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Mufasa

Cryptocurrencies: THE FUTURE IS HERE

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53 minutes ago, superman said:

I wonder why bubbles are bad for the economy? It's not like that people wasted got destroyed - it just got given to someone else.

 

Haha...no comment. That's how much I understand this convo. 

 

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3 hours ago, Mufasa said:

 

OK- Source?

 

 

I don't get this. You can't say "They aren't aiming to create a cryptocurrency" when they literally have done so--built around the same idea of a public/consensus-based ledger (though the release of 'coins' is managed differently than the others). They're trying to use this currency toward a new transfer system. But the new transfer system relies on the new currency.

 

If it's "useless to launder money," then your point 3 is not relevant to Ripple? That was my question.

 

 

 

1. http://money.cnn.com/2017/12/07/investing/bitcoin-what-is-going-on/index.html - the fact most BTC investors are small time amateur mom and pop types is similar to the pool of people who invest in Forex CFDs. 

Most market experts also believe Bitcoin is a bubble - https://www.cnbc.com/2017/12/12/80-percent-of-wall-street-economists-strategists-believe-bitcoin-is-a-bubble-survey.html - that 80% would probably be closer to 95% if discounting the people who answered "I don't know". 

 

2. Ripple's founders are more interested in the platform. Ripple itself isn't supposed to be used as a medium of exchange, but as an aid to the communication protocol. This means they don't plan for it to be used as a currency at points of transaction. Not to mention, there is a limited amount, it is a private network and operates a proof of consensus model to verify transactions.

 

3. Point 3 is not relevant to Ripple, that is correct. 

 

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1 hour ago, superman said:

I wonder why bubbles are bad for the economy? It's not like that people wasted got destroyed - it just got given to someone else.

 

Because unexpected outcomes mean people misvalued things and it shifts them away from their optimal consumption. It means that instead of wealth being properly allocated, it went into overpriced assets and thus represents an overall loss (this is reflected by economic contraction, aka recession). 

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5 hours ago, Mo- said:

 

1. http://money.cnn.com/2017/12/07/investing/bitcoin-what-is-going-on/index.html - the fact most BTC investors are small time amateur mom and pop types is similar to the pool of people who invest in Forex CFDs. 

Most market experts also believe Bitcoin is a bubble - https://www.cnbc.com/2017/12/12/80-percent-of-wall-street-economists-strategists-believe-bitcoin-is-a-bubble-survey.html - that 80% would probably be closer to 95% if discounting the people who answered "I don't know". 

 

I don't doubt what's in these articles. But it's not really what you claimed in your first post. It doesn't say anything about those who are interested as being "amateurs" - that's your extrapolation. I kind of doubt a majority of traditional investors have any clue about, let alone totally understand, Bitcoin, however. The first article actually indicates that traditional investors, though once skeptical, are becoming increasingly interested in Bitcoin. 

 

"Its price has taken off this year as mainstream investors have become more interested."

 


"This month, investors will be able to start trading bitcoin futures via the Chicago Board Options Exchange and Chicago Mercantile Exchange."

"New York's Nasdaq plans to launch its own bitcoin futures in 2018."

"Big institutional investors such as hedge funds and assets managers have largely stayed on the sidelines. But some experts predict they'll move into the market in the coming months, despite skepticism from the likes of Warren Buffett and JPMorgan Chase (JPM) CEO Jamie Dimon."

"Some industry insiders are incredibly bullish. Arthur Hayes, CEO of Hong Kong bitcoin exchange Bitmex, predicts prices could hit a mind-boggling $50,000 by the end of next year, driven by the flow of money when institutional investors "pull the trigger" on investing in the digital currency. Octagon's Chapman is willing to stick his neck out even further. He thinks it will go above $100,000 before 2018 is over."

 

 

5 hours ago, Mo- said:

 

2. Ripple's founders are more interested in the platform. Ripple itself isn't supposed to be used as a medium of exchange, but as an aid to the communication protocol. This means they don't plan for it to be used as a currency at points of transaction. Not to mention, there is a limited amount, it is a private network and operates a proof of consensus model to verify transactions.

 

3. Point 3 is not relevant to Ripple, that is correct. 

 

 

I feel like we're saying the same thing here? But I still don't understand how you can say it's not also a currency. It depends upon being a currency that others are using to have any value to be able to transfer funds, no? Like, if it were just a private technological tool, not available as a currency to the public, it wouldn't work. Right?

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18 hours ago, Haku said:

Extreme gharar is applied when some one buys bitcoins to merely sell it off later expecting a good profit.

Using bitcoin for purposes of transaction is entirely different story.

darulfiqh.com/shariah-interpretations-of-bitcoin

 

Interesting. I only skimmed it just now, but where does he say the point about it being "extreme gharar" to buy-hold-sell?

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6 hours ago, Mufasa said:

 

Interesting. I only skimmed it just now, but where does he say the point about it being "extreme gharar" to buy-hold-sell?

extreme gharar comes from Mo.

Using bit coin as currency might be okay comes from the article where they list 3 main opinions.

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11 hours ago, Mo- said:

 

Because unexpected outcomes mean people misvalued things and it shifts them away from their optimal consumption. It means that instead of wealth being properly allocated, it went into overpriced assets and thus represents an overall loss (this is reflected by economic contraction, aka recession). 

ahh that makes so much sense. I wonder how we can stop bubbles tho

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6 hours ago, Mufasa said:

 

I don't doubt what's in these articles. But it's not really what you claimed in your first post. It doesn't say anything about those who are interested as being "amateurs" - that's your extrapolation. I kind of doubt a majority of traditional investors have any clue about, let alone totally understand, Bitcoin, however. The first article actually indicates that traditional investors, though once skeptical, are becoming increasingly interested in Bitcoin. 

 

Do you actually believe people who consume bitcoin are willing to pay those crazy prices for it - or do you think the prices are being driven up by excited investors such as yourself. That will determine weather or not bitcoins a bubble.

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8 hours ago, Mufasa said:

 

I don't doubt what's in these articles. But it's not really what you claimed in your first post. It doesn't say anything about those who are interested as being "amateurs" - that's your extrapolation. I kind of doubt a majority of traditional investors have any clue about, let alone totally understand, Bitcoin, however. The first article actually indicates that traditional investors, though once skeptical, are becoming increasingly interested in Bitcoin. 

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"Its price has taken off this year as mainstream investors have become more interested."

 


"This month, investors will be able to start trading bitcoin futures via the Chicago Board Options Exchange and Chicago Mercantile Exchange."

"New York's Nasdaq plans to launch its own bitcoin futures in 2018."

"Big institutional investors such as hedge funds and assets managers have largely stayed on the sidelines. But some experts predict they'll move into the market in the coming months, despite skepticism from the likes of Warren Buffett and JPMorgan Chase (JPM) CEO Jamie Dimon."

"Some industry insiders are incredibly bullish. Arthur Hayes, CEO of Hong Kong bitcoin exchange Bitmex, predicts prices could hit a mind-boggling $50,000 by the end of next year, driven by the flow of money when institutional investors "pull the trigger" on investing in the digital currency. Octagon's Chapman is willing to stick his neck out even further. He thinks it will go above $100,000 before 2018 is over."

 

 

 

I feel like we're saying the same thing here? But I still don't understand how you can say it's not also a currency. It depends upon being a currency that others are using to have any value to be able to transfer funds, no? Like, if it were just a private technological tool, not available as a currency to the public, it wouldn't work. Right?

 

1. Amateur investors are what we call retail investors, i.e. nurses, cashier clerks, student hobbyists, etc., using their own money to invest. Professional investors are people who make their living off investing other people's money for them, such as fund managers who work in private equity, venture capital, hedge funds, etc. Most jurisdictions also have a legal term for people they refer to as qualified investors, but this is usually simply determined by net worth. The foremost investors in blockchain have been large financial 

institutions (which is why a lot of them are working with Ripple and have hired the Ethereum team to consult for them), contrary to what you stated they in fact know a lot about cryptocurrencies, it is technically their job to know. 

 

The article states:

 

For much of this year, it's mom-and-pop investors who have been buying in.



Many are in Japan and South Korea, where recent regulation changes have made it easier to trade bitcoin, according to experts.

 

These are the people driving the speculative Bitcoin bubble (and the same for wider crypto).
The reason financial institutions are getting involved with Bitcoin itself isn't because they are buying into Bitcoin, but because there is a profit to be made from providing the service of clearing Bitcoin futures, of selling Bitcoin to the handful of people who plan to open 'cryptocurrency funds', etc. Veterans of finance like Ray Dalio (CEO of Bridgewater, the world's largest hedgefund) and Larry Fink (CEO of Blackrock, the world's largest asset manager with nearly $6 trillion assets under management) have both declared Bitcoin as a bubble and kept away from crypto in general. 

 

Of course Bitcoin industry insiders will be bullish, they think that Bitcoin is going to be adopted as a global currency. But ask yourself this question: do you think the governments of the world which unanimously use a central banking system are going to forego their monopoly on money? Not a chance.

 

2. The creators of Ripple don't expect people to go out and buy stuff using Ripple, and the manner in which it is designed (private network, proof of consensus, limited supply), means it doesn't operate as a currency. It is an essential part of the communication protocol, but people using the Ripple Network won't transfer in XRP, they'll be transferring USD, GBP, Euros, etc. XRP will only be used by financial institutions for clearing. 

 

 

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2 hours ago, superman said:

ahh that makes so much sense. I wonder how we can stop bubbles tho

 first we have to stop people from being stupid. you should lead

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To Mo, because I feel like I'm being pulled into an argument I wasn't going for at this point:

 

-What I noted in the beginning (and which everyone knows) is that the future of cryptocurrency is uncertain. Even if cryptos take off--or if blockchain does--that means nothing of the future, for example, of Bitcoin, which is simply the first--not the most efficient. So yeah, it's based on a lot of excitement; the thing is, the value has flailed a lot in the last few months, but it will ultimately correct itself. I think that reflects that there is a lot of *real* money in there and people are going to let it sit. Right now a lot of it is driven by people fearing they will miss out--that's the nature of it being new, now mainstream, and quite easy to buy-in. But we don't know it's future. You might *think* it's a bubble. You don't know it's a bubble.

 

-Well, I definitely do not think that a firm like Bridgewater is going to be investing their clients or advising others to invest in Bitcoin. There's no doubt it's a risky investment, which I've noted from the very beginning. (though, their clients would not have been complaining had they had the foresight to invest a few years ago, would they?) However--and this is based on subjective experience--there are 'tons' of young people working at companies like Bridgewater who are personally investing in Bitcoin. This I know from friends who work at similar firms in New York. While I don't know much about finance, since I've become intrigued, I have you on your anti-crypto crusade, but I do also have them whispering in my ear too. They're obviously not putting all their money in cryptos; but they are diversifying within the crypto world and betting on it to work out.

 

-But none of this really addresses the issues I have. I have no delusions about whether cryptos are a *safe* investment. But where's the hadith that says it's only OK to invest if global investment corporations A-Okay it?

 

9 hours ago, Haku said:

extreme gharar comes from Mo.

Using bit coin as currency might be okay comes from the article where they list 3 main opinions.

 

Oh, but he himself doesn't seem to make that point at all.

Just the opposite, he says: "The fact that people are using them as investments does not negate their currency feature. It just gives them similarity to investing in foreign currencies."

 

I figured this implies Bitcoin is like a currency --> you can invest in a currency --> therefore that people use it as an investment is not problematic, right? Or did I misunderstand it?

 

And this is the point. I don't think there's much a consensus on Bitcoin/cryptos.

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20 minutes ago, Mufasa said:

Oh, he doesn't seem to make that point at all though.

Just the opposite, he says: "The fact that people are using them as investments does not negate their currency feature. It just gives them similarity to investing in foreign currencies."

 

I figured this implies Bitcoin is like a currency --> you can invest in a currency --> therefore that people use it as an investment is not problematic, right? Or did I misunderstand it?

 

And this is the point. I don't think there's much a consensus on Bitcoin/cryptos.

I think you misunderstood him.

Using bit coin as currency is okay according to some scholars, but final fatwa is pending.

 

Investing in bitcoin (buy now and sell later) involves lot of uncertainty and hence extreme gharar. Otherwise it is like investing in currency, but with the uncertainty/bubble factor.

I am not too sure about investing in traditional currency my self. 

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Just now, Haku said:

I think you misunderstood him.

Using bit coin as currency is okay according to some scholars, but final fatwa is pending.

 

Investing in bitcoin (buy now and sell later) involves lot of uncertainty due to its volatility and hence extreme gharar. Otherwise it is like investing in currency.

I am not too sure about investing in traditional currency my self. 

 

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1 minute ago, Haku said:

I think you misunderstood him.

Using bit coin as currency is okay according to some scholars, but final fatwa is pending.

 

Investing in bitcoin (buy now and sell later) involves lot of uncertainty and hence extreme gharar. Otherwise it is like investing in currency, but with the uncertainty/bubble factor.

I am not too sure about investing in traditional currency my self. 

 

I think this is Mo's point though, not his. He didn't say anything about uncertainty or a bubble.

 

Your right that his final fatwa is pending; he is unsympathetic to the first opinion. But I guess we'll see what he ultimately says--if he publishes more.

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Anyway, in terms of my own feelings re: investing now, after getting lots of opinions, I'll probably wait until more scholars have more to say. It seems a very fresh topic and the scholarship is not fully up to speed. I have seen opinions supportive, and, at least from Mo's source, opinions opposed. But I feel very unconvinced. My main concern is that, if tomorrow a currency were to BOOM, it wouldn't feel like honest money to me. I'm not sure that any investment would, though.

 

That said, I did put a very small amount into Ripple when it hit its *probable* rock bottom. I feel pretty confident that Ripple is in a league of its own. It's more out of personal interest in seeing how it all works.

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