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1. Most bubbles are not global but geographically restricted in some way; crypto is global. 2. There is some value to Blockchain technology, so the value is no

1. Most bubbles are not global but geographically restricted in some way; crypto is global. 2. There is some value to Blockchain technology, so the value is not $0. 3. When comparing, given all of these assets had a starting value of effectively $0 at launch, you should probably look at them from an angel investment PoV. Peter Thiel got similar returns when investing in Facebook. I'm not saying crypto is (entirely) comparable to Facebook in value (it might, it might not -- too early), but that's how I think the gains could make sense. It's valued like an internet startup, and then some. 4. The global market is still tiny? The entire crypto space is $550bn in market cap. Facebook is $552bn in market cap. Valuations have probably gotten ahead of themselves and a lot of the smaller coins will die eventually, but it's still a blip in the grand scheme of things. 5. There is too much capital in the world. Too much cheap debt. Too much free money. This will fuel the mania. You could have put $2m in the stock market in 2008-2009, and if you used leverage in a smart way, could have ended up with $75-100m.

pg314 9y ago
> 2. There is some value to Blockchain technology, so the value is not $0. The value of current crypto-currencies might very well be zero, even if there is some value to blockchain technology. > 4. The global market is still tiny? The entire crypto space is $550bn in market cap. Facebook is $552bn in market cap. Comparing market caps like that is silly. I launch my own coin pg314-coin, 1 billion exist. I sell one to my friend for $1000. The market cap is now $1 trillion, twice that of Facebook... > You could have put $2m in the stock market in 2008-2009, and if you used leverage in a smart way, could have ended up with $75-100m. That is true of any period in time where the stock market went up. If you have a positive return to start with you can have an arbitrary multiplier with 'leverage used in a smart way'.
- charlesdm 9y ago
  > The value of current crypto-currencies might very well be zero, even if there is some value to blockchain technology. Sure. I'm just saying; you can't know. Bitcoin might be around in 5 years, Ethereum might be the platform everything gets built upon, or something better comes along, or it all dies never to be heard of again. > Comparing market caps like that is silly. I launch my own coin pg314-coin, 1 billion exist. I sell one to my friend for $1000. The market cap is now $1 trillion, twice that of Facebook... Approx. $10bn worth of Bitcoin was traded in the last 24 hours ($200bn market cap). Approx. $3.4bn Facebook shares were traded per day during the last 50 trading sessions ($550bn market cap). Let's assume that even half of that Bitcoin trading is wash trading (which I don't think so). I think it's a pretty good way of looking at market caps. But you're right for the smaller coins -- those valuations are not in line with the money invested. > That is true of any period in time where the stock market went up. If you have a positive return to start with you can have an arbitrary multiplier with 'leverage used in a smart way'. Sure. But debt has been cheap in the last 10 to 20 years, and that has driven up asset prices significantly across the globe. People overpay for assets everywhere. In times when everything has been going up, people are more willing to take risks. In times where everything is falling, people are less likely to take on speculative investments. That's just part of the cycle.
bloak 9y ago
2. There's value in blockchain technology, certainly, but someone who buys (any kind of) bitcoin is not buying technology. You wouldn't invest in baseball cards just because you think there's value in sport, would you?
- charlesdm 9y ago
  No, of course not. I was not talking about Bitcoin in particular. However, some people are buying Ethereum (not Bitcoin) because they think there is value in Blockchain technology.
dnautics 9y ago
Most bubbles are debt driven phenomena. I'm not entirely convinced people are playing the crypto market en masse using debt based instruments (besides the dollar itself, which is our point of reference anyways).
- charlesdm 9y ago
  Maybe not directly, but indirectly? If I have $10m of unrealised gains in the stock market, I can easily borrow $500k against that at near free interest rates to invest that in Bitcoin. I have a friend who did that, and he has done well. So it's definitely happening.
  - dnautics 9y ago
    This is going to happen more, especially as mainstream finance gets in the game, but I don't suspect it's common. Also note that the leveraging in your case is inverse. 500k against 10M is 5% leverage, Forex trades are done with 1000%, 10000% leverage...
- beefield 9y ago
  Yes, there is the chance that tether actually is backed by usd reserves 1 to 1. If it happens that they are not, that is one big debt instrument there...
- mathgenius 9y ago
  The most successful exchanges offer leverage: bitfinex, poloniex, bithumb (i think).
thisisit 9y ago
> 2. There is some value to Blockchain technology, so the value is not $0. So going from say 20k to 12k or $10 is fine?

pg314 9y ago

> 2. There is some value to Blockchain technology, so the value is not $0. The value of current crypto-currencies might very well be zero, even if there is some value to blockchain technology. > 4. The global market is still tiny? The entire crypto space is $550bn in market cap. Facebook is $552bn in market cap. Comparing market caps like that is silly. I launch my own coin pg314-coin, 1 billion exist. I sell one to my friend for $1000. The market cap is now $1 trillion, twice that of Facebook... > You could have put $2m in the stock market in 2008-2009, and if you used leverage in a smart way, could have ended up with $75-100m. That is true of any period in time where the stock market went up. If you have a positive return to start with you can have an arbitrary multiplier with 'leverage used in a smart way'.

charlesdm 9y ago
> The value of current crypto-currencies might very well be zero, even if there is some value to blockchain technology. Sure. I'm just saying; you can't know. Bitcoin might be around in 5 years, Ethereum might be the platform everything gets built upon, or something better comes along, or it all dies never to be heard of again. > Comparing market caps like that is silly. I launch my own coin pg314-coin, 1 billion exist. I sell one to my friend for $1000. The market cap is now $1 trillion, twice that of Facebook... Approx. $10bn worth of Bitcoin was traded in the last 24 hours ($200bn market cap). Approx. $3.4bn Facebook shares were traded per day during the last 50 trading sessions ($550bn market cap). Let's assume that even half of that Bitcoin trading is wash trading (which I don't think so). I think it's a pretty good way of looking at market caps. But you're right for the smaller coins -- those valuations are not in line with the money invested. > That is true of any period in time where the stock market went up. If you have a positive return to start with you can have an arbitrary multiplier with 'leverage used in a smart way'. Sure. But debt has been cheap in the last 10 to 20 years, and that has driven up asset prices significantly across the globe. People overpay for assets everywhere. In times when everything has been going up, people are more willing to take risks. In times where everything is falling, people are less likely to take on speculative investments. That's just part of the cycle.

bloak 9y ago

2. There's value in blockchain technology, certainly, but someone who buys (any kind of) bitcoin is not buying technology. You wouldn't invest in baseball cards just because you think there's value in sport, would you?

charlesdm 9y ago
No, of course not. I was not talking about Bitcoin in particular. However, some people are buying Ethereum (not Bitcoin) because they think there is value in Blockchain technology.

dnautics 9y ago

Most bubbles are debt driven phenomena. I'm not entirely convinced people are playing the crypto market en masse using debt based instruments (besides the dollar itself, which is our point of reference anyways).

charlesdm 9y ago
Maybe not directly, but indirectly? If I have $10m of unrealised gains in the stock market, I can easily borrow $500k against that at near free interest rates to invest that in Bitcoin. I have a friend who did that, and he has done well. So it's definitely happening.
- dnautics 9y ago
  This is going to happen more, especially as mainstream finance gets in the game, but I don't suspect it's common. Also note that the leveraging in your case is inverse. 500k against 10M is 5% leverage, Forex trades are done with 1000%, 10000% leverage...
beefield 9y ago
Yes, there is the chance that tether actually is backed by usd reserves 1 to 1. If it happens that they are not, that is one big debt instrument there...
mathgenius 9y ago
The most successful exchanges offer leverage: bitfinex, poloniex, bithumb (i think).

thisisit 9y ago

> 2. There is some value to Blockchain technology, so the value is not $0. So going from say 20k to 12k or $10 is fine?