Bitcoin value graph audiobook
They facilitate international payments for goods and services. The primary cryptocurrencies are not a scam. Advertising a flawless Beanie Baby and shipping a defective Beanie Baby is a scam. Advertising a mortgage-backed security as low-risk and delivering a guaranteed-to-default stew of toxic mortgages is a scam. The primary cryptocurrencies bitcoin, Ethereum and Dash have transparent rules for emitting currency. The core characteristic of a scam is the asymmetry between what the seller knows the product is garbage and what the buyer knows garsh, this mortgage-backed security is low-risk--look at the rating.
While a Beanie Baby scam might use cryptocurrencies as a means of exchange, this doesn't make primary cryptocurrencies a scam, any more than using dollars to transact a scam makes the dollar itself a scam.
Bubbles pop when the pool of greater fools willing and able to pay nose-bleed valuations runs dry. In other words, when everyone with the desire and means to buy in and has already bought in, there's nobody left to buy in at a higher price except for central banks, of course.
At that point, normal selling quickly pushes prices off the cliff as there is no longer a bid from buyers, only frantic sellers trying to cash in their winnings at the gambling hall.
When only one of your circle of acquaintances, colleagues, friends, neighbors and extended family own an asset, there is no way that asset can be in a bubble, as the pool of potential buyers is thousands of times larger than the pool of present owners. I discussed The Network Effect last year: The Network Effect is expressed mathematically in Metcalfe's Law: The Network Effect cannot be fully captured by Metcalfe's Law, as the value of the network rises with the number of users in communication with others and with the synergies created by networks of users within the larger network , for example, ecosystems of suppliers and customers.
In other words, the Network Effect is not simply the value created by connected users; more importantly, it is the value created by the information and knowledge shared by users in sub-networks and in the entire network. In other words, when everyone with the desire and means to buy in and has already bought in, there's nobody left to buy in at a higher price except for central banks, of course. At that point, normal selling quickly pushes prices off the cliff as there is no longer a bid from buyers, only frantic sellers trying to cash in their winnings at the gambling hall.
When only one of your circle of acquaintances, colleagues, friends, neighbors and extended family own an asset, there is no way that asset can be in a bubble, as the pool of potential buyers is thousands of times larger than the pool of present owners. I discussed The Network Effect last year: The Network Effect is expressed mathematically in Metcalfe's Law: The Network Effect cannot be fully captured by Metcalfe's Law, as the value of the network rises with the number of users in communication with others and with the synergies created by networks of users within the larger network , for example, ecosystems of suppliers and customers.
In other words, the Network Effect is not simply the value created by connected users; more importantly, it is the value created by the information and knowledge shared by users in sub-networks and in the entire network.
In the context of the primary cryptocurrencies, the network effect and The Smith Corollary to Metcalfe's Law is one core driver of valuation: In other words, cryptocurrencies are not just stores of value and means of exchange --they are networks. When the skeptics fall silent, the potential for a bubble will be in place. When all the former skeptics start buying in at any price, just to preserve what's left of their fast-melting purchasing power in other currencies , then we might see the beginning stages of a real bubble.
The wild card in cryptocurrencies is the role of Big Institutional Money. When hedge funds, insurance companies, corporations, investment banks, sovereign wealth funds etc. It's something to ponder while researching the subject with a healthy skepticism.
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