9 ms·

It's Not Just a Bitcoin Bubble – It's Far Worse

51 points by joeax 9y ago

iamthirsty 9y ago
This has been said over and over again among enthusiasts — I don't really know what value this article adds, in all honesty.
- joeax 9y ago
  He is drawing comparisons to the dot-com bubble, specifically adding "Blockchain" to the company name vs added "e" or "com" in the 90's to dramatically increase valuations. I worked during the dot-com bubble when my company added a ".com" to the company name. I remember being told to drop what I was doing and go through all our UI and make sure the .com branding was there so marketing can UAT it by 3pm.
  - JauntyHatAngle 9y ago
    I think the point the post you were replying to was making is that comparisons to the .com bubble have been made for years and years.
    - iamthirsty 9y ago
      Exactly.
- deleted 9y ago
  [deleted]
bastian 9y ago
Far too simplistic view IMHO.
gesman 9y ago
Seekingalpha needs to seek a better quality content and better quality writers. Researching stocks - I finding these "wisdom" advisory gems from seekingalpha: "While I wish I had held on to [stock that shoot up] until now (instead of selling post-Q2), I wouldn't be holding past this point." In other words the writer affirms that he is a bad stock picker and immediately offers stock picking advise. Lol
- joeax 9y ago
  I don't think you should take stock picking advice from any writer on SA. A lot of articles are conjecture and a fun read, nothing more.
- AJ007 9y ago
  It is a content farm. Definitely not HN worthy.
thisisit 9y ago
> That being said, blockchain technology is not Bitcoin. Blockchain technology will likely be revolutionary, while Bitcoin is essentially worthless. People keep saying this but what exactly is the value proposition of blockchain again?
- matte_black 9y ago
  A perfect blockchain would be like having a massive, decentralized, global database from which anyone could read and write to and the information would always be guaranteed to be true. Imagine any app being able to use such a database anytime, anywhere. It would be a perfect single source of truth, that could never be destroyed or hacked.
  - _nalply 9y ago
    The information is not guaranteed to be true, it is guaranteed not to have been adultered after the write. The blockchain by itself can't verify the information it gets. After all no blockchain robot looks at your ID card.
    - matte_black 9y ago
      Hmm, that’s true I guess. I’m not sure how you would verify truth, but at least knowing it hasn’t been altered is halfway toward solving the problem.
      - _nalply 9y ago
        You could try to design the system that it is in the best self-interest of parties creating records to be truthful. An example is Bitcoin. It is in your best interest not to spend too much. Spend exactly the amount required, not more, and you are done.
- lubujackson 9y ago
  Triple-entry accounting, basically. There was an article on here a few months ago that went into depth on the issue. Double-entry accounting made it much harder to cook the books (a record of where money is coming from and a record of where it is going). Blockchains store every transaction within the coin itself and are validated by the entire network as valid transactions. People promote Bitcoin as anonymous, but it's actually the opposite - every transaction is traceable and open source, even if the accounts are not tied to a person directly. There are uses for this but I think the unintended consequences remain to be seen. I think of how people were able to be identified by that Netflix ratings datadump a few years ago, so imagine how easy it would be if Bitcoin became a common currency? I am not positive this is possible (I think it is?) but imagine I buy an apple from Whole Foods and pay with Bitcoin. Now I know what account they use and I can go back through the blockchain to see every other transaction they've ever made: bam, now I know all financial data about Whole Foods over Bitcoin including which accounts pay them the most and the datestamps of those transactions.
everdev 9y ago
As a developer I've had many people reach out to me on how they can "bring their business to the blockchain". It's a stretch for most of them but there seems to be some fever among non-technical CEOs that they need to ride this wave.
- stevenwoo 9y ago
  When I hear this my eyes roll back so far in my head they come back around.
  - notyourwork 9y ago
    Why? Its a new technology, people (who are unable to understand or grasp technology are curious) want to get involved with it. Mobile phones, computers, lots of things fell into this category at some point. You should pardon their ignorance.
    - sremani 9y ago
      If you replace "blockchain" with "database" and the application still makes sense, then you should not do "blockchain", at least for now. Not all apps benefit by being on blockchain, on the contrary they are needlessly complicated. There is a reason Netflix does not use torrents, centralized systems are efficient. Unless the application demands "trustless", no point touching it.
      - notyourwork 9y ago
        You are missing my point entirely.
    - michaelchisari 9y ago
      Speaking from experience, decentralization is not a feature. There are very few situations where decentralization provides free features and advantages over centralization. Contrastingly, decentralization is an extremely complicated way of achieving your goal, and anyone who is building an application should be 100% honest with themselves about whether it truly needs to be decentralized. Especially when that decentralization is both technological and political, both of which have their own unique difficulties.
gt_ 9y ago
For what it’s worth, there are 2 insights here: 1. Cryptocurrency is a bubble. 2. Surface-level associations or mere mentions of associations with cryptocurrency is a bubble. Both are reliant on the vague “bubble” term, but I think #2 is the conversation that not enough people are having. Most people I know who discuss cryptocurrency on a daily basis care next to nothing about what it is for, or the technology involved. They are entirely captivated by something limited to buzz, and anything beyond that or in oppositition to it is processed by them as unsavory. This observation, at least, decidingly bysteps debate over whether cryptocurrency has value, and points to the incredible amount of willful delusion invited by it’s fans. This phenomenon is of course attributed to so much of how late capitalism persists. But, when it happens on such a bloated level around something that should by any sober account be a critical ordeal, there is some significance to that conversation. The particular observations of mere phonetical and marginal associations with blockchain leading to overnight exhorbitant values should be understood as a very seperate discussion from “Is crypto a bubble?”.
pcurve 9y ago
Each Bitcoin transaction uses 100 - 200kwh. It's absurd if you think about it. Isn't this going to be what dooms block chain let alone Bitcoin?
- nlperguiy 9y ago
  Not if it's mining running on solar.
  - ajdlinux 9y ago
    I hear this argument from my colleague who runs his mining rigs on a solar PV setup. Given how quickly we as a civilisation need to be moving away from fossil fuels, I don't buy that this is a better use than using your solar PV panels to feed back into the grid and thus reduce demand on non-renewable generators.
    - nlperguiy 9y ago
      The amount of energy used for BTC is nothing compared to energy used for Internet. It's equivalent to 0, compared to usage for heating and cooling.
- JauntyHatAngle 9y ago
  Not all blockchains use PoW algos, or are decentralised in the bitcoin sense, or use the same hashing tools. Proof of stake is one example of how that doesn't "doom" blockchains.
- seibelj 9y ago
  It’s not just doing transactions. It’s maintaining $300billion in global wealth and rising every day, without any institutions or government. I’m sure the traditional financial system uses a lot of power as well...
  - ajdlinux 9y ago
    The IBM mainframes that run most of the global financial system and maintain a few orders of magnitude more of global wealth are reasonably power hungry, yes, but I don't think the system averages consumption of kilowatt hours of energy every single time I swipe my credit card.
ganeshkrishnan 9y ago
Here come the naysayers. >What is a fake coin in your electronic wallet truly worth? How much is the piece of paper in your wallet worth? Maybe bitcoin will burn and crash or maybe it will be a million dollars a piece. We don't know. People are buying bitcoin and that is driving the prices up. South Korea has been the biggest buyer of BTC (perhaps fear of NK?) Don't confuse the value of a cryptocurrency (Bitcoin) with companies that are riding it's wave
- hartator 9y ago
  Gold still holds value across centuries. A legionary from the Roman empire will be making $40k with his pay from back in the days. A key to a hash will be worthless in the future, specially when SHA2 will get broken.
- colechristensen 9y ago
  The piece of paper in my pocket is backed by the full faith and credit of the United States, an institution that has kept that faith for 241 years and that has the faith of the world. The planet is absolutely full of greater fools that have, do, and will continue to value the dollar. That "fake coin" in my electronic wallet is backed by algorithms. The greater fools giving it value are and have been, as far as I can see, excited mostly by profiting on the speculation of it. Who actually uses bitcoin outside of trying to profit from the bubble or just for the novelty of using it? The dollar is backed by the wealth and economy of the nation, the coin exclusively by greater fools and it's rarity.
bastijn 9y ago
Outline link for those who run into the signup wall: https://outline.com/U9qckd https://outline.com/U9qckd
throw2016 9y ago
Have the greedy every changed the world, for the better? Bitcoin adopters continue to religiously engage the same fraud that was adopted by initial promoters, peddling fantasies about decentralization, anonymity, transaction costs and taking on the global banking system. None of this is real, and on the last the slightest hint of adoption by the establishment send prices soaring and palpable excitement among supporters. So if it has no utility, with supporters who lie, then where are the absurd valuations coming from? Bitcoin exists without relation to economics, demand, utility or value, and with negative externalities for efficiency and the environment making rational discussion redundant. Why bother creating value to generate revenue, when you can print the revenue, literally. It's like a group of people get together to make IOU tokens and are convinced the world will one day accept their paper. Well if it has some utility the world may, but not simply because you want to gain something for nothing.
- mrb 9y ago
  You don't know what you are talking about. I use Bitcoin to transact with my brother overseas. It's decentralized. It works. Yes there is an absurd bubble going on. But bubbles are expected with revolutionary technologies (18th century train companies, 19th century car companies, 1990s dot com bubble...)
flowctrl 9y ago
> So, if it can’t be used as a currency to buy anything, and when you “invest” in it you’re not having any ownership in a company, what is it truly worth? What is a fake coin in your electronic wallet truly worth? What is SeekingAlpha.com truly worth? What is a fake newspaper on your electronic screen truly worth? What is the software you used to write the article worth? The value of digital assets lies in their usefulness, and how many people use them. The usefulness of the software "Bitcoin" is that it allows people to store a record of value -- like the numbers in your bank account -- in a reliable, secure, trust-worthy, fungible way that is practically immune to corruption, control, and seizure, and can be transferred to anyone else anywhere in the world almost instantly, for practically free. But that's just Bitcoin, the very first of its kind. The thriving technology ecosystem that Bitcoin birthed is boiling over with potential.
mdekkers 9y ago
Register for FREE to finish reading this article I don´t think so, clickbait
grover_hartmann 9y ago
Bitcoin is not a bubble, it's a pin.
- speedplane 9y ago
  I made the huge mistake of not investing more when I first heard about it back in 2011... back then, investing a month of rent could have now made me rich forever. Bitcoin has some serious problems to overcome as a real consumer currency, but it seems clear that some crypto-currency will eventually become ubiquitous. As far as the speculation game, Bitcoin is just barely starting to reach consumer investors. Whether it's a bubble or not, I'm not sure, but it has a long way to go.

51 points by joeax 9y ago

This has been said over and over again among enthusiasts — I don't really know what value this article adds, in all honesty.

joeax 9y ago
He is drawing comparisons to the dot-com bubble, specifically adding "Blockchain" to the company name vs added "e" or "com" in the 90's to dramatically increase valuations. I worked during the dot-com bubble when my company added a ".com" to the company name. I remember being told to drop what I was doing and go through all our UI and make sure the .com branding was there so marketing can UAT it by 3pm.
- JauntyHatAngle 9y ago
  I think the point the post you were replying to was making is that comparisons to the .com bubble have been made for years and years.
  - iamthirsty 9y ago
    Exactly.
deleted 9y ago
[deleted]

bastian 9y ago

Far too simplistic view IMHO.

gesman 9y ago

Seekingalpha needs to seek a better quality content and better quality writers. Researching stocks - I finding these "wisdom" advisory gems from seekingalpha: "While I wish I had held on to [stock that shoot up] until now (instead of selling post-Q2), I wouldn't be holding past this point." In other words the writer affirms that he is a bad stock picker and immediately offers stock picking advise. Lol

joeax 9y ago
I don't think you should take stock picking advice from any writer on SA. A lot of articles are conjecture and a fun read, nothing more.
AJ007 9y ago
It is a content farm. Definitely not HN worthy.

thisisit 9y ago

> That being said, blockchain technology is not Bitcoin. Blockchain technology will likely be revolutionary, while Bitcoin is essentially worthless. People keep saying this but what exactly is the value proposition of blockchain again?

matte_black 9y ago
A perfect blockchain would be like having a massive, decentralized, global database from which anyone could read and write to and the information would always be guaranteed to be true. Imagine any app being able to use such a database anytime, anywhere. It would be a perfect single source of truth, that could never be destroyed or hacked.
- _nalply 9y ago
  The information is not guaranteed to be true, it is guaranteed not to have been adultered after the write. The blockchain by itself can't verify the information it gets. After all no blockchain robot looks at your ID card.
  - matte_black 9y ago
    Hmm, that’s true I guess. I’m not sure how you would verify truth, but at least knowing it hasn’t been altered is halfway toward solving the problem.
    - _nalply 9y ago
      You could try to design the system that it is in the best self-interest of parties creating records to be truthful. An example is Bitcoin. It is in your best interest not to spend too much. Spend exactly the amount required, not more, and you are done.
lubujackson 9y ago
Triple-entry accounting, basically. There was an article on here a few months ago that went into depth on the issue. Double-entry accounting made it much harder to cook the books (a record of where money is coming from and a record of where it is going). Blockchains store every transaction within the coin itself and are validated by the entire network as valid transactions. People promote Bitcoin as anonymous, but it's actually the opposite - every transaction is traceable and open source, even if the accounts are not tied to a person directly. There are uses for this but I think the unintended consequences remain to be seen. I think of how people were able to be identified by that Netflix ratings datadump a few years ago, so imagine how easy it would be if Bitcoin became a common currency? I am not positive this is possible (I think it is?) but imagine I buy an apple from Whole Foods and pay with Bitcoin. Now I know what account they use and I can go back through the blockchain to see every other transaction they've ever made: bam, now I know all financial data about Whole Foods over Bitcoin including which accounts pay them the most and the datestamps of those transactions.

everdev 9y ago

As a developer I've had many people reach out to me on how they can "bring their business to the blockchain". It's a stretch for most of them but there seems to be some fever among non-technical CEOs that they need to ride this wave.

stevenwoo 9y ago
When I hear this my eyes roll back so far in my head they come back around.
- notyourwork 9y ago
  Why? Its a new technology, people (who are unable to understand or grasp technology are curious) want to get involved with it. Mobile phones, computers, lots of things fell into this category at some point. You should pardon their ignorance.
  - sremani 9y ago
    If you replace "blockchain" with "database" and the application still makes sense, then you should not do "blockchain", at least for now. Not all apps benefit by being on blockchain, on the contrary they are needlessly complicated. There is a reason Netflix does not use torrents, centralized systems are efficient. Unless the application demands "trustless", no point touching it.
    - notyourwork 9y ago
      You are missing my point entirely.
  - michaelchisari 9y ago
    Speaking from experience, decentralization is not a feature. There are very few situations where decentralization provides free features and advantages over centralization. Contrastingly, decentralization is an extremely complicated way of achieving your goal, and anyone who is building an application should be 100% honest with themselves about whether it truly needs to be decentralized. Especially when that decentralization is both technological and political, both of which have their own unique difficulties.

gt_ 9y ago

For what it’s worth, there are 2 insights here: 1. Cryptocurrency is a bubble. 2. Surface-level associations or mere mentions of associations with cryptocurrency is a bubble. Both are reliant on the vague “bubble” term, but I think #2 is the conversation that not enough people are having. Most people I know who discuss cryptocurrency on a daily basis care next to nothing about what it is for, or the technology involved. They are entirely captivated by something limited to buzz, and anything beyond that or in oppositition to it is processed by them as unsavory. This observation, at least, decidingly bysteps debate over whether cryptocurrency has value, and points to the incredible amount of willful delusion invited by it’s fans. This phenomenon is of course attributed to so much of how late capitalism persists. But, when it happens on such a bloated level around something that should by any sober account be a critical ordeal, there is some significance to that conversation. The particular observations of mere phonetical and marginal associations with blockchain leading to overnight exhorbitant values should be understood as a very seperate discussion from “Is crypto a bubble?”.

pcurve 9y ago

Each Bitcoin transaction uses 100 - 200kwh. It's absurd if you think about it. Isn't this going to be what dooms block chain let alone Bitcoin?

nlperguiy 9y ago
Not if it's mining running on solar.
- ajdlinux 9y ago
  I hear this argument from my colleague who runs his mining rigs on a solar PV setup. Given how quickly we as a civilisation need to be moving away from fossil fuels, I don't buy that this is a better use than using your solar PV panels to feed back into the grid and thus reduce demand on non-renewable generators.
  - nlperguiy 9y ago
    The amount of energy used for BTC is nothing compared to energy used for Internet. It's equivalent to 0, compared to usage for heating and cooling.
JauntyHatAngle 9y ago
Not all blockchains use PoW algos, or are decentralised in the bitcoin sense, or use the same hashing tools. Proof of stake is one example of how that doesn't "doom" blockchains.
seibelj 9y ago
It’s not just doing transactions. It’s maintaining $300billion in global wealth and rising every day, without any institutions or government. I’m sure the traditional financial system uses a lot of power as well...
- ajdlinux 9y ago
  The IBM mainframes that run most of the global financial system and maintain a few orders of magnitude more of global wealth are reasonably power hungry, yes, but I don't think the system averages consumption of kilowatt hours of energy every single time I swipe my credit card.

ganeshkrishnan 9y ago

Here come the naysayers. >What is a fake coin in your electronic wallet truly worth? How much is the piece of paper in your wallet worth? Maybe bitcoin will burn and crash or maybe it will be a million dollars a piece. We don't know. People are buying bitcoin and that is driving the prices up. South Korea has been the biggest buyer of BTC (perhaps fear of NK?) Don't confuse the value of a cryptocurrency (Bitcoin) with companies that are riding it's wave

hartator 9y ago
Gold still holds value across centuries. A legionary from the Roman empire will be making $40k with his pay from back in the days. A key to a hash will be worthless in the future, specially when SHA2 will get broken.
colechristensen 9y ago
The piece of paper in my pocket is backed by the full faith and credit of the United States, an institution that has kept that faith for 241 years and that has the faith of the world. The planet is absolutely full of greater fools that have, do, and will continue to value the dollar. That "fake coin" in my electronic wallet is backed by algorithms. The greater fools giving it value are and have been, as far as I can see, excited mostly by profiting on the speculation of it. Who actually uses bitcoin outside of trying to profit from the bubble or just for the novelty of using it? The dollar is backed by the wealth and economy of the nation, the coin exclusively by greater fools and it's rarity.

bastijn 9y ago

Outline link for those who run into the signup wall: https://outline.com/U9qckd https://outline.com/U9qckd

throw2016 9y ago

Have the greedy every changed the world, for the better? Bitcoin adopters continue to religiously engage the same fraud that was adopted by initial promoters, peddling fantasies about decentralization, anonymity, transaction costs and taking on the global banking system. None of this is real, and on the last the slightest hint of adoption by the establishment send prices soaring and palpable excitement among supporters. So if it has no utility, with supporters who lie, then where are the absurd valuations coming from? Bitcoin exists without relation to economics, demand, utility or value, and with negative externalities for efficiency and the environment making rational discussion redundant. Why bother creating value to generate revenue, when you can print the revenue, literally. It's like a group of people get together to make IOU tokens and are convinced the world will one day accept their paper. Well if it has some utility the world may, but not simply because you want to gain something for nothing.

mrb 9y ago
You don't know what you are talking about. I use Bitcoin to transact with my brother overseas. It's decentralized. It works. Yes there is an absurd bubble going on. But bubbles are expected with revolutionary technologies (18th century train companies, 19th century car companies, 1990s dot com bubble...)

flowctrl 9y ago

> So, if it can’t be used as a currency to buy anything, and when you “invest” in it you’re not having any ownership in a company, what is it truly worth? What is a fake coin in your electronic wallet truly worth? What is SeekingAlpha.com truly worth? What is a fake newspaper on your electronic screen truly worth? What is the software you used to write the article worth? The value of digital assets lies in their usefulness, and how many people use them. The usefulness of the software "Bitcoin" is that it allows people to store a record of value -- like the numbers in your bank account -- in a reliable, secure, trust-worthy, fungible way that is practically immune to corruption, control, and seizure, and can be transferred to anyone else anywhere in the world almost instantly, for practically free. But that's just Bitcoin, the very first of its kind. The thriving technology ecosystem that Bitcoin birthed is boiling over with potential.

mdekkers 9y ago

grover_hartmann 9y ago

Bitcoin is not a bubble, it's a pin.

speedplane 9y ago
I made the huge mistake of not investing more when I first heard about it back in 2011... back then, investing a month of rent could have now made me rich forever. Bitcoin has some serious problems to overcome as a real consumer currency, but it seems clear that some crypto-currency will eventually become ubiquitous. As far as the speculation game, Bitcoin is just barely starting to reach consumer investors. Whether it's a bubble or not, I'm not sure, but it has a long way to go.