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Is There a Cryptocurrency Bubble? Just Ask Doge

157 points by nemild 9y ago

cvsh 9y ago
This is possible enough that anyone putting a significant amount of money in crypto is playing with seriously dangerous fire. On the other hand, the fall of one cryptocurrency to scammers doesn't mean all of them are destined to pan out the same way. This article doesn't really offer any evidence for that extrapolation, either.
cairo_x 9y ago
I think the thing to remember with ICOs and new altcoins is that HODL, block your ears and walk away does not apply. People are making a living simply by flipping, insider trading, fake insider rumours, companies stringing out claims and updates, releasing of Alpha's that are paper models (not really even prototypes), teams with a lack of devs with relevant crypto background, ideas that have no use of a blockchain at all, tokens that offer no utility, or whose utility is yet to be determined, etc. Tokens that have utility, but whose utility is relatively small, yet whose investor base and node base is YUGE. It's turning into a bloodbath of fuckery.
- michaelchisari 9y ago
  This is what an unregulated market looks like, and the more chaotic it gets, the more I think people should understand why we regulate markets.
jdormit 9y ago
> A group of Bay Area programmers this year used an I.C.O. to raise $35 million for their project, an anonymous web browser called Brave As in Brave, the new browser from Brendan Eich (founder of Mozilla, famously invented JavaScript in 10 days)? Hardly a scam... Either the reporter didn't do their research or twisted the facts to fit their story.
- madamelic 9y ago
  >Either the reporter didn't do their research or twisted the facts to fit their story. It is quite obvious it is both. - Dogecoin creator was always a cryptocurrency skeptic. The article even admits it but papers over it. - Blockchain =/= Bitcoin. The article insinuates that any blockchain-related startups are built on top of Bitcoin. - ICOs =/= Bitcoin. - "early adopters often used it to buy drugs, weapons, or other illicit goods on the dark web" - "including Jamie Dimon, the chief executive of JPMorgan Chase, who last week called Bitcoin a “fraud,”" This line makes it clear what NY Times' outlook is, they quote an opponent of cryptocurrencies like he is an expert.
  - totalZero 9y ago
    He may not be an expert on cryptocurrencies, but he's certainly an expert on markets in some ways.
  - deleted 9y ago
    [deleted]
  - srj 9y ago
    The NY Times recently restructured their reporting operations in a way that reduced the amount of fact-checking done[1]. FWIW I'm a daily reader and definitely feel the quality has suffered. [1] https://www.poynter.org/news/new-york-times-copy-desk-top-editors-you-have-turned-your-backs-us https://www.poynter.org/news/new-york-times-copy-desk-top-ed...
- deleted 9y ago
  [deleted]
- gnicholas 9y ago
  Exactly. The narrative was all about strangers on the internet, so it would have been inconvenient to mention that the project is headed by the former CTO of Mozilla. Or to mention that the Brave browser was built long before the ICO happened. Both of these facts mitigate the risk that the creators are scammers with no intention of using the funds for the designated project. But it doesn't fit the narrative!
deleted 9y ago
[deleted]
craigc 9y ago
I think there is a difference between a cryptocurrency bubble and an ICO bubble, and this article fails to distinguish between the two. You can see Tom Lee, a financial strategist, talk about Bitcoin here: https://www.cnbc.com/2017/09/15/bitcoin-could-surge-another-600-percent-to-25000-dollars-in-5-years-says-strategist-tom-lee.html https://www.cnbc.com/2017/09/15/bitcoin-could-surge-another-... He points out that there are only 300,000 Bitcoin wallets that hold $5,000 or more. In the grand scheme of things that is very small compared to the overall global economy. He also refers to Jamie Dimon’s comments that Bitcoin is a “fraud” (It is worth nothing that JP Morgan bought up millions of dollars worth of Bitcoin after the price crashed following that statement – on behalf of their clients). ICOs, on the other hand, are absolutely in a bubble. Companies are raising hundreds of millions of dollars without even having a product. It doesn’t take a rocket scientist to understand how absurd that is. In my opinion, regulations in this area would actually do more of a service than disservice to crypto, and I welcome them with open arms. For one, it will legitimize token sales as a fundraising method, and for two it will remove most of the scams and illegitimate projects that seem to be popping up daily. I think Blockchain technology is here to stay. Even if 99 out of 100 ICO projects fail (they will), that still leaves a few that will survive and may become quite valuable. While the recent explosion in crypto prices seems unsustainable, if it really does become the money of the future then the prices now are going to look like pennies in five or ten years time.
- tokenizerrr 9y ago
  It's impossible to tell how many wallets there are with a certain amount in them. A wallet consists of multiple addresses and you can't tell which of them belong together. It is very common for money to be spread over multiple addresses, which are part of the same wallet. I probably have several hundred addresses in my wallet by now.
  - craigc 9y ago
    Ya, I am aware of that. I don’t think it really weakens his argument that much though. Your bitcoin is only redistributed to new addresses when you send and receive it so even looking at just people who have bought and held it will give you a piece of the puzzle. You can also compare Bitcoin’s current market cap (~$60 billion) to that of gold ($7 trillion) and see that it still has a ways to go (if it is going to become widely adopted).
ritarong 9y ago
One of the reasons Doge was successful was because it was, at its heart a meme, and something fun. Bitcoin is sort of a meme too but it seems to keep recreating itself. New 'Bitcoin Myths' keep popping up of why it should be valuable. Bitcoin will make micro-transactions on the internet feasible. Bitcoin will upend tyrannical governments. Bitcoin will be adopted by countries with hyperinflation. Bitcoin is a hedge against financial collapse. GOt that idea from here: https://publication.widmerdun.com/the-perpetual-bubble-machine-d7e8ec7ca973 https://publication.widmerdun.com/the-perpetual-bubble-machi...
rvern 9y ago
Scott Sumner: http://econlog.econlib.org/archives/2017/09/how_do_we_evalu.html http://econlog.econlib.org/archives/2017/09/how_do_we_evalu.....
madamelic 9y ago
Really tired of mainstream hit pieces against cryptocurrency. I wouldn't call myself a bitcoin fanatic (I hold a very small amount, just for the fact of making myself learn about blockchain and cryptocurrencies), but these articles are not well-researched. They don't understand the difference between Bitcoin and Dogecoin, let alone the difference between ICOs and Bitcoin, not to mention their misunderstanding that blockchains are a technology, not Bitcoin. The article even admits Dogecoin's creator was always skeptical and made the coin as a joke, so him suddenly saying he is skeptical is just about the least shocking thing.
- forgingahead 9y ago
  Indeed, and since this is the NYTimes, it's worth remembering Gell-Mann Amnesia once again: “Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray's case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the "wet streets cause rain" stories. Paper's full of them. In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.”
  - rtpg 9y ago
    For every story you read where you notice wrong facts, tens or hundreds of stories are getting things fine. Almost no one sits down and says "oh, indeed, this article is competent and a correct statement of fact"
    - droidist2 9y ago
      It just so happens that all the stories where we know about the topic are the ones with the wrong facts?
  - 9y ago
saskan 9y ago
Chase CEO is a fraudster. Boycott chase!!
LMYahooTFY 9y ago
"Bubble" has been used with so many contextual implications that it's practically meaningless. In this case it's effectively used to describe the digital divide in a new network protocol, just as the dot-com bubble before it. The casino analogy is accurate only if you ignore what most commentators fail to comprehend: Cryptocurrencies are both a technological innovation and a COMPETING CURRENCY. https://en.wikipedia.org/wiki/Free_banking#History_of_free_banking https://en.wikipedia.org/wiki/Free_banking#History_of_free_b... https://en.wikipedia.org/wiki/Alternative_currency https://en.wikipedia.org/wiki/Alternative_currency The Federal Reserve is very simply a banking cartel, which gives the United States a single stable currency to conduct transactions efficiently and maintain a unified economy. Obviously the trade-off in this system is a permanent banking oligopoly. The casino analogy works better if you include the notion that we all live and work within a dramatically larger casino. To answer the underlying point of the article, most of these cryptocurrencies are as much a scam as CompuServe, Usenet, Netcom, or whatever else is still walled off from the internet stack.
dhuramas 9y ago
Whenever I hear of "bubble" I am reminded of this quote - "“The market can stay irrational a lot longer than you can stay solvent!” So yes it may be a bubble- but the bubble may very last a few months, a few years, or a few decades...who knows?
- dogruck 9y ago
  Agreed. It's too bad there aren't effective mechanisms to go short though, so people who think we're at a peak can back their view with money.
  - fwdslash 9y ago
    What are you talking about? Also every exchange out there will let you short any number of cryptocurrencies.
    - dogruck 9y ago
      I do not personally believe the bitcoin markets will function properly for the shorting mechanism to pay off in interesting scenarios. If I borrow your bitcoins, how will you force me to sell them? If we agree that a third party will warehouse those coins, how can I trust them? And if BTC plunges, who's to say that 3rd party will still operate? All very different from shorting a stock. But if you want to loan me your bitcoins, let's talk! I'm also interested in borrowing any other bearer instrument that you possess? (Now thinking of bearer bonds in the movie Heat)
      - PretzelPirate 9y ago
        People successfully short cryptocurrencies every day and reputable exchanges pay out, even during massive drops. If you really want to short, sign up at GDAX and enable margin trading.
        dogruck 9y ago
        "It has worked ok so far. Therefore there's no problem."
SubiculumCode 9y ago
True or False: Crypto currency's value is determined by its utility to the black market.
mrb 9y ago
The current Bitcoin bubble is much tamer than previous ones. There were multiple periods in 2010-2013 where Bitcoin saw 10x gains in 2-3 months. In fact it's so tame that even some large-cap stocks have matched or outperformed Bitcoin recently eg. AMD who is up 6-7x over last 2 years, like Bitcoin. I don't see the NY Times writing articles about AMD being in a bubble...
aml183 9y ago
I have great respect for Kevin Roose, but this was a disappointing piece. Dogecoin was a meme. It gained popularity and is still worth something. Jackson Palmer might not believe it has value, but clearly, there are people who own Doge that think otherwise. There is definite frothiness in the market. Some token sales are scams, some are overpromising, and some that look promising will probably blow up. Take a look at SEC Fraud statistics for 2016. Crypto scams are a small fraction of these crimes: https://www.sec.gov/news/pressrelease/2016-212.html https://www.sec.gov/news/pressrelease/2016-212.html Reporters need to separate Bitcoin, Ethereum, Litecoin (and some of the other older cryptocurrencies) from token sales and other crypto assets. Bitcoin has existed for 9 years and has real users with real use cases (remittance & cross-border payments) I can keep going, but reporters really need to make an effort to do more research and separate fact from fiction (I guess this can be said for many areas of journalism though).
- chrishacken 9y ago
  What do you do with Dogecoin though? It's market cap is $91MM and yet its creation was a joke.
  - sjg007 9y ago
    Whatever you want. Crypto currencies are the fiat currency end game. Get enough foreign currency cross pollinated via bitcoin (and assuming enough political clout) and the world will suddenly change.
  - vit05 9y ago
    Some people say that moving Value from one exchange to another is cheaper when using DOGE than it would be using Bitcoin.
  - aml183 9y ago
    I guess sell it. People think it's valuable. Cryptocurrencies are priced not valued. You can't just go Dogecoin is valued at X. Dogecoin is priced based on supply and demand which is saying it's worth $91MM.
brownbat 9y ago
Coins could be useful for many ends, some dubious and some benign. Criminal purchases, inflation hedging, remittances, tax avoidance, online transactions, payments between friends, store of value / speculation. Any one of these could be affecting its value. I often wonder though if Cryptocurrency's killer app is just capital flight from China, with every other use case just so much noise. While that toy theory may seem reductive, it's miles more explanatory than the models offered by either the 'bubble' or 'will soon replace global financial system' camps.
perpetualcrayon 9y ago
The real "value" in cryptocurrency IMO is public-key encryption, which everyone on the internet already uses every day for free. The blockchain idea is novel, but I think way less valuable than the hype has led us to believe.
noddy1 9y ago
I was a longtime ethereum sceptic, however I was guilty of being a cynical old curmudgeon; the type that poo-poo's anything and everything novel on the grounds that I'll be right 95% of time, ignoring the fact that I'll poo-poo everything that will ever change the world. Bitcoin made currency decentralised and permissionless. Ethereum has made capital raising and equity holding decentralised and permissionless. Sure, lots of people talk about SEC compliance, but in reality anyone can raise equity for anything now. You can issue a token to fund for a drugmarket if you wish, and pay dividends, and noone can stop you really. The market cap of ethereum is 22 billion.. is that to high or too low for the promise of permissionless securities?
- hn_throwaway_99 9y ago
  > Bitcoin made currency decentralised and permissionless. This is a common misconception, that cryptocurrencies can somehow exist outside government control, and it makes me doubt some of the long term value of Bitcoin. A government can basically make anything it wants illegal, and once cryptocurrencies become large enough, there will be tons of additional regulations and control.
  - josu 9y ago
    Drugs are illegal almost everywhere in the world and they are one of the largest consumer markets. Something similar happens to US dollars in Venezuela. So I don't know if making bitcoin illegal will really hurt its value in the long run.
    - csallen 9y ago
      Your conclusion doesn't follow your observation. It's one thing to say that the government can't stop something, and quite another to say the government can't hurt it. Who knows how much bigger the drug trade would be without anti-drug laws.
      - JetSpiegel 9y ago
        > Who knows how much bigger the drug trade would be without anti-drug laws. Look at the legitimate drug companies for comparison.
eggs_and_avo 9y ago
I hear value conflated with price in this discussion and most discussions related to economics. Value is a completely subjective thing and does not dictate price (or necessarily influence it). Bitcoin's price says nothing about its value and vice-versa.
seibelj 9y ago
Yes, please spread more FUD about cryptocurriencies. Work for 10 years until you can make the connections to beg for enough money to found your startup. Global capital raising on the blockchain is bad. Only the rich should get richer. Hate on radical ideas getting funded. You are smart. They are dumb. Success can be yours if only you play the game...
- sctb 9y ago
  Could you please post civilly and substantively or not at all? https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
InclinedPlane 9y ago
Is there a cryptocurrency bubble? Of. Fucking. Course. Only those who are extremely naive or cryptocurrency zealots could possibly believe otherwise. Now, here's the core problem preventing people from understanding the reality of the bubble: in almost all bubbles there is still a kernel of honest, real value inside the bubble. That's the impetus for the bubble, but it doesn't prevent the bubble from being a bubble. Housing values during the 2000s were based on a strong economy and increasing demand in some fast growing cities. In some places housing values merely plateaued during the financial crisis, in some they never stopped going up. But, of course, across America there was a vast drop in housing values, a huge increase in foreclosures, and a recession that spread across the entire planet. It was a bubble, the bubble popped, bad things happened. A decade prior to that was the dot-com bubble. Many new internet businesses were growing like crazy, investment and stock valuations had gone off the deep end, leaving rationality behind. Businesses with no prospects for ever turning a profit were having money rained down on them from VCs and IPOs. Then eventually the bills started coming due, people became more skeptical of dubious business plans, venture capital dried up, stocks started getting dumped. Money stopped flowing so freely from investors into ridiculous startups and from there into the rest of the economy. The entire world economy was pushed into severe recession. But, of course, that doesn't mean there was nothing of value inside the dot-com bubble. Amazon cut its teeth in that era, and grew from a fledgling book store into a fulfillment powerhouse expanding into a variety of goods and services. Easily tens if not hundreds of billions of dollars in real honest to goodness value was built by internet companies during the dot-com boom, and many companies weathered the bust just fine, some even getting stronger. Google was born during the recession, in fact, in an era when basically the only way you made it with a dot-com company was to already be turning a profit or to have a very good and well executed idea. Of course there is real, substantive valuable stuff happening with cryptocurrency. But is that the majority of what's happening? Or is most of the activity, most of the valuations and "market caps" driven by speculative investment? It's pretty clear that it is the latter and that cryptocurrencies are in a huge bubble. And just as with all bubbles, when it pops it's going to be painful. Maybe something of value will survive? But only then will we know for sure what the true, hard-nosed practical value of cryptocurrencies is.
- chrisco255 9y ago
miralabs 9y ago
Here is where's the bubble's at http://www.marketwatch.com/story/heres-how-the-us-got-to-20-trillion-in-debt-2017-03-30 http://www.marketwatch.com/story/heres-how-the-us-got-to-20-...
zby 9y ago
What is a bubble? """ An economic bubble or asset bubble (...) is trade in an asset at a price or price range that strongly exceeds the asset's intrinsic value. """ from wikipedia https://en.wikipedia.org/wiki/Economic_bubble https://en.wikipedia.org/wiki/Economic_bubble What is intrinsic value of Bitcoin? There is none. But it is the same with dollars actually, yes if you live in the US then you can pay taxes with it, but you mostly pay taxes only after you earn dollars. And then the same with gold - the intrinsic value of gold as a technical material or for jewellery is probably a small fraction of its current market value. I tend to think that being in a bubble is a defining feature of money - people want it not for its value - but because they believe they'll later exchange it for something valuable. Money is a perpetual bubble, a bubble that does not pop. I am not sure if there is a place for thousands of inflated bubbles. There is too much friction in such a system - you never know if the seller will accept your coins. Not all cryptotokens are money - some are just securities with an intrinsic value - for example https://zrcoin.io/ https://zrcoin.io/ which is backed by a promise to buy it back for the market price of 1kg of ZrO2.
- dtech 9y ago
  > Money is a perpetual bubble, a bubble that does not pop The bubble can very much pop if people stop having faith in the currency and stop accepting it (or demanding larger amounts to compensate), making the currency lose its value. This is a very large risk for most current cryptocurrencies, bitcoin included. I would also argue that the Dollar has a very strong link to useful physical goods: it's the only currency OPEC oil is sold in.
dagaci 9y ago
Some have posted and argued that these currencies do not have "real" value. I would argue that CrytoCurrencies do actually have inherent value. A few reasons: 1# CrytoCurrencies are free from the existing monopolies of the banking sector, money exchangers and politics. You can argue that those hegemonies should have control, but it is undeniable that there is tremendous value to many in that control weakening and being eliminated. So you can see a source of inherent value. #2 CrytoCurrencies are incredibly secure, can be extremely private and become ever more secure overtime because of the effect of mining, every watt burned acts to secure the network in an irreversible way #3 Mining is the first application, mining secures the network and participants are rewarded. More generalized applications with things like solidity only increases the value of the network. CrytoCurrencies are very much in an early phase, and not cleanly understood. There's a long way to go.
- zby 9y ago
  These are features that are useful only after you accept that the coins have some value. If they don't store any value - then there is no use in security, privacy etc. But the point is that it is the same with all money - people don't want it for itself - but rather because they expect to exchange it for something that they'll want in the future.
  - dagaci 9y ago
    If your paper money does not store value directly. Which means you can't eat it or directly build anything useful with it. And your checking account is simply a digital representation of that paper then i would argue that a purely digital currency is simply an evolution of that and not actually massively different from paper. The difference being the removal of the requirement of centralized control.
- Drakim 9y ago
  > Some have posted and argued that these currencies do not have "real" value. I was always puzzled about this. Real people are buying real stuff with crypto currency. It sounds like a Monty Python skit: "Your money isn't real! You didn't buy that! You didn't sell that! This transaction never happened, stop it!"
thinbeige 9y ago
Two simple patterns (and there is nothing wrong with either one): - People who say crypto is a bubble missed to invest - People who hype crypto are invested However, the key is still to have a balanced portfolio and not just with crypto.
jondubois 9y ago
He is probably just upset that Dogecoin has been going down for a while now. The fact that Dogecoin is going down could be seen as proof that cryptocurrencies are becoming more serious.
jokoon 9y ago
It's true that libertarians are really fans of crypto-currencies. To be honest, as long as you trust a government, banks can be trusted with your money, especially since the government regulate banks since the government doesn't regulate crypto-currencies (yet). Libertarian when you profit from crypto-currencies, until somebody steal you bitcoin wallet or until bitcoin crashes again. Then you're pretty happy to still use an insured bank account. I would not be surprised to see bitcoin being used to launder money. All you would have to do is to sell a pile of dirty cash online against bitcoins, and send those dollar bill by the mail. I'm sure somebody already thought about that and is doing it already. To be honest I would not understand why bitcoin is so high right now, a logical explanation would be drug money.
Geee 9y ago
This thread is history book material, once again. Coming generations will roll on the floor laughing that we actually used pictures of dead people for money.
eighthnate 9y ago
Given the low interest rate environment the past 10 years by major central banks around the world, couldn't you argue that everything is a bubble at this point? If the world is awash in cheap money, then it's almost tautological that most "assets" are in a bubble.
- droidist2 9y ago
  It seems hip to say things are in a bubble so I'm going to say yes, everything is a bubble, well except the things that are "dead" because that's even cooler to say. So, hmm, maybe Bitcoin is dead. Time to write a Medium article called "Bitcoin is Dead, Long Live Blockchain!"
MustrumRidcully 9y ago
The problem of bitcoin is that there is a finite amount of it that will be available. As use of bitcoin is scheduled to grow, the pace of the production of bitcoins needed to support the market does not keep up. This results in a steady increase of the value of bitcoin, which is good for adoption (more people will buy it to speculate and sellers will accept it), but endangers it as a mean of paiement as buyers are always better of paying in $, which devaluates over time, instead of Btc, which will increase over time. The reason bitcoin will not be used for daily exchanges is the same as we do not use gold anymore. But since Btc has no intrisic value, I hardly see it as a reserve money.
- koonsolo 9y ago
  > The reason bitcoin will not be used for daily exchanges is the same as we do not use gold anymore. Everybody has a cellphone. You pay and receive "money" with your cellphone. Wallets will be redundant in the future, everything that is in your wallet will be stored in your phone. And you know which currency can be paid with your phone? Exactly!
  - MustrumRidcully 9y ago
    Well you could do the same with paper-gold. But since its value increases over time you have no incentive to prefer it over $, which have a decreasing value. Stop focusing on tech and try to think about underlying market forces.
    - koonsolo 9y ago
      I don't know about you, but I prefer to store the value that I work for, in something that doesn't burn 2% off each year. And if I have to buy something, I will just trade in my value stored with the thing I want to buy. I don't see any need to go to an intermediate thing that keeps decreasing in value. Paper money was preferred over gold because it was inconvenient to keep working with gold, not because the paper loses its value.
      - 9y ago
eddieone 9y ago
There is a bubble some where. Looking at the total supply of bitcoin and the current maximum of 21 million, bitcoin's inflation is slowing while fiat inflation is growing exponentially. Expect more big waves and mass capital flight as currency transitions into the crypto economies.
tpallarino 9y ago
Ironically, Doge had a market cap of over 400 million a few months ago. It is now below 100 million. Does that mean the bubble already happened according to this article?

157 points by nemild 9y ago

cvsh 9y ago

This is possible enough that anyone putting a significant amount of money in crypto is playing with seriously dangerous fire. On the other hand, the fall of one cryptocurrency to scammers doesn't mean all of them are destined to pan out the same way. This article doesn't really offer any evidence for that extrapolation, either.

cairo_x 9y ago

I think the thing to remember with ICOs and new altcoins is that HODL, block your ears and walk away does not apply. People are making a living simply by flipping, insider trading, fake insider rumours, companies stringing out claims and updates, releasing of Alpha's that are paper models (not really even prototypes), teams with a lack of devs with relevant crypto background, ideas that have no use of a blockchain at all, tokens that offer no utility, or whose utility is yet to be determined, etc. Tokens that have utility, but whose utility is relatively small, yet whose investor base and node base is YUGE. It's turning into a bloodbath of fuckery.

michaelchisari 9y ago
This is what an unregulated market looks like, and the more chaotic it gets, the more I think people should understand why we regulate markets.

jdormit 9y ago

> A group of Bay Area programmers this year used an I.C.O. to raise $35 million for their project, an anonymous web browser called Brave As in Brave, the new browser from Brendan Eich (founder of Mozilla, famously invented JavaScript in 10 days)? Hardly a scam... Either the reporter didn't do their research or twisted the facts to fit their story.

madamelic 9y ago
>Either the reporter didn't do their research or twisted the facts to fit their story. It is quite obvious it is both. - Dogecoin creator was always a cryptocurrency skeptic. The article even admits it but papers over it. - Blockchain =/= Bitcoin. The article insinuates that any blockchain-related startups are built on top of Bitcoin. - ICOs =/= Bitcoin. - "early adopters often used it to buy drugs, weapons, or other illicit goods on the dark web" - "including Jamie Dimon, the chief executive of JPMorgan Chase, who last week called Bitcoin a “fraud,”" This line makes it clear what NY Times' outlook is, they quote an opponent of cryptocurrencies like he is an expert.
- totalZero 9y ago
  He may not be an expert on cryptocurrencies, but he's certainly an expert on markets in some ways.
- deleted 9y ago
  [deleted]
- srj 9y ago
  The NY Times recently restructured their reporting operations in a way that reduced the amount of fact-checking done[1]. FWIW I'm a daily reader and definitely feel the quality has suffered. [1] https://www.poynter.org/news/new-york-times-copy-desk-top-editors-you-have-turned-your-backs-us https://www.poynter.org/news/new-york-times-copy-desk-top-ed...
deleted 9y ago
[deleted]
gnicholas 9y ago
Exactly. The narrative was all about strangers on the internet, so it would have been inconvenient to mention that the project is headed by the former CTO of Mozilla. Or to mention that the Brave browser was built long before the ICO happened. Both of these facts mitigate the risk that the creators are scammers with no intention of using the funds for the designated project. But it doesn't fit the narrative!

deleted 9y ago

[deleted]

craigc 9y ago

I think there is a difference between a cryptocurrency bubble and an ICO bubble, and this article fails to distinguish between the two. You can see Tom Lee, a financial strategist, talk about Bitcoin here: https://www.cnbc.com/2017/09/15/bitcoin-could-surge-another-600-percent-to-25000-dollars-in-5-years-says-strategist-tom-lee.html https://www.cnbc.com/2017/09/15/bitcoin-could-surge-another-... He points out that there are only 300,000 Bitcoin wallets that hold $5,000 or more. In the grand scheme of things that is very small compared to the overall global economy. He also refers to Jamie Dimon’s comments that Bitcoin is a “fraud” (It is worth nothing that JP Morgan bought up millions of dollars worth of Bitcoin after the price crashed following that statement – on behalf of their clients). ICOs, on the other hand, are absolutely in a bubble. Companies are raising hundreds of millions of dollars without even having a product. It doesn’t take a rocket scientist to understand how absurd that is. In my opinion, regulations in this area would actually do more of a service than disservice to crypto, and I welcome them with open arms. For one, it will legitimize token sales as a fundraising method, and for two it will remove most of the scams and illegitimate projects that seem to be popping up daily. I think Blockchain technology is here to stay. Even if 99 out of 100 ICO projects fail (they will), that still leaves a few that will survive and may become quite valuable. While the recent explosion in crypto prices seems unsustainable, if it really does become the money of the future then the prices now are going to look like pennies in five or ten years time.

tokenizerrr 9y ago
It's impossible to tell how many wallets there are with a certain amount in them. A wallet consists of multiple addresses and you can't tell which of them belong together. It is very common for money to be spread over multiple addresses, which are part of the same wallet. I probably have several hundred addresses in my wallet by now.
- craigc 9y ago
  Ya, I am aware of that. I don’t think it really weakens his argument that much though. Your bitcoin is only redistributed to new addresses when you send and receive it so even looking at just people who have bought and held it will give you a piece of the puzzle. You can also compare Bitcoin’s current market cap (~$60 billion) to that of gold ($7 trillion) and see that it still has a ways to go (if it is going to become widely adopted).

ritarong 9y ago

One of the reasons Doge was successful was because it was, at its heart a meme, and something fun. Bitcoin is sort of a meme too but it seems to keep recreating itself. New 'Bitcoin Myths' keep popping up of why it should be valuable. Bitcoin will make micro-transactions on the internet feasible. Bitcoin will upend tyrannical governments. Bitcoin will be adopted by countries with hyperinflation. Bitcoin is a hedge against financial collapse. GOt that idea from here: https://publication.widmerdun.com/the-perpetual-bubble-machine-d7e8ec7ca973 https://publication.widmerdun.com/the-perpetual-bubble-machi...

rvern 9y ago

Scott Sumner: http://econlog.econlib.org/archives/2017/09/how_do_we_evalu.html http://econlog.econlib.org/archives/2017/09/how_do_we_evalu.....

madamelic 9y ago

Really tired of mainstream hit pieces against cryptocurrency. I wouldn't call myself a bitcoin fanatic (I hold a very small amount, just for the fact of making myself learn about blockchain and cryptocurrencies), but these articles are not well-researched. They don't understand the difference between Bitcoin and Dogecoin, let alone the difference between ICOs and Bitcoin, not to mention their misunderstanding that blockchains are a technology, not Bitcoin. The article even admits Dogecoin's creator was always skeptical and made the coin as a joke, so him suddenly saying he is skeptical is just about the least shocking thing.

forgingahead 9y ago
Indeed, and since this is the NYTimes, it's worth remembering Gell-Mann Amnesia once again: “Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray's case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the "wet streets cause rain" stories. Paper's full of them. In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.”
- rtpg 9y ago
  For every story you read where you notice wrong facts, tens or hundreds of stories are getting things fine. Almost no one sits down and says "oh, indeed, this article is competent and a correct statement of fact"
  - droidist2 9y ago
    It just so happens that all the stories where we know about the topic are the ones with the wrong facts?
- 9y ago

saskan 9y ago

Chase CEO is a fraudster. Boycott chase!!

LMYahooTFY 9y ago

"Bubble" has been used with so many contextual implications that it's practically meaningless. In this case it's effectively used to describe the digital divide in a new network protocol, just as the dot-com bubble before it. The casino analogy is accurate only if you ignore what most commentators fail to comprehend: Cryptocurrencies are both a technological innovation and a COMPETING CURRENCY. https://en.wikipedia.org/wiki/Free_banking#History_of_free_banking https://en.wikipedia.org/wiki/Free_banking#History_of_free_b... https://en.wikipedia.org/wiki/Alternative_currency https://en.wikipedia.org/wiki/Alternative_currency The Federal Reserve is very simply a banking cartel, which gives the United States a single stable currency to conduct transactions efficiently and maintain a unified economy. Obviously the trade-off in this system is a permanent banking oligopoly. The casino analogy works better if you include the notion that we all live and work within a dramatically larger casino. To answer the underlying point of the article, most of these cryptocurrencies are as much a scam as CompuServe, Usenet, Netcom, or whatever else is still walled off from the internet stack.

dhuramas 9y ago

Whenever I hear of "bubble" I am reminded of this quote - "“The market can stay irrational a lot longer than you can stay solvent!” So yes it may be a bubble- but the bubble may very last a few months, a few years, or a few decades...who knows?

dogruck 9y ago
Agreed. It's too bad there aren't effective mechanisms to go short though, so people who think we're at a peak can back their view with money.
- fwdslash 9y ago
  What are you talking about? Also every exchange out there will let you short any number of cryptocurrencies.
  - dogruck 9y ago
    I do not personally believe the bitcoin markets will function properly for the shorting mechanism to pay off in interesting scenarios. If I borrow your bitcoins, how will you force me to sell them? If we agree that a third party will warehouse those coins, how can I trust them? And if BTC plunges, who's to say that 3rd party will still operate? All very different from shorting a stock. But if you want to loan me your bitcoins, let's talk! I'm also interested in borrowing any other bearer instrument that you possess? (Now thinking of bearer bonds in the movie Heat)
    - PretzelPirate 9y ago
      People successfully short cryptocurrencies every day and reputable exchanges pay out, even during massive drops. If you really want to short, sign up at GDAX and enable margin trading.
      - dogruck 9y ago
        "It has worked ok so far. Therefore there's no problem."

SubiculumCode 9y ago

True or False: Crypto currency's value is determined by its utility to the black market.

mrb 9y ago

The current Bitcoin bubble is much tamer than previous ones. There were multiple periods in 2010-2013 where Bitcoin saw 10x gains in 2-3 months. In fact it's so tame that even some large-cap stocks have matched or outperformed Bitcoin recently eg. AMD who is up 6-7x over last 2 years, like Bitcoin. I don't see the NY Times writing articles about AMD being in a bubble...

aml183 9y ago

I have great respect for Kevin Roose, but this was a disappointing piece. Dogecoin was a meme. It gained popularity and is still worth something. Jackson Palmer might not believe it has value, but clearly, there are people who own Doge that think otherwise. There is definite frothiness in the market. Some token sales are scams, some are overpromising, and some that look promising will probably blow up. Take a look at SEC Fraud statistics for 2016. Crypto scams are a small fraction of these crimes: https://www.sec.gov/news/pressrelease/2016-212.html https://www.sec.gov/news/pressrelease/2016-212.html Reporters need to separate Bitcoin, Ethereum, Litecoin (and some of the other older cryptocurrencies) from token sales and other crypto assets. Bitcoin has existed for 9 years and has real users with real use cases (remittance & cross-border payments) I can keep going, but reporters really need to make an effort to do more research and separate fact from fiction (I guess this can be said for many areas of journalism though).

chrishacken 9y ago
What do you do with Dogecoin though? It's market cap is $91MM and yet its creation was a joke.
- sjg007 9y ago
  Whatever you want. Crypto currencies are the fiat currency end game. Get enough foreign currency cross pollinated via bitcoin (and assuming enough political clout) and the world will suddenly change.
- vit05 9y ago
  Some people say that moving Value from one exchange to another is cheaper when using DOGE than it would be using Bitcoin.
- aml183 9y ago
  I guess sell it. People think it's valuable. Cryptocurrencies are priced not valued. You can't just go Dogecoin is valued at X. Dogecoin is priced based on supply and demand which is saying it's worth $91MM.

brownbat 9y ago

Coins could be useful for many ends, some dubious and some benign. Criminal purchases, inflation hedging, remittances, tax avoidance, online transactions, payments between friends, store of value / speculation. Any one of these could be affecting its value. I often wonder though if Cryptocurrency's killer app is just capital flight from China, with every other use case just so much noise. While that toy theory may seem reductive, it's miles more explanatory than the models offered by either the 'bubble' or 'will soon replace global financial system' camps.

perpetualcrayon 9y ago

The real "value" in cryptocurrency IMO is public-key encryption, which everyone on the internet already uses every day for free. The blockchain idea is novel, but I think way less valuable than the hype has led us to believe.

noddy1 9y ago

I was a longtime ethereum sceptic, however I was guilty of being a cynical old curmudgeon; the type that poo-poo's anything and everything novel on the grounds that I'll be right 95% of time, ignoring the fact that I'll poo-poo everything that will ever change the world. Bitcoin made currency decentralised and permissionless. Ethereum has made capital raising and equity holding decentralised and permissionless. Sure, lots of people talk about SEC compliance, but in reality anyone can raise equity for anything now. You can issue a token to fund for a drugmarket if you wish, and pay dividends, and noone can stop you really. The market cap of ethereum is 22 billion.. is that to high or too low for the promise of permissionless securities?

hn_throwaway_99 9y ago
> Bitcoin made currency decentralised and permissionless. This is a common misconception, that cryptocurrencies can somehow exist outside government control, and it makes me doubt some of the long term value of Bitcoin. A government can basically make anything it wants illegal, and once cryptocurrencies become large enough, there will be tons of additional regulations and control.
- josu 9y ago
  Drugs are illegal almost everywhere in the world and they are one of the largest consumer markets. Something similar happens to US dollars in Venezuela. So I don't know if making bitcoin illegal will really hurt its value in the long run.
  - csallen 9y ago
    Your conclusion doesn't follow your observation. It's one thing to say that the government can't stop something, and quite another to say the government can't hurt it. Who knows how much bigger the drug trade would be without anti-drug laws.
    - JetSpiegel 9y ago
      > Who knows how much bigger the drug trade would be without anti-drug laws. Look at the legitimate drug companies for comparison.

eggs_and_avo 9y ago

I hear value conflated with price in this discussion and most discussions related to economics. Value is a completely subjective thing and does not dictate price (or necessarily influence it). Bitcoin's price says nothing about its value and vice-versa.

seibelj 9y ago

Yes, please spread more FUD about cryptocurriencies. Work for 10 years until you can make the connections to beg for enough money to found your startup. Global capital raising on the blockchain is bad. Only the rich should get richer. Hate on radical ideas getting funded. You are smart. They are dumb. Success can be yours if only you play the game...

sctb 9y ago
Could you please post civilly and substantively or not at all? https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

InclinedPlane 9y ago

Is there a cryptocurrency bubble? Of. Fucking. Course. Only those who are extremely naive or cryptocurrency zealots could possibly believe otherwise. Now, here's the core problem preventing people from understanding the reality of the bubble: in almost all bubbles there is still a kernel of honest, real value inside the bubble. That's the impetus for the bubble, but it doesn't prevent the bubble from being a bubble. Housing values during the 2000s were based on a strong economy and increasing demand in some fast growing cities. In some places housing values merely plateaued during the financial crisis, in some they never stopped going up. But, of course, across America there was a vast drop in housing values, a huge increase in foreclosures, and a recession that spread across the entire planet. It was a bubble, the bubble popped, bad things happened. A decade prior to that was the dot-com bubble. Many new internet businesses were growing like crazy, investment and stock valuations had gone off the deep end, leaving rationality behind. Businesses with no prospects for ever turning a profit were having money rained down on them from VCs and IPOs. Then eventually the bills started coming due, people became more skeptical of dubious business plans, venture capital dried up, stocks started getting dumped. Money stopped flowing so freely from investors into ridiculous startups and from there into the rest of the economy. The entire world economy was pushed into severe recession. But, of course, that doesn't mean there was nothing of value inside the dot-com bubble. Amazon cut its teeth in that era, and grew from a fledgling book store into a fulfillment powerhouse expanding into a variety of goods and services. Easily tens if not hundreds of billions of dollars in real honest to goodness value was built by internet companies during the dot-com boom, and many companies weathered the bust just fine, some even getting stronger. Google was born during the recession, in fact, in an era when basically the only way you made it with a dot-com company was to already be turning a profit or to have a very good and well executed idea. Of course there is real, substantive valuable stuff happening with cryptocurrency. But is that the majority of what's happening? Or is most of the activity, most of the valuations and "market caps" driven by speculative investment? It's pretty clear that it is the latter and that cryptocurrencies are in a huge bubble. And just as with all bubbles, when it pops it's going to be painful. Maybe something of value will survive? But only then will we know for sure what the true, hard-nosed practical value of cryptocurrencies is.

chrisco255 9y ago

miralabs 9y ago

Here is where's the bubble's at http://www.marketwatch.com/story/heres-how-the-us-got-to-20-trillion-in-debt-2017-03-30 http://www.marketwatch.com/story/heres-how-the-us-got-to-20-...

zby 9y ago

What is a bubble? """ An economic bubble or asset bubble (...) is trade in an asset at a price or price range that strongly exceeds the asset's intrinsic value. """ from wikipedia https://en.wikipedia.org/wiki/Economic_bubble https://en.wikipedia.org/wiki/Economic_bubble What is intrinsic value of Bitcoin? There is none. But it is the same with dollars actually, yes if you live in the US then you can pay taxes with it, but you mostly pay taxes only after you earn dollars. And then the same with gold - the intrinsic value of gold as a technical material or for jewellery is probably a small fraction of its current market value. I tend to think that being in a bubble is a defining feature of money - people want it not for its value - but because they believe they'll later exchange it for something valuable. Money is a perpetual bubble, a bubble that does not pop. I am not sure if there is a place for thousands of inflated bubbles. There is too much friction in such a system - you never know if the seller will accept your coins. Not all cryptotokens are money - some are just securities with an intrinsic value - for example https://zrcoin.io/ https://zrcoin.io/ which is backed by a promise to buy it back for the market price of 1kg of ZrO2.

dtech 9y ago
> Money is a perpetual bubble, a bubble that does not pop The bubble can very much pop if people stop having faith in the currency and stop accepting it (or demanding larger amounts to compensate), making the currency lose its value. This is a very large risk for most current cryptocurrencies, bitcoin included. I would also argue that the Dollar has a very strong link to useful physical goods: it's the only currency OPEC oil is sold in.

dagaci 9y ago

Some have posted and argued that these currencies do not have "real" value. I would argue that CrytoCurrencies do actually have inherent value. A few reasons: 1# CrytoCurrencies are free from the existing monopolies of the banking sector, money exchangers and politics. You can argue that those hegemonies should have control, but it is undeniable that there is tremendous value to many in that control weakening and being eliminated. So you can see a source of inherent value. #2 CrytoCurrencies are incredibly secure, can be extremely private and become ever more secure overtime because of the effect of mining, every watt burned acts to secure the network in an irreversible way #3 Mining is the first application, mining secures the network and participants are rewarded. More generalized applications with things like solidity only increases the value of the network. CrytoCurrencies are very much in an early phase, and not cleanly understood. There's a long way to go.

zby 9y ago
These are features that are useful only after you accept that the coins have some value. If they don't store any value - then there is no use in security, privacy etc. But the point is that it is the same with all money - people don't want it for itself - but rather because they expect to exchange it for something that they'll want in the future.
- dagaci 9y ago
  If your paper money does not store value directly. Which means you can't eat it or directly build anything useful with it. And your checking account is simply a digital representation of that paper then i would argue that a purely digital currency is simply an evolution of that and not actually massively different from paper. The difference being the removal of the requirement of centralized control.
Drakim 9y ago
> Some have posted and argued that these currencies do not have "real" value. I was always puzzled about this. Real people are buying real stuff with crypto currency. It sounds like a Monty Python skit: "Your money isn't real! You didn't buy that! You didn't sell that! This transaction never happened, stop it!"

thinbeige 9y ago

Two simple patterns (and there is nothing wrong with either one): - People who say crypto is a bubble missed to invest - People who hype crypto are invested However, the key is still to have a balanced portfolio and not just with crypto.

jondubois 9y ago

He is probably just upset that Dogecoin has been going down for a while now. The fact that Dogecoin is going down could be seen as proof that cryptocurrencies are becoming more serious.

jokoon 9y ago

It's true that libertarians are really fans of crypto-currencies. To be honest, as long as you trust a government, banks can be trusted with your money, especially since the government regulate banks since the government doesn't regulate crypto-currencies (yet). Libertarian when you profit from crypto-currencies, until somebody steal you bitcoin wallet or until bitcoin crashes again. Then you're pretty happy to still use an insured bank account. I would not be surprised to see bitcoin being used to launder money. All you would have to do is to sell a pile of dirty cash online against bitcoins, and send those dollar bill by the mail. I'm sure somebody already thought about that and is doing it already. To be honest I would not understand why bitcoin is so high right now, a logical explanation would be drug money.

Geee 9y ago

This thread is history book material, once again. Coming generations will roll on the floor laughing that we actually used pictures of dead people for money.

eighthnate 9y ago

Given the low interest rate environment the past 10 years by major central banks around the world, couldn't you argue that everything is a bubble at this point? If the world is awash in cheap money, then it's almost tautological that most "assets" are in a bubble.

droidist2 9y ago
It seems hip to say things are in a bubble so I'm going to say yes, everything is a bubble, well except the things that are "dead" because that's even cooler to say. So, hmm, maybe Bitcoin is dead. Time to write a Medium article called "Bitcoin is Dead, Long Live Blockchain!"

MustrumRidcully 9y ago

The problem of bitcoin is that there is a finite amount of it that will be available. As use of bitcoin is scheduled to grow, the pace of the production of bitcoins needed to support the market does not keep up. This results in a steady increase of the value of bitcoin, which is good for adoption (more people will buy it to speculate and sellers will accept it), but endangers it as a mean of paiement as buyers are always better of paying in $, which devaluates over time, instead of Btc, which will increase over time. The reason bitcoin will not be used for daily exchanges is the same as we do not use gold anymore. But since Btc has no intrisic value, I hardly see it as a reserve money.

koonsolo 9y ago
> The reason bitcoin will not be used for daily exchanges is the same as we do not use gold anymore. Everybody has a cellphone. You pay and receive "money" with your cellphone. Wallets will be redundant in the future, everything that is in your wallet will be stored in your phone. And you know which currency can be paid with your phone? Exactly!
- MustrumRidcully 9y ago
  Well you could do the same with paper-gold. But since its value increases over time you have no incentive to prefer it over $, which have a decreasing value. Stop focusing on tech and try to think about underlying market forces.
  - koonsolo 9y ago
    I don't know about you, but I prefer to store the value that I work for, in something that doesn't burn 2% off each year. And if I have to buy something, I will just trade in my value stored with the thing I want to buy. I don't see any need to go to an intermediate thing that keeps decreasing in value. Paper money was preferred over gold because it was inconvenient to keep working with gold, not because the paper loses its value.
    - 9y ago

eddieone 9y ago

There is a bubble some where. Looking at the total supply of bitcoin and the current maximum of 21 million, bitcoin's inflation is slowing while fiat inflation is growing exponentially. Expect more big waves and mass capital flight as currency transitions into the crypto economies.

tpallarino 9y ago

Ironically, Doge had a market cap of over 400 million a few months ago. It is now below 100 million. Does that mean the bubble already happened according to this article?