Digital currency Bitcoin hits new high before losing S$200 in value in one day

[CY09]

Crypto-currencies comes in many forms; however they are using the same blockchain technology. While a single inventor of a crypto currency may tout he produces only a limited supply of cryptocurrency; if every single IT engineer comes out with his own crypto-currency, there will still be a massive supply of them.

In fact, anyone with blockchain technology and does multi layer encryption of his product can essentially produce his/her own crypto currency. The value of the crypto currency will then be backed by how many retailer's and community trust your credit worthiness to use your invented currency. Hence, the supply of crypto currency is tied to the number of people on this earth - essentially unlimited supply. We are seeing the emergence of many variants of crypto-currency such as lite coin etc.

[weijian]

What happen when the coin truly collapse?Any contingent effect ?

Depending on how big Bitcoin gets before it collapse. If institutional investors pile in, depending on their exposure, there's no telling what kind of chain effect this will lead to.

thats right, now cryptocurrencies are worth half a trillion, that's about one third of QE3 (FED bought in about 1.6trillion USD worth for MBS and Treasuries). Maybe when it hit over a trillion and collapse, that will be something like taking away QE3 overnight/over very short term and enough to tank markets worldwide.

https://www.cryptocoinsnews.com/500-bill...milestone/

The 500bil is just a numerical number.

For example, I have 1000monkeys --> if i sell 1 monkey for 1mil, then i can tell people that i am a billionaire. Come tomorrow, if another person sells his monkey for 1 dollar (ie. the monkey market crashes), then i will realize i am only worth 999dollars now. In this case, nothing has been lost, except my own perception of my net worth.

My own perception of my net worth due to the monkeys i hold, cannot crash other markets. Nonetheless, markets can crash if there are interactions like below:

(1) There are so many monkey owners like me that felt the "wealth effect" when 1 monkey was worth 1mil. So we start spending and created massive artificial demand. When the "wealth effect" is lost after our monkeys became 1 dollar/pc, we stop spending and all the excess capacity would cause prices of goods to crash. Manufacturers of these goods would hold back, cut jobs and create a negative feedback loop.

(2) When my monkey was worth 1mil/pc, i pledged some of my monkeys to the bank to get a loan to buy stocks/bonds, prompting up those markets. When monkey became 1 dollar, i got margin-called and all my stocks/bonds got sold at any prices, crashing these markets.

[opmi]

not worry about the wealth effect. I will be more alert if people starts leveraging up for bitcoin trading. Then the bitcoin price crash would cause systemic risks via the banking system.
That where the central banks should be monitoring.

Just look back on the past crisis, the serious crisis are the ones that affect the banking systems i.e. credit and liquidity.

[Wildreamz]

Crypto-currencies comes in many forms; however they are using the same blockchain technology. While a single inventor of a crypto currency may tout he produces only a limited supply of cryptocurrency; if every single IT engineer comes out with his own crypto-currency, there will still be a massive supply of them.

In fact, anyone with blockchain technology and does multi layer encryption of his product can essentially produce his/her own crypto currency. The value of the crypto currency will then be backed by how many retailer's and community trust your credit worthiness to use your invented currency. Hence, the supply of crypto currency is tied to the number of people on this earth - essentially unlimited supply. We are seeing the emergence of many variants of crypto-currency such as lite coin etc.

Yes. Cyptocurrencies are intrinsically almost worthless and is only valued by how much the next guy is willing to pay for it (a more nuance perspective is that it's "value" is based on it's "utility", which can be estimated by metrics such as transaction volume, ubiquity, security, developer support, institutional and public adoption, reputation etc). In other words, Bitcoin with the longest history and the most "street cred" is the defacto standard, which is in line with what we see in it's market value today as well. More over, any features can be added on top of Bitcoin, and issues can be resolved via a "fork".

[GPD]

Frankly, I still dont understand what blockchain is after reading up on the internet.

Anyway, it seems the technology itself has immersed value but does these "coins" has the same?

[brattzz]

before u can sell a tulip for a house, u need a field...

blockchain is that field...to farm the bitcoins...

[Wildreamz]

Blockchain is just a distributed ledger. Say to verify a transection, you can use an escrow (3rd party, say a bank), which will get a transection fee for taking the risk. 

Using Blockchain technology, the transection can be verified by n nodes (say 100 computers) simultaneously. Each nodes containing a record of ALL the transections since beginning of time, so every transection is traceable. Then in order to forge a transection, you need to seize control of 51% of the nodes. Which is virtually impossible (unhackable) for a huge Blockchain network like Bitcoin, which have millions of nodes.  

This removes the need of an escrow (banks, Uber, Facebook, Spotify, Google etc) and theoretically be used for anything (digital rights for music, movies, ads, money etc). You can theoretically have Uber without Uber, Facebook without Facebook, so and so on. Every transection can be paid directly from consumer to service provider for example.

For example D-Tube (https://d.tube) is a decentralised Youtube, paying content creators via Blockchain technology. Theoretically no one can shut it down, or control the content on it.
LaZooz (http://lazooz.org) is decentralised Uber.
Opus (http://opus-foundation.org) is decentralized Spotify.

Blockchain will fundamentally change the way we transect in the not so distant future.

[yeokiwi]

Till date, Bitcoin is unhackable with current computing technology but it is still vulnerable to stealing. And since there is no one regulating the transactions, the loss will be permanent unlike credit card loss or fraudulent bank transfer that are likely to be reversible.

So, if you are using your own bitcoin wallet, please be extra careful
Using a third party bitcoin storage service will just transfer the risk of loss to the company. So, use a reputable company.

[BlueKelah]

We are now hearing exchanges willing to try them for trading. This is jin scary. If people can create bitcoins program, they surely has backdoor to print thousands of them and profit from it. There is no need to mine them. Is like banana money ..... we know how it ends.


.

Well the CBOE Futures exchange already started doing bitcoin futures trading a week or so ago. A few more big traditional futures trading exchanges starting bitcoin futures trading and coming online over next couple weeks as well. This will likely put the total amount for both Bitcoin trading and Bitcoin futures trading over 1 billion over the next month, especially if price goes above $20k

https://www.cnbc.com/2017/12/15/bitcoin-...boost.html

Bitcoin could very well be the cause of the next financial crisis rather than a property/banking crash in China.

From what I read, seems like there is a resurgence of synthetic CDOs as well, which was the things that enabled the GFC crash to happen
http://www.zerohedge.com/news/2017-11-02...ase-2-year

Usually 10 years in between big crashes, we are almost there in terms of timing as well. All worldwide stock market pretty high now and party hats on all around.

[corydorus]

What can we do to protect ourselves from our exposure in stock market ?