26 ms·

I'm a fan of "there is no rational explanation." The other answers seem plausible, but my theory is that if a coin has any kind of value proposition and doesn't

I'm a fan of "there is no rational explanation." The other answers seem plausible, but my theory is that if a coin has any kind of value proposition and doesn't completely fail, eventually some speculators will notice that it's a solid investment. The calculus goes like this: When it's a bull market, if you buy $X million of a coin that hasn't had much volume, everyone else will simultaneously see that this coin is suddenly popular. That will trigger them to buy, since it's going up. Why doesn't it go back down? Well, once you've invested, there isn't much reason to sell. Your investment went up by some N multiplier, and as long as most people feel the same way, your multiplier is safe. This explanation sounds too simplistic to be true, but whenever you look at the chart, the data seems to suggest it's plausible: http://i.imgur.com/OU6me1N.png http://i.imgur.com/OU6me1N.png Notice the volume was completely flatlined up until a huge purchase in March 2017. That massive purchase kickstarted that 50x factor. These dynamics are independent of any particular coin. So yes, it's true that CoinDuJour might offer some benefits and unique features. But that value proposition is secondary to the overall investment dynamics at play here. It almost doesn't matter what the coin does. As long as it does something different and it's stable, it becomes an attractive target for speculation. There are a massive number of people with spare ETH and BTC to throw around. They all want to park it somewhere that earns them money. See Pinkapp for a strange phenomenon: https://news.ycombinator.com/item?id=15153586 https://news.ycombinator.com/item?id=15153586 https://news.ycombinator.com/item?id=15151292 https://news.ycombinator.com/item?id=15151292 After they posted that comment, I've been lurking their slack channel. A bunch of people have come in trying to invest in them. So if even pinkapp can generate a >$1M "series A" when it's straight-up illegal, it's clear there's a lot of investment energy floating around.

Anderkent 9y ago
> When it's a bull market, if you buy $X million of a coin that hasn't had much volume, everyone else will simultaneously see that this coin is suddenly popular. That will trigger them to buy, since it's going up. Why doesn't it go back down? Well, once you've invested, there isn't much reason to sell. Your investment went up by some N multiplier, and as long as most people feel the same way, your multiplier is safe. That's basically definition of a bubble. 'as long as most people feel the same way, your multiplier is safe'? So basically your multiplier might go away at any point.
- zdkl 9y ago
  > So basically your multiplier might go away at any point. Hedging, hedging, hedging. There are enough derivatives in the coin world to have a pretty decent portfolio growth, if you're willing to manage it and deal with the tx/transfer fees
  - clappski 9y ago
    But if there is a bubble, hedging coins against each other is probably the worst thing you can do, right?
    - zdkl 9y ago
      If you've cashed out your initial investment plus a healthy return, anything left in that portfolio is gravy though, right?
  - z3t4 9y ago
    The problem is that they do not hold any value compared to for example a baseball card.
    - z3t4 9y ago
      A baseball card has a sentimental value that makes it more valuable then the actual paper it's printed on. Virtual goods can also have sentimental value, like a cool hat in team fortress. Stock shares has a value because of future dividend. A house have value because you can live in it or rent it out. Now think about a crypto currency, it only holds value because someone is willing to buy it, so think about why you want to buy it and what will happen when people want to liquidate their "investment".
      - zdkl 9y ago
        Your argument makes sense and I'm not advocating for people to replicate the experience, especially not with the current prices. My argument merely goes: if you threw away some marginal amount of initial (real) cash at something, and for some reason that something paid you back in full, with bonus and interest, then the price can tank as much as it wants since I'm cashed out. From there I don't care if 90% of the unit price is pure speculative pressure, as long as I find a counterparty for my trades. Does this make sense to you, if not why?

Anderkent 9y ago

> When it's a bull market, if you buy $X million of a coin that hasn't had much volume, everyone else will simultaneously see that this coin is suddenly popular. That will trigger them to buy, since it's going up. Why doesn't it go back down? Well, once you've invested, there isn't much reason to sell. Your investment went up by some N multiplier, and as long as most people feel the same way, your multiplier is safe. That's basically definition of a bubble. 'as long as most people feel the same way, your multiplier is safe'? So basically your multiplier might go away at any point.

zdkl 9y ago
> So basically your multiplier might go away at any point. Hedging, hedging, hedging. There are enough derivatives in the coin world to have a pretty decent portfolio growth, if you're willing to manage it and deal with the tx/transfer fees
- clappski 9y ago
  But if there is a bubble, hedging coins against each other is probably the worst thing you can do, right?
  - zdkl 9y ago
    If you've cashed out your initial investment plus a healthy return, anything left in that portfolio is gravy though, right?
- z3t4 9y ago
  The problem is that they do not hold any value compared to for example a baseball card.
  - z3t4 9y ago
    A baseball card has a sentimental value that makes it more valuable then the actual paper it's printed on. Virtual goods can also have sentimental value, like a cool hat in team fortress. Stock shares has a value because of future dividend. A house have value because you can live in it or rent it out. Now think about a crypto currency, it only holds value because someone is willing to buy it, so think about why you want to buy it and what will happen when people want to liquidate their "investment".
    - zdkl 9y ago
      Your argument makes sense and I'm not advocating for people to replicate the experience, especially not with the current prices. My argument merely goes: if you threw away some marginal amount of initial (real) cash at something, and for some reason that something paid you back in full, with bonus and interest, then the price can tank as much as it wants since I'm cashed out. From there I don't care if 90% of the unit price is pure speculative pressure, as long as I find a counterparty for my trades. Does this make sense to you, if not why?