[Oxymoron]

If you can answer this question I will agree with you about the value of bitcoin.

What is the security of Bitcoin?
What happens if the person or people in charge of controlling bitcoin are blackmailed?
What if Bitcoin starts manipulating it?

I mean that is why the US dollar is worth something, because the US Goverment has shown over a long term that the currency is stability. I am sorry I do not trust some Yoshi mother fucker to keep this shit afloat.
This is bullshit based on a pyramid scheme.

[Kaiserschmarrn]

Bitcoins are useless as a currency. They're not even useful to criminals, since a record of every transaction using Bitcoins is recorded and retained essentially forever. In the long term, just like tulip bulbs, they are worth nothing. In the short term, people will speculate in them in the hope of getting rich for doing nothing and contributing nothing to the economy. This intense speculation in an ultimately worthless commodity is known as a 'bubble'. If the bubble gets too big before it bursts, this can affect the 'real' economy.

They aren't useless, as you can circumvent restrictions on product exchanges with them. This is an issue currently, for instance, when buying medication overseas which can be much cheaper and is perfectly legal in many countries, where the major credit card companies, paypal, etc. refuse to carry out transactions for some companies because of pressure by the pharma industry. It's the decentralised nature that matters.

Buying and selling bitcoins can be as anonymous as exchanging cash. As far as I know, there are also ways to make the tracking of transactions very expensive, and hence not worth the effort for the authorities unless it involves serious crimes such as terrorism.

Did you take note of the US property market exposure to governments in 2008 by the way? Some dangers are not noticeable until it is too late. This will be one of them I am sure.

Surely everybody knew about the banks' and government's exposure to the property market. It's the judgment about the risk of that exposure that was wrong.

Edit:

If you can answer this question I will agree with you about the value of bitcoin.

What is the security of Bitcoin?
What happens if the person or people in charge of controlling bitcoin are blackmailed?
What if Bitcoin starts manipulating it?

I mean that is why the US dollar is worth something, because the US Goverment has shown over a long term that the currency is stability. I am sorry I do not trust some Yoshi mother fucker to keep this shit afloat.
This is bullshit based on a pyramid scheme.

I'm no expert, but I'll try and answer your questions.

1. There is no security or backing for bitcoins which does make them more risky than a regular currency. Yet a regular currency is also not without risk, as we've seen historically in countries with hyper-inflation. In general the average person today will not engage in long-term investments in bitcoin anyway but use it for transactions where they hold the currency only for short periods of time, which obviously reduces the risk.

2. There isn't really anybody in charge of bitcoin. There is a person responsible for the (open source) bitcoin software and the risk of blackmailing here is not different to any other private software development company many of which produce software which is used in critical applications. The open source nature of the software actually reduces that risk as any programmer or software developer can see the code which is not the case with proprietary software.

3. See 2 above and further central banks and government do also manipulate currencies.

[Oxymoron]

I'm no expert, but I'll try and answer your questions.

1. There is no security or backing for bitcoins which does make them more risky than a regular currency. Yet a regular currency is also not without risk, as we've seen historically in countries with hyper-inflation. In general the average person today will not engage in long-term investments in bitcoin anyway but use it for transactions where they hold the currency only for short periods of time, which obviously reduces the risk.

2. There isn't really anybody in charge of bitcoin. There is a person responsible for the (open source) bitcoin software and the risk of blackmailing here is not different to any other private software development company many of which produce software which is used in critical applications. The open source nature of the software actually reduces that risk as any programmer or software developer can see the code which is not the case with proprietary software.

3. See 2 above and further central banks and government do also manipulate currencies.

By security I mean what stops someone from utterly hacking Bitcoin?
2. Can the US dollar be hacked?
3. Banks manipulate currency for a reason and it is open for everyone to see.

[B0ycey]

There is a lot of confusion on bitcoins.

Firstly, because of the complexion of the code, yes there is a trail on bitcoins but the anonymity for the trader is great. That is why they are used in illegal activity.

Second, yes currency can be manipulated but it is linked to a nations assets. So money would never be worthless. Bitcoins value is soley down to confidence that it has worth (when it hasn't). Perhaps liking it to a pyramid scheme isn't far fetched actually as it can be broken down into smaller pieces.

Three, because of complexity of code, bitcoins would be difficult to hack. However the security protocols on them means if you lose your pin (forget your passwords), you lose everything. You can't phone anyone up and ask for a new one. But again as we are talking about data, so something like a solar flare could destroy this system anyway.

Four, yes you don't have handling fees to trade among borders with bitcoins, but nations are unlikely to not restrict its use in the future. Bitcoins would never be legal tender as it is a threat to the nations own currency. China don't like bitcoins so trading among there would be difficult and even NY has put in place restrictions for trading with bitcoins. Also restrictions on their use among every nation would only intensify when they are more commonly used, so again what benefits bitcoin has over currency today will be non-existent in a few years anyway.

Five, very few traders trade in bitcoin. It is a richmans fad. And because of this, when the fad stops, the bubble bursts. The bigger the bubble, the more problems you will have in the overall global economy. This move from CME has the potential to make this a global economic disaster looming.

@Kaiserschmarrn, you are telling me you knew the banking crisis was going to occur when no one else did? If true, what makes you think this is different if that was the case?

[Kaiserschmarrn]

By security I mean what stops someone from utterly hacking Bitcoin?
2. Can the US dollar be hacked?
3. Banks manipulate currency for a reason and it is open for everyone to see.

Anything you do online is at risk of being hacked or tampered with, but I think you are right that bitcoin is more vulnerable at this point, if only because it's relatively new technology. I don't think it's possible to say that it's inherently less secure than other digital technologies though. It's still a work in progress and while I'm sure there is some hype surrounding blockchain, it looks like it is currently being adopted or under consideration by many private and public organisations, including banks and governments, so I'd expect increasing interest and research into its security.

Currencies can certainly be "hacked", e.g. counterfeit money is as old as money itself and we have a long history of trying to make the forgery of notes more difficult. Money is also mostly created electronically today.

@Kaiserschmarrn, you are telling me you knew the banking crisis was going to occur when no one else did?

You need to either reread what I wrote or stop your strawmen arguments.

[B0ycey]

You need to either reread what I wrote or stop your strawmen arguments.

Perhaps it should be you who needs to re-read.

I said did you take note of governments exposure to the US property market in 2008, you said sure everyone did, so I said did you know the crisis was going to occur then. The only way you could have predicted the governments exposure to the crisis is it you knew there was going to be bailouts. Banks and governments are not the same thing.

[Kaiserschmarrn]

Perhaps it should be you who needs to re-read.

I said did you take note of governments exposure to the US property market in 2008, you said sure everyone did, so I said did you know the crisis was going to occur then. The only way you could have predicted the governments exposure to the crisis is it you knew there was going to be bailouts. Banks and governments are not the same thing.

I said that the exposure was known, but that the judgment how risky that exposure was turned out to be wrong, i.e. everybody thought there was virtually no risk of banks getting into trouble because of these mortgage backed securities.

The situation with bitcoin today is that there is no exposure, hence my comment that I will take note if there actually is exposure in the future.

[B0ycey]

The situation with bitcoin today is that there is no exposure, hence my comment that I will take note if there actually is exposure in the future.

The exposure depends on investment. For something that is no more than a token, bitcoins are already overpriced. If banks invest heavily in them and the bubble bursts, that is the exposure to governments.

The irony of course is bitcoins was an alternative to Wall street to prevent exposure of such bubbles. Instead they have the potential to take down Wall Street. Certainly CME and their clients.

[Kaiserschmarrn]

The exposure depends on investment. For something that is no more than a token, bitcoins are already overpriced. If banks invest heavily in them and the bubble bursts, that is the exposure to governments.

The irony of course is bitcoins was an alternative to Wall street to prevent exposure to such bubbles. Instead they have the potential to take down Wall Street. Certainly CME and their clients.

Again, I will take note if banks actually do heavily invest in them. Today they don't and there is no rush or exuberance in that respect coming from the financial industry. It's rather the opposite; banks seem to be very skeptical of the bitcoin phenomenon.

[B0ycey]

Again, I will take note if banks actually do heavily invest in them. Today they don't and there is no rush or exuberance in that respect coming from the financial industry. It's rather the opposite; banks seem to be very skeptical of the bitcoin phenomenon.

But the conditions to bet on Bitcoins are about to occur with Bitcoin futures. Do you think investors will not bet on bitcoin?

[Kaiserschmarrn]

But the conditions to bet on Bitcoins are about to occur with Bitcoin futures. Do you think investors will not bet on bitcoin?

Of course people will speculate. Banks don't need standardised contracts for their trades though, they do this over the counter, so the CME announcement isn't really relevant to our discussion.

I'm now able to make this thread (somewhat) on topic again:

JPMorgan's Dimon says bitcoin 'is a fraud'

NEW YORK (Reuters) - Bitcoin “is a fraud” and will blow up, Jamie Dimon, chief executive of JPMorgan Chase & Co, said on Tuesday.

Speaking at a bank investor conference in New York, Dimon said, “The currency isn’t going to work. You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart.” Dimon said that if any JPMorgan traders were trading the crypto-currency, “I would fire them in a second, for two reasons: It is against our rules and they are stupid, and both are dangerous.”

Dimon’s comments come as the bitcoin, a virtual currency not backed by any government, has more than quadrupled in value since December to more than $4,100. Bitcoin is a digital currency that enables individuals to transfer value to each other and pay for goods and services bypassing banks and the mainstream financial system. While banks have largely steered clear of bitcoin since it emerged following the financial crisis, the virtual currency has a range of people who support it, including technololgy enthusiasts, liberterians skeptical of government monetary policy and speculators attracted by its price swings.

“Like it or not, people want exposure to bitcoin,” Edward Tilly, chairman and CEO of exchange group CBOE Holdings Inc., said at the same conference. CBOE has applied with U.S. regulators to launch a bitcoin futures contract and a bitcoin exchange traded fund on its venues.

Any good trade is started with a difference of opinion, Tilly added. ”So Jamie can be on the short side and the issuers and those trading in physical can be on the long side, and it sounds like we have a great trade.”

Dimon may also be on the other side of another bitcoin trade closer to home. At another conference about two hours later, Dimon said that one of his daughters had bought some bitcoin. “It went up and she thinks she’s a genius now,” Dimon said at the CNBC Institutional Investor Delivering Alpha Conference.

“WORSE THAN TULIP BULBS”

Banks and other financial institutions have been concerned over bitcoin’s early association with online crime and money laundering. The supply of bitcoin is meant to be limited to 21 million, but there are clones of the virtual currency in circulation which have made the market for it more volatile.

“It is worse than tulips bulbs,” Dimon said, referring to a famous market bubble from the 1600s.

JPMorgan and many of its competitors, however, have invested millions of dollars in blockchain, the technology that tracks bitcoin transactions. Blockchain is a shared ledger of transactions maintained by a network of computers on the internet. Dimon said such uses will roll out over coming years as it is adapted to different business lines. Financial institutions are hoping blockchain can be adapted to simplify and lower the costs of processes such as securities settlement, loan trading and international money transfers.

Dimon predicted big losses for bitcoin buyers. “Don’t ask me to short it. It could be at $20,000 before this happens, but it will eventually blow up.” he said. “Honestly, I am just shocked that anyone can’t see it for what it is.” Bitcoin’s price fell as much as 4 percent following Dimon’s comments and was last trading at $4,164. Rumors that the Chinese government is planning to ban trading of virtual currencies on domestic exchanges has weighed on bitcoin recently. “It feels like we are in the midst of a negative news cycle, but even considering all this, we are still trading above $4,000.” said John Spallanzani, chief macro strategist at GFI Group.

[B0ycey]

so the CME announcement isn't really relevant to our discussion.

Where do investors get their money I wonder? Nonetheless, do you think banks will not invest in bitcoin?

Don't get me wrong. I hope I am wrong. But you are naive to the dangers.

[Kaiserschmarrn]

^ The world is flush with money today which is one reason we see stock markets going from strength to strength and ever lower bond yields, which brings me back to my first response to you about the unprecedented balance sheet expansion of central banks. Hardly anybody seems to bat an eye over this, though, with the exception perhaps of the ordoliberals (which are mainly in German speaking countries). Some of this money may well have gone into bitcoin too but it is such a small share that the idea that the next financial crash will be based on it is almost funny. There are so many potential bubbles today, as people are desperate to park their money somewhere to the extent that they are willing to pay some governments to lend to them, but I ought to be worried about bitcoin which most people are extremely skeptical about and think "is a fraud". If anything is a good predictor for a financial crisis, it's that nobody expects it. Usually, everybody thinks that things are going extremely well until shortly before a bubble bursts or a crash happens. With bitcoin it's the opposite today - perceptions already are that it's dangerous.

So yeah, I'm definitely not worried about bitcoin causing any distress in the financial markets today.

[B0ycey]

^ The world is flush with money today which is one reason we see stock markets going from strength to strength and ever lower bond yields, which brings me back to my first response to you about the unprecedented balance sheet expansion of central banks. Hardly anybody seems to bat an eye over this, though, with the exception perhaps of the ordoliberals (which are mainly in German speaking countries).

People do take this seriously. But it is more to do with inflation concerns. Currency will always obtain worth - even if it reduces in value due to QE. But your concerns were/are measures to stimulate growth and solve the 2008 crash btw. The alternative would have been much worse. So if you aren't worried about inflation but more concerned about jobs and growth (like me) perhaps this isn't something to worry about.

With bitcoin it's the opposite today - perceptions already are that it's dangerous.

So yeah, I'm definitely not worried about bitcoin causing any distress in the financial markets today.

Who says bitcoins are dangerous? Not you. ME!!

Your link pretty much says what I have been saying to you. He even predicts a tenfold growth pattern. And bitcoins futures might make this possible. Do you think banks will sit on their hands on this? The danger is people thinking there is no danger. The reality is do you think a global finance economy can have a 2tn vanishing of wealth? In context that is greater the UK debt btw. So sure don't worry about it. If you are lucky the bank's might not touch it. But if they do, the losses could be great.

[Kaiserschmarrn]

The vast majority of people, including experts, thinks bitcoin is dangerous, a fraud or a bubble that will burst soon. That is, pretty much everybody expects there to be a problem down the line. You are with the majority regarding your skepticism.

My link says nothing about a financial crash or crisis, i.e. an event that is dangerous to the financial system. If (or when) the bitcoin bubble bursts some people will lose money. Big deal.

[B0ycey]

The vast majority of people, including experts, thinks bitcoin is dangerous, a fraud or a bubble that will burst soon. That is, pretty much everybody expects there to be a problem down the line. You are with the majority.

My link says nothing about a financial crash or crisis, i.e. an event that is dangerous to the financial system. If (or when) the bitcoin bubble bursts some people will lose money. Big deal.

...Your link was before the announcement of bitcoin futures.

Perhaps when/if it is approved I suspect some experts might even highlight the dangers to you more coherently in an article. But that doesn't stop rogues trying to make a quick buck on it but instead getting stung in the process. Enough Nick Lesson's and you have Barings. Multiple Barings all over the globe and you have a problem. But don't worry about it. After all, it's only a small bubble. Big deal.

[Kaiserschmarrn]

The article actually mentions the planned introduction of futures.

As long as there is major skepticism the risk is negligible because bitcoin will remain a niche product and likely quite volatile which will attract speculators, most of which will lose money eventually. Though for them, but no systematic danger for banks or the financial system. On the other hand, we will have cause for concern if governments start calling bitcoin the best thing since sliced bread, declare it safe and encourage investment and speculation (although I have my doubts that that's ever going to happen).

Rogues can cause problems with any commodity and they are an internal problem of banks. You are describing an unrelated potential problem that has nothing to do with the nature of bitcoin. Fewer strawmen please.

[B0ycey]

The only strawmen are come you Kaiser. But I doubt the danger would be rogues actually. More lack of worry or over confidence from traders in something that 'gives off the illusion of worth'. But there is no point in discussing this with you. You think $110bn spent on data with the potential to expand greatly into the global finance market is a small bubble not to worry about.

[Kaiserschmarrn]

All your claim comes down to is that there is a possibility for the financial system to be exposed to bitcoin to the extent that it would lead to a crash or crisis. I responded by telling you that I will take note if there ever is such an exposure. As far as I can tell from your posts, you admit that there isn't any exposure today that could cause anything approaching an event that could destabilise the financial system. We differ in our judgements about how likely it is that this is going to happen. You seem to think it's almost certain, although you have not given any evidence or reasons for this believe, while I think it's very unlikely unless there is a turnaround in perception by experts, banks and governments.

So in summary, your argument seems to be that because there is a possibility for bitcoin to be problematic in the future, bitcoin will be problematic in the future. That's really weak and poor reasoning.

[Rugoz]

Blockchain is interesting technology.

I can see a future where personal data (e.g. social media) is on the blockchain and people get money for making that data available to others (because they own it instead of Facebook, Google and co.). It's potentially disruptive.

Blockchain is not 100% safe though, an attacker with a majority of computing power can corrupt the chain.