Interfluidity bitcoin price

Tether is the issuer of the cryptocurrrency world's premier stablecoin, USDT. Stablecoins aim to guarantee the value of cryptocurrencies in dollar terms, hedging volatility risk and making it easier to realise notional gains from cryptocurrency's wild price rises. But Tether's relationship with the main cryptocurrencies, particularly Bitcoin, is controversial. But in my view, the truth is more complex. Tether's asymmetric mechanics both support and disprove the arguments of both sides. And so far, USDT has not disappointed.

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WATCH RELATED VIDEO: Bitcoin BTC Crypto - Price Prediction and Technical Analysis February 2022

The Fair Price of a Bitcoin is Zero

For some reason, at my seder a different question was raised as well: what are bitcoins all about? I guess everybody wants to know about bitcoins now.

Well, how embarrassing is that? Bitcoins provide no real service distinct from being a means of payment. It will be as worthless as a three-dollar bill. Now I grant you that that final moment of clarity might not happen for a long time — maybe not even for a very long time. But if anything is certain, it is certain that, sooner or later, such a moment must certainly come.

But if it is certain that ultimately no one will accept a bitcoin in exchange, then it follows that no one forseeing that inevitable outcome would accept a bitcoin in exchange prior to that moment unless he or she is confident that there is some sucker out there who will accept in the interim. But since when does a theory of asset valuation premised on the existence of an unlimited supply of suckers count as an acceptable theory?

Under the normal rationality assumptions that economists like to use, it is not possible to rationalize a positive price for a bitcoin at any point in its history. So if, as the above chart so dramatically shows, bitcoins are in fact trading at a positive price, how does one avoid concluding that bitcoins are a massive bubble, a Ponzi scheme that must inevitably collapse, as soon as people realize where things are headed?

To see just how massive a bubble bitcoins are, compare the above chart to this one constructed by Earl Thompson from actual prices in tulip contracts during the Dutch tulip mania of Compared to bitcoins, the tulips were barely more than a blip. Now one could respond that if bitcoins are a bubble, then so is fiat currency.

That is a pretty good response, and the positive value that we typically observe for most fiat currencies is far from unproblematic. But, as I have pointed out before on this blog here and here , it is possible to account for the positive value of fiat currency by reference to its acceptability in discharging tax liabilities to the government.

The acceptability of fiat currency in payment of taxes is a real service provided by fiat currency that is conceptually distinct from, though certainly facilitated by, its acceptability as payment in ordinary transactions. So, as long as one expects the government issuing fiat currency to remain in power and to be able to punish tax evasion, there is a rational basis for the positive value of a fiat currency. The backward induction argument that establishes the worthlessness of bitcoins does not apply to fiat currency.

Another possible explanation for the positive value of bitcoins is that they are very useful to those wanting to engage in illegal transactions on line, because, unlike other forms of electronic payment, payment via bitcoin is hard to trace. That is certainly a good reason for people to want to use bitcoins in certain kinds of transactions.

However, the difficulty of tracing transactions via bitcoin is not an explanation of why bitcoins have a positive value in the first place, only an argument why, if they do have a positive value, the demand for them might be greater than it would have been if it were not for that advantage. So there you have it. As far as I can tell, the value of a bitcoin should be zero. There seem to be only a couple of ways of explaining this anomalous state of affairs.

Either I have overlooked some material fact about bitcoins that might impart a positive value to them, or there is a problem with the theory of valuation that I am using.

So I ask, in all sincerity, for enlightenment. Help me understand why bitcoins are not a bubble. Of course, if some rival money came along, then the monetary premium of the baseball card would be driven to zero, though the original curio value of the card might remain.

You make an important point about taxes backing money, but it needs to be pressed harder. I am agnostic as to whether it will succeed in the way its proponents imagine. Nonetheless, your argument is unsatisfactory. I must admit I winced a bit reading some of your reasoning in this post. You have started with the assertion that they have 0 value and used backward induction to create an argument that is supposed to support your conclusion.

Assuming it has value then it has plenty of features that would make it attractive to people. If multiple people have decided it has value then can it not become a self-fulfilling prophesy? Or would you insist that it is illusory? Compare it to be a multi-player computer game that requires widespread participation for it to be playable and therefore valuable. Also social networks, telephones, chess sets. Of course multiple people may decide it has no value.

It has no divine right to be valuable to people. Still, I would like to know why the collective decision of people that something has value is not just wrong but completely wrong. You seem to be saying it has to have zero value for some existential reason. If bitcoin was created as part of a business venture to fill the market need for an anonymous means of electronic payments then could not the bootstrap process that initially gave them value have been engineered as part of the business plan?

At the simplest level bitcoins backers could have initially intervened directly to create a market for them, by for example anonymously buying up the initial batches of mined bitcoins at a non-zero rate of exchange against a real currency. They would have to continue to do so until people have enough confidence in its value to start to really use it for anonymous electronic payments.

From that point on bitcoin would have genuine value based on its usefulness in anonymous transactions compared to other means of payments. I do not see its value as being based on a bubble any more than a conventional fiat currency whose value is derived from it use a a form of taxation settlement. Eli Dourado has a nice detailed article about the potential non-monetary uses of Bitcoin e. In general I agree with your post, David. Bitcoin are almost infinitely divisible. A baseball card, on the other hand, loses all curio value once one starts to cut it up into pieces.

Reminds me of XRP in Ripple, which as JP explained, was given positive initial value as a chartal currency users are required to have a minimum XRP balance to make ledger entries and extend lines of credit to other users, and XRPs are required to make transactions.

Yes of course. My point was that the believers of Bitcoins and I am not one of them will see it that way and for them that is the answer. If the services provided by Bitcoin are far higher than that figure, why should anyone care about its possible collapse? Why would it be zero, so long as I can exchange it for goods and services? I think its better to think of this as an exchange rate, not a fundamental value. If I can wire my friend in CA bitcoin to pay for beer, and its cheaper, bit coin will be valuable.

Also, I have read that bitcoin is used in the underground economy — drugs etc. I need to add a disclaimer: I do not know this firsthand, and even if I did it would be a felony for me to tell someone how to do this. Nevertheless you can read this:. So, what would the exchange rate be?

I think check bitcoin is only created at some small rate. Think of it as a fixed stock of currency, like gold. The exchange rate should be governed by the rate of change of the bitcoin supply. I expect the exchange rate to be about This is simplistic, but you get the idea.

First I think you are questioning whether its a good store of value. When its no longer useful as an exchange medium, the exchange rate should be zero. Probably not a good store of value, I agree. However, so long as there are people willing to transact bilaterally in illegal stuff looking to avoid the banking system, I do not think its an issue, and the exchange rate should be positive.

There is always a market for untraceable money. Someone sits in the middle with feet in both countries like Thomas Cook willing to exchange the bitcoin for local currency, or diamonds, or something else aka money laundering. If I were a drug dealer and I did not pay my supplier, or left them holding the bag, the penalty would be pretty severe. Also, if you hold it directly or somewhere pretty safe a bank vault in Singapore? And there are no chargebacks.

In countries that are rather less politically stable and more disorderly than the US of and also the US of today , this has much more value than someone who lives in the West might appreciate. These things always start at the fringe, and in niche markets and at that point the bugs are worked out, preparing for eventual more mainstream adoption.

People tend to treat the behaviour of financial assets during a particular period as representing intrinsic qualities of the asset rather than as being shaped by the experiences during that particular time — and these may or may not repeat themselves in the future. Every equity market is kind of psycho in the beginning — look at the Baltic States, or Mongolia.

But over time as there are more, and more sober participants this tends to settle down. So I would be cautious about expecting that bitcoin will always trade in this manner. Bitcoin is not an equity, but similar effects may apply. In particular the rally to recent highs was driven by investment flows of a more medium term nature. But on the other hand these investment flows are exactly the kind of thing that happens as part of a market becoming more serious and institutionalized, and one should look at the situation in the greater context.

One final point is that if inflation — contra the current views of our host here — were to pick up, slowly in the beginning, and then quickly, bitcoin is likely to be seen as an asset having attractive portfolio characteristics in price and non-price terms.

Something not many have discussed is the influence of real rates on bitcoin valuation. Today, real rates are extremely low everywhere. Perhaps this might change and I think it will.

As real rates rise, this may be a little more challenging for bitcoin again, one is reminded of the similarities to gold.

JP: Interesting point about divisibility. But change analogies from baseball cards to gold, and the divisibility problem goes away. Bitcoin provides the means to simplify the exchange of goods and services in a way that cannot be accomplished today.

Markets tend toward efficiency in the long run, and paper currency has obvious limits, a couple of which were pointed out by JohnS. Electron is more efficient that paper — this is the reason you document your thoughts at uneasymoney. David Andolfatto had some interesting thoughts on Bitcoin:. Everything is guaranteed to not have value in the sufficiently distant future: entropy death and all that.

Bootstrapping a thing without intrinsic value is easy.

To Max Keiser & Stacy Herbert – Sorry Bitcoin is for Suckers

Post a Comment. Saturday, 4 January New Year arguments for Yes. It wasn't just the drink: my problem was that I was actually making two separate arguments, and the logic of one does not translate to the other. The two arguments were: Small countries do as well as large countries, if not better The UK is run particularly badly as far as its peripheral regions are concerned Obviously saying Germany's great and that the UK does badly and that this is because small countries function better is nonsensical. But I think the two points both stand - it's just that they stand independently so to speak of each other. Posted by dcomerf at Email This BlogThis!

Source: Interfluidity. Contrast that with the red line, which shows the price of the same basket of goods in terms of Bitcoin. From month to month.

SEC Chairman on Cryptocurrencies and Initial Coin Offerings

Did I say they? I mean we, of course. But of course, not doing these things means continuing to tolerate an increasingly predatory, dysfunctional, stagnant society. Even for its current beneficiaries, the present system is a game of musical chairs. As time goes on, with each round, yet more chairs are yanked from the game. The only way out of this, the only escape, is to reduce the degree of stratification, the degree to which outcomes depend on our capacity to buy price-rationed positional goods. Only when the stakes are lower will be find ourselves able to tolerate, to risk, an economy that delivers increasing quantity and quality of goods and services at decreasing prices, rather than one that sustains markups upon which we, or some of us, with white knuckles must depend. Interesting throughout.

How a debt ceiling standoff could help the banks

interfluidity bitcoin price

Both wrong — all money, nominarian or not, is always backed by the future physical production of goods or services. That is lesson of the credit theory of money — for a primer see Greabers years of debt. Indeed all anti-neoclassicals — of which Max is a prime example — seem to hold to this theory. Money is advanced as credit, to fund some future operation which will yield a greater output of goods or services to create growth. Moving into it is the opportunity cost of buying some other good or currency.

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Chapter 20. Managing Kerberos Flags and Principal Aliases

Thai language by Mindphp. Short-Term Effects. Read here. I think most people are actively nodding their heads at this point. And it's not a secret.

Eli Dourado

While we were out some people who keep to a less rigorous vacation schedule than we do wrote some stuff about complexity in finance. Lisa Pollack at FT Alphaville started the ball rolling by attributing increasing complexity in finance to increasing smartness in the financial industry. This is a delightful theory if you are or were in the financial industry, particularly if you were tasked with developing financial instruments, so we'll go ahead and endorse it. Others, however, disagree. Here is a very nice thing at Interfluidity that various financial pundit types found life-changing:.

For example, the price term in a contract on the blockchain: you can't transfer Bitcoin unless you received it in a previous transaction.

OlympusDAO’s Blindfold

I think there is a tradeoff between inequality and full employment that becomes exacerbated as technological productivity improves. This is driven by the fact that the marginal benefit humans gain from current consumption declines much more rapidly than the benefit we get from retaining claims against an uncertain future. Wealth is about insurance much more than it is about consumption.

For some reason, at my seder a different question was raised as well: what are bitcoins all about? I guess everybody wants to know about bitcoins now. Well, how embarrassing is that? Bitcoins provide no real service distinct from being a means of payment. It will be as worthless as a three-dollar bill. Now I grant you that that final moment of clarity might not happen for a long time — maybe not even for a very long time.

Market monetarism is a school of macroeconomic thought that advocates that central banks target the level of nominal income instead of inflation , unemployment , or other measures of economic activity, including in times of shocks such as the bursting of the real estate bubble in , and in the financial crisis that followed. Market monetarists also reject the New Keynesian focus on interest rates as the primary instrument of monetary policy.

The virtual currency craze is on a tear, with new virtual currencies emerging every day. The New York Times just ran a series of articles about them last week. There are three components to this system:. This new page refers to all past transactions requests by referring to the immediate previous block and records all the new transactions requests. The ledger is crucial to the system because it allows users to verify that a transaction request between two parties is not fraudulent. For example, Mr X.

However, to achieve such growth Yellen has had to maintain very low interest rates. Then, disaster strikes. France leaves the Euro unexpectedly and causes a world wide credit crunch.

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