Bonanza: Bitcoin Hits $9,200, Up 200% Since Jamie Dimon ‘Fraud’ Call
There have been many positive developments during the last five months and a few of the obstacles that were in Bitcoin's way have been knocked down. An argument can be made that the good news is still not fully reflected in the current price.
That's what Ronnie Moas, founder of Standpoint Research, said in a note to clients last Monday.
This is probably as good a time as any to remind you what we said on Twitter about Ronnie's call. To wit:
https://twitter.com/heisenbergrpt/status/93264655422
In theory, the value of bitcoin is supposed to be tied to the cost (electrical, hardware, etc) of mining a new new coin. This cost can be computed as in a straight forward mathematical way since a “coin” is a value whose hash starts with a specified number of leading zeroes. As the costs decrease due to Moore’s law, the number of leading zeroes required in the hash increases. During the first few years of Bitcoin’s existence, the mining cost and the “exchange value” were tied pretty closely to the cost of mining a coin using a GPU.
So, basically, I have no idea how these bitcoins can be valued so highly. I ain’t buying.
As with everything an items cost is a mix of it’s cost to produce and it’s utility. An iPhone X doesn’t cost $999 to produce for example. Bitcoin does seem likely to trend higher as multiple countries are taking fairly accommodating stances and other which are not simply present too good an opportunity to use the technology to worry about the laws, Zimbabwe for example. $100k BTC would put it in the realm of Gold for a market cap and we all know gold is a “barbarous relic”, so I guess $100k is a fairly safe bet even if this all ends up being Tamagotchi fever, though I doubt that’s the case.
All I want for Xmas is BTC!
…not
When I was teaching I read about a business prof who tried a really interesting behavioral experiment in his class. Every semester he would auction off a $20bill. The way the auction worked was that the highest bidder would get the twenty in exchange for what s/he bid and the second highest bidder, who lost, would also have to pay what s/he bid. The prof became known for this crazy looking deal and even then he could still make it work because students who heard about it thought they could beat him. On average he would collect at least $75 from his auction. How did this work? On the way to the $20 breakeven bid everyone was fine, you know, just one more bid and the other person would drop …. The second high bidder would keep upping the bid, not wanting to pay for nothing. Trouble is, no one wanted to quit so the price kept going higher. After it reached $20, then the last two bidders would keep going because now the twenty was a way for the winner to offset part of the inevitable loss both of the final bidders would take. In other words, they couldn’t stop. I thought this sounded very interesting so I did it in one of my classes. I got the same result the other prof did. Incidentally, both of us donated the proceeds of our experiment to student organizations in our schools. Later I was giving an after dinner speech to some business leaders on the topic of decision biases (a quiz was involved). After a rousing discussion ensued I decided to see what would happen with a bunch of smart well-heeled business guys. Same result. I ended up getting a total of $100 for my 20$ bill. Feels like the same sort of thing is going on with bitcoin.
The names of some of the cryptocurrencies are every bit as strange and hilarious as the names of some of the WiFi networks in my neighborhood.
Here are a few (except for the last one, I’ve limited this to those having a “market cap” of at least US$1 million):
https://coinmarketcap.com/currencies/bigboobscoin/
https://coinmarketcap.com/currencies/useless-ethereum-token/
https://coinmarketcap.com/currencies/fucktoken/
https://coinmarketcap.com/currencies/unobtanium/
https://coinmarketcap.com/currencies/roulettetoken/
https://coinmarketcap.com/currencies/insanecoin-insn/