13 ms·

A tale of two bubbles, the dot-coms and Bitcoin

94 points by fraqed 9y ago

mavdi 9y ago
I will say what I've always said about crypto... Keep telling me it's a bubble. Keep writing long educated articles about it. All while I consistently get rich. All while it's getting late for you to get rich too.
- stephengillie 9y ago
  Remember 2013 and 2014? What's different this time?
  - mavdi 9y ago
    Nothing is different. I said back then it would hit $1M in 10 years, I will say the same now except perhaps now 2 years. People are really underestimating what a shit storm Bitcoin and other crypto will cause in finance.
    - wyldfire 9y ago
      I'm long on bitcoin. I think it's awesome and a powerful, clever innovation. But I don't think that cryptocurrencies will cause a "shitstorm". I'm under no delusion that Your Favorite Bank or Stock Exchange won't exist in two years, or in ten or even twenty. Managing and storing/handling/operating cryptocoins is not for the feint of heart. At best, the most disruption you might see would be the Coinbases of the world having a bigger role in some of the global financial market and traditional financial giants having some slightly smaller role to make room. Holding bitcoin on your own is better than putting money in your mattress, but it's way, way, way less safe than an insured deposit in a bank. The volatility will decrease but it will at best be subject to the same 0.5-1% intradaily swings that a foreign currency goes through. It would take a substantial amount of time and money for it to settle down that much, though.
    - stinky613 9y ago
      Why and how will they cause a shit storm in finance?
    - deadmetheny 9y ago
      The financial shitstorm that it's gonna cause is when the world comes to its fucking senses and realizes that burning electricity to move around Internet Fun Bucks is a massive waste, the bottom falls out entirely, and this whole thing is finally behind us. I'm gonna feel vaguely sorry for everyone who put their life's savings into Dunning-Krugerrands to get a handful of lucky nerds who got out at the right time rich.
      - harrumph 9y ago
        >Managing and storing/handling/operating cryptocoins is not for the feint of heart. Given the body count of exchanges and coins that have collapsed due to unauthorized access, your spelling error is actually a beautiful thing.
      - pessimizer 9y ago
        > everyone who put their life's savings into Dunning-Krugerrands I'm pretty sure that's going to turn out to be pension, mutual funds, and banks, just like last time, and everyone is going to be screwed. The question as bitcoin rises is how much has been borrowed against bitcoin holdings in how many ass-backward, half-fraudulent, made-legal-by-obscure-clauses-in-amendments-written-by-lobbyists-and-attached-to-unrelated-bills-with-bipartisan-support ways.
  - deleted 9y ago
    [deleted]
  - DennisP 9y ago
    If nothing is different, you're implying that if someone holds through the next crash, they'll reach much greater heights later. (But personally I think there is a difference: there's more-advanced competition now.)
- AznHisoka 9y ago
  Why would it ever be late to get rich if it's not a bubble?
  - mavdi 9y ago
    I think the price will stabilise at some point with small fluctuations (just like gold). So soon you won't be able to make money from buying in early.
    - singularity2001 9y ago
      no the price can't stabilize. Its hyper-deflationary by Design. it will either go way up or completely down.
      - mavdi 9y ago
        Fair enough :) You should write a long educated article about it!
      - popol12 9y ago
        yes, just like gold, right ?
    - rsynnott 9y ago
      > I think the price will stabilise at some point with small fluctuations (just like gold). Have you ever looked at the price history of gold in inflation-adjusted terms? That is VERY much not what gold does.
  - bryanrasmussen 9y ago
    Well the industrial revolution was not a bubble, but it's pretty late in general to get rich at the industrializing your local handy-crafts. Not that I have an opinion on Bitcoin not being a bubble.
    - gspetr 9y ago
      > it's pretty late in general to get rich at the industrializing your local handy-crafts. In general, yes. But now you can get rich when you deindustrialize: http://instapaint.com/ http://instapaint.com/
- empath75 9y ago
  Tell that to all the paper millionaires I knew in the late 90s who lost everything in the dotcom bubble. They were 'rich', too, for a few months.
  - zaidf 9y ago
    There is a difference between "a few months" and 7 years (and going).
- whyenot 9y ago
  > All while it's getting late for you to get rich too. It's easy to get on the train, much harder to know when to get off. I still remember the anguished posts four years ago on HN from people who put their life savings into bitcoin shortly before the market crashed. One Reddit user on r/bitcoinmarkets posted that he had lost everything and took his own life. It took years for the market to recover. Don't fool yourself, nobody knows where this train is going.
- PeterisP 9y ago
  Have you actually gotten rich? As in, have you realized any of your gains; have you diversified your (new) assets so that at least a significant part of them is in something that's not speculative and can't go down much even if you're mistaken? For example, silicon valley is full of people that were once multi-multi-millionaires on paper by holding stock that had an extremely high price, but didn't manage to get to sell it until the valuation collapsed. There's much more of them than the actual multi-multi-millionaires.
paulpauper 9y ago
$16k lol wtf bitcoin solved a problem..A few weeks ago I could not login to my paypal account due to verification BS, so I was able to pay instantly with Bitcoin. problem solved.
- stinky613 9y ago
  Instantly? I thought the transactions took an average 10min. Am I wrong?
  - rocqua 9y ago
    It depends. If you send me a signed transaction that spends some of your money, you can simply put that into the blockchain. The issue is that you might send multiple such transactions spending the same money. If I want to guard against others trying to spend the same money I have to wait until the transaction is a few blocks deep. Generally the advice is 6 blocks which should be about an hour.
    - spookthesunset 9y ago
      In other words, for any useful transaction... Bitcoin isn't instant at all.
      - joshvm 9y ago
        Define useful though. If you have to wait an hour to confirm an online order, is that a problem if the item won't ship for hours anyway? A bigger problem right now is that you pay whatever the current rate is. With the current volatility you could easily overspend or underspend by a large amount.
        j_s 9y ago
        Steam blamed volatility when they bailed yesterday. Steam is no longer supporting Bitcoin | https://news.ycombinator.com/item?id=15863182 https://news.ycombinator.com/item?id=15863182 > due to high fees and volatility in the value of Bitcoin
etr-strike 9y ago
An article claiming bitcoin's a bubble? Wow, hadn't considered that before! Just yesterday it came to light that the ECB was purchasing fraudulent bonds that are now worthless. The Bank of Japan is directly buying ETFs. The Federal Reserve increased the money supply to levels never seen before using QE, and has yet to reduce its balance sheet even slightly. Housing is more expensive than it's ever been. Stock markets are more expensive than they've ever been. Everyone knows the official rate of inflation is well below the real rate. Our savings accounts have effectively negatively interest rates. But bitcoin is the bubble. Bitcoin is the only safe haven asset available for purchase right now. It's the only asset that doesn't require me to trust an institution or an individual. It can't be confiscated. It's rules are known. I'll trust in Bitcoin, thanks.
- paulpauper 9y ago
  it's the everything-goes-up economy: bitcoin, expensive homes, stocks, web 2.0 valuations, etc.
- CPLX 9y ago
  > Bitcoin is the only safe haven asset available for purchase right now. lol
  - etr-strike 9y ago
    Is bitcoin volatile? Absolutely...but how do you expect a completely new asset type to behave? At this point bitcoin is a populist movement just as unexpected as Trump or Brexit. It's a populist revolt against monetary policy which people have no control over. Of course this trustless and decentralized asset type forcing it's way into the world financial system is going to experience volatility.
    - CPLX 9y ago
      Bitcoin, currently, is a mechanism for high stakes gambling.* People fucking love gambling. So it's a useful innovation, in a sense. As long as you actually understand what it is and why people are buying it you'll be OK. Calling it a safe haven asset class however, is, in fact, amusing. * To be fair it's also good for buying drugs, credit card numbers, and child porn.
elmar 9y ago
CryptoKitties that's the real bubble.
- sf_rob 9y ago
  When the USD collapses, you're going to wish you had a rare Gen 0 kitty to trade for ammo and rice.
- cwkoss 9y ago
  We're entering a dank cyberpunk future where Banks hold digital cats as a significant portion of their balance sheet.
stillbourne 9y ago
The block chain is an interesting concept. I just don't think entropy should be a valid commodity currency. Here, let's trade spent compute cycles, and then spend more compute tracking where my compute has gone! Yo, dawg! I heard you like entropy so I put some entropy on your entropy so you can track entropy. Meta-Entropy is all the rage these days.
- wyldfire 9y ago
  I will posit that the proof-of-work is the only way to have: (1) a trustless decentralized network with (2) equitable distribution/minting of the coin. I will concede that other coins exist that don't use a proof-of-work (instead proof-of-stake or other). Those forfeit trustlessness and/or equitable distribution. I will also concede that it may be possible for those coins to fulfill a need and be useful without all of those things. Though I doubt they ever could have been created if not for bitcoin having been created first.
  - stillbourne 9y ago
    Explaining your reason for trusting it doesn't detract from the fact that you are just trading entropy around. "Proof-of-work?" What work? I spent a undefined amount of power from the grid to render a string of digits in a specific pattern? I can flail against my keyboard or pipe /dev/urandom to a file is that worth $16k? Can't you see that you are engaging in madness? Just because you have defined the method of your madness doesn't make it any less insane.
    - wyldfire 9y ago
      It's not madness. I think you're dismissing it as "insane" without understanding some critical issues. It's [proof-of-work] the only way to do that [what bitcoin does], or rather no one has yet suggested an alternative that preserves those qualities. The work done for the bitcoin network has utility, that much we can agree on? And you think perhaps that the utility provided by the network is not a net benefit considering the cost of the PoW? Well, unfortunately that much is subjective and there's enough folks out there willing to spend resources on it. However it's not madness. Proof-of-work is required in order to have a mechanism that has bitcoin's qualities. If you want to fight against what you might perceive as waste or madness, it seems like tilting at windmills IMO. But the best thing you could do is build a better mousetrap -- or invest/promote one of the non-PoW coins out there. EDIT: clarified some uses of "it" in the first paragraph.
dpflan 9y ago
If you're interested in the concept of bubbles in general: The economist John Kenneth Galbraith wrote about bubbles in his book A Short History of Financial Euphoria. If you're intrigued by such economics events, this is a good, quick read (on the "tulip craze", junk bonds, etc): A Short History of Financial Euphoria > https://www.penguinrandomhouse.com/books/321392/a-short-history-of-financial-euphoria-by-john-kenneth-galbraith/9780140238563/ https://www.penguinrandomhouse.com/books/321392/a-short-hist... _ JKG's Bio: > https://en.wikipedia.org/wiki/John_Kenneth_Galbraith https://en.wikipedia.org/wiki/John_Kenneth_Galbraith _ _-_ UPDATE _-_ Shiller also published Irrational Exuberance, each new edition filled with more analysis of recent "bubbles": > https://en.wikipedia.org/wiki/Irrational_Exuberance_(book) https://en.wikipedia.org/wiki/Irrational_Exuberance_(book)
crispytx 9y ago
"Even for a survivor of the dot-com bust, bitcoin is breathtaking"
hectorr1 9y ago
The question that I keep coming back to is what are the implications of investing/speculating in a technology well before its implications are understood? Adam Ludwin, the CEO of Chain, talks about how when the dot-com bubble happened, everyone knew at least to an extent that online retail would be a thing. Social networks would be a thing. Digital media would be a thing. The required ingredients were competition, Moore's Law, and time. Bitcoin is different for a few reasons. It doesn't solve economic problems for most people in developed countries. It's also a development far deeper in the technology stack, a change in ledger management and accounting procedures. The last major update to this was double entry in the Italian Renaissance, which allowed the formation of corporations. The one before that was the invention of zero. We don't know what the implications of Bitcoin will be. I think a much better analogy for the current bubble is the South Sea Company, since that was essentially people speculating on a new asset class (equity) that was poorly understood at the time. But saying that it's a bad investment because the use cases are not immediately obvious misses the forest for the trees.
- throwawayjava 9y ago
  > a change in ledger management and accounting procedures. The last major update to this was double entry in the Italian Renaissance That seems wrong. I'm not an accountant, but I have a damn hard time believing that accounting practices haven't changed significantly since the Italian Renaissance...
  - hectorr1 9y ago
    Accounting practices, professionalism, standardization, etc have obviously evolved tremendously since then, the same way any technology does as adoption increases. Math wasn't fixed between the invention of numbers and the concept of zero, but it became far more powerful when you incorporated it. Another way to think about it is with cars. Cars today bear no resemblance to what they looked like or were capable of when they were invented, but nothing around the core idea of putting an engine on wheels has changed. The airplane was different. (But so was the Segway)
  - colorint 9y ago
thisisit 9y ago
The gaggle of articles on the Bitcoin bubble is amazing. Most interesting thing is, at least for me, that these are not doing a great job convincing cryptocurrency supporters that there is a bubble. The logic goes - If everyone thinks it is bubble, it probably is not a bubble. I wonder how much of this record rally can be attributed to the upcoming Futures market. Anyone has theories on this?
- paulgb 9y ago
  When has there ever been something that everyone thought was a bubble but wasn't?
  - thisisit 9y ago
    I don't know. I am just echoing a sentiment which is going around. The way I see it is not many of the articles talk about the economic perspective of bitcoin and rather dismissive of the whole point of bitcoin. It helps no one but reinforces the support.
  - joeschmoecad 9y ago
    Google. Facebook. Amazon. Big Tech in general. Everyone called it a bubble until they started making shit loads of money.
  - iopq 9y ago
    "The growth of the Internet will slow drastically, as the flaw in 'Metcalfe's law'–which states that the number of potential connections in a network is proportional to the square of the number of participants–becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's." -Paul Krugman, 1998
  - solresol 9y ago
    The first railway mania (England 1830s). The pricing of the railways was completely insane compared to any reasonable business projections. Everyone was saying that there was a financial bubble (they were well aware of the Dutch tulip mania) as more railways were built with ever more insane valuations, all designed to be repackaged into shares to be sold onto the next fool. Punchline: because the trains had to stop to pick up coal and water along the way, the railway operators discovered that most of their business wasn't coming from end-to-end journeys between big locations (which was what the railways were built to do), but instead from people getting on and off at stops along the way. With this sudden extra source of income, the railways returned quite a healthy return to their investors.
singularity2001 9y ago
people thinking "Oh I just get out when the price starts falling" are utterly mistaken: Transactions now taking several hours might then take several days. Already getting Error 520 on Kraken
xutopia 9y ago
He's saying Bitcoin is shit by using example another cryptocurrency as his example. This is simply disingenuous.
- wyldfire 9y ago
  Yeah, the fact that he mentioned ICOs so many times is really disappointing. I think many/most ICOs are crap, too, but how does that impact bitcoin?
  - PeterisP 9y ago
    In order to justify the current valuation of bitcoin, there needs to be some (at least one, but preferably more) future use case that's extremely useful to masses and would have a very large market cap because of it's large scale usefulness. The author mentions a bunch of candidate use-cases that might perhaps somehow justify it (including ICOs), but finds them all insufficient. If it's not competitive to replace a large portion of world wide consumer payments, then the author doesn't see any other use case (other than pure speculation i.e. holding BTC with expectation that they'll appreciate) that's sufficiently huge for the valuation/market cap BTC is currently trying to fill.
jondubois 9y ago
There are some huge differences between the dot-com bubble and cryptocurrencies. Firstly, practically everyone who invests in cryptocurrencies knows that there is a chance that they could drop massively - Nobody is being deceived. If anything, I would say that most buyers tend to underestimate the technical accomplishments and the amount of vision behind most popular cryptocurrencies. Secondly, unlike companies, cryptocurrencies can never* go bankrupt. They cannot be shut down by any single government. There will always be developers with machines somewhere willing to mine coins. It's already possible to build businesses/services on top of blockchains and these businesses have a huge advantage over regular businesses; they can never go bankrupt. Also, they are completely autonomous. There was a lot of publicity around DAO (and its subsequent failure) but in spite of this, there are already value-creating businesses based on Blockchain technology which are currently operating under the radar: e.g. IOTA is a cryptocurrency but it's also platform that lets users buy and sell data directly from internet-connected sensors also Siacoin is a file-storage service, Power Ledger is an electricity marketplace... There are many others. Another huge advantage of most blockchain-based businesses is that anyone with hardware (or virtual machines) can participate in the value-creation process and be rewarded for it. * Unless maybe there is another massive Carrington Event... But even then it's unlikely that the blockchain of major cryptocurrencies will be completely wiped out.
- michaelchisari 9y ago
  knows that there is a chance that they could collapse completely - Nobody is being deceived I think this is your bias based on the people bought in within your circle, but when technologies like this hit the mainstream, that's never the case.
  - jondubois 9y ago
    Maybe, but the word 'bubble' comes up quite regularly in the media when discussing Bitcoin. Surely it's somewhere at the back of people's minds.
    - RyanZAG 9y ago
0xCMP 9y ago
(just read the title, couldn't get past the bylines) I just saved this article so I can laugh at Tim in the future. First off. This-is-a-bubble. I'm not saying it's not. But, bitcoin IS solving major problems and it WILL fix the problems it has. Will it still be worth ~$20K/BTC? Maybe not, but maybe it'll be more. Hard to say. I can not imagine how Tim could think that cryptocurrencies, and more specifically blockchain technology, "doesn't solve anything." This is such a stupid statement to make. How exactly does a way to do trustless computing around the world equal "doesn't solve anything?" Brain dead opinion.
- workthrowaway27 9y ago
  Some questions: 1. Why is trustless computing important? 2. What does trustless computing allow us to do that we can't/won't do now at a comparable or lesser cost? 3. What evidence do you have that anyone cares about trustless computing other than the price of bitcoin and other cryptocurrencies?
  - 0xCMP 9y ago
    1. Removing the central party was always key for making a system that could benefit everyone and not create rules that favored the powerful. Your question is phrased such that it’s talking about trustless computing as a whole so it can be applied to things such as creating a true and verifiably secure direct democratic system that everyone can trust and understand given some level of tech knowledge. 2. To establish a system of trust requires physical secuirty, political power, and financial resources that make this kind of computing only possible for the rich and powerful unless it’s already in their interest. 3. Price is an excellent indicator and the fact that we see coins being created means there’s innovation around it, but excluding those I think the best place to look is before there was a financial motive and look at the crypto punk movements and those who’d been trying to do trustless computing since the 90s in order to use technology to make society more fair and democratic.
- netsharc 9y ago
  So, what is stopping people from adapting some other blockchain currency technology to do their trades? Why does it have to be bitcoin? I really don't get how you can't separate the technology and one implementation of the technology.
increment_i 9y ago
Could you imagine if Bitcoin was the catalyst for the next economic recession? That would certainly be out of left field.
- westiseast 9y ago
  I was thinking about this - it probably won’t be. It’s just a lot of people will end up feeling sheepish. Recessions tend to bring down economies when they impact on wider economic activity - eg in the Great Depression it was all the loans taken and functional capital misused to play on the stock market. In the Great Recession it was mortgages in arrears, and the huge credit crunch as banks tried to balance their books. At least at the moment, Bitcoin is probably mostly made up of small investors using small savings (sub 20k USD) that aren’t leveraged up in any way. If Bitcoin collapses, people just lose their shirts, but not their homes and jobs.
- OtterCoder 9y ago
  It's possible. This bubble reminds me of the South Sea Company bubble. Whatever utility Bitcoin has is being massively dwarfed by the price speculation.
- ifdefdebug 9y ago
  By now I think it's essentially zero-sum gambling what's going on. No dollars are going to be destroyed when the bubble bursts (if it is a bubble). They just change owner. No factories will close. Probably no major banks are going to crash. Just individuals losing or earning money. All of this of course might change if/when factories/banks begin to invest heavily in bitcoin.
  - nostrademons 9y ago
    Right now it'd probably be a net positive to the economy. Many of the people who were in early and have made paper millions weren't all that rich before and just happened to get lucky, while the money that's cashing them out now is largely coming from wealthy people & institutions that don't want to be left behind. Redistribution from rich -> poor is usually an economic plus, because it shifts cash from people who have a tendency to sit on marginal dollars to people who have a tendency to spend it. This could reverse if the average man on the street starts investing significant amounts of money, enough that they'd miss it if it evaporated. Then we'd get a big recession when the bubble popped.
dumbfounder 9y ago
There are 2 basic things that the writer misses the point completely on that he uses to "prove" his point: Bitcoin isn't a business. ICO's are not Bitcoin.
- workthrowaway27 9y ago
  His point is that Bitcoin/the blockchain doesn't enable any new applications that people care about[0], while it was obvious to everyone at the time that the internet enabled all sorts of new businesses. He's not claiming Bitcoin is a business anymore than he's claiming the internet is a business. And the ICO stuff is just supporting the his argument that the technology has no underlying value. [0]: Someone will probably comment, "but Bitcoin[1] enables decentralized blah-blah-blah". Okay, but why is the decentralized version any better? Centralization works fine for almost everything, and in fact is the trend in technology. [1]: Someone else will probably say, "Bitcoin is just an instance of a blockchain/a distributed consensus protocol/whatever you want to call it and that's what's revolutionary." Okay, fine, but what applications does it enable that aren't better served by existing technology?
cerealbad 9y ago
is bitcoin the new html?
swlkr 9y ago
I just think it's an amazing opportunity to be part of a bubble. I missed the last two bubbles (real estate and dot com). Bubbles pop, sure, but putting at least some money into them can pay off, of course I'm willing to lose whatever I put into it.
- workthrowaway27 9y ago
  If you assume that a bubble starts and ends at the same place[0] then a bubble just serves to transfer wealth from one group of people to another. If you think you know something that allows you to be on the receiving end, great, you might even be right. Otherwise you're just gambling. [0]: Simplifying somewhat since some assets like stocks, homes, etc. have upward trends so the bubble probably ends slightly higher than it started.
659087 9y ago
The "it's a sure thing" posts have really been ramping up in recent days. Lots of talk on reddit about how people should take their money out of the evil banks and put it in Bitcoin where it's "safer" and "sure to make them more money".
mamon 9y ago
It's official: Bitcoin bubble will burst in the next few weeks/months. Just wait for Goldman Sachs clients to buy enough shorts... https://www.bloomberg.com/news/articles/2017-12-07/goldman-sachs-is-said-to-clear-bitcoin-futures-when-they-go-live https://www.bloomberg.com/news/articles/2017-12-07/goldman-s...
mirimir 9y ago
> ... whose backers posit its primary value as a way to avoid the rule of law ... Sounds bad. But here's what Ari Paul actually said:[0] > So there are quite a few use cases. I think the biggest and clearest, and easiest to understand, is as a store of value that can't be censored and is resistant to seizure. And so, the really clear example of demand for this, that I see, is the offshore banking system. Which is roughly 20 trillion dollars today. And it's not just people trying to dodge taxes. Apple, Amazon, every billionaire on the planet, has wealth stored there. And firms like JPMorgan collect fees to offshore law abiding citizens’ wealth. And people want to store their wealth securely, in a way that no single judge could freeze all of their assets. Right? Amazon doesn't want their entire global business operation to be shut down by one judge in Brussels. They want to be able to go through a lengthy appeals process and keep their business operating. So cryptocurrency performs that same task of the offshore banking, of keeping wealth secure an order of magnitude better. So we see massive real fundamental demand for this use case. Makes sense to me. 0) http://www.businessinsider.com/cryptocurrency-value-explained-by-crypto-hedge-fund-cio-ari-paul-2017-11?IR=T http://www.businessinsider.com/cryptocurrency-value-explaine...
- PeterisP 9y ago
  An offshore account in Belize (forgive me Belizeans, I'm not sure about your taxes, your name just came to my mind) is useful because an USD transfer from an anonymous Belize company can be used to buy a yacht or mansion in USA. Bitcoin is currently (mostly) unrestricted because it has many use cases, it's unclear which are the main ones, and there's a lot of posturing about the legitimate use cases. However, in the long run, if it becomes clear that the other use cases fail and only this one remains, then this one will be (made) useless as well - a single act of law requiring all legitimate sellers to verify the identity (and tax status) of every transaction in bitcoin above USD $1000 (like https://en.wikipedia.org/wiki/Currency_transaction_report https://en.wikipedia.org/wiki/Currency_transaction_report for cash), and it's suddenly not worth to store billions in it. Sure, the small scale people will use it to stash their wealth, but they don't have that much wealth to begin with, and that usecase won't justify the immense market cap associated with a $19000 BTC price.
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CryptoPunk 9y ago
Bitcoin really worries me. I don't think cryptocurrency is a bubble, but I believe Bitcoin could be, and that its crash could cause a lot of market chaos, and hurt a lot of people. What the general public doesn't understand about Bitcoin is that its promise was betrayed by its ruling elite. It is no longer peer-to-peer electronic cash, because it cannot scale to allow widespread peer-to-peer usage. It is increasingly becoming a pure speculative vehicle, with no utility other than as a store of value (and a very expensive to transact one at that). In other words, the advocacy done years ago to put Bitcoin into the public consciousness was all based on a premise that turned out to be a lie. The investing public doesn't know any of this. Why I say it 'could' be a bubble, rather than that it is a bubble, is that it could find utility as a form of central bank money. While the masses wouldn't be able to use it, it's conceivable that it could have enough utility to large financial institutions to maintain a very high value.
- hnarn 9y ago
  Crypto currencies are like TCP/IP in a world with no use cases for networks. I've said from day one that the day I will start using Bitcoins is when it's "market ready", meaning that my mom can use it and it meets the demands put on regular payment services today in terms of reliability and speed. BTC is nowhere close, more specifically no cryptocurrency at all is anywhere close. Bitcoin has barely moved from being a cool proof of concept, which is worrying. And now people are "investing" heavily in something they don't understand, if buying a currency can even count as investing.
noddy1 9y ago
Big picture time: 1) Do you think in 50 years there will be 150 nation state currencies or mainly a single global one? 2) Do you think the world superpowers (china, russia, US) will refuse to let another superpower's currency become the single global currency? 3) What will the total market cap of this currency be? 4) What is the chance that bitcoin or some derived form in which current holdings are preserved is that currency? Now put a value on probability or amount for each of these statements. Here's my personal belief for example: 1 x 2 x 3 x 4 = ? 50% x 70% x 30 trillion x 10% = 1.05 trillion
- asdgkknio 9y ago
  1. No idea. 2. No idea. 3. No idea. 4. About 0%. They're laughably unscalable and wasteful.
- marvin 9y ago
  With the market cap of Bitcoin at $250 billion, we are already 1/4 of the way there. So if your numbers are right, you won't make more than 4x by buying BTC at the current price.
mderazon 9y ago
Isn't the whole point of a bubble is that you don't know you're in one until it bursts ? > Because it is often difficult to observe intrinsic values in real-life markets, bubbles are often conclusively identified only in retrospect. [1] https://en.m.wikipedia.org/wiki/Economic_bubble https://en.m.wikipedia.org/wiki/Economic_bubble

94 points by fraqed 9y ago

I will say what I've always said about crypto... Keep telling me it's a bubble. Keep writing long educated articles about it. All while I consistently get rich. All while it's getting late for you to get rich too.

stephengillie 9y ago
Remember 2013 and 2014? What's different this time?
- mavdi 9y ago
  Nothing is different. I said back then it would hit $1M in 10 years, I will say the same now except perhaps now 2 years. People are really underestimating what a shit storm Bitcoin and other crypto will cause in finance.
  - wyldfire 9y ago
    I'm long on bitcoin. I think it's awesome and a powerful, clever innovation. But I don't think that cryptocurrencies will cause a "shitstorm". I'm under no delusion that Your Favorite Bank or Stock Exchange won't exist in two years, or in ten or even twenty. Managing and storing/handling/operating cryptocoins is not for the feint of heart. At best, the most disruption you might see would be the Coinbases of the world having a bigger role in some of the global financial market and traditional financial giants having some slightly smaller role to make room. Holding bitcoin on your own is better than putting money in your mattress, but it's way, way, way less safe than an insured deposit in a bank. The volatility will decrease but it will at best be subject to the same 0.5-1% intradaily swings that a foreign currency goes through. It would take a substantial amount of time and money for it to settle down that much, though.
  - stinky613 9y ago
    Why and how will they cause a shit storm in finance?
  - deadmetheny 9y ago
    The financial shitstorm that it's gonna cause is when the world comes to its fucking senses and realizes that burning electricity to move around Internet Fun Bucks is a massive waste, the bottom falls out entirely, and this whole thing is finally behind us. I'm gonna feel vaguely sorry for everyone who put their life's savings into Dunning-Krugerrands to get a handful of lucky nerds who got out at the right time rich.
    - harrumph 9y ago
      >Managing and storing/handling/operating cryptocoins is not for the feint of heart. Given the body count of exchanges and coins that have collapsed due to unauthorized access, your spelling error is actually a beautiful thing.
    - pessimizer 9y ago
      > everyone who put their life's savings into Dunning-Krugerrands I'm pretty sure that's going to turn out to be pension, mutual funds, and banks, just like last time, and everyone is going to be screwed. The question as bitcoin rises is how much has been borrowed against bitcoin holdings in how many ass-backward, half-fraudulent, made-legal-by-obscure-clauses-in-amendments-written-by-lobbyists-and-attached-to-unrelated-bills-with-bipartisan-support ways.
- deleted 9y ago
  [deleted]
- DennisP 9y ago
  If nothing is different, you're implying that if someone holds through the next crash, they'll reach much greater heights later. (But personally I think there is a difference: there's more-advanced competition now.)
AznHisoka 9y ago
Why would it ever be late to get rich if it's not a bubble?
- mavdi 9y ago
  I think the price will stabilise at some point with small fluctuations (just like gold). So soon you won't be able to make money from buying in early.
  - singularity2001 9y ago
    no the price can't stabilize. Its hyper-deflationary by Design. it will either go way up or completely down.
    - mavdi 9y ago
      Fair enough :) You should write a long educated article about it!
    - popol12 9y ago
      yes, just like gold, right ?
  - rsynnott 9y ago
    > I think the price will stabilise at some point with small fluctuations (just like gold). Have you ever looked at the price history of gold in inflation-adjusted terms? That is VERY much not what gold does.
- bryanrasmussen 9y ago
  Well the industrial revolution was not a bubble, but it's pretty late in general to get rich at the industrializing your local handy-crafts. Not that I have an opinion on Bitcoin not being a bubble.
  - gspetr 9y ago
    > it's pretty late in general to get rich at the industrializing your local handy-crafts. In general, yes. But now you can get rich when you deindustrialize: http://instapaint.com/ http://instapaint.com/
empath75 9y ago
Tell that to all the paper millionaires I knew in the late 90s who lost everything in the dotcom bubble. They were 'rich', too, for a few months.
- zaidf 9y ago
  There is a difference between "a few months" and 7 years (and going).
whyenot 9y ago
> All while it's getting late for you to get rich too. It's easy to get on the train, much harder to know when to get off. I still remember the anguished posts four years ago on HN from people who put their life savings into bitcoin shortly before the market crashed. One Reddit user on r/bitcoinmarkets posted that he had lost everything and took his own life. It took years for the market to recover. Don't fool yourself, nobody knows where this train is going.
PeterisP 9y ago
Have you actually gotten rich? As in, have you realized any of your gains; have you diversified your (new) assets so that at least a significant part of them is in something that's not speculative and can't go down much even if you're mistaken? For example, silicon valley is full of people that were once multi-multi-millionaires on paper by holding stock that had an extremely high price, but didn't manage to get to sell it until the valuation collapsed. There's much more of them than the actual multi-multi-millionaires.

paulpauper 9y ago

$16k lol wtf bitcoin solved a problem..A few weeks ago I could not login to my paypal account due to verification BS, so I was able to pay instantly with Bitcoin. problem solved.

stinky613 9y ago
Instantly? I thought the transactions took an average 10min. Am I wrong?
- rocqua 9y ago
  It depends. If you send me a signed transaction that spends some of your money, you can simply put that into the blockchain. The issue is that you might send multiple such transactions spending the same money. If I want to guard against others trying to spend the same money I have to wait until the transaction is a few blocks deep. Generally the advice is 6 blocks which should be about an hour.
  - spookthesunset 9y ago
    In other words, for any useful transaction... Bitcoin isn't instant at all.
    - joshvm 9y ago
      Define useful though. If you have to wait an hour to confirm an online order, is that a problem if the item won't ship for hours anyway? A bigger problem right now is that you pay whatever the current rate is. With the current volatility you could easily overspend or underspend by a large amount.
      - j_s 9y ago
        Steam blamed volatility when they bailed yesterday. Steam is no longer supporting Bitcoin | https://news.ycombinator.com/item?id=15863182 https://news.ycombinator.com/item?id=15863182 > due to high fees and volatility in the value of Bitcoin

etr-strike 9y ago

An article claiming bitcoin's a bubble? Wow, hadn't considered that before! Just yesterday it came to light that the ECB was purchasing fraudulent bonds that are now worthless. The Bank of Japan is directly buying ETFs. The Federal Reserve increased the money supply to levels never seen before using QE, and has yet to reduce its balance sheet even slightly. Housing is more expensive than it's ever been. Stock markets are more expensive than they've ever been. Everyone knows the official rate of inflation is well below the real rate. Our savings accounts have effectively negatively interest rates. But bitcoin is the bubble. Bitcoin is the only safe haven asset available for purchase right now. It's the only asset that doesn't require me to trust an institution or an individual. It can't be confiscated. It's rules are known. I'll trust in Bitcoin, thanks.

paulpauper 9y ago
it's the everything-goes-up economy: bitcoin, expensive homes, stocks, web 2.0 valuations, etc.
CPLX 9y ago
> Bitcoin is the only safe haven asset available for purchase right now. lol
- etr-strike 9y ago
  Is bitcoin volatile? Absolutely...but how do you expect a completely new asset type to behave? At this point bitcoin is a populist movement just as unexpected as Trump or Brexit. It's a populist revolt against monetary policy which people have no control over. Of course this trustless and decentralized asset type forcing it's way into the world financial system is going to experience volatility.
  - CPLX 9y ago
    Bitcoin, currently, is a mechanism for high stakes gambling.* People fucking love gambling. So it's a useful innovation, in a sense. As long as you actually understand what it is and why people are buying it you'll be OK. Calling it a safe haven asset class however, is, in fact, amusing. * To be fair it's also good for buying drugs, credit card numbers, and child porn.

elmar 9y ago

CryptoKitties that's the real bubble.

sf_rob 9y ago
When the USD collapses, you're going to wish you had a rare Gen 0 kitty to trade for ammo and rice.
cwkoss 9y ago
We're entering a dank cyberpunk future where Banks hold digital cats as a significant portion of their balance sheet.

stillbourne 9y ago

The block chain is an interesting concept. I just don't think entropy should be a valid commodity currency. Here, let's trade spent compute cycles, and then spend more compute tracking where my compute has gone! Yo, dawg! I heard you like entropy so I put some entropy on your entropy so you can track entropy. Meta-Entropy is all the rage these days.

wyldfire 9y ago
I will posit that the proof-of-work is the only way to have: (1) a trustless decentralized network with (2) equitable distribution/minting of the coin. I will concede that other coins exist that don't use a proof-of-work (instead proof-of-stake or other). Those forfeit trustlessness and/or equitable distribution. I will also concede that it may be possible for those coins to fulfill a need and be useful without all of those things. Though I doubt they ever could have been created if not for bitcoin having been created first.
- stillbourne 9y ago
  Explaining your reason for trusting it doesn't detract from the fact that you are just trading entropy around. "Proof-of-work?" What work? I spent a undefined amount of power from the grid to render a string of digits in a specific pattern? I can flail against my keyboard or pipe /dev/urandom to a file is that worth $16k? Can't you see that you are engaging in madness? Just because you have defined the method of your madness doesn't make it any less insane.
  - wyldfire 9y ago
    It's not madness. I think you're dismissing it as "insane" without understanding some critical issues. It's [proof-of-work] the only way to do that [what bitcoin does], or rather no one has yet suggested an alternative that preserves those qualities. The work done for the bitcoin network has utility, that much we can agree on? And you think perhaps that the utility provided by the network is not a net benefit considering the cost of the PoW? Well, unfortunately that much is subjective and there's enough folks out there willing to spend resources on it. However it's not madness. Proof-of-work is required in order to have a mechanism that has bitcoin's qualities. If you want to fight against what you might perceive as waste or madness, it seems like tilting at windmills IMO. But the best thing you could do is build a better mousetrap -- or invest/promote one of the non-PoW coins out there. EDIT: clarified some uses of "it" in the first paragraph.

dpflan 9y ago

If you're interested in the concept of bubbles in general: The economist John Kenneth Galbraith wrote about bubbles in his book A Short History of Financial Euphoria. If you're intrigued by such economics events, this is a good, quick read (on the "tulip craze", junk bonds, etc): A Short History of Financial Euphoria > https://www.penguinrandomhouse.com/books/321392/a-short-history-of-financial-euphoria-by-john-kenneth-galbraith/9780140238563/ https://www.penguinrandomhouse.com/books/321392/a-short-hist... _ JKG's Bio: > https://en.wikipedia.org/wiki/John_Kenneth_Galbraith https://en.wikipedia.org/wiki/John_Kenneth_Galbraith _ _-_ UPDATE _-_ Shiller also published Irrational Exuberance, each new edition filled with more analysis of recent "bubbles": > https://en.wikipedia.org/wiki/Irrational_Exuberance_(book) https://en.wikipedia.org/wiki/Irrational_Exuberance_(book)

crispytx 9y ago

"Even for a survivor of the dot-com bust, bitcoin is breathtaking"

hectorr1 9y ago

The question that I keep coming back to is what are the implications of investing/speculating in a technology well before its implications are understood? Adam Ludwin, the CEO of Chain, talks about how when the dot-com bubble happened, everyone knew at least to an extent that online retail would be a thing. Social networks would be a thing. Digital media would be a thing. The required ingredients were competition, Moore's Law, and time. Bitcoin is different for a few reasons. It doesn't solve economic problems for most people in developed countries. It's also a development far deeper in the technology stack, a change in ledger management and accounting procedures. The last major update to this was double entry in the Italian Renaissance, which allowed the formation of corporations. The one before that was the invention of zero. We don't know what the implications of Bitcoin will be. I think a much better analogy for the current bubble is the South Sea Company, since that was essentially people speculating on a new asset class (equity) that was poorly understood at the time. But saying that it's a bad investment because the use cases are not immediately obvious misses the forest for the trees.

throwawayjava 9y ago
> a change in ledger management and accounting procedures. The last major update to this was double entry in the Italian Renaissance That seems wrong. I'm not an accountant, but I have a damn hard time believing that accounting practices haven't changed significantly since the Italian Renaissance...
- hectorr1 9y ago
  Accounting practices, professionalism, standardization, etc have obviously evolved tremendously since then, the same way any technology does as adoption increases. Math wasn't fixed between the invention of numbers and the concept of zero, but it became far more powerful when you incorporated it. Another way to think about it is with cars. Cars today bear no resemblance to what they looked like or were capable of when they were invented, but nothing around the core idea of putting an engine on wheels has changed. The airplane was different. (But so was the Segway)
- colorint 9y ago

thisisit 9y ago

The gaggle of articles on the Bitcoin bubble is amazing. Most interesting thing is, at least for me, that these are not doing a great job convincing cryptocurrency supporters that there is a bubble. The logic goes - If everyone thinks it is bubble, it probably is not a bubble. I wonder how much of this record rally can be attributed to the upcoming Futures market. Anyone has theories on this?

paulgb 9y ago
When has there ever been something that everyone thought was a bubble but wasn't?
- thisisit 9y ago
  I don't know. I am just echoing a sentiment which is going around. The way I see it is not many of the articles talk about the economic perspective of bitcoin and rather dismissive of the whole point of bitcoin. It helps no one but reinforces the support.
- joeschmoecad 9y ago
  Google. Facebook. Amazon. Big Tech in general. Everyone called it a bubble until they started making shit loads of money.
- iopq 9y ago
  "The growth of the Internet will slow drastically, as the flaw in 'Metcalfe's law'–which states that the number of potential connections in a network is proportional to the square of the number of participants–becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's." -Paul Krugman, 1998
- solresol 9y ago
  The first railway mania (England 1830s). The pricing of the railways was completely insane compared to any reasonable business projections. Everyone was saying that there was a financial bubble (they were well aware of the Dutch tulip mania) as more railways were built with ever more insane valuations, all designed to be repackaged into shares to be sold onto the next fool. Punchline: because the trains had to stop to pick up coal and water along the way, the railway operators discovered that most of their business wasn't coming from end-to-end journeys between big locations (which was what the railways were built to do), but instead from people getting on and off at stops along the way. With this sudden extra source of income, the railways returned quite a healthy return to their investors.

singularity2001 9y ago

people thinking "Oh I just get out when the price starts falling" are utterly mistaken: Transactions now taking several hours might then take several days. Already getting Error 520 on Kraken

xutopia 9y ago

He's saying Bitcoin is shit by using example another cryptocurrency as his example. This is simply disingenuous.

wyldfire 9y ago
Yeah, the fact that he mentioned ICOs so many times is really disappointing. I think many/most ICOs are crap, too, but how does that impact bitcoin?
- PeterisP 9y ago
  In order to justify the current valuation of bitcoin, there needs to be some (at least one, but preferably more) future use case that's extremely useful to masses and would have a very large market cap because of it's large scale usefulness. The author mentions a bunch of candidate use-cases that might perhaps somehow justify it (including ICOs), but finds them all insufficient. If it's not competitive to replace a large portion of world wide consumer payments, then the author doesn't see any other use case (other than pure speculation i.e. holding BTC with expectation that they'll appreciate) that's sufficiently huge for the valuation/market cap BTC is currently trying to fill.

jondubois 9y ago

There are some huge differences between the dot-com bubble and cryptocurrencies. Firstly, practically everyone who invests in cryptocurrencies knows that there is a chance that they could drop massively - Nobody is being deceived. If anything, I would say that most buyers tend to underestimate the technical accomplishments and the amount of vision behind most popular cryptocurrencies. Secondly, unlike companies, cryptocurrencies can never* go bankrupt. They cannot be shut down by any single government. There will always be developers with machines somewhere willing to mine coins. It's already possible to build businesses/services on top of blockchains and these businesses have a huge advantage over regular businesses; they can never go bankrupt. Also, they are completely autonomous. There was a lot of publicity around DAO (and its subsequent failure) but in spite of this, there are already value-creating businesses based on Blockchain technology which are currently operating under the radar: e.g. IOTA is a cryptocurrency but it's also platform that lets users buy and sell data directly from internet-connected sensors also Siacoin is a file-storage service, Power Ledger is an electricity marketplace... There are many others. Another huge advantage of most blockchain-based businesses is that anyone with hardware (or virtual machines) can participate in the value-creation process and be rewarded for it. * Unless maybe there is another massive Carrington Event... But even then it's unlikely that the blockchain of major cryptocurrencies will be completely wiped out.

michaelchisari 9y ago
knows that there is a chance that they could collapse completely - Nobody is being deceived I think this is your bias based on the people bought in within your circle, but when technologies like this hit the mainstream, that's never the case.
- jondubois 9y ago
  Maybe, but the word 'bubble' comes up quite regularly in the media when discussing Bitcoin. Surely it's somewhere at the back of people's minds.
  - RyanZAG 9y ago

0xCMP 9y ago

(just read the title, couldn't get past the bylines) I just saved this article so I can laugh at Tim in the future. First off. This-is-a-bubble. I'm not saying it's not. But, bitcoin IS solving major problems and it WILL fix the problems it has. Will it still be worth ~$20K/BTC? Maybe not, but maybe it'll be more. Hard to say. I can not imagine how Tim could think that cryptocurrencies, and more specifically blockchain technology, "doesn't solve anything." This is such a stupid statement to make. How exactly does a way to do trustless computing around the world equal "doesn't solve anything?" Brain dead opinion.

workthrowaway27 9y ago
Some questions: 1. Why is trustless computing important? 2. What does trustless computing allow us to do that we can't/won't do now at a comparable or lesser cost? 3. What evidence do you have that anyone cares about trustless computing other than the price of bitcoin and other cryptocurrencies?
- 0xCMP 9y ago
  1. Removing the central party was always key for making a system that could benefit everyone and not create rules that favored the powerful. Your question is phrased such that it’s talking about trustless computing as a whole so it can be applied to things such as creating a true and verifiably secure direct democratic system that everyone can trust and understand given some level of tech knowledge. 2. To establish a system of trust requires physical secuirty, political power, and financial resources that make this kind of computing only possible for the rich and powerful unless it’s already in their interest. 3. Price is an excellent indicator and the fact that we see coins being created means there’s innovation around it, but excluding those I think the best place to look is before there was a financial motive and look at the crypto punk movements and those who’d been trying to do trustless computing since the 90s in order to use technology to make society more fair and democratic.
netsharc 9y ago
So, what is stopping people from adapting some other blockchain currency technology to do their trades? Why does it have to be bitcoin? I really don't get how you can't separate the technology and one implementation of the technology.

increment_i 9y ago

Could you imagine if Bitcoin was the catalyst for the next economic recession? That would certainly be out of left field.

westiseast 9y ago
I was thinking about this - it probably won’t be. It’s just a lot of people will end up feeling sheepish. Recessions tend to bring down economies when they impact on wider economic activity - eg in the Great Depression it was all the loans taken and functional capital misused to play on the stock market. In the Great Recession it was mortgages in arrears, and the huge credit crunch as banks tried to balance their books. At least at the moment, Bitcoin is probably mostly made up of small investors using small savings (sub 20k USD) that aren’t leveraged up in any way. If Bitcoin collapses, people just lose their shirts, but not their homes and jobs.
OtterCoder 9y ago
It's possible. This bubble reminds me of the South Sea Company bubble. Whatever utility Bitcoin has is being massively dwarfed by the price speculation.
ifdefdebug 9y ago
By now I think it's essentially zero-sum gambling what's going on. No dollars are going to be destroyed when the bubble bursts (if it is a bubble). They just change owner. No factories will close. Probably no major banks are going to crash. Just individuals losing or earning money. All of this of course might change if/when factories/banks begin to invest heavily in bitcoin.
- nostrademons 9y ago
  Right now it'd probably be a net positive to the economy. Many of the people who were in early and have made paper millions weren't all that rich before and just happened to get lucky, while the money that's cashing them out now is largely coming from wealthy people & institutions that don't want to be left behind. Redistribution from rich -> poor is usually an economic plus, because it shifts cash from people who have a tendency to sit on marginal dollars to people who have a tendency to spend it. This could reverse if the average man on the street starts investing significant amounts of money, enough that they'd miss it if it evaporated. Then we'd get a big recession when the bubble popped.

dumbfounder 9y ago

There are 2 basic things that the writer misses the point completely on that he uses to "prove" his point: Bitcoin isn't a business. ICO's are not Bitcoin.

workthrowaway27 9y ago
His point is that Bitcoin/the blockchain doesn't enable any new applications that people care about[0], while it was obvious to everyone at the time that the internet enabled all sorts of new businesses. He's not claiming Bitcoin is a business anymore than he's claiming the internet is a business. And the ICO stuff is just supporting the his argument that the technology has no underlying value. [0]: Someone will probably comment, "but Bitcoin[1] enables decentralized blah-blah-blah". Okay, but why is the decentralized version any better? Centralization works fine for almost everything, and in fact is the trend in technology. [1]: Someone else will probably say, "Bitcoin is just an instance of a blockchain/a distributed consensus protocol/whatever you want to call it and that's what's revolutionary." Okay, fine, but what applications does it enable that aren't better served by existing technology?

cerealbad 9y ago

is bitcoin the new html?

swlkr 9y ago

I just think it's an amazing opportunity to be part of a bubble. I missed the last two bubbles (real estate and dot com). Bubbles pop, sure, but putting at least some money into them can pay off, of course I'm willing to lose whatever I put into it.

workthrowaway27 9y ago
If you assume that a bubble starts and ends at the same place[0] then a bubble just serves to transfer wealth from one group of people to another. If you think you know something that allows you to be on the receiving end, great, you might even be right. Otherwise you're just gambling. [0]: Simplifying somewhat since some assets like stocks, homes, etc. have upward trends so the bubble probably ends slightly higher than it started.

659087 9y ago

The "it's a sure thing" posts have really been ramping up in recent days. Lots of talk on reddit about how people should take their money out of the evil banks and put it in Bitcoin where it's "safer" and "sure to make them more money".

mamon 9y ago

It's official: Bitcoin bubble will burst in the next few weeks/months. Just wait for Goldman Sachs clients to buy enough shorts... https://www.bloomberg.com/news/articles/2017-12-07/goldman-sachs-is-said-to-clear-bitcoin-futures-when-they-go-live https://www.bloomberg.com/news/articles/2017-12-07/goldman-s...

mirimir 9y ago

> ... whose backers posit its primary value as a way to avoid the rule of law ... Sounds bad. But here's what Ari Paul actually said:[0] > So there are quite a few use cases. I think the biggest and clearest, and easiest to understand, is as a store of value that can't be censored and is resistant to seizure. And so, the really clear example of demand for this, that I see, is the offshore banking system. Which is roughly 20 trillion dollars today. And it's not just people trying to dodge taxes. Apple, Amazon, every billionaire on the planet, has wealth stored there. And firms like JPMorgan collect fees to offshore law abiding citizens’ wealth. And people want to store their wealth securely, in a way that no single judge could freeze all of their assets. Right? Amazon doesn't want their entire global business operation to be shut down by one judge in Brussels. They want to be able to go through a lengthy appeals process and keep their business operating. So cryptocurrency performs that same task of the offshore banking, of keeping wealth secure an order of magnitude better. So we see massive real fundamental demand for this use case. Makes sense to me. 0) http://www.businessinsider.com/cryptocurrency-value-explained-by-crypto-hedge-fund-cio-ari-paul-2017-11?IR=T http://www.businessinsider.com/cryptocurrency-value-explaine...

PeterisP 9y ago
An offshore account in Belize (forgive me Belizeans, I'm not sure about your taxes, your name just came to my mind) is useful because an USD transfer from an anonymous Belize company can be used to buy a yacht or mansion in USA. Bitcoin is currently (mostly) unrestricted because it has many use cases, it's unclear which are the main ones, and there's a lot of posturing about the legitimate use cases. However, in the long run, if it becomes clear that the other use cases fail and only this one remains, then this one will be (made) useless as well - a single act of law requiring all legitimate sellers to verify the identity (and tax status) of every transaction in bitcoin above USD $1000 (like https://en.wikipedia.org/wiki/Currency_transaction_report https://en.wikipedia.org/wiki/Currency_transaction_report for cash), and it's suddenly not worth to store billions in it. Sure, the small scale people will use it to stash their wealth, but they don't have that much wealth to begin with, and that usecase won't justify the immense market cap associated with a $19000 BTC price.
- 9y ago

deleted 9y ago

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CryptoPunk 9y ago

Bitcoin really worries me. I don't think cryptocurrency is a bubble, but I believe Bitcoin could be, and that its crash could cause a lot of market chaos, and hurt a lot of people. What the general public doesn't understand about Bitcoin is that its promise was betrayed by its ruling elite. It is no longer peer-to-peer electronic cash, because it cannot scale to allow widespread peer-to-peer usage. It is increasingly becoming a pure speculative vehicle, with no utility other than as a store of value (and a very expensive to transact one at that). In other words, the advocacy done years ago to put Bitcoin into the public consciousness was all based on a premise that turned out to be a lie. The investing public doesn't know any of this. Why I say it 'could' be a bubble, rather than that it is a bubble, is that it could find utility as a form of central bank money. While the masses wouldn't be able to use it, it's conceivable that it could have enough utility to large financial institutions to maintain a very high value.

hnarn 9y ago
Crypto currencies are like TCP/IP in a world with no use cases for networks. I've said from day one that the day I will start using Bitcoins is when it's "market ready", meaning that my mom can use it and it meets the demands put on regular payment services today in terms of reliability and speed. BTC is nowhere close, more specifically no cryptocurrency at all is anywhere close. Bitcoin has barely moved from being a cool proof of concept, which is worrying. And now people are "investing" heavily in something they don't understand, if buying a currency can even count as investing.

noddy1 9y ago

Big picture time: 1) Do you think in 50 years there will be 150 nation state currencies or mainly a single global one? 2) Do you think the world superpowers (china, russia, US) will refuse to let another superpower's currency become the single global currency? 3) What will the total market cap of this currency be? 4) What is the chance that bitcoin or some derived form in which current holdings are preserved is that currency? Now put a value on probability or amount for each of these statements. Here's my personal belief for example: 1 x 2 x 3 x 4 = ? 50% x 70% x 30 trillion x 10% = 1.05 trillion

asdgkknio 9y ago
1. No idea. 2. No idea. 3. No idea. 4. About 0%. They're laughably unscalable and wasteful.
marvin 9y ago
With the market cap of Bitcoin at $250 billion, we are already 1/4 of the way there. So if your numbers are right, you won't make more than 4x by buying BTC at the current price.

mderazon 9y ago

Isn't the whole point of a bubble is that you don't know you're in one until it bursts ? > Because it is often difficult to observe intrinsic values in real-life markets, bubbles are often conclusively identified only in retrospect. [1] https://en.m.wikipedia.org/wiki/Economic_bubble https://en.m.wikipedia.org/wiki/Economic_bubble