
Bitcoin is a bubble, no plans to short-sell: Japan Post Bank CIO - mbgaxyz
https://www.reuters.com/article/us-investment-summit-japanpost-bank-bitc/bitcoin-is-a-bubble-no-plans-to-short-sell-japan-post-bank-cio-idUSKBN1DG18L
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alexasmyths
I'd like to know how on god's green earth they did the 'valuation'. Because
there are certainly no generally accepted ways of doing that - hence the
volatility.

"Here are a set of numbers that you can own and rigorously control (i.e.
establish ownership). You can possibly exchange them as value, like a
currency, but not many people will do that. Start the bidding!"

It's the most pure form of speculation imaginable.

Most other forms of speculation are derived, yes, from what we think 'others'
will pay, but what 'others' will pay is usually derived from some economic
value: i.e. a home is a place to live, a building a place to work, shares are
rights to future profits, bonds get 'repaid' and pay 'coupons' ... so you can
try to figure out 'what they are worth'.

BTC ... it's literally just worth what some other guy will pay - and that's
100% of the story. That's a difficult thing to predict :)

~~~
nullnilvoid
Bitcoin is no more speculation than gold. Gold has its price. It is rarely
used (I have not seen anyone exchanging value using gold). It cannot be eaten,
drunk, lived in, or used as a tool (I guess you can use it as a weapon like a
brick). Yes, it is used to make jewelries because it is expensive not because
its intrinsic usability or functionalities (there are other metals or plastics
that look better and weigh lighter than gold). Yet it is expensive. As a
matter of fact, it is harder to use gold to exchange value than Bitcoin
because you have to weigh gold and test its purity.

~~~
proee
Our entire high-tech industry relies on gold because of its amazing physical
properties. To say it's rarely used is not accurate.

If gold was less expensive, I'd use it for a roof on my house!

[http://www.usesof.net/uses-of-gold.html](http://www.usesof.net/uses-of-
gold.html)

~~~
nullnilvoid
Before high-tech industry even existed, gold was expensive. Clearly, the
demand from high-tech industry did not make it expensive.

~~~
alexasmyths
It's a metal that does not tarnish, which makes it good for making pretty
things, like monuments and Jewelry. That it is rare, gives it's high price.

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panarky
I remember analysts and experts in 2004 sneering at the thought that Google
might be worth $23 billion at the time of their IPO.

The pundits and talking heads gravely warned that investors were crazy to pay
230 times the prior year's net income.

They said Google was a "one-trick pony". They said Google could never grow
into that insane valuation.

It was a bubble, they said.

Why didn't foolish speculators learn from the dot com crash, or from the Dutch
tulip mania?

Maybe today's wise men are right, and the cryptocurrency bubble will burst in
a spectacular bonfire of hubris.

Or maybe they aren't really wise. Maybe they only know what they know, and
can't understand what's right in front of their faces, just like they couldn't
understand what Google could become.

~~~
graeme
Warren buffet wrote a good piece about the expected value of buying ownership
of a chunk of the us economy (i.e. shares) vs. buying gold.

The former is normally a good investment, because it grows. Gold just sits
there. It’s decent as a store of value compared to cash, but that’s about it.

Google is a company. It had a high valuation because some people expected it
to grow larger and earn future revenues.

Bitcoin seems more like gold. What does it _do_? Why should it have more value
tomorrow than today?

The only reason I can come up with is that it has intrinsic scarcity, like
gold, and can be a store of value. But this doesn’t seem very convincing -
other people could make other blockchain based currencies.

Can someone explain why bitcoin _ought_ to be worth more money in te future?

~~~
panarky
Pretty simple, really.

1) People are building business with cryptocurrencies

2) Bitcoin is the biggest, oldest, most conservative, and most reliable of the
cryptocurrencies

3) Therefore, as crypto businesses grow, transaction volume increases, and
more people need to hold and save in Bitcoin

4) More people holding and using it, with a supply that is capped, means the
value per unit would tend to increase with growth

Now maybe that growth is over-estimated, or already priced in, or speculative
forces have over-shot the true value.

Or maybe more people are finally waking up to the real potential, and it's
actually under-valued right now.

Hard for me to know. That's why it's curious that others have such great
certainty.

~~~
graeme
Thanks, that’s the clearest explanation I’ve received of a plausible mechanism
for bitcoin having any intrinsic value.

I’m not _convinced_ that justifies it’s value, but I’ll mull this theory over
when bitcoin articles come up.

Based on your theory, would it be fair to say the following:

1\. Like gold, bitcoin won’t be a long run value producing asset. (Unlike
stocks)

2\. Like gold, bitcoin may settle on some value relative to non-bitcoin

3\. People investing in bitcoin are betting it has not yet reached that value,
and are thus hoping it will increase in price to a future equilibrium.

Obviously gold fluctuates based on market conditions, but it has rough
parameters of value. Are people assuming btc has some similar level of value
and will rise to it?

~~~
panarky
That's a pretty good way to describe how I think about it.

Like many innovations, usage probably looks like an S-curve -- slow in the
beginning, then a period of rapid growth, followed by a plateau.

It's unclear where we are in the cycle, and it's definitely possible that
valuations have over-shot.

But it seems to me that there's something real going on in addition to the
hype, and that potential could be worth a hell of a lot more than $100b
globally.

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holyheifer
“During the information technology bubble, we saw a rally in dot-com company
shares. But at least at that time, there were people using Yahoo or (Japanese
internet firm) Rakuten -- people were using their services,” he said.

-> People ARE using Bitcoin's services, notably Venezuela now after the default. Argentinians have been using it to escape the terrible inflation that plagues their peso.

“But this time, I see quite a lot of people doing crypto-currency businesses
in my circle of friends. But I hardly know anyone in person who is trading
crypto-currencies and I haven’t seen anyone using them in real life,” he said.

Just because you are living in a bubble doesn't mean people don't use it.
TenX's cards have been around for a while and they can be used quite
seamlessly. i have also paid my friend for lunch using Bitcoin just to test it
out. Heck there are even bitcoin atms in Japan. I think this speaks more about
the quality of their leadership than about cryptos tbh.

That said, I am not claiming the currency will go up or down. As noted by some
other users, the value is quite arbitrary, and like gold this is a market that
is sentiment driven. But if he understood the theory and tech behind it, he
wouldn't have made the $100 claim, really makes him look like a joke.

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hw
The price of bitcoin may be bubbly but the tech isn't. Most of the people
buying in to bitcoin and crypto right now are chasing $ and are mostly driven
by speculation instead of an understanding of the tech behind it and its
potential.

Regardless if the price doubles in the next year or corrects 30% in a few
days, there's a ton that's going on in the blockchain space (if you look past
a lot of the get-rich-quick/scammy ICO companies). Payments, cross border
transactions, IPFS, security, voting, etc are all things that are being or
could be disrupted by the blockchain tech

~~~
ruvis
>or corrects 30% in a few days,

Didn't it just do that?

~~~
kss238
It was more like a 20% correction but it's already is back up and higher than
pre drop.

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thisisit
"Sago said bitcoin’s rally could end after its price hits the $10,000 mark or
_right before the CME Group launches bitcoin futures_ some time by the end of
this year."

Given the fact this happened yesterday:
[https://www.bloomberg.com/news/articles/2017-11-15/bitcoin-e...](https://www.bloomberg.com/news/articles/2017-11-15/bitcoin-
exchange-that-cme-plans-to-use-for-futures-is-down)

It will be interesting to see how things pan out once the future contracts are
released.

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ThrustVectoring
Bitcoin cannot be expected to be priced "correctly" (whatever that means)
since there's no practical way to short it.

~~~
mbgaxyz
Bitcoin Futures start trading on the CME in the next few weeks:

[http://www.cmegroup.com/bitcoin](http://www.cmegroup.com/bitcoin)

However the largest electronic brokerage in the US considers it unwise:

[https://cointelegraph.com/news/cme-clearing-member-to-
regula...](https://cointelegraph.com/news/cme-clearing-member-to-regulator-
bitcoin-futures-impossible)

~~~
panarky
Peterffy's letter to the CME is short and fun reading.

[https://www.interactivebrokers.com/download/11-IB17-1145-tp-...](https://www.interactivebrokers.com/download/11-IB17-1145-tp-
letter-to-futures-trading-commission.pdf) [PDF]

His doomsday scenario is based on the Bitcoin price _rising_ rapidly.

The CME's volatility limits would kick in, preventing shorts buying to cover
their positions. This leads to "ruin" for them and the CME, and contagion for
the real economy.

He has a good point, since losses on short positions are theoretically
infinite, there's no way to put up enough margin for perfect safety.

------
Taniwha
In other news "emperor naked"

