Amidst the talk of the amount of energy needed to power bitcoin and so forth, the question struck me: given that the money supply in an economy is managed, it is (?) impossible for someone to gain funds without others losing funds.
We know who the winners are. Who are the losers?
Losers are anyone who hasn’t a game plan to get out as soon as the sugar rush of the speculative highs wear off. This includes anyone trying to get in now since the government is already restricting ICOs and other such “investment vehicles” in the United States.
/-- this. No different than stock trading. When you win, someone else loses. If the prices only ever go up for a time, nobody loses. Until the prices fall again. Then the people that lose are the ones who are forced to sell below what they paid.
Right, but the total amount spent purchasing bitcoin to date is lower than the total value of bitcoin now.
Where does that Delta come from?
Speculative inflation? It’s not like bitcoins are really worth more than a few cents to a dollar or two in electrical power used to mine them.
Yes speculative inflation, but … I’ve never really considered this - say, right now, all bitcoins are exchanged at current prices, for dollars. We know it’s a bubble. Next week it drops from $15k to $100.
Ach I’m just confusing myself!
Difference here is that stock (at least any stock worth investing in, if you ask me) also pays dividends, and represents a slice of an actual going business. It’s not just trying to find someone else to sell it for a higher price.
It’s mostly illusory. You got to remember that unlike actual currency, or US Treasury bills, or serious stocks on serious exchanges like NASDAQ or NYSE, or even gold, bitcoins aren’t especially liquid. There’s not much actual money involved, and it’s extremely likely that if any of the big players, like the Winklevoss twins, put any significant amount of their hoard on the market, the prices would crash immediately.
My point is that you can’t exchange all, or any significant percentage, of bitcoins into cash without bursting the bubble. There’s very little supply, so even a small demand can drive the prices sky-high as speculators get in. If the supply increases rapidly, by some nominal bitcoin billionaire trying to cash out for example, the supply suddenly overwhelms the demand and the price crashes.
Also, shouldn’t we expect that any asset that can’t be shorted will be frequently overvalued?
I would say the loser is anyone who pays hard currency for Bitcoin. They’re trading real value (stable and usable currency) for bubblicious vaporware that will vanish the second the herd smells panic and there’s a rush to sell.
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