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Bitcoin & crypto? Pt. 2

Discussions about the economic and financial ramifications of PEAK OIL

Re: Bitcoin & crypto? Pt. 2

Unread postby vtsnowedin » Tue 21 Jun 2022, 18:56:46

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Re: Bitcoin & crypto? Pt. 2

Unread postby dauterman » Tue 21 Jun 2022, 19:24:19

Cryptocurrencies are not currency. By definition a currency is backed by a government or other similar entity. There is no govenrment backing bitcoin or any other crypto.

Bitcoin is legal tender in El Slvador. Legal tender status means it can be used in trade and is accepted as payment. However, it is NOT backed by the full faith and credit of the government. This is an important difference.

Bitcoin traded as low as $86 in 2013. Has anything happened since 2013 that would justify the price rise from $83 to over $20,000? To me the answer is "no" - bitcoin has been accepted as legal tender in one central american coutnry, and is more accepted in trade internationally but in my opinion this does not justify the price going up around 24,000%.

Thus, in my opinion bitcoin is a bubble. My advice is to avoid any bubbled asset. I will neither buy (go long) not sell (go short) any bubbled asset. The reason for this is because financial markets can stay irrational longer than I can stay solvent.

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Re: Bitcoin & crypto? Pt. 2

Unread postby Tanada » Tue 21 Jun 2022, 21:38:00

dauterman wrote:Cryptocurrencies are not currency. By definition a currency is backed by a government or other similar entity. There is no govenrment backing bitcoin or any other crypto.

Bitcoin is legal tender in El Slvador. Legal tender status means it can be used in trade and is accepted as payment. However, it is NOT backed by the full faith and credit of the government. This is an important difference.

Bitcoin traded as low as $86 in 2013. Has anything happened since 2013 that would justify the price rise from $83 to over $20,000? To me the answer is "no" - bitcoin has been accepted as legal tender in one central american coutnry, and is more accepted in trade internationally but in my opinion this does not justify the price going up around 24,000%.

Thus, in my opinion bitcoin is a bubble. My advice is to avoid any bubbled asset. I will neither buy (go long) not sell (go short) any bubbled asset. The reason for this is because financial markets can stay irrational longer than I can stay solvent.

v/r
dauterman


I have never mined or purchased any Cryptocurrency but I think you are putting an awful lot of faith in that "full faith and credit" statement about government backed money being better. The number of governments that have debased their coinage, run their cash printers overtime or created deposits with the stroke of a keyboard is too large to name. In the last few decades we have had Argentina, Venezuela, Zimbabwe all inflate their native currencies to the point that they were worth less than toilet paper. With what the American Federal Reserve considers ideal inflation rates of 3.5% annually your savings hidden in your mattress will lose 50% of their purchasing power in 20 years. There have been 5.5 of those 20 year cycles since the Fed was created in 1913, care to guess how much your thousand dollars of paper currency you found in great grandpas basement safe would be worth in 2022 purchasing power? 1913 $1000.00, 1933 $500.00, 1953 $250.00, 1973 $125.00, 1993 $62.50, 2013 $31.25, 2022 $23.44! This built in devaluation is why a single working parent in 1913 could provide food, shelter and basic medical care to a family with a house-working spouse raising 7-9 children.

As late as the 1960's my mother working one job as a cook in a small restaurant with five dependent children at home. She was able to rent a house and keep everyone basically well fed and healthy without any form of government "assistance" or much in the way of aid from the Catholic church they all attended every Sunday. Her first husband was an incompetent thief and drunkard serving time in prison after being convicted on a string of local breaking and entering crimes where he sold off stolen goods to buy more liquor to feed his addiction. She was too proud to ask for charity when by dint of hard work she was able to support her dependent children and herself.

Today the person doing the same job would be hard pressed to support themselves as a single person living in a tiny efficiency apartment with a Murphy bed no bathroom or kitchen. That is the power of inflation over just three 20 year cycles in a country with the super power status and "full faith and credit" behind the currency.

Just to be clear I don't think Cryto's are the answer or I would have invested in them. Our system today is absolutely corrupt but I don't have any magic solution for fixing it either. I think proper understanding of what inflation does to the value of your wealth would be a great first step but that would be directly opposed by all levels of the financial industry and governments who all benefit to some extent from inflating currency until it loses all value.
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Re: Bitcoin & crypto? Pt. 2

Unread postby AdamB » Tue 21 Jun 2022, 23:48:44

dauterman wrote:Bitcoin traded as low as $86 in 2013. Has anything happened since 2013 that would justify the price rise from $83 to over $20,000?



Yes. It is a ponzi scheme. Lack of regulation makes it possible.
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Armageddon » Thu 09 Feb 2006, 10:47:28
whales are a perfect example as to why evolution is wrong. Nothing can evolve into something that enormous. There is no explanation for it getting that big. end of discussion
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Re: Bitcoin & crypto? Pt. 2

Unread postby Plantagenet » Wed 22 Jun 2022, 13:56:13

Bubbles in investments aren't always bad things......in fact, Overvaluation and bubbles are an intrinsic part of capitalism.

In fact the goal of investors is to buy low----sell high, i.e. buy something BEFORE the bubble and then sell it at the peak.

And its much easier to buy something at a decent price then it is to spot the top and sell at the right time.

The trick is to buy a stock, a tulip, a beanie baby, a house, a BITCOIN, or whatever....... BEFORE the bubble and then sell at the PEAK of the bubble.

Its easy to see a bubble after its popped.

AND Yes, cryptocurrencies have been in a bubble.

Similar, the stock market has been in a bubble.

But those bubbles are now popping.

The housing market is in a bubble.

That bubble is just starting to pop.

And there is a new bubble in oil prices.....that bubble is still inflating.

Image
Bubbles are part of capitalism......the old saying "buy low sell high" means buy BEFORE the bubble and SELL when the bubble is inflated

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Re: Bitcoin & crypto? Pt. 2

Unread postby theluckycountry » Wed 22 Jun 2022, 22:32:43

I wouldn't include oil in that list. It's suffering from volatility, sure, but the price rises we have seen are more in line with basic monetary inflation. The insane 2008 run up was perhaps a bubble, I wouldn't call today's rises that though. Look at Gold. It began the new century at $250, now it's at $1800. Gold; silver, food, houses, anything you can name has gone up by 100's of percent in the last 20 years, so why not oil?

Back in 2000 oil was US$ 30/Bbl, now it's $100 a barrel, a 330% increase roughly. Looking at the 25 year chart and evening out the volatility, it makes a pretty consistent line up. No different than anything else aside from the manipulations (of Fear action) along the way

https://tradingeconomics.com/commodity/crude-oil

Now @AdamB can come in and say something intelligent about Queensland and Bananas.
Not that I'll see it though lol lol.
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Re: Bitcoin & crypto? Pt. 2

Unread postby AdamB » Wed 22 Jun 2022, 23:06:45

theluckycountry wrote:Now @AdamB can come in and say something intelligent about Queensland and Bananas.
Not that I'll see it though lol lol.


What are you talking about, ..Queensland is it? Is that some part of that island off the coast of New Zealand where those descendants of common criminals work for the Chinese? The same ones that haven't advanced enough to even build their own cars? There isn't anything to say about intelligence in regards to that place...
What does a science denier look like?

Armageddon » Thu 09 Feb 2006, 10:47:28
whales are a perfect example as to why evolution is wrong. Nothing can evolve into something that enormous. There is no explanation for it getting that big. end of discussion
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Re: Bitcoin & crypto? Pt. 2

Unread postby Plantagenet » Wed 22 Jun 2022, 23:56:34

theluckycountry wrote:I wouldn't include oil in that list. It's suffering from volatility, sure, but the price rises we have seen are more in line with basic monetary inflation.


Not really. Oil prices have a long history of going through boom and bust cycles.....

The most recent "bust" for oil came in March 2020 when oil futures actually went negative....i.e. the markets were saying you had to pay someone $30+/bbl to even get them to take your oil....a market condition known as "contango."

crude-oil-can-get-carried-away-by-contango

I bought a couple of thousand shares of Schlumberger back when the oil markets were in contango....

Today the situation is much different.....oil is well over $100/bbl now.

The price of oil has almost quadrupled since March 2020.

If something basically quadruples in price in two years is that a price bubble? I think it clearly is a bubble.

Thats why I sold all my Schlumberger shares about a month ago (my Schlumber shares also went up a bit more than 400% in two years...)

So when will the current oil price bubble pop? When will the price of oil come back down?

I'll take a guess.......thanks to Biden's idiotic economic policies the USA is about to go into a recession.

Millions of people will lose their jobs and they won't be buying a whole lot of gasoline anymore....that decrease in demand will eventually bring down gasoline prices.

AND SO...I predict the current oil price bubble will POP sometime after the USA goes into recession....and as a bonus the EU and perhaps even China are heading into recession as well, and drops in oil demand will likely occur there as well.

Image
I predict the current oil price bubble will POP sometime after the USA goes into recession later in 2022 or in early 2023.

The same thing happens to other assets like stocks, houses and even BITCOIN.......look at Bitcoin.....clearly it was in a bubble and now its bubble has popped. Of course if you're a BITCOIN investor this is when you should be thinking about buying.....or maybe even wait for it to go a bit lower.

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Re: Bitcoin & crypto? Pt. 2

Unread postby theluckycountry » Fri 24 Jun 2022, 02:02:38

Plantagenet wrote:
If something basically quadruples in price in two years is that a price bubble? I think it clearly is a bubble.


Well you're starting from the contango, so it doesn't really apply does it. That plunging price situation with oil was due to the lockdowns was it not? A totally unheard of event.

Oli will go up and down in the future of course, it's a market and there is always going to be fluctuations, but I think it's fair to say the average price (under normal non-covid situations) will rise and rise going forward. It's energy, irreplaceable energy really. Take it out of the equation and try making solar panels and Lipo batteries anyone can afford. They "say" it can be done, but it never has been
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Re: Bitcoin & crypto? Pt. 2

Unread postby EnergyUnlimited » Fri 24 Jun 2022, 12:50:38

dauterman wrote:Cryptocurrencies are not currency. By definition a currency is backed by a government or other similar entity. There is no govenrment backing bitcoin or any other crypto.

Is gold or silver backed by government or similar entity?
Do you trust gold more than dollar or the other way?
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Re: Bitcoin & crypto? Pt. 2

Unread postby vtsnowedin » Fri 24 Jun 2022, 14:47:06

EnergyUnlimited wrote:
dauterman wrote:Cryptocurrencies are not currency. By definition a currency is backed by a government or other similar entity. There is no govenrment backing bitcoin or any other crypto.

Is gold or silver backed by government or similar entity?
Do you trust gold more than dollar or the other way?

Gold does not need to be backed by anybody or any government. Same for Silver. People value them both for their many uses and the beauty of the art objects and jewelry that can be made out of them. Diamonds are a girls best friend but gold and silver make the mountings to hold the diamonds.
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Re: Bitcoin & crypto? Pt. 2

Unread postby Plantagenet » Fri 24 Jun 2022, 19:53:47

theluckycountry wrote:Well you're starting from the contango, so it doesn't really apply does it.


Of course it applies. You can't cherry pick which price data you look at. We have to live in the real world, and the oil bust in 2020 is the logical place to start when looking at the most recent OIL BUST to OIL BOOM to OIL BUST CYCLE.

Oil (like most commodities) goes through boom and bust cycles over and over again. If you're going to invest in oil or oil stocks, then investing during an oil price "bust" is the logical thing to do. The last bust in oil prices happened in March 2020 and occurred when oil demand plummeted and oil prices plummeted.

theluckycountry wrote:
That plunging price situation with oil was due to the lockdowns was it not? A totally unheard of event.


Totally unheard of events happen all the time. For instance, who ever expected Putin to turn into ADOLPH PUTIN and try to conquer Ukraine? Totally unheard of, right?

Image
who ever expected Putin to turn into ADOLPH PUTIN and try to conquer Ukraine? Totally unexpected, right?

Economists even have a name for these totally unexpected and unheard of events. They call them "Black Swans." Because most swans are white, but every so often there is a black swan and you can't just ignore the black swan economic events in your economic analysis.

Image

theluckycountry wrote:
Oil will go up and down in the future of course, it's a market and there is always going to be fluctuations, but I think it's fair to say the average price (under normal non-covid situations) will rise and rise going forward. It's energy, irreplaceable energy really. Take it out of the equation and try making solar panels and Lipo batteries anyone can afford. They "say" it can be done, but it never has been


Of course that is true when you take a decades-long view, but on the time scale humans actually operate on......a scale of months to years.......oil has always had boom and bust cycles and most likely it will continue to have boom and bust cycles. The last bust in oil prices was in 2020, and now just two years later we are in an oil price boom.

Since we are in an oil price BOOM right now its logical to ask how long will the current oil price boom last?

Well, you know the old saying...predictions are very difficult, especially about the future.

My guess is the current oil price boom will last from 6 months to two years in duration. As soon as the Biden effects works its magic on the US economy and we go into recession, we'll have job losses and there will be less fuel demand. Similar recessions will occur in the EU and perhaps in other countries. The drop in oil demand will cause an eventual drop in oil prices.....and we will have seen yet another another BOOM-BUST oil price cycle in the oil Biz, this going from the bust in 2020 to the boom in 2022 to a future bust perhaps in 2023 or 2024? Thats assuming no BLACK SWAN events happen to interrupt the normal BOOM-BUST cycle in oil prices going forward.

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Re: Bitcoin & crypto? Pt. 2

Unread postby vtsnowedin » Fri 24 Jun 2022, 22:13:31

Fear not!! the oil companies can see that the Biden administration will be ham strung come November and out of office in 2024. They can and will hold their cash and wait out the Biden administration before they dip a single drill bit into new ground or cut a permit for a refinery expansion.
Yesterdays non meeting pretty much set that policy in concrete.
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Re: Bitcoin & crypto? Pt. 2

Unread postby Doly » Sat 25 Jun 2022, 14:31:43

For instance, who ever expected Putin to turn into ADOLPH PUTIN and try to conquer Ukraine? Totally unheard of, right?


I thought it was a very real possibility, especially after a former NATO general wrote the book 2017: War with Russia, which I bought when it was published.

The drop in oil demand will cause an eventual drop in oil prices.....and we will have seen yet another another BOOM-BUST oil price cycle in the oil Biz, this going from the bust in 2020 to the boom in 2022 to a future bust perhaps in 2023 or 2024?


Unless central banks decide it's imperative to keep oil prices stable, in which case they may follow a policy targeting stable oil prices.
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Re: Bitcoin & crypto? Pt. 2

Unread postby vtsnowedin » Sat 25 Jun 2022, 18:42:24

The idea that central banks can control oil prices is amusing!
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Re: Bitcoin & crypto? Pt. 2

Unread postby Doly » Mon 27 Jun 2022, 15:04:47

The idea that central banks can control oil prices is amusing!


I got it from somebody who was giving a talk at an event organised by the Financial Times. I don't think they invite people that they don't think are knowledgeable on finance issues.
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Re: Bitcoin & crypto? Pt. 2

Unread postby AdamB » Mon 27 Jun 2022, 15:17:50

Doly wrote:
The idea that central banks can control oil prices is amusing!


I got it from somebody who was giving a talk at an event organised by the Financial Times. I don't think they invite people that they don't think are knowledgeable on finance issues.


That is true, but there is no guarentee that "some people" know any more about the topic than peak oilers do geology. You yourself gave a good example of his engineers focus on their specialty, and engineer stuff. It wouldn't be a surprise that some analyst at an event doesn't know a refinery from a well, but being economically oriented, they sure can speculate in an ignorant fashion on oil prices. I agree with VT, central banks are full of economists, and work around them along enough and you realize they do the same thing the engineers you describe do. Everything is dependent upon X. "X" of course being whatever they were trained in.

The world needs more polymaths, and fewer folks wielding a hammer, and using it regardless of whether or not it is to a nail.
What does a science denier look like?

Armageddon » Thu 09 Feb 2006, 10:47:28
whales are a perfect example as to why evolution is wrong. Nothing can evolve into something that enormous. There is no explanation for it getting that big. end of discussion
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Re: Bitcoin & crypto? Pt. 2

Unread postby Doly » Wed 29 Jun 2022, 15:10:27

I agree with VT, central banks are full of economists, and work around them along enough and you realize they do the same thing the engineers you describe do. Everything is dependent upon X. "X" of course being whatever they were trained in.


I never said that central banks were correct. I just said they probably have the power to target stable oil prices. That doesn't mean it would be a good idea to do so.

The world needs more polymaths, and fewer folks wielding a hammer, and using it regardless of whether or not it is to a nail.


You don't seem to like me much, and I happen to be one of those polymaths.

And also, there are some mathematical ideas that are rather powerful and can be used in a lot of different situations.
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Re: Bitcoin & crypto? Pt. 2

Unread postby AdamB » Wed 29 Jun 2022, 18:53:14

Doly wrote:I never said that central banks were correct. I just said they probably have the power to target stable oil prices. That doesn't mean it would be a good idea to do so.


Banks can target whatever they'd like. It'll have nothing to do with the oil markets, unless banks want to get involved directly in the business of producing and controlling volumes. Sure they can short the financing, that simply means any given project goes up in cost, but doesn't target production in the now. The best thing that has happened to oil prices over the last decade is that the marginal barrel has arrived in the US, where volumes aren't dictated by anyone other than some decent number of US E&P's doing whatever it is they want to, for themselves, and their shareholders. That is good when they are borrowing to grow, or not so good when they are happily making a mint off the surge out of Covid and the supply chain problems.


Doly wrote:
The world needs more polymaths, and fewer folks wielding a hammer, and using it regardless of whether or not it is to a nail.

You don't seem to like me much, and I happen to be one of those polymaths.


Doly, I apologize if I come across that way with you. I think you are one of the most interesting, and open minded, people on this site. You don't offend easily, you at least try to think the point through, you aren't a natural peak oiler in the sense that you rabidly repeat bad ideas hoping for a different result, and you've done some actual modeling on the topic!! Makes you quite interesting.

As far as being a polymath, I don't know that you are, or are not, one any more than I am. You certainly think clearly, don't tend to get involved in the silly chatter that often permeates the place, but you also appear to avoid integrating economic thinking in terms of future modeling and ideas related to oil and gas production. And that is a fatal flaw when dealing with resource economics. Not that your energy-centric modeling requires it, but you've been around long enough to know that energy-centric modeling hasn't worked out any better than logistic curves on this topic. Charlie has been happy to prove that one for us.

Doly wrote:
And also, there are some mathematical ideas that are rather powerful and can be used in a lot of different situations.


Sure. And how might they be applied to economic concepts in play when it comes to causal factors of oil and natural gas production? Solving peak oil doesn't require advanced mathematics. But oh boy does it require an understanding of how oil and gas resources become production, and under what economic conditions.
What does a science denier look like?

Armageddon » Thu 09 Feb 2006, 10:47:28
whales are a perfect example as to why evolution is wrong. Nothing can evolve into something that enormous. There is no explanation for it getting that big. end of discussion
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Re: Bitcoin & crypto? Pt. 2

Unread postby theluckycountry » Thu 30 Jun 2022, 20:06:06

Well the seven sisters controlled oil prices via their cartel for long enough. It can be done, even on a small scale like what happened after the eViL PuTiN invasion of the peace loving democratic state of...

There are no 'free' markets anymore, everything is controlled by someone and most everything by the $US and other nations response to it. Bu this is the Bitcoin thread, and the latest there is that's it dived well below 20k again, one day soon it will stay below too no doubt and start looking for the next support. Though who is buying it and why is the mystery? Perhaps it's just people terrified of another GFC on the stock market and hedging, but they should have realized by now the folly in hedging into crypto in troubled times.
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