[Chugalug] A comment on the Bitcoin .. fraud

Lynn Dixon boodaddy at gmail.com
Mon Apr 15 14:52:40 UTC 2013


Stephen,
I didn't mean to direct my comments towards you, at all.  It's just the
huge number of folks writing articles on the web only seem to use a small
resource pool for their investigations in Bitcoin. Most of the time, they
will use the Bitcointalk forums since those results pop up highest in
Google searches.

Usually those folks are pretty crafty when it comes to writing blog posts,
and they can, on the surface, present a good argument.  Albeit based on
half-correct or wrong information. Then you have people whom maybe be
slightly interested in Bitcoin looking into the currency, and they stumble
across these articles and learn mis-information.  That's where my
frustrations lie.

Feel free to criticize bitcoin, it does indeed have its flaws.  Firstly, I
think its a bit cumbersome for simple transactions like buying stuff at the
convenience store. Granted, there are alot of folks working on alot of cool
projects to fix this, but for right now, it's not very easy.

I use Bitcoins in FOREX mostly.  I also use it as another investment
vehicle. But thats just my use cases.  I like the idea of a currency's
value being dependant upon its demand. We know the supply to be constant,
so therefore the exchange prices are solely driven on demand.  There's no
fiscal or monetary policies being controlled by a government to regulate
the currencies value. This is why alot of the Keynesian economists say its
a bunk currency.  Since there is no way a controlling body can regulate the
supply of the currency, most Keynesian's will generally discredit it.  The
demand driven currency ideals flys right in the face of Keynesiasts.   With
that being said, demand driven prices do tend to "bubble" more easily since
there is no way to control the supply to mitigate the forming "bubbles".
 Again, this is what *some* economists will steer clear of demand driven
ideas.

If we look at the price over time, we really only have two "bubbles" in the
entire bitcoin history.  We had the first bubble that formed almost 2 years
ago, when the price spiked to $33ish.  Then we have the one that happened
just recently, when it spiked to $266.

http://bitcoincharts.com/charts/mtgoxUSD#rg360ztgSzm1g10zm2g25zv   <---
This shows the price over a 1 year period.  That's a pretty steady trend up
until a few weeks ago. There is only one "bubble" that peaked at $266.

http://bitcoincharts.com/charts/mtgoxUSD#tgSzm1g10zm2g25zv  <---- This
shows ALL the data that www.bitcoincharts.com has collected, which covers
about 32ish months of statistics. Again, we only see 2 bubbles.  The one at
the $33ish mark, and the other at $266 that happened recently.

Both of those charts even shows some impressive stability in the currency.
 If you look at the very tall red bars, you will see massive sell-offs.
 For the most part, those massive sell-offs didn't offset the price of the
currency very much at all (disregarding the cool-off period after the first
bubble of course).

This last bubble was a combination of a huge increase in demand for the
currency mostly because there was ALOT of press recently about it.  With
Cypress failing, the Euro having problems, and the other myriad of economic
problems, the press had a field day with bitcoin, causing a huge inrush of
new investors.




On Mon, Apr 15, 2013 at 10:18 AM, Stephen Kraus <ub3ratl4sf00 at gmail.com>wrote:

> And Lynn, I think you are probably one of the smartest people here, so I
> find it hard to criticize your argument because they are usually fairly
> well thought out.
>
> My other big thing with Bitcoins is the rapid inflation. I mean look at
> that guy who paid for a pizza in bitcoins a couple years ago, the amount he
> paid for the pizza would now be worth hundreds of thousands of dollars!
>
> Even inflation from the early 1900s to now isn't nearly that bad.
>
>
> On Mon, Apr 15, 2013 at 10:10 AM, Stephen Kraus <ub3ratl4sf00 at gmail.com>wrote:
>
>> I criticize it because numerous economics professors criticize it.
>>
>> Look, I'm all for you doing Bitcoin, its your time and your processing
>> power, not mine.
>>
>> But lets be perfectly honest: When a bunch of people who spend their
>> entire lives studying economic systems inside and out say its a waste and
>> it will lead nowhere, I'm of the mind to take their opinions into account.
>> Especially when a Nobel Laureate is saying so.
>>
>> Right now, I've watched the Bitcoin trends from Mt. Gox and it is bouncy
>> as hell, repeatedly bubbles then pops. It doesn't matter how often it
>> spikes if it cannot stay consistent at a certain value for long or trends
>> rapidly up and down.
>>
>> Just read this thread, ignore some of the goofiness and listen to some of
>> the people in it. I find their opinions seem to reflect a lot of people I
>> know in the economics fields:
>> http://forums.somethingawful.com/showthread.php?threadid=3543334&pagenumber=70#lastpost
>>
>>
>> On Mon, Apr 15, 2013 at 9:29 AM, Lynn Dixon <boodaddy at gmail.com> wrote:
>>
>>> What is surprising to me is the vast number of people that will jump in
>>> and criticize the currency after doing no research on it.  They will read a
>>> few articles on the web, or maybe even some horrid bitcointalk forum posts
>>> and simply make an assumption that is usually incorrect.
>>>
>>> The currency works, and works well. I have been mining for a while now,
>>> nearly two years, and I have personally made some impressive returns.  I
>>> have also used the currency quite a bit. I have used it as a vehicle of
>>> exchange when dealing with foreign currency, I have used it as a vehicle of
>>> exchange for goods and services, and I even accept bitcoin as payment for
>>> my web hosting company.
>>>
>>>
>>> On Mon, Apr 15, 2013 at 8:02 AM, Mike Robinson <
>>> miker at sundialservices.com> wrote:
>>>
>>>> These are just my thoughts – but I see a bully pulpit here, and I'll be
>>>> brief.
>>>>
>>>> If you wanted to fleece a bunch of nerds, how would you do it?  Well,
>>>> first of all, you'd promise them, one way or another, "easy money."  In
>>>> fact, knowing that many of them spend hours each day in gam-environments
>>>> where guns never run out of ammo, you'd promise them "make your own money."
>>>>  An altogether synthetic currency system.  "World Money, Release 2.0."
>>>>
>>>> You'd slow-roll the whole thing.  Just toss the ball out onto the field
>>>> almost unmentioned.  Aside from the obvious need for plausible denial when
>>>> the sheet hits the fan, you're playing hard to get, in the form of a
>>>> cryptographic-based puzzle that can only be brute-forced, but that can be
>>>> shown to be solvable.  Add a few more promises – that the supply of this
>>>> "money" will always be limited (never mind how) – and wait for the
>>>> Powerball Effect to take hold of its own accord.  A very large number of
>>>> paper cards are thrown away near my driveway, because I live on a country
>>>> road about a quarter-mile from a convenience store.  I pick them up by the
>>>> hundreds.
>>>>
>>>> Meanwhile, start selling supplies .. for real money.  And books, of
>>>> course.  Every now and then, grab a quiet instant-success headline, say by
>>>> selling a Ferrari (a Ford will NOT do ...) for this "new money."  Then wait.
>>>>
>>>> It's a Crowd Psychology 101 play, people, and I just want to say ..
>>>> there are some things in this ol' world that are truly ancient, and finding
>>>> new and creative ways to rip off your fellow-man by leveraging his own
>>>> gullibility is one of them.  I don't want my Chattanooga virtual friends to
>>>> be among those many that will eventually be hurt.
>>>>
>>>> #undef soapbox .. Thank you.
>>>>
>>>> – Mike Robinson
>>>> (615) 268-3829
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>>>>
>>>
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>>
>
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