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There will be so many small time investors losing money when the bubble pops it's starting to make me wonder if it won't lead to some serious global destablizat

by gph 9y ago

There will be so many small time investors losing money when the bubble pops it's starting to make me wonder if it won't lead to some serious global destablization. This isn't just some investment play-thing of otherwise well-off individuals in developed countries. A lot of dumb money has flowed in, and it's from people who probably can't really afford to lose it without taking a serious hit to their net worth. Interesting times, maybe 50 years from now historians will be talking about the crypto-bubble and rising nationalism as the precursors to the next big war.

gomox 9y ago
Based on some surveys I did within the general US population, a significant number of people (around 30%) haven't even heard of Bitcoin or cryptocurrencies and most (60%+) have heard of it but haven't put money in it. Keep in mind that statistically speaking, you and I live in an echo chamber. Hacker News is a bubble of engineers with a penchant for business and finance (startups, the main thing here, are where geeks who also like money gravitate towards). My subjective experience in meatspace is similar to yours: a lot of people around me are involved somehow with cryptos, but I think that is likely caused by me fitting the aforementioned demographic. I think (and surveys validate) that the general penetration in the general population is still low. Total market cap for cryptocurrencies is 500B as we speak. Actual capital involved is much less. This is peanuts when compared to any measure of the global financial system. Most people have heard and operate by the mantra "this is crazy, don't put anything in that you are not willing to lose". 500B is a little over half what Apple alone is worth on NASDAQ. The difference being most people don't invest in Apple directly. A lot of people are probably exposed to Apple stock, but I don't think any mutual/hedge funds have significant positions in cryptocurrencies where a crash would affect the common folk. That is very different from a subprime mortgage used to buy a house you live in. No one that I know sells during dips or crashes, because cryptos are to some extent "play money". This, I think, explains the resiliency of the market to its wild fluctuations: no one expects anything else but crazy volatility. That being said, I am certain that cryptos will take a page in the history books. I have personally witnessed people doing and saying things that immediately make me think I should probably be working on the script for the cryptocurrency edition of The Big Short. Source: I have a bit of skin in the game.
- cobookman 9y ago
  And on the flip side a movie lime "wolf of walstreet"
  - Steeeve 9y ago
    The parallels to penny stocks in the 80s are rampant.
- pessimizer 9y ago
  > Based on some surveys I did within the general US population, a significant number of people (around 30%) haven't even heard of Bitcoin or cryptocurrencies and most (60%+) have heard of it but haven't put money in it. I hope these numbers aren't in any way accurate or representative, because they are absurdly high. If 40% of the population has invested in cryptocurrencies, that can't be anything but dangerous.
  - vitobcn 9y ago
    That doesn't sound right. I believe he was referring to 30% and 60+% making it 90+% who haven't touched crypto at all. Or in other words, at most the US crypto population would be under 10%. To me, that still sounds generous, and I would expect the actual number to be around a few percentage points only, but I don't have any data to back it up. Where I'm from, discussing with friends and acquaintances in real life, I haven't been able to find anybody at all who owns any cryptocurrencies whatsoever. So, there certainly might be a bubble (price market exceeding utility), but at this stage it would affect a very insignificant percentage of the overall population.

by gph 9y ago

gomox 9y ago

Based on some surveys I did within the general US population, a significant number of people (around 30%) haven't even heard of Bitcoin or cryptocurrencies and most (60%+) have heard of it but haven't put money in it. Keep in mind that statistically speaking, you and I live in an echo chamber. Hacker News is a bubble of engineers with a penchant for business and finance (startups, the main thing here, are where geeks who also like money gravitate towards). My subjective experience in meatspace is similar to yours: a lot of people around me are involved somehow with cryptos, but I think that is likely caused by me fitting the aforementioned demographic. I think (and surveys validate) that the general penetration in the general population is still low. Total market cap for cryptocurrencies is 500B as we speak. Actual capital involved is much less. This is peanuts when compared to any measure of the global financial system. Most people have heard and operate by the mantra "this is crazy, don't put anything in that you are not willing to lose". 500B is a little over half what Apple alone is worth on NASDAQ. The difference being most people don't invest in Apple directly. A lot of people are probably exposed to Apple stock, but I don't think any mutual/hedge funds have significant positions in cryptocurrencies where a crash would affect the common folk. That is very different from a subprime mortgage used to buy a house you live in. No one that I know sells during dips or crashes, because cryptos are to some extent "play money". This, I think, explains the resiliency of the market to its wild fluctuations: no one expects anything else but crazy volatility. That being said, I am certain that cryptos will take a page in the history books. I have personally witnessed people doing and saying things that immediately make me think I should probably be working on the script for the cryptocurrency edition of The Big Short. Source: I have a bit of skin in the game.

cobookman 9y ago
And on the flip side a movie lime "wolf of walstreet"
- Steeeve 9y ago
  The parallels to penny stocks in the 80s are rampant.
pessimizer 9y ago
> Based on some surveys I did within the general US population, a significant number of people (around 30%) haven't even heard of Bitcoin or cryptocurrencies and most (60%+) have heard of it but haven't put money in it. I hope these numbers aren't in any way accurate or representative, because they are absurdly high. If 40% of the population has invested in cryptocurrencies, that can't be anything but dangerous.
- vitobcn 9y ago
  That doesn't sound right. I believe he was referring to 30% and 60+% making it 90+% who haven't touched crypto at all. Or in other words, at most the US crypto population would be under 10%. To me, that still sounds generous, and I would expect the actual number to be around a few percentage points only, but I don't have any data to back it up. Where I'm from, discussing with friends and acquaintances in real life, I haven't been able to find anybody at all who owns any cryptocurrencies whatsoever. So, there certainly might be a bubble (price market exceeding utility), but at this stage it would affect a very insignificant percentage of the overall population.