Survey: Bitcoin familiarity and use

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Bitcoin:How familiar are you with Bitcoin?

  • Bitcoin? Never heard of it.

  • I have heard of it, but have no idea what it is or how it works.

  • Heard of it, but could not care less.

  • Heard of it, but do not trust money I cannot hold in my hands.

  • Heard of it, and it is interesting.

  • I know what it is and generally understand how virtual currency works.

  • I own Bitcoin, but have never used it for a transaction.

  • I own Bitcoin, but rarely use it for transactions.

  • I own it, and use it all the time.


Results are only viewable after voting.
Rollercoasters can be a lot of fun, but this is not typically where you want to get on the ride...

Bitcoin_Oct-2017.jpg

Wow here we are just a bit over 1 month after this graph and BTC is at $9,675.00US!
 
Bitcoin (in)security and large thefts, one recent $64 million one. Since 2011, $15 billion has been stolen from digital currency exchanges alone. Start at 18:08 in this video:

[video=youtube;JnZM9VY86_w]https://www.youtube.com/watch?v=JnZM9VY86_w[/video]
 
Bitcoin (in)security and large thefts, one recent $64 million one. Since 2011, $15 billion has been stolen from digital currency exchanges alone. Start at 18:08 in this video:

[video=youtube;JnZM9VY86_w]https://www.youtube.com/watch?v=JnZM9VY86_w[/video]
Most new technologies with any value are exploited. Fiat currencies are stolen all the time from lending institutions, or anytime for that matter. Gold has been plundered since it was used as a currency. Fiat currencies have also been subject to the bigger problem of counterfeiting, at least up until recently. As I understand the new bills are arguably harder to counterfeit but none the less the technology is not immune.
 
THIS is HUGE. If I owned any, I'd convert them to gold as they peaked in value.

While I have enjoyed reading your informed posts over the years, your statement that it has peaked seems like a guess at best. Just curious about your track record in predicting investment markets? Personally mine sucks.
 
Bitcoin as of 8 pm eastern time, 12/9/2017:$14,655


How does the US government benefit from the Bitcoin frenzy?

"Coinbase has lost an opportunity to block a U.S. tax investigation on their customers. The company is now compelled to hand over information on all members with more than $20,000 worth of Bitcoins in their Coinbase wallets, which covers 14,355 users as of this time."

https://www.theverge.com/2017/11/29/16717416/us-coinbase-irs-records
 
While I have enjoyed reading your informed posts over the years, your statement that it has peaked seems like a guess at best. Just curious about your track record in predicting investment markets? Personally mine sucks.
I wasn't predicting where bitcoin is going. No one can with any certainty.

I stated that the ability to easily convert bitcoins to gold is huge because this is the first time this is possible according to what I've read. Gold has sustained value over time whereas bitcoin, in my opinion, is in a mania bubble and is HIGHLY volatile. IF I -MINED- bitcoins (personally, I would NEVER -BUY- bitcoins due to their extreme volatility and my belief that they're in a speculative bubble), I would convert them over to gold at each point I believed they had peaked. Of course, one can only GUESS at the peaks.

Right now, graphics cards for PCs are overpriced because so many people are buying them to legally mine "free money". Unfortunately, many are doing this based upon what I believe to be an inflated value of the coins meaning that if and when that value drops their expensive mining rigs will LOSE money by virtue of power consumption alone. These are the default settings for hashing power, power consumption, and power cost on this web page which calculates mining profitability:

https://www.cryptocompare.com/minin...it=GH/s&PowerConsumption=1293&CostPerkWh=0.12

Look at the HUGE hashing power requirements for the more mature bitcoin blockchain in comparison to the other cryptocurrencies.

Also, there's this:

The Bitcoin Whales: 1,000 People Who Own 40 Percent of the Market
A few massive investors can rock it with a shrug
8 Dec 2017

https://www.bloomberg.com/news/arti...1-000-people-who-own-40-percent-of-the-market

And these analyses:

Digital ‘Currencies’ Are ALL A Scam

https://www.theburningplatform.com/2017/06/17/digital-currencies-are-all-a-scam/

Why Cryptocurrencies Will Never Be Safe Havens

https://mises.org/blog/why-cryptocurrencies-will-never-be-safe-havens
 
I wasn't predicting where bitcoin is going. No one can with any certainty.

I stated that the ability to easily convert bitcoins to gold is huge because this is the first time this is possible according to what I've read. Gold has sustained value over time whereas bitcoin, in my opinion, is in a mania bubble and is HIGHLY volatile. IF I -MINED- bitcoins (personally, I would NEVER -BUY- bitcoins due to their extreme volatility and my belief that they're in a speculative bubble), I would convert them over to gold at each point I believed they had peaked. Of course, one can only GUESS at the peaks.

Right now, graphics cards for PCs are overpriced because so many people are buying them to legally mine "free money". Unfortunately, many are doing this based upon what I believe to be an inflated value of the coins meaning that if and when that value drops their expensive mining rigs will LOSE money by virtue of power consumption alone. These are the default settings for hashing power, power consumption, and power cost on this web page which calculates mining profitability:

https://www.cryptocompare.com/minin...it=GH/s&PowerConsumption=1293&CostPerkWh=0.12

Look at the HUGE hashing power requirements for the more mature bitcoin blockchain in comparison to the other cryptocurrencies.

Also, there's this:

The Bitcoin Whales: 1,000 People Who Own 40 Percent of the Market
A few massive investors can rock it with a shrug
8 Dec 2017

https://www.bloomberg.com/news/arti...1-000-people-who-own-40-percent-of-the-market

And these analyses:

Digital ‘Currencies’ Are ALL A Scam

https://www.theburningplatform.com/2017/06/17/digital-currencies-are-all-a-scam/

Why Cryptocurrencies Will Never Be Safe Havens

https://mises.org/blog/why-cryptocurrencies-will-never-be-safe-havens

CPU and GPU mining for Bitcoins hit it's peak years ago and although there are still some users, primarily home users, still using them to mine BTC they are kidding themselves that it is profitable. That part I am in agreement with.

However BTC is primarily mined with an ASIC appliance today. Specifically the gold standard is the Antminer S9 by Bitmain. The output of the mining hardware is measured in how many hashes they can solve per second. CPUs and GPUs are measured in the KH/S or GH/s at best, whereas the S9 can output from 11.5 to 14 TH/s, depending on the batch. There is a new player claiming 16 TH/s with 30% less power consumption, however they have yet to hit the market and some suggest they are just another scam in the wild wild west of crypto-currencies.

For reference here are the hash rate denominations:


  • 1 kH/s is 1,000 (one thousand) hashes per second
  • 1 MH/s is 1,000,000 (one million) hashes per second.
  • 1 GH/s is 1,000,000,000 (one billion) hashes per second.
  • 1 TH/s is 1,000,000,000,000 (one trillion) hashes per second.
  • 1 PH/s is 1,000,000,000,000,000 (one quadrillion) hashes per second.
  • 1 EH/s is 1,000,000,000,000,000,000 (one quintillion) hashes per second.

One thing that is very much applicable in mining is scale. Typically the more hardware you can power the more efficient your mining operation is, and as you said power price is the key. This is why there are mining operations opening up in Countries that are both Cypto-currency friendly and offer significant savings in the form of grants and or very cheap power. South Africa is one and Iceland is another. In my opinion these countries are very forward thinking and will economically benefit greatly.

As far as do or die for miners, yes I would agree for some but not the smart mining operations. Effectively they have a substantial amount of computing power and this power can be adopted for other usage cases for the underlying technology of Bitcoin, the block chain. As this technology is adopted it will require hardware to run it, if Bitcoins fails then the miners can always move over to this emerging market. This is already happening and is a viable business model for some mining operations

I totally agree with you in converting some Bitcoin to gold, diversification has generally been considered a prudent strategy for investors and business. Not that I am an investment guru by any stretch but I think diversification was the first word I learned and one that almost everyone agrees on. The bigger point I think of trading Bitcoin for gold is the fact that you can now do that. This simply means that Bitcoin is gaining wider acceptance and is a good sign.

I won't disagree that Bitcoin and or crypto-currencies in their current form have a long way to go and the big fight is yet to come. But the battle is not whether it can work or not as a currency the battle will be in the form of big banks losing their control over fiat currencies. This is and will result in governments banding together under the guise of protecting their citizens from the corruption and evil dark cyber ways of crypto-currencies. While I agree that there is a dark side to the tech, there is and has always been a dark side to fiat currencies as well so that argument is false. Whether it's gold, oil, live stock, fiat currency or any other form of currency wars have been raged over all of them, and always will.

I predict that crypto-currencies are here to stay and what we are seeing now with all of the fear mongering is simply the people who control fiat currency re-actively responding to the market. First they will do what they always do, use government and government agencies to wage the war on the crypto-currencies as I mentioned above. Then they in fact will adopt their own versions of crypto-currencies, but they will be versions that suit their needs, ones that allow them to do exactly what you are suggesting and that is manipulating them. This is the biggest issue with fiat currencies, our governments make promises they cannot afford and simply print more money to pay for them. Remarkably Greenspan said it himself, "The united States can pay any debt it has because we can always print money to do that"

[video=youtube;emyqyd5acOA]https://www.youtube.com/watch?v=emyqyd5acOA[/video]

As far as responding to the inks you provided, well the lovely thing about the internet is that it is full of every side of every argument and an awful lot of trolls. I am personally more inclined to believe the opposite of what the experts, government and the media says, the louder they get.

Monday will be interesting as Bitcoin futures will hit exchanges. I believe that this is what contributed to the sharp increase of the currency over the last week weeks, and that is all the financial folks getting into BTC. Come Monday they will now be abel to short or bet against it, which will no doubt lead to more instability. I believe this is just art of their on-going strategy to discredit the currency. It will be interesting to see how the market responds and how BTC holds up. I am hopeful it will but truthfully I am a bit nervous.

I would suggest that if anyone wants to get their head around it they listen to all sides of the argument, factor in the history of mankind, research the history of fiat currencies, banking, taxes, consider the true nature of our species that we are an opportunistic organism, and throw in some common sense. If at the end of that you still think they are all a scam then I am not sure there is much more to say, except watch what happens.
 
However BTC is primarily mined with an ASIC appliance today.
Not cheap and the few times I've checked for the most popular and, supposedly, most powerful brand - not in stock. Anyway, the fundamental flaws of cryptocurrencies detailed at the "All are a scam" link are pretty hard to refute.

Here's some very significant news I just found today and it's probably why APMEX only just now decided to start accepting bitcoin for gold purchases:

Twas The Night Before Bitcoin Futures
10 Dec 2017

https://www.forbes.com/sites/petert...he-night-before-bitcoin-futures/#53ebfd854960

You Can Trade Bitcoin Futures. But Should You?
10 Dec 2017

https://www.bloomberg.com/news/arti...-bitcoin-futures-but-should-you-quicktake-q-a

One take on this futures thing, a very cynical one, and from what I know about the lack of SEC enforcement against such things as high frequency trading bids which are intended to drive individual stock prices up without completing a trade (illegal) and other cases of market manipulation, probably a correct one.:

[video=youtube;6P4OUZJCYh0]https://www.youtube.com/watch?v=6P4OUZJCYh0[/video]

Here's an outstanding documentary to help you along the road to my level of cynicism about Wall Street fairness to the small investor. Free streaming for Amazon Prime members:

Ghost Exchange (2012)

https://www.amazon.com/dp/B00FX3E5QO/?tag=skimlinks_replacement-20
 
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An email received from Coinbase a couple of days ago. It's interesting that they are preparing people for the possibility of high volume selling, and the resulting delays (and losses) that could ensue.


We at Coinbase couldn’t be more excited by the explosion of interest in digital currencies. The last few weeks has seen an unprecedented increase in the price of digital currencies. More people are engaging with our platform than ever and that bodes well for the future of the digital currency. At the same time, it does create extreme volatility and stress on our systems. We take this very seriously and wanted to share some important thoughts.

We’re continuing to invest heavily to scale our platform

Over the course of this year we have invested significant resources to increase trading capacity on our platform and maintain availability of our service. We have increased the size of our support team by 640% and launched phone support in September. We have also invested heavily in our infrastructure and have increased the number of transactions we are processing during peak hours by over 40x.

There may be downtime which can impact your ability to trade

Despite the sizable and ongoing increases in our technical infrastructure and engineering staff, we wanted to remind customers that access to Coinbase services may become degraded or unavailable during times of significant volatility or volume. This could result in the inability to buy or sell for periods of time. Despite ongoing increases in our support capacity, our customer support response times may be delayed, especially for requests that do not involve immediate risks to customer account security. You can read more in our Coinbase User Agreement.

Be an educated investor

We also wanted to remind customers of some of the risks associated with trading digital currency. Digital currencies are volatile and the prices can go up and down. Due to the rapidly changing price of digital currencies, some customers may not have sell limits that are sufficient relative to the value of total digital currency they are storing on Coinbase. Sell limits are one of the many measures Coinbase takes to protect client accounts and assets.

As a proactive measure, we encourage customers to check the following items on their accounts:

  • Ensure your email address is properly receiving all communications and notifications from Coinbase. To learn more about ensuring email delivery, please refer to this support article.
  • Ensure your two-factor authentication is updated and functional. If you have recently switched mobile devices, your two-factor authentication needs to be properly migrated to the new device. In addition, please migrate from SMS two factor to Google Authenticator to enhance the security on your account, if you have not already done so. To learn more about two-factor authentication, please refer to this FAQ.
  • Familiarize yourself with your buy and sell limits. They can be found here.
  • Complete any pending identity verifications. During times of significant volatility, ID verification may become degraded or unavailable. To learn more about identity verification on Coinbase, please refer to this FAQ.
  • Expect payments to take the maximum number of days indicated when making a deposit or withdrawal.

Stay up to date

We will continue to update customers for our website, our status page, in our apps, via email, on our blog and on Twitter.

We will keep you informed

We are committed to safety, security and transparency. We are working tirelessly to provide the best service and support but we can’t promise perfection during the periods of extraordinary demand. We will continue to do our best to keep our customers informed.

Thank you,

The Coinbase Team
 
...and the resulting delays (and losses) that could ensue.
Except, of course, for the HFTs who won't even be going through Coinbase:

Microwave vies with fiber for high-frequency trading
Stock traders turning to legacy microwave technologies for faster communications
10 Dec 2012

https://www.computerworld.com/artic...es-with-fiber-for-high-frequency-trading.html

In the world of high-frequency trading, where being ahead of the competition by a few milliseconds can mean profits worth millions of dollars, finance firms are increasingly looking to decades-old microwave technologies for a competitive edge.

Such firms are finding that wireless microwave technology, despite being in use for more than half a century, can deliver data a few milliseconds faster than fiber-optic cable.


High frequency traders shift to futures markets
26 Oct 2015

https://www.afr.com/markets/high-frequency-traders-shift-to-futures-markets-20151025-gki8pq

Once again:

Ghost Exchange (2012)

https://www.amazon.com/dp/B00FX3E5QO/?tag=skimlinks_replacement-20
 
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I'm glad I just happened by chance to come back to this topic at this moment. It's getting interesting.

Futures Industry Association Blasts New Bitcoin Derivatives
7 Dec 2017

Days after CME Group and the CBOE announced their bitcoin futures contracts launch dates, U.S. clearinghouses are expressing concerns over how these products were developed.

In an open letter to the Commodity Futures Trading Commission (CFTC), Futures Industry Association (FIA) chief executive Walt Lukken said members of the organization are worried about their exposure to bitcoin's price swings as a result of these contracts.

"We remain apprehensive with the lack of transparency and regulation of the underlying reference products on which these futures contracts are based," he wrote, also asking whether the companies offering the products can protect their customers from "manipulation, fraud, and operational risk."


Feds start to crack down on fraud as Bitcoin soars
9 Dec 2017

https://money.cnn.com/2017/12/08/technology/bitcoin-ico-fraud/index.html

While these new digital currencies are helping some pioneering investors gain quick wealth, federal authorities are warning about their potential for fraud.

The Securities and Exchange Commission has warned investors to be on the lookout for "potential scams" involving Initial Coin Offerings.

ICOs are sometimes called "crowdsales" and function similarly to an Initial Public Offering on the stock market, but without the governmental regulation. They typically receive investments in the form of cryptocurrency in exchange for shares known as tokens.

"So far, the cases that have attracted regulatory scrutiny and enforcement actions appear to be blatant, outright frauds where apparently there were never any intentions of actually delivering a product or service, or so it has been alleged," Kornfeld said.
 
Most new technologies with any value are exploited. Fiat currencies are stolen all the time from lending institutions, or anytime for that matter. Gold has been plundered since it was used as a currency. Fiat currencies have also been subject to the bigger problem of counterfeiting, at least up until recently. As I understand the new bills are arguably harder to counterfeit but none the less the technology is not immune.
The issue discussed in that video is the insecurity of bitcoins UNLESS your compromisable info is AIR GAPPED - not attached to any network. With credit and debit cards at least you have protection against fraud and theft. With bitcoins, you don't. I have nothing against bitcoins, but beyond the main problem I have with them right now because of my belief they may be in a speculative bubble, I don't like the idea of having large sums stolen from me via a few keystrokes from somewhere else in the world with no real recourse if that happens.

Thefts will only accelerate as bitcoin values go up:

Another Cryptocurrency Gets Hacked, Money Disappears. Here are the 30 Biggest Crypto Hacks
21 Nov 2017

https://wolfstreet.com/2017/11/21/t...ed-list-of-biggest-crypto-hacks-money-stolen/

Also:

Nearly 4 Million Bitcoins Lost Forever, New Study Says
25 Nov 2017

https://fortune.com/2017/11/25/lost-bitcoins/

According to new research from Chainalysis, a digital forensics firm that studies the bitcoin blockchain, 3.79 million bitcoins are already gone for good based on a high estimate—and 2.78 million based on a low one. Those numbers imply 17% to 23% of existing bitcoins, which are today worth around $8,500 each, are lost.

While others have speculated about the number of lost bitcoins, the Chainalysis findings are significant because they rely on a detailed empirical analysis of the blockchain, where all bitcoin transactions are recorded.
 
A very interesting article by an optimist:

Will The futures market do to Bitcoin what it did to gold?
9 Dec 2017

https://medium.com/@ImagineTraffic/...do-to-bitcoin-what-it-did-to-gold-b7d35704641

Excerpts:

While we can’t predict the future, we can look at the past.

If only there were some other type of rare asset, one that had to be “mined”. One that people turn to to hedge against a falling dollar? One that has an active futures market?

[snip]

Before we look at gold, lets look at silver.

I want to address the question — does market manipulation exist on a large scale?

Yes, I believe it does.


Let me clue him in to an actual case:

CFTC Finds Former Trader David Liew Engaged in Spoofing and Manipulation of the Gold and Silver Futures Markets and Permanently Bans Him from Trading and Other Activities in CFTC-Regulated Markets - June 2, 2017

https://www.cftc.gov/PressRoom/PressReleases/pr7567-17

Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against David Liew for engaging in numerous acts of spoofing, attempted manipulation, and, at times, manipulation of the gold and silver futures markets. Liew engaged in this unlawful conduct for more than two years while he was employed as a junior trader on the precious metals desk for a large financial institution (Financial Institution 1). The CFTC Order finds that Liew acted individually and in coordination with traders at Financial Institution 1 and with a trader at another large financial institution.

In the Order, Liew admits the facts of his manipulation and spoofing activity and acknowledges that his conduct violated the Commodity Exchange Act (CEA) and Commission Regulations.


Excerpts continue:

We can say that the crypto markets display the same behavior pattern as the cornered silver market.

Is it a natural fractal that all assets with limited supply play out over and over, or is it price manipulation by powerful interests controlling the markets?

The answer is: probably both — human nature is fractal too.

So what can we expect from Bitcoin?

I wouldn’t expect the Bitcoin trend to follow the gold trend exactly, but if it did, we would see a large drop that would bottom out in about April 2018 (remember, Bitcoin is moving at 4.3X Speed). Followed by an eventual rise to $60k — $80k before another major pull back, with a final run up to $180k.

However, there are several difference between the Bitcoin market now and the gold market in 1974, three especially come to mind.

1: The velocity of information is orders of magnitude faster — I doubt most market participants in 1975 even knew that gold futures were a thing.

2: The Demand to hold is bitcoin is one of the highest of any assets ever — Bitcoiners have learned to buy the dip and hodl.

3: Bitcoin has more competitors than gold. And any underlying flaw that gets discovered in bitcoin (Quantum Computing for example) could change the situation dramatically.


He lists quantum computing as a potential flaw, but that's a ways off and the degree of potential compromise after initial claims of vulnerability is now debated. However, the "Digital 'Currencies' Are ALL A Scam" article I linked to above contains a number of inherent flaws that exist even now.
 
Is Bitcoin the Most Obvious Bubble Ever?
The cryptocurrency is almost certainly due for a major correction. But its long-term value remains a mystery.
9 Dec 2017

https://www.theatlantic.com/business/archive/2017/12/bitcoin-bubble/547952/

There is another important feature of the bitcoin market that could both explain its high valuation and suggest an imminent correction. The crypto market is insanely concentrated. Approximately 1,000 people own 40 percent of all bitcoin in circulation, according to Bloomberg. Just 100 accounts control 17 percent of the market. Many of these accounts have held bitcoin for years because they believe fervently in its value. But if a handful of them sell even a small portion of their shares, it could dramatically move bitcoin’s price, potentially triggering a massive correction, as retail investors (who only bought in because the price was going up) try to sell en masse to avoid losing all of their money. There is an upside to this concentration, however, which is minimal contagion effects. If the bitcoin bubble crashes, it likely won’t spill out into the general economy, like the subprime mortgage crisis did one decade ago.
 
On the economy in general. The "Central Bankers' Bubble" in the first graph is more properly called, as that author has previously done, the "Everything Bubble" - stocks, bonds, housing, etc.:

Three Bubbles/Strikes and You're Out
11 Dec 2017

https://charleshughsmith.blogspot.com/2017/12/three-bubblesstrikes-and-youre-out.html

Those betting on a fourth bubble of even greater extremes will find their time at bat has come to an end.

The conventional investment wisdom holds that central banks will never let markets decline. This is an interesting belief, given that two previous asset bubbles based on central bank "easy money" both imploded, impoverishing believers in central bank omnipotence.

asset-prices-GDP.png


So perhaps we can say that the conventional investment wisdom holds that any asset bubble that bursts will quickly be reflated into an even more extreme asset bubble. That's certainly been the history of the past 17 years.

But there's a case to be made that bubbles are like strikes, and you only get three. A recent article, Deutsche: "We Are Almost At The Point Beyond Which There Will Be No More Bubbles", made a nuanced case for "3 bubbles and you're out" based on volatility and other inputs.
I propose a much simpler case for "3 bubbles and you're out":

1. Every policy yields diminishing returns as the positive results follow an S-curve.
2. What every trader knows no longer has any predictive power.
3. Policy extremes have become normalized, leaving central banks with unintended and unpredictable consequences should they push even more extreme policies in the next bubble burst.

Radical new central bank policies work wonders in the initial boost phase (see diagram below) because the sums being deployed are so large and the policy is so extreme: quantitative easing / purchase of assets by central banks, for example: never before have central banks conjured trillions of dollars, yuan, yen and euros out of thin air and used this new currency to buy bonds, stocks and debt instruments in vast quantities for eight years running.

But over time, the novelty and effectiveness of the radical policies wear off.Participants habituate to the policies, which become a given that can not be removed without disrupting the markets.
Traders are always seeking an edge, and front-running central bank policy has proven to be a very effective strategy. But once everyone starts using the same strategy, it stops working. Put another way, there's no predictive power left in what everyone knows.

So central banks suppress volatility--everybody knows that. Central banks jump in and buy every dip, stopping any decline in its tracks with unlimited buying of assets. Everybody knows this.
Eventually, everyone is on the same side of every trade. At that point, there is only one movement left--a reversal that catches everyone by surprise.


Scurve2017.png


The third dynamic is that central banks are visibly getting nervous about the unintended and unpredictable consequences of their extreme policies. It's all fun and games when central banks are buying trillions of assets with money created out of thin air, but how do you stop the asset purchases when everyone depends on them as the foundation of the markets?

Are there no consequences from holding interest rates near zero for eight long years?

What about political blowback from the rising wealth inequality that central banks have fueled?


inequality-NYT8-17a.png


Policy extremes trigger unintended consequences as a result of being extreme.You can't throw around trillions and not generate expectations, incentives and blowback from those who don't benefit from the extreme policies.

Central banks don't control the consequences of their policies. If they respond to the popping of the current bubble with tens of trillions in new asset purchases, they might find this policy is nowhere near as effective as when it was unleashed in 2008.

Once markets grasp that central banks have lost control of the consequences of their policies, confidence, faith and trust in central banks "saving the day" will evaporate. The likely result of this realization is that markets will plummet to new lows rather than reach new highs.

Three bubbles/strikes and you're out. Those betting on a fourth bubble of even greater extremes will find their time at bat has come to an end.


dear-America3-17.png


If interest rates ever return to historical norms because of an eventual inability of the US fedgov to borrow money without offering higher interest rates for that money, that minimum payment (interest only) could reach $1 TRILLION and beyond.
 
How many Tulip Bulbs can one buy with a Bitcoin?

Tulips were getting a little frothy for me, but I got a great deal on some South Sea Company stock.

I'd rather stick with steady investment in low-cost mutual funds than much higher risk/higher return investments. YMMV of course. And like I say about rockets, don't fly them if you can't afford to lose them.
 
I'd rather stick with steady investment in low-cost mutual funds than much higher risk/higher return investments.
Trouble is, even mutual funds are far more risky than they should be because stock values are not based entirely upon performance of the relevant corporations as they had been before the Fed began destroying the price discovery mechanism ("what is this stock REALLY worth") by artificially spiking the market at every dip via financial manipulations even to the point of bailing out using taxpayer-liable debt those companies that DESERVED to fail due to their own bad choices while also creating a huge "moral hazard" where corporations making bad choices aren't the ones who pay when those choices go bad. This has created "The Fed has your back, so buy the dip" phenomena while also destroying the ESSENTIAL element that makes capitalism so superior - the Darwinian force of failure via bankruptcy of corporations that deserve to fail, those bankruptcies also very importantly extinguishing debt, thereby resetting the inherently exponential debt growth curve to a manageable slope. Smaller corporations still fail, of course, but huge ones are not allowed to do so due to political influence and claims of systemic risks of allowing them to fail. However, as even Greenspan has said, in a capitalist system, too big to fail is too big to allow to continue to exist when they make mistakes and deserve to fail, preferably breaking them up before they pose a systemic risk.

This is now worldwide like NEVER before. It has gone on for years and will continue to do so until some unknown trigger ends it with a cascade event as it did in the dot com and housing bubble bursts.
 
"Bitcoin is sitting at $16,674 at the time of writing, after rocketing from $1,000 to more than $19,000 in the course of this year. Those types of eye-catching numbers (and the resulting media hype) are bound to draw the interest of casual folk. But, unless you've got money to burn (like Bitcoin billionaires, and Zuck's Harvard-era nemeses, the Winklevoss twins), most analysts will tell you the same thing: steer clear of the hyper-volatile currency. (Even those dabbling in it have lost tons of cash to cyberattacks on Bitcoin wallets).

Still, it seems some people aren't paying heed. A bunch of wannabe investors are even going so far as to take mortgages out to buy bitcoin, while others are running up credit cards and turning to equity lines. That's according to securities regulator, Joseph Borg...."

Read more... https://www.engadget.com/2017/12/12/bitcoin-mania-mortage-house-investors/
 
One Bank Believes It Found The Identity Of Who Is "Propping Up The Bitcoin Market"

https://www.zerohedge.com/news/2017...it-found-identity-who-propping-bitcoin-market

Back in May when the Chinese domination over Bitcoin was ending, we predicted that it would shift over to Japan, specifically, we said that "just as the Chinese bubble frenzy in bitcoin is fading, it may be replaced with a new one, in which thousands of Mrs. Watanabe traders shift their attention away from the FX market and toward digital currencies" and added that "If the transition is seamless, there is no telling just how far this particular bubble can grow."

Judging by the exponential price surge in bitcoin in the subsequent period, we were clearly right on the latter, and now, according to a new analysis, we were also right on the former, because as Deutsche Bank reveals in a new report by Masao Muraki, "Japanese men in their 30s and 40s who are engaged in leveraged FX trading (or who used to trade but have stopped) are driving the cryptocurrency market" and who according to DB, happen to be more or less idiots, arguably because for the time being they are outperforming every other asset class... in history, to wit: "Japanese retail investors are less financially literate than their US peers across all age groups. Compared to the US, financial literacy is particularly poor among people 35-54 years of age. The poor literacy of Japanese retail investors also stands out beside UK and German investors."

1. 40% of cryptocurrency trading is Japanese yen-denominated

An 11 December Nikkei report stated that 40% of cryptocurrency trading in Oct-Nov was yen-denominated. Japanese traders have reportedly come to account for nearly half of cryptocurrency trading since China started to shut down cryptocurrency exchanges, and this is said to be widely known among industry insiders (various estimates exist). This report shows that Japanese men in their 30s and 40s who are engaged in leveraged FX trading (or who used to trade but have stopped) are driving the cryptocurrency market.

[snip]

5. From leveraged FX trading to leveraged cryptocurrency trading

We think that retail investors are shifting from leveraged FX trading to leveraged cryptocurrency trading. Firms such as the GMO Group and SBI Group are embracing the sense of urgency and starting to offer cryptocurrency trading services. Factor breakdown is difficult due to market variables, but leveraged FX trading has been sluggish since February 2017 (Figure 1).

6. Margin call risk and fail risk

Leveraged cryptocurrency trading services are available in Japan. Some major FX brokers are using the same 25x leverage limit that applies to FX trading, but there are no direct rules in leveraged trading of cryptocurrency. During the Swiss franc shock in January 2015, many retail investors not only received margin calls but also incurred losses greater than their margin balances, because forced settlements couldn’t be implemented in a timely manner. This shows that investors can suffer losses which brokers end up booking as credit losses even with leveraged FX trading of developed nation currencies. Authentication of Bitcoin settlements takes at least 10 minutes. The risk of incurring losses greater than margin is higher than in normal FX trading, due to high intraday volatility. As a result, we believe that brokers also face a higher risk of failure.

[snip]

8. Fair value of cryptocurrency

Cryptocurrency such as Bitcoin that have pure distributed systems do not have an underlying value like precious metals. Value is not guaranteed by an issuer because there is no issuer. The value of cryptocurrency is thus entirely based on the belief that it can be exchanged for goods or sovereign currencies (BoJ review of December 2015). While valuation of exchange rates between legal tender and cryptocurrency should be the vital factor, it is retail investors (including “Mr. Watanabe”) who are currently carrying out price discovery.

With a broader range of investors set to enter the market in 2018 and an increase in the ways to hedge (short selling), we expect to see the market's price discovery function being utilized. The CBOE Futures Exchange began offering Bitcoin futures trading on 10 December and the CME plans to start on the 18th (the US Futures Industry Association sent a critical letter to the Commodity Futures Trading Commission who self-certified new contracts for bitcoin futures products. The letter said that there has not been enough discussion on topics such as margin levels, transaction limits, stress tests, and settlement).

Rather than the cryptocurrency used for speculation, our focus is on the impact that distributed ledger technology (broadly defined as blockchain technology) can have on financial transactions and the business models of financial institutions. Furthermore, as speculation in cryptocurrency is growing to a scale that cannot be ignored, we plan to look more deeply into the potential impact on the market if the bubble should burst and the effect of concerns over this on regulations and monetary policy.
 
Of course, in my view, these folks are just as likely to be wrong as to be right, but this is too much of a crap shoot for me to get involved anyway.

Gundlach: "Bet Against Bitcoin and Make Money"

https://www.themaven.net/mishtalk/e...bitcoin-and-make-money-oLBMIoo4CUqFJA_8TlnIow

Excerpt:

Jeffrey Gundlach, chief executive officer of Doubleline Capital LP, is beyond skeptical regarding bitcoin.

"We're starting to see the big rock of silly season" on the cryptocurrency, Gundlach told CNBC's Scott Wapner on CNBC's "Halftime Report." "This is the kind of nutty stuff. The fact we're talking about it 24/7."

The investor said there isn't much analysis behind bitcoin's rising price. "If you short bitcoin today, you'll make money," he said, conceding, "Can it go higher? Of course."

"I have no interest in this type of maniacal type of trading market," he said.

DoubleLine has assets under management of more than $100 billion, according to its website.

Shorting bubbles until they burst is risky business. We saw that in 1998-1999, and again in 2006-2007.

Is this the top? I have no idea.


Bitcoin Goes Hollywood - Movies Coming Up

https://www.themaven.net/mishtalk/e...ywood-movies-coming-up-TBVFj8MTwEyPv4tpXJMdCA

Bitcoin heads for Hollywood. The Indie movie ‘Bitcoin’ will be the first comedy about cryptocurrency.

No bubble can be complete without a movie. And here we are: Hollywood Gears Up for ‘Bitcoin’ Movies.

"Hollywood is jumping on the Bitcoin bandwagon.

Filmmaker Christian Cashmir is in pre-production for his feature film debut, “Bitcoin,” a comedy about two down-and-out brothers in Arizona who stumble across a Bitcoin wallet worth $20 million and try to sell it on the black market. “Bitcoin” is produced by up-and-coming indie producer Lauren Cribb and has TV comedian Theo Von attached to star.

“'The plan is to start shooting the film in the last week of April in New Mexico,' Cashmir told MarketWatch. 'But then two weeks ago Bitcoin went up to $19,000 and I thought maybe we should think about going into production faster.'”

The "Big Short" was produced after the crash. This marks a change. So, expect more movies.

This is disconcerting:

Former Botmaster, ‘Darkode’ Founder is CTO of Hacked Bitcoin Mining Firm ‘NiceHash’

https://krebsonsecurity.com/2017/12...s-cto-of-hacked-bitcoin-mining-firm-nicehash/

Excerpt:

On Dec. 6, 2017, approximately USD $52 million worth of Bitcoin mysteriously disappeared from the coffers of NiceHash, a Slovenian company that lets users sell their computing power to help others mine virtual currencies. As the investigation into the heist nears the end of its second week, many Nice-Hash users have expressed surprise to learn that the company’s chief technology officer recently served several years in prison for operating and reselling a massive botnet, and for creating and running ‘Darkode,” until recently the world’s most bustling English-language cybercrime forum.
 
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