If you are a one man hedge fund manager you need to find out from the drug dealers what's the highest price they would buy your Bitcoins at before it was cheaper to deal in cash like they used to.
Surely there is no limit, the actual value of a bitcoin is irrelevant to the transaction.
I regularly use bitcoins to buy things I can't get here, I go to the website, I fill my cart and get a price in sterling, I then convert the sterling price, using google, into bitcoins and send that to the vendor, as long as the number of bitcoins I'm sending equates correctly to the sterling price, it doesn't matter if I'm sending 340953457349 or 0.00000000001 bitcoins.
Absolutely correct, IF you are using Bitcoin as a currency, you are using its utility value. Your explanation of the process highlights the oddity.
What you are doing is the same as saying I can buy a loaf of bread online from a French supermarket by converting some Sterling into Euros and settling my checkout basket in Euros online. How simpler is it to buy a loaf of bread.
Alternatively I could have popped into Tescos
You are exposed to exchange rate fluctuations and your argument is that I am happy with the exposure because it will always fluctuate in my favour. You are speculating on a currency to subsidise the price you pay for bread.
When Tesco’s accept Euros, Dollars and Yen at the checkout Bitcoins will have utility value.
Miners are the people who are paid for administering the Bitcoin system and they are paid in newly created Bitcoins. Depending on what value you place on owning Bitcoins it’s either like a Royal Mint worker being allowed to let the machine run to fund his wages,or a worker for a snake oil producer being paid in snake oil.
@Dippenhall has summed things up. Perhaps we take things one stage further by looking at houses? The utility value is the opportunity cost of renting if you don't own plus the prospect of future gains in prices. Values have tended to outstrip wage and price inflation due to shortages and the cost of renting plus the availability and cost of capital hasve both improved over time.
Not only is there a floor on house prices but there are varying amounts of liquidity where you can always convert to cash / crystalize your gains. And there is visibility of pricing and transactions.
Bitcoin has no underlying asset or utility value save for the ability to exchange for legal or illicit goods - so no different to cash. And no guarantee of liquidity. Sure people can trade it today - but tomorrow or next week?
The price is going up rapidly now because it is going mainstream with global media coverage especially the recent gains. That's millions of potential purchasers. But there's much less about the potential losses. And there is absolutely no floor so when it goes it could simply disappear. Once people start to bail it has the potential to crash overnight - or perhaps the people behind it will put in a floor... and that begs the question who regulates and for what purpose?
Anybody watching the Big Short will know that when a market becomes really extended those with big exposures start asking about counter-party risk. Whether you hold bitcoins or a new style bitcoin derivative can the other side afford to let you cash out. Can you even find the other side?!
But there is a subtle but important difference. That is that regular cash DOES have an underlying asset. So, all pound notes in circulation are liabilities on the Bank of England's weekly balance sheet. These are balanced out by the assets the Bank holds by way of Gilts or other Commercial debt. The Fed does something similar for US$. In simple terms, too, money that is not actual folding stuff will be a bank's liability to its depositors in its balance sheet with its lending, etc as the balancing asset.
But bitcoin has what? Not even a milk bottle top!
True but the value of all major currencies has dropped precipitously over time....see Charlton-related example below (it would cost about £6 just to get a pint before a similar concert today):
Martin Lewis on MoneySupermarktet seems to think it is harmless enough as they just ask for email and name.
Set up by ex PayPal staff ts a method to replace credit cards started in the 1950’s.
Probably a waste of time ponzi scheme but I said that about bitcoin a few years back and it is free so nothing ventured... if any one is interested you can sign up through a link I can pm you and I need to authorise it. When you sign up you can invite 5 people
Martin Lewis on MoneySupermarktet seems to think it is harmless enough as they just ask for email and name.
Set up by ex PayPal staff ts a method to replace credit cards started in the 1950’s.
Probably a waste of time ponzi scheme but I said that about bitcoin a few years back and it is free so nothing ventured... if any one is interested you can sign up through a link I can pm you and I need to authorise it. When you sign up you can invite 5 people
Martin Lewis on MoneySupermarktet seems to think it is harmless enough as they just ask for email and name.
Set up by ex PayPal staff ts a method to replace credit cards started in the 1950’s.
Probably a waste of time ponzi scheme but I said that about bitcoin a few years back and it is free so nothing ventured... if any one is interested you can sign up through a link I can pm you and I need to authorise it. When you sign up you can invite 5 people
Martin Lewis on MoneySupermarktet seems to think it is harmless enough as they just ask for email and name.
Set up by ex PayPal staff ts a method to replace credit cards started in the 1950’s.
Probably a waste of time ponzi scheme but I said that about bitcoin a few years back and it is free so nothing ventured... if any one is interested you can sign up through a link I can pm you and I need to authorise it. When you sign up you can invite 5 people
But... You were right...
If you would’ve bought 1 bitcoin 5 years ago it would be worth around 40 times the amount you originally paid for it today.
Martin Lewis on MoneySupermarktet seems to think it is harmless enough as they just ask for email and name.
Set up by ex PayPal staff ts a method to replace credit cards started in the 1950’s.
Probably a waste of time ponzi scheme but I said that about bitcoin a few years back and it is free so nothing ventured... if any one is interested you can sign up through a link I can pm you and I need to authorise it. When you sign up you can invite 5 people
But... You were right...
If you would’ve bought 1 bitcoin 5 years ago it would be worth around 40 times the amount you originally paid for it today.
So you're saying the people at the top of the pyramid get the most out of it? Tell me more...
Martin Lewis on MoneySupermarktet seems to think it is harmless enough as they just ask for email and name.
Set up by ex PayPal staff ts a method to replace credit cards started in the 1950’s.
Probably a waste of time ponzi scheme but I said that about bitcoin a few years back and it is free so nothing ventured... if any one is interested you can sign up through a link I can pm you and I need to authorise it. When you sign up you can invite 5 people
But... You were right...
Lol. I am no fan of bitcoin and have never owned any but if I could go back to its inception and buy some for nothing then why not !
Martin Lewis on MoneySupermarktet seems to think it is harmless enough as they just ask for email and name.
Set up by ex PayPal staff ts a method to replace credit cards started in the 1950’s.
Probably a waste of time ponzi scheme but I said that about bitcoin a few years back and it is free so nothing ventured... if any one is interested you can sign up through a link I can pm you and I need to authorise it. When you sign up you can invite 5 people
Done
If you did it on the link I put up here then it did not come through. If you haven’t authorised your email address that may be the reason... the authorisation email they sent to me ended in junk (maybe fitting !). I took the link off here and made it a pm because I thought the mods may not like links.
Comments
I regularly use bitcoins to buy things I can't get here, I go to the website, I fill my cart and get a price in sterling, I then convert the sterling price, using google, into bitcoins and send that to the vendor, as long as the number of bitcoins I'm sending equates correctly to the sterling price, it doesn't matter if I'm sending 340953457349 or 0.00000000001 bitcoins.
Absolutely correct, IF you are using Bitcoin as a currency, you are using its utility value.
Your explanation of the process highlights the oddity.
What you are doing is the same as saying I can buy a loaf of bread online from a French supermarket by converting some Sterling into Euros and settling my checkout basket in Euros online. How simpler is it to buy a loaf of bread.
Alternatively I could have popped into Tescos
You are exposed to exchange rate fluctuations and your argument is that I am happy with the exposure because it will always fluctuate in my favour. You are speculating on a currency to subsidise the price you pay for bread.
When Tesco’s accept Euros, Dollars and Yen at the checkout Bitcoins will have utility value.
Depending on what value you place on owning Bitcoins it’s either like a Royal Mint worker being allowed to let the machine run to fund his wages,or a worker for a snake oil producer being paid in snake oil.
Need to verify bank with coinbase.
Send a SEPA transfer to them, £15.99.
That’s the process I believe.
Martin Lewis on MoneySupermarktet seems to think it is harmless enough as they just ask for email and name.
Set up by ex PayPal staff ts a method to replace credit cards started in the 1950’s.
Probably a waste of time ponzi scheme but I said that about bitcoin a few years back and it is free so nothing ventured... if any one is interested you can sign up through a link I can pm you and I need to authorise it. When you sign up you can invite 5 people
If you did it on the link I put up here then it did not come through. If you haven’t authorised your email address that may be the reason... the authorisation email they sent to me ended in junk (maybe fitting !). I took the link off here and made it a pm because I thought the mods may not like links.