own" that cryptocurrency, they would only own the "coins" themselves which they would then choose how to distribute. The coins could be stored and distributed to give the illusion of printing to mimic inflation, but every store and transaction of the cryptocurrency is stored on the blockchain, so no more coins can ever be "created". This means it's still decentralised and would eventually become owned by the holders and not the federal reserve that created it.

 

[WilliamMunny]

But storing value in the form of gold was a decision made by a person thousands of years ago.
Gold is only valuable because we deem it valuable. The same as BTC is only valuable because people deem it valuable.
If everyone sells their gold and never wants to buy it again, it becomes worthless, the same as cryptocurrencies do.

Even if I accept the point about gold have value only because we deem it valuable, for gold to be deemed no longer valuable, we would need to discover another physical element that is superior to gold. Perhaps that is what is being attempted with Bitcoin, only with a digital element rather than a physical one. If that is the case, I still question when, if ever, the masses will be making transactions with bitcoin given that the vast majority of us do not carry out transactions in gold.

 

[Ash88]

Even if I accept the point about gold have value only because we deem it valuable, for gold to be deemed no longer valuable, we would need to discover another physical element that is superior to gold. Perhaps that is what is being attempted with Bitcoin, only with a digital element rather than a physical one. If that is the case, I still question when, if ever, the masses will be making transactions with bitcoin given that the vast majority of us do not carry out transactions in gold.

Why do we need another physical element superior for gold to be deemed no longer valuable?
If nobody ever wanted to buy another gram of gold, gold becomes worthless, without a superior element.
This obviously will never happen, gold will always be valuable... but my point is, it's value is based on it's own perceived value, exactly the same as BTC.

 

[Ash88]

Even if I accept the point about gold have value only because we deem it valuable, for gold to be deemed no longer valuable, we would need to discover another physical element that is superior to gold. Perhaps that is what is being attempted with Bitcoin, only with a digital element rather than a physical one. If that is the case, I still question when, if ever, the masses will be making transactions with bitcoin given that the vast majority of us do not carry out transactions in gold.

I asked you that very question Ash but it was the only part of my post you chose not to respond to, which is in itself interesting.

It's also interesting that you were equally as selective in which part of my post you chose to respond to.

 

[Nano]

So it is impossible for somebody to create BTC2 for example? Why can't somebody use blockchain technology to create something similar to Bitcoin, but perhaps even better? That's a genuine question that nobody I ask can ever answer to my satisfaction.

Also, nobody will ever tell me why a United States backed cryptocurrency, or an EU one, or a Chinese one, etc, etc, etc, etc, would not be more popular than BTC. I asked you that very question Ash but it was the only part of my post you chose not to respond to, which is in itself interesting.

1. The reason there are so many cryptocurrencies is in part because of this reason. Bitcoin isn't actually very good, it just has 1st mover advantage. It is slow, expensive, can't handle traffic and mining is a waste of energy and is environmentally harmful. There are far better cryptos that do what Bitcoin does but better. There are even some that are instant, feeless, scalable and energy use is next to nothing but they haven't had the exposure/marketing that Bitcoin has. Crypto as an industry is akin to the dotcom bubble where many companies went bust but some of the biggest today where big then like Amazon etc. The best tech doesn't necessarily win and sometimes just being the biggest like Bitcoin is enough to win.

Bitcoin will never be used as a currency. You can't buy a coffee with it because fees cost more than the coffee and you have to wait an hour or more for it to be a confirmed transaction. So if a crypto succeeds in becoming a regular payment option then there will either be another currency that does that or it will be a 2nd or 3rd layer solution like the Lightning Network.

2. The whole point of crypto is that it isn't controlled by a government or company, is self-governing, can't be taken off you etc. If you are going to use a state-backed crypto then you might as well use the existing fiat system.

 

[Andy_W]

From what I understand, Gold currently doesn't have the potential to go to zero mind (I think), as ~40% of it is used for electronics, and we're using more and more of those. We would need something to replace that, or just accept lower quality in that aspect. It's a great conductor and doesn't corrode. Obviously old electronic goods can be recycled, but whether that's cost effective in tiny individual quantities is another matter.

One day in the next decade or two, we will possibly run out, or it just becomes to ineffective to mine, and the wealth stores places have might just end up having to melt it down so it can be used for things we need, and something else is used for the wealth store. The price might rocket as production comes down, or the world might just switch out of it as it's looked at now, who knows.

Judging by the guys on the program "Gold Rush", there's not much left to go at, certainly in the USA and Canada.

 

[WilliamMunny]

It's also interesting that you were equally as selective in which part of my post you chose to respond to.

Sorry you've lost me there. I can't see any question that I failed/refused to answer.

 

[WilliamMunny]

1. The reason there are so many cryptocurrencies is in part because of this reason. Bitcoin isn't actually very good, it just has 1st mover advantage. It is slow, expensive, can't handle traffic and mining is a waste of energy and is environmentally harmful. There are far better cryptos that do what Bitcoin does but better. There are even some that are instant, feeless, scalable and energy use is next to nothing but they haven't had the exposure/marketing that Bitcoin has. Crypto as an industry is akin to the dotcom bubble where many companies went bust but some of the biggest today where big then like Amazon etc. The best tech doesn't necessarily win and sometimes just being the biggest like Bitcoin is enough to win.

Bitcoin will never be used as a currency. You can't buy a coffee with it because fees cost more than the coffee and you have to wait an hour or more for it to be a confirmed transaction. So if a crypto succeeds in becoming a regular payment option then there will either be another currency that does that or it will be a 2nd or 3rd layer solution like the Lightning Network.

2. The whole point of crypto is that it isn't controlled by a government or company, is self-governing, can't be taken off you etc. If you are going to use a state-backed crypto then you might as well use the existing fiat system.

Thanks Nano. The problem I have with comparing the crypto bubble to the dot com bubble is that nobody produces/sells anything. In that respect, there is a similarity with most of the failed dot coms which floated with huge valuations based on a blind faith that revenue streams would increase 100 fold or more! The vast majority failed to survive let alone thrive, but those that did such as Amazon, went on to dominate the market. The key difference for me though is Amazon sells products all over the world and makes ever more profit doing so, whilst BTC is simply an asset that goes up in value due to demand. My question is what happens when that demand dries up?

I am quite prepared to be proven wrong on this but I cannot escape the feeling that the whole crypto market is based on the greater fool theory and it will all come crashing down eventually. At best there may be a few coins that survive and service a market that distrusts fiat currency, the govt, etc. But if that is supposed to be the whole point of crypto, I just cannot see there being enough nutters around to make it mainstream.

 

[Nano]

Thanks Nano. The problem I have with comparing the crypto bubble to the dot com bubble is that nobody produces/sells anything. In that respect, there is a similarity with most of the failed dot coms which floated with huge valuations based on a blind faith that revenue streams would increase 100 fold or more! The vast majority failed to survive let alone thrive, but those that did such as Amazon, went on to dominate the market. The key difference for me though is Amazon sells products all over the world and makes ever more profit doing so, whilst BTC is simply an asset that goes up in value due to demand. My question is what happens when that demand dries up?

I am quite prepared to be proven wrong on this but I cannot escape the feeling that the whole crypto market is based on the greater fool theory and it will all come crashing down eventually. At best there may be a few coins that survive and service a market that distrusts fiat currency, the govt, etc. But if that is supposed to be the whole point of crypto, I just cannot see there being enough nutters around to make it mainstream.

The value comes from the potential future utility. That utility might never occur and the product would then be worth nothing but that's not really any different to any company. If demand dries up then so does the value.

The theory is that if Bitcoin, or any other item with a finite supply, is to be used ubiquitously in the future then at that point in time you would convert your £ to BTC and then spend it. You would get £1000 worth of BTC to spend and you buy £1000 worth of goods in BTC. If everyone is using it globally then volatility reduces to a stable value. It isn't being speculated on ,it is being used. At that point it might get you 0.001BTC but today you can buy that BTC for £25. People buying now are just early investors in a product that they believe will be used ubiquitously and so will be worth more.

So the only questions are:
1. Will there be a global payment system that isn't controlled by a government or corporation?
2. If yes, will there be only one or might there be many?
*Bear in mind that we already have global payment systems such as VISA, Mastercard, Paypal etc so is it really much of stretch to believe that we might have one that isn't controlled by a company?

People use the comparison with gold because everyone has realised that Bitcoin can't be a currency like it originally set out to be, on the 1st layer anyway. Most gold traded isn't ever moved. Numbers move around a ledger. That is no different to bitcoin except it is much easier to move bitcoin, there is no physical store needed and you don't need to pay an intermediary broker your purchase or pay them to store it etc.

That is just digital currency. There are many other cryptos that have nothing to do with currencies and have other uses instead like smart contracts, tokens and NFTs.

 

[Cardiffdaffs]

Interesting article about FTC and which was seen as a safe home to invest in crypto. It went bust under major allegations of fraud and ponzi scheme characteristics and thousands are out of pocket. Social media influencers and celebrities like Larry David persuaded people to buy and are now being sued.

How the fall of the 'King of Crypto' cost one British man millions https://www.bbc.co.uk/news/technology-66892685

 

[Ziggy]

Happened before and will happen again.

“ The Dutch tulip bulb market bubble, also known as tulipmania, was one of the most famous market bubbles and crashes of all time. It occurred in Holland during the early to mid-1600s, when speculation drove the value of tulip bulbs to extremes”

 

[Redwurzel]

Gold has stood the test of 5,000 years of human activity. I can always see a use for it in jewellery. You can't wear a cryptocurrency coin.

I have concerns that some new technology could come a long that can devalue the current blockchain technology.

For several thousand years humans have tried to make gold and they can't.

Genuine question - If cyber criminals use bit coin as their currency of choice, why is this so? if it is so trackable.