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On the contrary, market makers in fact help reduce the bid/ask spread and help improve liquidity in the market, i.e. make the market.

If you have used zebpay a couple of weeks back, and the latest one, you will know the difference. Right now, right this second, the difference between the buy and sell price of BTC on Zebpay is an enormous ₹1.

Banks are suspending accounts of Crypto-fiat gateways because they are scared that crypto will take away all the accounts (which they will, in half a decade).

There are no professional market making companies operating in this space right? If there are professional third party market makers involved, the bid/ask spread will be negligible.

So it is likely that the exchange or parties associated close to exchange promoters are acting as market makers, keeping a wide bid/ask spread. If this exchange was under SEBI, it would not be allowed. But there are no regulations here, so Zebpay/Unocoin can do pretty much what they want.

Quoting from the ET article:

Result of more competition (exchanges) operating in this space. They will slash their own margins to keep market share.

Based on my own experience (made a few trades to see how things work) with cryptocurrencies, there is no way on earth banks and bank accounts will be replaced by these.

But yeah, this decision by big banks is strange if RBI has not instructed them to do so. Why should banks care what customers do with their money?

Here is a screenshot I took a few seconds back.

How much more 'Negligible' do you want it to be?



Regarding banks being replaced, let's just wait and watch. My 'yet to be purchased' Crypto debit card should arrive in a couple of months. I will be sure to evaluate and report here, the pros and cons.

wow! But do check after some time because those are impressively tight spreads. Probably the best in the world?

Spreads on major exchanges: https://www.tokenspread.com/

What I see in that link is an opportunity to make money. An arbitrage opportunity.

There is money to be made everywhere if you know where to look. The arbitrage will always be there as long as the same security is traded on more than 1 exchange. It exists even on NSE/BSE.

Market spreads reduce if there is more volume and liquidity. On the day of the last bottom(17th Jan), there was 1300+ BTC of trading on just Zebpay. That's over 1 billion rupees (₹100Cr). :Shockked:

Everyone knows how truthful the media is. ET and CNBC was egging everyone to get on the BTC train when it was trading above $17k. People bought BTC on credit cards when the people in the core community were liquidating their BTC. When BTC started tanking, the media started pumping Ripple! When Ripple started dropping, they started again with TRON! None of those have ended well.

The correction was inevitable, and exaggerated more due to these panic sellers (who bought off credit cards). I would like to thank these sellers who helped us buy cheap BTC at a month+ old prices ($9k-$10k). Who would miss out on such 50% sales?

As for the non believers, my advice would be to try it out with 1% of your total portfolio. Try ETH if the prices of BTC scare you. You will come back to thank this post later.

More than the money making possibilities, the ideals and the vision are appealing. Anyone interested in Ethereum should read articles on blockgeeks.com. I looked at this space like a retail investor earlier, but now I am really impressed by the vision. I keep trying to buy whatever my limited means permit, and right now it is around 10% of my portfolio. It may end badly, but if it is something that makes me look towards a better world, I am willing to risk it. People who are celebrating the fall in prices are most likely mistaken. I hope time will prove that. I cannot.

And yes, economics is not a privilege of a few blog post writers. Even today, the Prof who teaches us economics said we do not know what exactly is the link between unemployment and inflation after 2008. He was the head of ECB for quite some time. Humility is a product of excellence. Along with other topics, Bitcoin is on his list of graded presentations this time. Not surprisingly, it is the most popular topic so far. I'm saying this because Cryptocurrencies are perceived to be akin to lottery tickets by many members. That is not true, and people who are really smart are assessing the merits/demerits of making them mainstream, instead of trying to bulldoze their lack of faith in the concept.

I like your approach (not in for speculation, but for a better world etc). After all, most of us spend our savings on things like travel, clothes, cars, gadgets etc. So spending some money on what you believe in (blockchain tech making a better world) is okay. And yes, Ethereum project is definitely more interesting than Bitcoin or Ripple

But I have a question - you know companies like Ola/Uber, Swiggy/ Zomato, Zoomcar, Flipkart etc are attempting to solve people's problems and are genuinely building something useful. If they come out with an IPO now and ask for public money, would you invest in them? If yes, wow I'm impressed! If no, why?

People perceive crypto currencies to be like Stocks, just because they can be easily traded on exchanges. But the fundamental reason you buy stocks is different from why you buy crypto.

People argue that there is not inherent value in crypto currencies and it is all speculation. Whereas the inherent value to stocks is the dividend yield. That's why stock prices gain/fall on favourable/unfavorable quarter results. But apart from that (and the speculative gains) there is no practical utility of holding stocks of a company for almost all small investors.

The counter argument is, the value provided by crypto currencies my not be from its dividend, it comes from its use as a product.

If you use Ripple instead of SWIFT for cross border payments, you save money! Its this value proposition of XRP which gives it value! It doesn't matter if it is $0.18 or $3.5. It will always work the same, and it will always save you money over SWIFT. Its traded value is just a product of its popularity and in no way interferes with its core value proposition.

If you use the Ethereum Blockchain to set up smart contracts based projects instead of making paper contracts, you save money on legal fees. It doesn't matter if ETH is trading $8 or $1400, you always save money. And as a side benefit, people helping run the Ethereum Blockchain also make a small amount of money in return for their contribution.

Decentralisation helps reduce middleman fees and even those miniscule fees are distributed among the supporting community.

I agree that the situation with BTC is truly getting out of hand but Bitcoin Cash is still doing exactly what Bitcoin was originally trying to achieve, though without much community support, due to its roots.

The crux of the matter is, as long as the product is functional, there is no reason why the value of a crypto currency will "crash and burn" to zero. But as soon as the product stops being appealing, there is nothing to stop it from doing exactly that. It all depends on the product and the value proposition over existing solutions. Something like that happened on the morning of 17th Jan with Bitconnect Coin (BCC) which dropped from $250 to $5. So choose wisely what you support and believe in.

People who are worried about Bitcoin miners wasting energy for little return. I just want to tell you that what Bitcoin community has done is ground work for something much bigger. In a few years (3-4) time all the miners will be mining something totally different because all "Currency" cryptos will move on to the much more energy efficient "Proof of Stake". All the hardware currently being "wasted" on Crypto currency mining will be doing something much much much more beneficial for the society at large.

Thanks for your response. Yes, I'll invest in Oyo, Ola and maybe Zomato when the get to the market. The reason is that I feel they have genuinely transformed the way people think. My friends refer to bookimg rooms as "please book an Oyo". Few say please book a hotel. That brand equity is worth far more than a billion dollars in a nation of one and a half billion. I like Ola because I've been cheated less by them. Since you always need an OTP to start the ride, drivers cannot fool you. Also, they offer Auto Rickshaws which are actually available. And Zomato has become the google of Restaurant reviews, even outside India. They may fail, but I beleieve they have impacted enough lives to be worthy of being successful. :)

Agree. But this is where it gets tricky. How do you value something like that? What is the fair value? As you say, for a company, you can look at earnings & dividends.

This thinking of mine seems somewhat rational -

1) Cross border payments is a $1 trillion industry (some random number)
2) Bitcoin has 1% market share (some random number)
3) Bitcoin's current market cap should be $10 billion (1% of $1 trillion)
4) Fair value of bitcoin = $10 billion divided by bitcoins in circulation = $650

Correct. The price of XRP does not matter when you are about to make a transaction. If a cryptocurrency has a utility, then use it at the time of transaction. So why buy and hold XRP for the long term? Without having some hard data (like in the bitcoin example above) on extent of XRP's utility/ usage and if one is buying XRP, then isn't it pure speculation?

Yeah, speculation and 'investment' in ETH is not so bad. Ethereum projects will speed up innovation, because it gives entrepreneurs access to capital. It makes crowdfunding much simpler. Something good might come out of it in the future (see my Sirin Labs post No. 201 on this thread).

:thumbs up

Now we're firmly in currency territory.
$650 would be the value of BTC if it was an extremely liquid currency with no appreciation in value (like say INR). There would be no reason to hoard and HODL such a currency in the hope of future speculative gains.

BUT, since all of it is already in circulation (as per your calculations), if Bitcoin's market share of the global remittance business rises (due to its better value proposition), to be able to handle the extra business volume, the value needs to be increased (since more cannot be printed freely, supply is controlled).

If the value increases, people now realise that it is an appreciating asset, and start to hoard it. This reduces the money in circulation (similar to RBI increasing interest rates to curb money supply, spending and control spiralling inflation) and now it's value needs to be increased even more to conduct the same amount of business.

As of now, there is very small inflation and very small circulation. The domino effect of growth is unstoppable as long as the product is desirable.

In such a scenario, the "fair valuation" cannot be a specific number in US$ terms (which is high supply, freely printed and highly liquid due to extremely low interest rates). However, it can be defined as a slope, on a logarithmic scale chart.

As for altcoins, most of them share characteristics similar to Bitcoin and so a fair value for them can definitely be arrived at, at least in BTC terms.

BTC has been desparately trying to shoot itself in the foot and reduce this slope, by not following what Satoshi Nakamoto wrote in his original whitepaper. This has led to increasing transaction times and fees, i.e. less desirability of the product. And it is destined to plateau (sideways movement) and get replaced (a crash is a worst case scenario after a replacement has happened) if they don't fix it.


XRP has very large inflation as compared to BTC. 1Bn XRP is added to circulation every month. Thats around 2.5% of total supply. Hoarding it doesn't make sense, there are better "investments" around.

ETH as you said has a bigger value proposition leading to even more reason for hoarding than BTC. It will definitely beat BTC in the long run, if not in price/unit, at least in total market cap.

Niti Aayog CEO Mr. Amitabh Kant agrees with my prediction. He has mentioned an intermediate step in his prediction, hence the shorter timeline.

http://m.hindustantimes.com/india-ne...751zBpBmI.html

I think Mr. Amitabh has said in context of cashless transaction and hence physical banks will be irrelevant in the future. It is not anyway linked to Cryptocurrency.

I just realized that cryptocurrency trading will go on even if RBI bans trading or if exchanges are shutdown and even if Government brings out a law against it. That's because there are a large number of global peer to peer trading platforms

www.localbitcoins.com
www.localethereum.com
www.remitano.com

Money is transferred directly via NEFT or Paypal. Nobody can figure out what you bought / sold if authorities look at your account statement.

www.dether.io -> This one is likely to be a very popular with black money holders. You can buy cryptocurrencies with CASH. Ideal and ready infrastructure for Hawala operators to take cash out of the country.

Looks like cryptocurrency trading will stop only if prices crash.

A most interesting article on Cryptos & Bitties. Reflects my views. No offense to those who have invested (best of luck) and to those who actually encashed their gains (anyone?). I am curious to see what posts this thread will receive in January 2019. There is a lot left for me to learn in life. after all I am only 70% of the way through (I think!). But one thing I have learnt is that you usually don't get rich and stay rich through the quick and short cut way.

http://thereformedbroker.com/2018/01...re-making-now/

The Fatal Mistake Crypto Investors are Making Now
Posted January 7, 2018 by Joshua M Brown