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Lets discuss bubbles, financials and disruptive technologies

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A common discussion in the scope of crypto currently is that bitcoin and cryptocurrencies as a whole, are in a bubble. We hear about it in the news, lead professionals in the financial industries constantly warn us about it (Jamie Diamond, Jim Rogers, etc.) and it always seems to be in the back of our minds. But why do these professionals in the financial sectors keep warning us that its a bubble, when bitcoin is considered a threat to the monetary systems? Wouldn't they be better off encouraging/pumping bitcoin news positivly so that everyone learns a good hard lesson (losing all your money when it crashes) about trying to beat their system?

I think a lot of issues that cause financial experts to believe this is a bubble (and why they are so vocal about it) is because a lot of money was lost during similar "bubble" situations in the past, and as a result, lives were ruined. 

Bitcoin isn't as big a threat to the monetary system as people believe it is.  Realistically the only disruptive technology is blockchain and its actually NOT that disruptive to the financial sector, contrary to popular belief. Its more disruptive to the technology sector, yet we don't hear as much noise from those sectors about the threat? Could the people warning us it is a bubble, be doing so because of financial advice rather than because they think its a threat to their sector? 

Potentially, yes.

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Well, in my opinion, banks and large corporations that spread lies about crypto-coins (in order to defame their reputation) are afraid of their future results. That's why they're saying bitcoin is a bubble. And the fact that the government has no control over the currency, about the transactions, disturbs them a lot.

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7 minutes ago, Jonata said:

Well, in my opinion, banks and large corporations that spread lies about crypto-coins (in order to defame their reputation) are afraid of their future results. That's why they're saying bitcoin is a bubble. And the fact that the government has no control over the currency, about the transactions, disturbs them a lot.

Currently (and for the last 12 months) transaction fee's have been the same (if not higher) on the bitcoin network than what most banks offer. How is that a threat? You cant go down to a shop in your street and buy anything directly with bitcoin, because not only is the network too slow (which means people could double spend) but nobody provides a service that feasibly works with bitcoin wallet to bitcoin wallet merchant services.

Furthermore the only payment options to spend your crypto are cards served by visa/mastercard. In those cases they simply transfer the value of your bitcoin at that moment into the value of fiat (this is done by the card operator, i.e. TenX, etc.) Bitcoin isn't even remotely a threat to the financial sector in its current use case.

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I agree with you about the fact that banks are absolutely not threatened by cryptos. They know about them for years and they'll can launch their own crypto when needed. For the vast majority of banks customers, having a crypto own by the same bank will be easier that going elsewhere. Actual FIAT money already work the same way for the "lambda" customer, it's just a transfer of numbers between 2 accounts.

Even if crypto is a bubble, for bankers that change nothing. Like we saw with the Internet bubble, it could explode but it will still grow bigger later. Same for the crypto world. What I can imagine is : they bought some bitcoin & co already, now that they made a bunch of money they sell them and cry after a bubble. When the bubble will explode they'll buy more with their benefit. Results : they will make money 2 times and even 3 times when they'll be able to bet on the crash of cryptos next year.

I believe a part of that misconception about blockchain Vs financial sector is the fact that the first crypto (BTC) was focused on the monetary aspect. It's only later than other usages for the blockchain appeared.

 

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12 hours ago, dreramon said:

Well said i do really believe that banks and huge investment companies have known about bitcoins ages go and are milking bitcoins for all it is  worth and will continue to use them to earn profits.

I believe too, first time i heard about BTC in 2012-2013 I already read things at that time about banks lurking at it. So it's nothing new for them.

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There are a couple of different points in the OP.

I'll do the simplest first, is Bitcoin in a bubble, there's no way to know.  However its rise, this year especially, has been breath taking.  As a general rule I assume people in the financial sector simply "talk their (trading) book" so when I see people like Jim Rodgers saying Bitcoin is in a bubble, I just translate that as Jim Rogers owns no Bitcoin.  If it was at $500 and he didn't own any he'd still say to say away.  It is literally unknowable what the price of something like Bitcoin will be, all we have is a range of educated guesses.  I would have never thought Bitcoin would go over 5000 USD this year, so so much for my guess.

The second larger point about the threat of Bitcoin to banks and the financial system is harder.  I really love the idea of a deflationary stateless electronic currency backed by math.  Given that the US Federal Reserve targets the USD to drop by 2% a year, I've never understood all the hate for Bitcoin.  I agree, it's too slow and too expensive to use for small payments but there are other crypto currencies that can cover that or, as you noted, service providers to turn your crypto into spendable local money.  Banks are built on the idea of fractional reserves.  If everyone really understood how little money banks actually held they might be a lot more susceptible to runs.  So there is a threat to the state and because all transactions are recorded and visible a threat to fractional reserve banking systems.

Will either go away, I doubt it.  But if I lived in someplace like Venezuela or Zimbabwe I would view crypto as a god sent miracle and massively prefer it over anything backed by the "full faith and credit" of my government..

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It's due to value being derived from the very last trade rates. This is something that happens with markets other than crypto-currencies.

As to what their motivations are, it could be plain self interest, but it could also be worry about some eventual collapse of the system. They aren't mutually exclusive.

Edited by testB | mixed things up

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3 hours ago, SuddenlyBroke said:

But isn't the whole point of bitcoin, and why it is so threatening on the surface to many big financiers, that it is decentralized. You can't centralize the blockchain into a bank and expect it to work the same way, as Andreas Antonopoulos said the other day in the video I shared, taking the centralized blockchain out of bitcoin, or bitcoin out of the blockchain, is like taking wheels off a car and adding a horse... sure you can do that, but you don't have a car any more you have a horse drawn carriage and we've had those for years. 

I really believe that for the "lambda" non techy user, they don't care if a system is centralized or not. They live with a centralized one since ... well, all their life basically. And they now what banks are, what they do, ... People know that banks are not interesting for their money, but they also know that they provide a minimum level of security. At least for those who didn't face a bank crisis like it was the case in Greece, Cyprus, Argentina, ...

 

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