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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

by 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).
newmanships 9y ago
Small thing, but wasn't it JP Morgan's clients buying bitcoin through their brokerage service, not actually JP Morgan? https://twitter.com/ToneVays/status/909032026455642113 https://twitter.com/ToneVays/status/909032026455642113
- craigc 9y ago
  Ah, good point. Well there is still some irony in that!
  - yxhuvud 9y ago
    Not really, but it may make them hypocrites, as they act as enablers for something they see as fraud.
subroutine 9y ago
Noob question... What is the "product" that underlies the value of cryptocurrency that is so much more valuable than what underlies an ICO? What is the value of a machine churning hashes? It seems like the value is underlied by securing a transaction ledger + an arbitrarily difficult math problem. So is the value the security of the ledger?
- craigc 9y ago
  That is a very good question. I didn’t do a good job making an argument for why I think the value of a currency like Bitcoin could be so much higher than an altcoin that did an ICO. In my opinion, Bitcoin has the first mover advantage in this space. It was the first real use of the blockchain, is still the gateway to pretty much every other crypto currency, there is a maximum supply of coins, and is one of the only coins that can be purchased/exchanged for US dollars (or other fiat currency). In order to purchase an altcoin such as BAT (the token behind the brave browser the article refers to), you have to first purchase Bitcoin. If you want to sell your BAT tokens, you will receive Bitcoin. Also Bitcoins do cost real money to actually mine (electricity costs). Other tokens such as Ethereum are gaining popularity as well and have some advantages over Bitcoin, but I don’t see Bitcoin being displaced anytime soon. In the case of Ethereum, the value is that the token is used as “gas” on the Ethereum network. Any action you want to take or data you want to store will require that you send a certain amount of Ether in order to perform that task. Since Ethereum is a platform that many of these ICO companies are building apps on top of, it stands to reason that the value of the platform should be greater than the value of the company building on top of it.
  - subroutine 9y ago
    That's interesting. I have so many follow-up questions but I gotta head out to dinner. Time for just one... if you're saying ICO company coins are worth sand - and the value of Etherium is as a platform for ICO companies. That seems like the definition of a bubble. No?
    - craigc 9y ago
andkon 9y ago
> 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. Yeah, that's literally exactly why it is a bubble. It's a big if, but that's how you rationalize entering the market.
- craigc 9y ago
  I suppose that is true, but if the price does crash back down to $1,000 and then rises up to $6,000 then what does that mean? The bubble burst and the price crashed, but now we are in another bubble? This article is an interesting read and seems to suggest something like that: https://medium.com/@mcasey0827/speculative-bitcoin-adoption-price-theory-2eed48ecf7da https://medium.com/@mcasey0827/speculative-bitcoin-adoption-...
adamnemecek 9y ago
> It is worth nothing that JP Morgan bought up millions of dollars worth of Bitcoin after the price crashed following that statement The crash was mostly independent of Dimon's statements.
- craigc 9y ago
  Yeah I should have made that clear. The price had already started a correction, and the crashing was more associated with uncertainty related to Bitcoin exchanges in China shutting down, but his statement certainly didn’t help. It was picked up by pretty much every news outlet.
  - stretchwithme 9y ago
    I guess that's true if learning that Jamie Dimon thought it was a bubble moved a lot of people to sell their bitcoin.
mirimir 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. Not only that, there's no such thing as a "cryptocurrency bubble". There are bubbles for particular cryptocurrencies. Just as there are bubbles for particular investments. But generalizing isn't meaningful. And furthermore, a focus on cryptocurrency trading is the fundamental problem. People trade fiat currencies, but they don't (as far as I know) trade any fiat currencies that are primarily used for investment, rather than in commerce. Me, I just want an electronic currency that can be used anonymously. To get paid, and buy stuff. Because actually, I can't convert with fiat currencies without risking anonymity loss. So it goes.
yxhuvud 9y ago
Of course blockchain technology is here to stay, regardless of what happens, the same way tulips stayed with us after the mania had ended.

by craigc 9y ago

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).

newmanships 9y ago

Small thing, but wasn't it JP Morgan's clients buying bitcoin through their brokerage service, not actually JP Morgan? https://twitter.com/ToneVays/status/909032026455642113 https://twitter.com/ToneVays/status/909032026455642113

craigc 9y ago
Ah, good point. Well there is still some irony in that!
- yxhuvud 9y ago
  Not really, but it may make them hypocrites, as they act as enablers for something they see as fraud.

subroutine 9y ago

Noob question... What is the "product" that underlies the value of cryptocurrency that is so much more valuable than what underlies an ICO? What is the value of a machine churning hashes? It seems like the value is underlied by securing a transaction ledger + an arbitrarily difficult math problem. So is the value the security of the ledger?

craigc 9y ago
That is a very good question. I didn’t do a good job making an argument for why I think the value of a currency like Bitcoin could be so much higher than an altcoin that did an ICO. In my opinion, Bitcoin has the first mover advantage in this space. It was the first real use of the blockchain, is still the gateway to pretty much every other crypto currency, there is a maximum supply of coins, and is one of the only coins that can be purchased/exchanged for US dollars (or other fiat currency). In order to purchase an altcoin such as BAT (the token behind the brave browser the article refers to), you have to first purchase Bitcoin. If you want to sell your BAT tokens, you will receive Bitcoin. Also Bitcoins do cost real money to actually mine (electricity costs). Other tokens such as Ethereum are gaining popularity as well and have some advantages over Bitcoin, but I don’t see Bitcoin being displaced anytime soon. In the case of Ethereum, the value is that the token is used as “gas” on the Ethereum network. Any action you want to take or data you want to store will require that you send a certain amount of Ether in order to perform that task. Since Ethereum is a platform that many of these ICO companies are building apps on top of, it stands to reason that the value of the platform should be greater than the value of the company building on top of it.
- subroutine 9y ago
  That's interesting. I have so many follow-up questions but I gotta head out to dinner. Time for just one... if you're saying ICO company coins are worth sand - and the value of Etherium is as a platform for ICO companies. That seems like the definition of a bubble. No?
  - craigc 9y ago

andkon 9y ago

> 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. Yeah, that's literally exactly why it is a bubble. It's a big if, but that's how you rationalize entering the market.

craigc 9y ago
I suppose that is true, but if the price does crash back down to $1,000 and then rises up to $6,000 then what does that mean? The bubble burst and the price crashed, but now we are in another bubble? This article is an interesting read and seems to suggest something like that: https://medium.com/@mcasey0827/speculative-bitcoin-adoption-price-theory-2eed48ecf7da https://medium.com/@mcasey0827/speculative-bitcoin-adoption-...

adamnemecek 9y ago

> It is worth nothing that JP Morgan bought up millions of dollars worth of Bitcoin after the price crashed following that statement The crash was mostly independent of Dimon's statements.

craigc 9y ago
Yeah I should have made that clear. The price had already started a correction, and the crashing was more associated with uncertainty related to Bitcoin exchanges in China shutting down, but his statement certainly didn’t help. It was picked up by pretty much every news outlet.
- stretchwithme 9y ago
  I guess that's true if learning that Jamie Dimon thought it was a bubble moved a lot of people to sell their bitcoin.

mirimir 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. Not only that, there's no such thing as a "cryptocurrency bubble". There are bubbles for particular cryptocurrencies. Just as there are bubbles for particular investments. But generalizing isn't meaningful. And furthermore, a focus on cryptocurrency trading is the fundamental problem. People trade fiat currencies, but they don't (as far as I know) trade any fiat currencies that are primarily used for investment, rather than in commerce. Me, I just want an electronic currency that can be used anonymously. To get paid, and buy stuff. Because actually, I can't convert with fiat currencies without risking anonymity loss. So it goes.

yxhuvud 9y ago

Of course blockchain technology is here to stay, regardless of what happens, the same way tulips stayed with us after the mania had ended.