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I think the behaviour of Bitcoin price (not the technology) reflects some social phenomenon rather than the real economy. And it is precisely why it is interest

by d__k 9y ago

I think the behaviour of Bitcoin price (not the technology) reflects some social phenomenon rather than the real economy. And it is precisely why it is interesting.

nickjj 9y ago
Yeah, it's pretty much what happened 500 years ago when people were selling everything they owned (including houses) to buy tulip bulbs[0]. Maybe it's not that bad yet, but it's looking to get that way. Spoiler alert: It ended really badly, but the people who got out early enough did make a lot of money. Plot twist: I did invest in bitcoins back when they were hovering around 2k and sold them for a small profit (~10%). Yep, I wish I invested more and held on, but it's so easy to think this way after the fact. [0]: https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania.
- SippinLean 9y ago
  Someone HAD to get the Tulip comment out of the way, I saw pyramid schemes mentioned above, but did anyone call it a Ponzi in this thread yet?
- jesusthatsgreat 9y ago
  Tulips aren't finite in number nor can they be transferred on a decentralised ledger. Anyone can grow tulips and grow fake tulips that may look like tulips but are cheaper quicker to buy / make. You can't fake Bitcoin nor can you grow it indefinitely in your garden. People who make the tulip comparison simply don't understand the revolutionary aspect of the technology. It's like calling the internet tulip mania back in the mid 90's. Blockchain technology will change the world. Bitcoin's value will boom and bust for many years to come. Where will it end up in USD terms? Nobody knows... but the technology itself will become as indispensable as the internet.
  - nickjj 9y ago
    I was replying to someone who was talking about the social phenomenon of bitcoin trading. I wasn't comparing them literally.
  - mcv 9y ago
    What are "fake tulips"? There are many types of flower, but I've never heard any described as fake tulips. And why grow fake tulips when you can grow real ones? And why is a decentralised ledger even relevant to tulips? They're not bits of code, they're real things you own irrespective of whether other people know you own it. Also, you need to distinguish between the blockchain technology and the value of bitcoins. Blockchain does not depend on bitcoin. Bitcoin can fail while blockchain continues to change the world. The real value of bitcoin at this moment comes from trust that the hype will continue. It might. Or it might not.
  - ryanmarsh 9y ago
    People who make the tulip comparison simply don't understand the revolutionary aspect of the technology. People who make the tulip comparison simply don't understand the Tulip craze.
- wallace_f 9y ago
  The comparison between bitcoin and tulips is pretty common, JPM CEO, Jamie Dimon, said "bitcoin is a fraud worse than tulips," then his bank apparently bought bitcoin [???], or at least did on behalf of clients. There have been a number of threads on HN though about the comparison. The tulip bubble is apparently not as interesting as its reputation leads us to believe >"the tulip price crashed, not because it was irrationally high, but because of an external shock." [1] https://stratechery.com/2017/tulips-myths-and-cryptocurrencies/ https://stratechery.com/2017/tulips-myths-and-cryptocurrenci...
- pc86 9y ago
  I bought in slightly after you but sold later (in at ~$2.5k, out at ~$4.4k or so for 1 BTC). It's so easy to get caught up in it and think "man, if I had just bought 10x as much and sold now, I'd have so much more!" I also sold right before that dip to $3k for several weeks, I could have just as easily have lost half my gains.
- RoboTeddy 9y ago
  There's a reason society eventually settled on gold instead of tulips or pinecones. Good monies have certain attributes. Bitcoin's direct technological antecedent was called bitgold, and it was created by Nick Szabo who is a scholar of the origins of money (e.g. http://nakamotoinstitute.org/shelling-out/ http://nakamotoinstitute.org/shelling-out/)
prostoalex 9y ago
It's currently hard to say how much of price increase has been driven by general public converting their USD/EUR/JPY into BTC versus current asset owners just trading with one another (or between their wallets) at ever-increasing prices. The Twitter account @bitfinexed suggests the price increase is driven entirely by wash trading, and Bitcoin exchanges or brokers are not exactly the paragon of transparency as far as inflows/outflows.
hidenotslide 9y ago
It is a textbook example of a speculative bubble. Shiller's book Irrational Exuberance is a great exposition on the topic. Almost every criterion he cites is satisfied: dramatic price increases, "new era" stories, mass media coverage, and stories of overnight millionaires. The only thing missing is lowered lending standards. This doesn't mean the price will go down though, it is notoriously difficult to predict when a bubble will pop and hazardous to bet against financially.
- NathanCH 9y ago
  Sounds exactly like the stock market and real estate asset classes. The global economy is in a bubble. It's the fringe markets which suffer the most (btc).
vertex-four 9y ago
Isn't "the real economy" by definition a social phenomenon?

by d__k 9y ago

I think the behaviour of Bitcoin price (not the technology) reflects some social phenomenon rather than the real economy. And it is precisely why it is interesting.

nickjj 9y ago

Yeah, it's pretty much what happened 500 years ago when people were selling everything they owned (including houses) to buy tulip bulbs[0]. Maybe it's not that bad yet, but it's looking to get that way. Spoiler alert: It ended really badly, but the people who got out early enough did make a lot of money. Plot twist: I did invest in bitcoins back when they were hovering around 2k and sold them for a small profit (~10%). Yep, I wish I invested more and held on, but it's so easy to think this way after the fact. [0]: https://en.wikipedia.org/wiki/Tulip_mania https://en.wikipedia.org/wiki/Tulip_mania.

SippinLean 9y ago
Someone HAD to get the Tulip comment out of the way, I saw pyramid schemes mentioned above, but did anyone call it a Ponzi in this thread yet?
jesusthatsgreat 9y ago
Tulips aren't finite in number nor can they be transferred on a decentralised ledger. Anyone can grow tulips and grow fake tulips that may look like tulips but are cheaper quicker to buy / make. You can't fake Bitcoin nor can you grow it indefinitely in your garden. People who make the tulip comparison simply don't understand the revolutionary aspect of the technology. It's like calling the internet tulip mania back in the mid 90's. Blockchain technology will change the world. Bitcoin's value will boom and bust for many years to come. Where will it end up in USD terms? Nobody knows... but the technology itself will become as indispensable as the internet.
- nickjj 9y ago
  I was replying to someone who was talking about the social phenomenon of bitcoin trading. I wasn't comparing them literally.
- mcv 9y ago
  What are "fake tulips"? There are many types of flower, but I've never heard any described as fake tulips. And why grow fake tulips when you can grow real ones? And why is a decentralised ledger even relevant to tulips? They're not bits of code, they're real things you own irrespective of whether other people know you own it. Also, you need to distinguish between the blockchain technology and the value of bitcoins. Blockchain does not depend on bitcoin. Bitcoin can fail while blockchain continues to change the world. The real value of bitcoin at this moment comes from trust that the hype will continue. It might. Or it might not.
- ryanmarsh 9y ago
  People who make the tulip comparison simply don't understand the revolutionary aspect of the technology. People who make the tulip comparison simply don't understand the Tulip craze.
wallace_f 9y ago
The comparison between bitcoin and tulips is pretty common, JPM CEO, Jamie Dimon, said "bitcoin is a fraud worse than tulips," then his bank apparently bought bitcoin [???], or at least did on behalf of clients. There have been a number of threads on HN though about the comparison. The tulip bubble is apparently not as interesting as its reputation leads us to believe >"the tulip price crashed, not because it was irrationally high, but because of an external shock." [1] https://stratechery.com/2017/tulips-myths-and-cryptocurrencies/ https://stratechery.com/2017/tulips-myths-and-cryptocurrenci...
pc86 9y ago
I bought in slightly after you but sold later (in at ~$2.5k, out at ~$4.4k or so for 1 BTC). It's so easy to get caught up in it and think "man, if I had just bought 10x as much and sold now, I'd have so much more!" I also sold right before that dip to $3k for several weeks, I could have just as easily have lost half my gains.
RoboTeddy 9y ago
There's a reason society eventually settled on gold instead of tulips or pinecones. Good monies have certain attributes. Bitcoin's direct technological antecedent was called bitgold, and it was created by Nick Szabo who is a scholar of the origins of money (e.g. http://nakamotoinstitute.org/shelling-out/ http://nakamotoinstitute.org/shelling-out/)

prostoalex 9y ago

It's currently hard to say how much of price increase has been driven by general public converting their USD/EUR/JPY into BTC versus current asset owners just trading with one another (or between their wallets) at ever-increasing prices. The Twitter account @bitfinexed suggests the price increase is driven entirely by wash trading, and Bitcoin exchanges or brokers are not exactly the paragon of transparency as far as inflows/outflows.

hidenotslide 9y ago

It is a textbook example of a speculative bubble. Shiller's book Irrational Exuberance is a great exposition on the topic. Almost every criterion he cites is satisfied: dramatic price increases, "new era" stories, mass media coverage, and stories of overnight millionaires. The only thing missing is lowered lending standards. This doesn't mean the price will go down though, it is notoriously difficult to predict when a bubble will pop and hazardous to bet against financially.

NathanCH 9y ago
Sounds exactly like the stock market and real estate asset classes. The global economy is in a bubble. It's the fringe markets which suffer the most (btc).

vertex-four 9y ago

Isn't "the real economy" by definition a social phenomenon?