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The Cryptocurrency Industry Is 'On the Brink of an Implosion', Research Says

191 points by nopacience 8y ago

drivingmenuts 8y ago
Well, hopefully graphics card prices will drop then.
- Scoundreller 8y ago
  My friend put a computer in their garbage bin last fall. I took out its “worthless” video card and still sold it for $40.
- sneak 8y ago
  That happened some time ago.
slammm 8y ago
I feel like its another case of the tech bubble. The projects with real causes and uses will come back from any implosion in the long run.
- fullshark 8y ago
  So illegal transactions and money laundering it is.
  - Scoundreller 8y ago
    Iunno, if i were a billionaire, the idea of having $50m under nobody’s control but my own that I can take anywhere, anytime, doesn’t exist anywhere else. I can’t do that with gold. Bank deposits are always available until they aren’t. But Coinbase can’t do this either.
    - notJim 8y ago
      Right, that's money laundering.
      - fastball 8y ago
        Having money you control is not money laundering.
      - beaner 8y ago
        Money laundering is when you launder money. Exclusive access to your own money is called financial sovereignty.
    - scient 8y ago
      And why would someone put $50m into a highly volatile, unchecked tech, where mediators are mostly known because of their security problems and breaches?
      - Scoundreller 8y ago
        1. Because you can afford to lose it. 2. There’s a chance (however small) that you could lose the other $950m, but keep some of this other $50m.
      - jobigoud 8y ago
        It's written in the post you are answering to: "Because it's under nobody’s control but my own that I can take anywhere, anytime".
    - umanwizard 8y ago
      Edit: I calculated this wrong, please ignore this comment
      - mopeloi 8y ago
        unless you have to cross a border with it?
      - 8y ago
  - MrEfficiency 8y ago
    Idk, I buy burritos at taco bell with my Bitcoin Debit Card. I dont trust my local government's always inflating currency.
    - spectec 8y ago
      >non-inflated currency >bitcoin Pick one.
      - fastball 8y ago
        > always inflating > fixed number of Bitcoins Don't think he needs to.
        spectec 8y ago
        Google defines inflation as: “a general increase in prices and fall in the purchasing value of money“. Let’s take a step back and remember how Bitcoin’s purchasing power has lost nearly $15,000 since its all-time high. So yes, he does need to.
        sincerely 8y ago
        Bitcoin is also worth almost exactly as much as it was worth a year ago.
        DennisP 8y ago
        The number of Bitcoins that currently exist is still increasing, at about 4% annually. They have an eventual cap (assuming that never gets hard-forked away) but for now they still mint 12.5 new bitcoins every 10 minutes.
    - headnshoulders 8y ago
      What card do you use? Anything on this list? https://docs.google.com/spreadsheets/d/1DRbTeMCzb4UeXI0YlAzBxMc2u2i0cN_17Ql6eMngK6E/edit#gid=0 https://docs.google.com/spreadsheets/d/1DRbTeMCzb4UeXI0YlAzB...
  - mindfulplay 8y ago
    That's exactly what will remain out of this pile of hot steaming garbage.
  - leroy_masochist 8y ago
    The long-term value of crypto will likely come from use cases made possible by auditable smart contracts that are administered on decentralized databases and run at perfect fidelity, facilitating the efficient flow of information through multiple types of systems (logistics, finance, etc) at a refresh rate / granularity that will be orders of magnitude faster / more detailed than the current status quo. In the meantime it'll be fun to say snarky things about shitcoins, no question about it, but the tech does have some pretty exciting potential.
    - castlecrasher2 8y ago
      >but the tech does have some pretty exciting potential And some terrifying consequences for bugs. Or administrative errors with contracts, or non-binding contracts that you'll need a traditional court to sort out anyway.
      - codehalo 8y ago
        > And some terrifying consequences for bugs As all important software (aircraft, medical, financial) do.
        rspeer 8y ago
        Those industries have stringent regulations on them. When an aircraft has a bug, there is a federal investigation.
    - lottin 8y ago
      These smart contracts people keep talking about, maybe one day they'll amount to something, but so far I don't know anyone who uses smart contracts, or who wants to use them, or who even knows what they are or what they do.
  - lawn 8y ago
    And... * Porn * Donations to wikileaks * Pot * Sending money to Venezuela * Leaving Venezuela with your wealth intact * Payments without giving all transaction info to the credit card companies * Digital payments for the unbanked All legal usage that makes sense.
    - ceejayoz 8y ago
      All of those items can be done pretty trivially without cryptocurrency (with the sort-of exception of Venezuela, but taking money out of the country is not a legal usage in either case).
      - lawn 8y ago
        Except credit card companies don't want to touch porn sites (they have to pay a huge markup and go through other middlemen) or pot companies (who accept cash but it's not digital). PayPal froze the donations to wikileaks. That's not possible if you donate using Bitcoin. The corrupt government in Venezuela may deem it illegal but it's not immoral to want to flee the country with your wealth. This is much easier with Bitcoin as you can just remember or write down your seed. The point is cryptocurrencies does this all better. And your definition of "pretty trivial" is for the most part ignorant.
        ceejayoz 8y ago
        That's quite a few moved goalposts.
        lawn 8y ago
        Granted the Venezuela example was a bad example of a legal use. Everything else stands though.
        ceejayoz 8y ago
        Your markup/middleman argument pretends that Bitcoin didn't fairly recently have massive fees for transactions - for a while, one's $10/month Pornhub subscription would've cost $40+/month. (Side note: said monthly subscriptions are another challenge here for crypto and porn...) Cryptocurrency stored on an exchange can be frozen, just like one's PayPal balance can be. Wikileaks takes PayPal (and credit card, bank transfer, checks, etc.) donations currently on their site.
- yoavm 8y ago
  The only question is... what cryptocurrency projects have a real cause and use cases? I have yet to meet a person that bought something using a cryptocurrency, expect for another cryptocurrency.
clircle 8y ago
Those red lines on the graph are just awful: arbitrarily drawn to make things look worse. Fit an actual model and drawn on prediction intervals next time. I have never owned crypto currency, I'm just easily triggered by bad graphs.
- agumonkey 8y ago
  Welcome to crypto, land of the arbitrary graph. pro tip: never read twitter streams from "crypto trader" your IQ will drop like that \
ataturk 8y ago
About time, the whole thing has been a complete and total scam from Day Uno.
fullshark 8y ago
Unless there's more analysis than what's quoted in the article, this appears to be nothing more than trend analysis based on the last few months.
pavlov 8y ago
An important harbinger of trouble to come is that the Tether (USDT) coin, which is supposed to be pegged 1:1 to USD, is now trading substantially below $1: https://www.bloomberg.com/news/articles/2018-10-15/dollar-peg-that-underpins-20-of-crypto-trades-is-under-pressure https://www.bloomberg.com/news/articles/2018-10-15/dollar-pe... Billions of Tethers were printed seemingly out of thin air and used to purchase Bitcoin. It's part of the foundation of the house of cards that keeps Bitcoin at its current price: "Despite their modest total market value of about $2.4 billion, Tether’s coins play an outsized role on cryptocurrency exchanges. They were the second-most traded among all digital currencies after Bitcoin as of Oct. 15, according to data compiled by CoinMarketCap.com." https://www.bloomberg.com/news/articles/2018-10-14/why-crypto-traders-are-so-worried-about-tether-quicktake-q-a https://www.bloomberg.com/news/articles/2018-10-14/why-crypt...
- kjullien 8y ago
  Tether isn't what cryptocurrencies was/is supposed to be. It's as if you took Herbalife as a valuable/honest/model player in the dietary supplement market...
  - jayalpha 8y ago
    " It's as if you took Herbalife as a valuable/honest/model player in the dietary supplement market..." Are they not? Shakes can be a decent way to lose weight. Seems to be that people are willing to pay a premium for the "community". But IMHO saying their stuff is overpriced is like saying beer in a bar is overpriced because you can buy a beer for one dollar in the supermarket. Yes, it is correct. In some way.
    - blang 8y ago
      Not the parent, but I imagine what they are talking about is the Herbalife depends more on recruiting new members than they are from selling product. I would link but just googling "bill ackman herbalife" will lead you down infinite rabbit holes.
      - 8y ago
mindfulplay 8y ago
Getting my popcorn ready... This is the silliest human endeavor that somehow seems to attract a few smart people too.
- gph 8y ago
  The early smart people are now rich smart people. The late smart people aren't very smart after all.
- gibsons77 8y ago
  Perhaps there's a reason why smart people are attracted to it.
- kickopotomus 8y ago
  I wouldn't call it silly. The idea behind cryptocurrency (distributed agreement) remains a difficult problem to solve efficiently and securely. If nothing else, it is a worthwhile thought experiment. As for whether or not any cryptocurrency will ever be stable and widespread enough to be usable in the western world remains to be seen.
  - floatboth 8y ago
    Trustless distributed agreement. It's an interesting algorithm, but not actually useful. Society is literally built on trust. So "anti-government" (or "anti-social"?) currency is the only use for it.
- megaman8 8y ago
  Do you also think it's silly that credit card companies can charge merchant fees from 2.5% to 5% for everything you purchase. Whether or not you use a credit card, you still end up paying the fee because it still gets passed on to you. the future may not be Bitcoin. But, Alot of smart people saw this opportunity: I wouldn't write it off just yet.
decentralised 8y ago
In general, if you pick the all time high as a starting point for your "research" it's all the way down from there. Bitcoin's daily transaction volume is moving to second layer so the metric used is not very useful. More importantly, and I can't stress this enough, the FX value of a cryptocurrency is not directly related to the project's status (developer activity or security track record, etc) but it is correlated to public perception of its value, which is why these sort of article pops up every now and again at regular intervals. https://www.reddit.com/r/Bitcoin/comments/9niw8x/lightning_network_at_the_senate_counterargument/ https://www.reddit.com/r/Bitcoin/comments/9niw8x/lightning_n...
- pkulak 8y ago
  By "second layer" do you mean lightning? Is that project off the ground yet? It's been a while since I paid attention.
  - decentralised 8y ago
    I meant a number of second layer solutions, but lightning is one of the best examples right now. Check this visualisation for a current view of the size of the network: https://www.easyzoom.com/image/126770 https://www.easyzoom.com/image/126770
    - arcticfox 8y ago
      not a great sign when "NO NOOBS" is one of your more central nodes
      - decentralised 8y ago
        Well, the network is made of volunteering techies and imho it's still a work in progress.
  - arcticfox 8y ago
    lightning is a nightmare, there are a lot of sad-humorous fails associated with trying to use it: https://twitter.com/Don_wonton/status/1050260801175597058 https://twitter.com/Don_wonton/status/1050260801175597058
mogadsheu 8y ago
Wasn’t there a HackerNews post last week about Bloomberg journalists getting paid for articles that move markets? This one seems like one of those articles.
- anonymouswacker 8y ago
  Bingo, Bango. Manufactured market manipulation.
- atomical 8y ago
  Because you don't agree with it?
  - mogadsheu 8y ago
    I don't disagree with it, my focus is more on it being a sensationalist piece of news, which makes the content less trustworthy because I know their goal is to make me move.
coliveira 8y ago
Bitcoin and similars are the biggest waste of computing power and energy in the history of the planet. It will be nice for the environment when this is all over.
- fastball 8y ago
  Quite the claim. Obviously you haven't heard of the NSA or the US Military.
  - superkuh 8y ago
    For anyone downvoting this I'll expand what he said so you can understand it before reflex downvoting. Nationstate backed fiat currencies require enormous amounts of energy waste in the form of standing armies and other tools of power. Compared to the energy Bitcoin uses to protect itself from attack or fraud this energy is very large.
    - mancerayder 8y ago
      The implication now is that there'd be no standing armies or other, as you say, tools of power? Do you believe this?
      - superkuh 8y ago
        Not sure where you are going with this, but yeah, Bitcoin does not have a standing army. It secures itself from attack by proof of work.
        s73v3r_ 8y ago
        Ok, cool. How does that secure the rest of us?
        OedipusRex 8y ago
        It doesn't, Bitcoin is as safe as the security of the person who holds it. And as someone who had Bitcoin on Mt Gox, this is a moot point to argue.
bluedevil2k 8y ago
Is there even any reason the world needs more than 1 cryptocurrency? I know there are dozens (hundreds?), but they all effectively do the same thing, right? Allow decentralized currency that can be used for legal and illegal transactions.
- chrisco255 8y ago
  Ethereum is Turing-complete. Bitcoin is not. Many more differences among the cryptos, including governance, privacy, etc.
- sleepless_on 8y ago
  I guess people always have preferences. For example privacy, speed, decentralised vs centralised etc. We also don't need 10 different messaging apps.
- LyndsySimon 8y ago
  There are some goals that are mutually exclusive. or instance: a government might issue a cryptocurrency and require that their authority maintain the ability to issue new coins at their direction; another cryptocurrency (like Bitcoin) has "no centralized issuing authority" as a core design decision. The vast majority of existing cryptocurrencies are just copies of others, or just sit atop Ethereum. Those will certainly end up being worthless or nearly so. That doesn't require that all future cryptocurrencies will necessarily meet the same fate.
- oelmekki 8y ago
  Just as programming languages are all (well mostly) doing the same thing. Cryptocurrencies are tech products, various projects try various ideas. You'll have the initial blockchain idea from bitcoin, the privacy blockchain from monero, the programming contracts from ethereum, the decentralized exchange from stellar, etc. I'm perfectly fine with that, I prefer to see people create new projects to test new ideas rather than to hear them complain bitcoin is not doing what they want.
- lawn 8y ago
  You can have different approaches on how to make a cryptocurrency. For example let's look at two, Bitcoin Cash (BCH) and Monero (XMR). * BCH as a fixed coin limit at 21 million. XMR has a tail emission so the coin supply will always increase * BCH has a POW backed by ASICs and XMR has been doing all they can to brick existing ASICs and keep the mining on CPUs and GPUs * BCH prioritizes scaling on-chain aggressively while XMR has more hope on second layer solutions * BCH allows more script functionality (for example allowing you to store Twitter message, see memo.cash) while XMR disallows all that * BCH has a transparent blockchain where all transactions can be traced while XMR tries to shield all senders and receivers Of course other coins can make other trade-offs. Ethereum for example explores the extreme end of scripts on-chain, even having a Turing complete scripting language. Other coins are experimenting with alternatives to mining like proof-of-stake (POS). Etc...
superkuh 8y ago
Bloomberg absolutely loves writing these "Anything not a central bank is on the brink of implosion" scare articles. They must generate a tons of views. Unfortunately Bloomberg as a whole doesn't know anything about cryptocurrency beyond the speculation side which is similar to their existing competencies. But that's all they see. We have a blind man feeling an elephant's ass and telling us it's shitty. While true, it only describes a tiny part of what cryptocurrencies are or do.
- atomical 8y ago
  > Unfortunately Bloomberg as a whole doesn't know anything about cryptocurrency beyond the speculation side which is similar to their existing competencies. But that's all they see. They don't know anything? Even though they partnered with Mike Novogratz to create an index? https://www.bloomberg.com/professional/product/indices/bloomberg-galaxy-crypto-index/ https://www.bloomberg.com/professional/product/indices/bloom...
  - superkuh 8y ago
    I never said they don't know anything about finance or speculation markets. But if you (and they) think that's all cryptocurrency is then you're missing 90% of what's up. Bloomberg keeps trying to predict crypto's behavior based entirely on the most traditional looking speculation markets. Speculation markets aren't really a part of cryptocurency at all (they aren't on the blockchain(s)) but they are the only part of the concept that traditional finance people can (or will try to) understand.
    - atomical 8y ago
      I'm sure Bloomberg has a huge archive of speculative articles on stocks. Why are blockchain advocates so emotional? They should understand these articles because speculation is a core feature of the ICO boom and cryptocurrency in general.
      - JAlexoid 8y ago
ramblerouser 8y ago
>Echoing sentiments of mainstream economists Yea, Paul Krugman has been saying "Bitcoin is doomed" since 2012. He'll always be wrong because this is all politically motivated. The banking and political establishment are scared shitless by alternative currencies, crypto or otherwise. Google the "Liberty Dollar". Mouth pieces for the financial industry like Bloomberg will attack alternatives to the petrodollar no matter what they really think, and obviously they know Bitcoin has a future because Goldman-Sachs has bought tons of them.
- __Joker 8y ago
  I am not sure Paul Krugman is scared or politically motivated. One of the strongest argument Paul Krugman makes against bitcoin is about trust. Like, he says dollar has value because US government backs it and you can pay taxes with it. Basically, he is questioning can bitcoin gain that level of trust among its users to be successful. Not the current level of some transaction around dark markets. Personally, I don't know.
  - ramblerouser 8y ago
    >US government backs it Yes, by putting people in jail who put forward viable alternatives to USD, like Liberty Dollar. And making Bitcoin impossible to use legally as a currency by applying strict capital gains tax reporting requirements. >Can Bitcoin gain that level of trust amoung its users to be successful. The massive public and institutional buy-in over the past 5 years suggests that trust in its cryptographic security is not what is holding it back. Bitcoin, from its inception, is part of a political battle, not a technological or economic one. Read the Satoshi white paper. Paul Krugman is saying that it wont be successful because the banks and government will fight it, and his social status is dependant on him being part of that fight. Do you think Krugman would keep all his exposure and prestige if he went off the reservation and criticized the banks and the petrodollar? No way.
    - floatboth 8y ago
      > Paul Krugman is saying that it wont be successful because the banks and government will fight it He's wrong. It won't be successful because it's pretty much unusable by regular people, difficult to secure (surprise, "be your own bank" implies "be your own security guard" — and 99% of people want to be neither of those things), extremely wasteful, slow and full of scams. Most people's first encounter with buttcoins is literally RANSOMWARE. Do you really think mass adoption is coming?
root_axis 8y ago
I doubt it. There is nothing to implode. Most of the activity in the "industry" is shuffling around tokens between the various blockchains as their respective cheerleaders hype their chosen coin and spread FUD about competing ones. All of the "real" economic activity surrounding cryptocurrencies (e.g. darknet commerce) will continue regardless of the price since darknet prices are pegged against the value of government currency anyway. The cryptocurrency world will continue to churn with activity indefinitely because creating the appearance of activity is what the industry does
- ttul 8y ago
  ... and that economic value is tiny when compared with the speculative value. The untethering of tether portends a crash, IMHO.
  - root_axis 8y ago
    Well, it depends on your definition of crash. We know that large price fluctuations are not uncommon in cryptotoken land so it's important to be clear about exactly what we mean. Personally, I'd consider a definitive crash to be a sub 1k BTC/USD price. I don't see that happening any time soon because the "speculative value" is very cheap to maintain with lots of enthusiasts broadcasting hype across every popular tech platform and the various exchanges generating superficial traffic and trading activity with very little cost.
liftbigweights 8y ago
Two anti-crypto stories on the same day? "Blockchain isn't about democracy and decentralisation – it's about greed " https://news.ycombinator.com/item?id=18219256 https://news.ycombinator.com/item?id=18219256 I'm not a fan of cryptos, but it's fascinating how so much of the media ( even in different countries ) push the same narrative in almost a coordinated fashion.
- s73v3r_ 8y ago
  Or maybe they just show up here because the community is interested in cryptocurrency.
- LyndsySimon 8y ago
  I'm a somewhat early adopter of Bitcoin, and believe in its long-term utility. Even so, I've been bearish for some time due to the influx of people who are buying coins or nothing more than speculation. I don't think that's "bad" per se, but it's not a sustainable means of growth. I'm seeing more an more of these "the end is near" articles popping up. After witnessing a half dozen or so boom/bust cycle firsthand, my spidey sense is beginning to tingle that we're about to enter another one. After ten months of decreasing volatility and regression toward a mean price of $6,500 +/- 5%, I'm expecting a run-up any day now. It may not be another "to the moon!" run, but it'll happen. When it does, the new value will stabilize higher than it is right now.
  - LyndsySimon 8y ago
    Ha! After writing this comment, I checked the price history for the first time in a month or two. There was a spike in price and volume about 12 hours ago, that at first glance appears to be the largest in six months or so.
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Aqueous 8y ago
According to the finance industry and finance media, the cryptocurrency industry, and cryptocurrencies in particular, have been on the brink of collapse since 2008, when Bitcoin first surfaced and was worth $0. I guess they're going all-in on the whole 'stopped-clock' prediction strategy, no?
- sodafountan 8y ago
  It's fascinating to watch these patterns repeat themselves over and over. It's almost like we're all investing in an algorithm and everything's playing out according to its specifications. - Sincerely, a guy who's been buying bitcoin since 2013
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labbyz 8y ago
Thanks Bloomberg for this advertorial summary of a 1250$ research .pdf. Saves me some money to invest (in crypto or otherwise). Would you believe that the author of this research was harping about blockchain adoption by large companies less than a year ago? A lot has changed in 11 months, such as a slow price drop from the 2017 December insanity. Isn't it a bit rich to first make companies anxious to join in on the bandwagon, then to turn around and say they are investing into something that is on the very brink of destruction? Based on pretending that Bitcoin was invented at its height in December 2017? Heck, I did not sell any of my market research, I gave it away for free (silly me). Sure, sure, I made a few million here and there, but nothing like charging 0.5 BTC to tell you the financial world is collapsing, because John McAffee is so irrationally bullish. This time it is real though. I can feel it too. Bitcoin is over! I hope you made out like a bandit, because soon, the only way to make money is to sell research about the impending bounce-back of crypto. Of course the early adopters of Bitcoin are critical about its demise. They have a vested financial interest in seeing it succeed. Unlike these researchers, who only stumbled upon Bitcoin when they realized that people are willing to pay for their objective expert opinion on something they themselves missed the boat on.
- sodafountan 8y ago
  Gold
- rstuart4133 8y ago
  > Heck, I did not sell any of my market research, I gave it away for free Don't work for Bloomberg, eg? Bloomberg News Pays Reporters More If Their Stories Move Markets: https://news.ycombinator.com/item?id=18162440 https://news.ycombinator.com/item?id=18162440
jessriedel 8y ago
I'm uninformed and bearish on bitcoins, but I find it helpful to look at the historic bitcoin price on a log scale. https://bitcoincharts.com/charts/bitstampUSD#tgSzm1g10zm2g25zl https://bitcoincharts.com/charts/bitstampUSD#tgSzm1g10zm2g25... Bitcoin has had relative declines this big and lasting this long (late 2013 to mid 2015) only to bounce back later.
- CyberDildonics 8y ago
  That's a very simplistic way to look at it. Before the latest huge price increase, bitcoin had very little real competition. Now it has proved that its artificially crippled capacity of 1MB is an enormous problem and that the limited throughput couldn't even come close to handling the last bubble smoothly.
  - jessriedel 8y ago
    My comment is intended to speak to cryptocurrency as a whole (the OP topic) rather than Bitcoin specifically relative to other cryptocurrencies. I welcome links to charts that show, e.g., total crypto market cap on a log scale.
    - CyberDildonics 8y ago
      > My comment is intended to speak to cryptocurrency as a whole (the OP topic) rather than Bitcoin specifically You said bitcoin twice and linked to btc's price over time, I'm not sure why anyone would take that to mean crypto-currencies in general. This seems like a textbook example of moving goal posts.
      - jessriedel 8y ago
        This isn't a competition. I intended my comment to make one point, you interpreted it as another.
        CyberDildonics 8y ago
CyberDildonics 8y ago
Here is Bitfenix's cold wallet address: https://bitinfocharts.com/bitcoin/address/3D2oetdNuZUqQHPJmcMDDHYoqkyNVsFk9r https://bitinfocharts.com/bitcoin/address/3D2oetdNuZUqQHPJmc... They have about 934 Million in BTC, having had as little as 869 Million USD recently. Their tether liabilities are between 2.5 and 3 Billion USD: https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/ It has long been asked how a token can be pegged to 1 USD without any actual USD. The reality is that it can work if your balance in other currencies doesn't go below the average price you bought them at. The more the price of btc goes down, the more btc they have to give back when people exchange their tethers for btc (you can't exchange them for USD). Two dynamics work in their favor: First, exchanging tethers for btc means buying btc, which makes the price of btc go up. If people buy the btc so that they can exchange it at real exchanges for USD, then this effect would be temporary and you would see a disconnect between the price of btc at Bitfinex and real exchanges like coinbase. Two days ago the premium on Bitfinex was about $100, now it is about $400 higher than coinbase and bitstamp. Second, what many think originally happened due to the stark correlation between tether creation and btc price jumps on bitfinex, was that the creation of tethers and subsequent transfer in bulk to bitfinex's exchange caused the btc price to rise. Now not only do they benefit from creating tethers out of nothing, they get the exchange commission on top AND get to create the illusion of demand. This illusion of demand was seen to work extremely well on unsophisticated investors during the run up to 20,000 USD per btc, helping to create articles, fear of missing out and general hysteria that brought in more unsophisticated investors buying in to something they did not understand.
wickoff 8y ago
It's interesting that an article like this pops up now. From a technical analysis perspective the entire crypto market had been exhibiting classical accumulation properties for two months now. Before critics show up - technical analysis is not meant to predict the future, but rather to pick the more probable outcome.
Tsubasachan 8y ago
Instead of inventing bitcoin because evil banks maybe people should do some consumer rights stuff? I have become painfully aware that using an ATM in America costs money... Whose idea was that anyway. Why is Mastercard making billions? A percentage based fee instead of a flat fee. As if it matters if you use your CC to buy a carton of milk or a car. Hocus pocus Capitol Hillus make usury illegal spell. I really don't want to use cash anymore.
fredgrott 8y ago
I have a new BS rule when its a crypto currency headline just replace with Pharm Industry..you get the same exact meaning
PinkMilkshake 8y ago
Another one for the Bitcoin Obituaries https://99bitcoins.com/bitcoinobituaries https://99bitcoins.com/bitcoinobituaries Honestly I have no idea whats going to happen. I threw some money into Bitcoin I was okay with loosing and check on it every few months. It's been fun. Maybe some perfect storm of the Lightning Network, Web Payments and dodgy banks or failing economies will bring about some crypto-utopia. Or maybe it will implode and in the end all we have done is collectively purchased a metric shit ton of GPU's. Actually, that's not all we would have done. It didn't work out but at least we ran the experiment.

191 points by nopacience 8y ago

drivingmenuts 8y ago

Well, hopefully graphics card prices will drop then.

Scoundreller 8y ago
My friend put a computer in their garbage bin last fall. I took out its “worthless” video card and still sold it for $40.
sneak 8y ago
That happened some time ago.

slammm 8y ago

I feel like its another case of the tech bubble. The projects with real causes and uses will come back from any implosion in the long run.

fullshark 8y ago
So illegal transactions and money laundering it is.
- Scoundreller 8y ago
  Iunno, if i were a billionaire, the idea of having $50m under nobody’s control but my own that I can take anywhere, anytime, doesn’t exist anywhere else. I can’t do that with gold. Bank deposits are always available until they aren’t. But Coinbase can’t do this either.
  - notJim 8y ago
    Right, that's money laundering.
    - fastball 8y ago
      Having money you control is not money laundering.
    - beaner 8y ago
      Money laundering is when you launder money. Exclusive access to your own money is called financial sovereignty.
  - scient 8y ago
    And why would someone put $50m into a highly volatile, unchecked tech, where mediators are mostly known because of their security problems and breaches?
    - Scoundreller 8y ago
      1. Because you can afford to lose it. 2. There’s a chance (however small) that you could lose the other $950m, but keep some of this other $50m.
    - jobigoud 8y ago
      It's written in the post you are answering to: "Because it's under nobody’s control but my own that I can take anywhere, anytime".
  - umanwizard 8y ago
    Edit: I calculated this wrong, please ignore this comment
    - mopeloi 8y ago
      unless you have to cross a border with it?
    - 8y ago
- MrEfficiency 8y ago
  Idk, I buy burritos at taco bell with my Bitcoin Debit Card. I dont trust my local government's always inflating currency.
  - spectec 8y ago
    >non-inflated currency >bitcoin Pick one.
    - fastball 8y ago
      > always inflating > fixed number of Bitcoins Don't think he needs to.
      - spectec 8y ago
        Google defines inflation as: “a general increase in prices and fall in the purchasing value of money“. Let’s take a step back and remember how Bitcoin’s purchasing power has lost nearly $15,000 since its all-time high. So yes, he does need to.
        sincerely 8y ago
        Bitcoin is also worth almost exactly as much as it was worth a year ago.
      - DennisP 8y ago
        The number of Bitcoins that currently exist is still increasing, at about 4% annually. They have an eventual cap (assuming that never gets hard-forked away) but for now they still mint 12.5 new bitcoins every 10 minutes.
  - headnshoulders 8y ago
    What card do you use? Anything on this list? https://docs.google.com/spreadsheets/d/1DRbTeMCzb4UeXI0YlAzBxMc2u2i0cN_17Ql6eMngK6E/edit#gid=0 https://docs.google.com/spreadsheets/d/1DRbTeMCzb4UeXI0YlAzB...
- mindfulplay 8y ago
  That's exactly what will remain out of this pile of hot steaming garbage.
- leroy_masochist 8y ago
  The long-term value of crypto will likely come from use cases made possible by auditable smart contracts that are administered on decentralized databases and run at perfect fidelity, facilitating the efficient flow of information through multiple types of systems (logistics, finance, etc) at a refresh rate / granularity that will be orders of magnitude faster / more detailed than the current status quo. In the meantime it'll be fun to say snarky things about shitcoins, no question about it, but the tech does have some pretty exciting potential.
  - castlecrasher2 8y ago
    >but the tech does have some pretty exciting potential And some terrifying consequences for bugs. Or administrative errors with contracts, or non-binding contracts that you'll need a traditional court to sort out anyway.
    - codehalo 8y ago
      > And some terrifying consequences for bugs As all important software (aircraft, medical, financial) do.
      - rspeer 8y ago
        Those industries have stringent regulations on them. When an aircraft has a bug, there is a federal investigation.
  - lottin 8y ago
    These smart contracts people keep talking about, maybe one day they'll amount to something, but so far I don't know anyone who uses smart contracts, or who wants to use them, or who even knows what they are or what they do.
- lawn 8y ago
  And... * Porn * Donations to wikileaks * Pot * Sending money to Venezuela * Leaving Venezuela with your wealth intact * Payments without giving all transaction info to the credit card companies * Digital payments for the unbanked All legal usage that makes sense.
  - ceejayoz 8y ago
    All of those items can be done pretty trivially without cryptocurrency (with the sort-of exception of Venezuela, but taking money out of the country is not a legal usage in either case).
    - lawn 8y ago
      Except credit card companies don't want to touch porn sites (they have to pay a huge markup and go through other middlemen) or pot companies (who accept cash but it's not digital). PayPal froze the donations to wikileaks. That's not possible if you donate using Bitcoin. The corrupt government in Venezuela may deem it illegal but it's not immoral to want to flee the country with your wealth. This is much easier with Bitcoin as you can just remember or write down your seed. The point is cryptocurrencies does this all better. And your definition of "pretty trivial" is for the most part ignorant.
      - ceejayoz 8y ago
        That's quite a few moved goalposts.
        lawn 8y ago
        Granted the Venezuela example was a bad example of a legal use. Everything else stands though.
        ceejayoz 8y ago
        Your markup/middleman argument pretends that Bitcoin didn't fairly recently have massive fees for transactions - for a while, one's $10/month Pornhub subscription would've cost $40+/month. (Side note: said monthly subscriptions are another challenge here for crypto and porn...) Cryptocurrency stored on an exchange can be frozen, just like one's PayPal balance can be. Wikileaks takes PayPal (and credit card, bank transfer, checks, etc.) donations currently on their site.
yoavm 8y ago
The only question is... what cryptocurrency projects have a real cause and use cases? I have yet to meet a person that bought something using a cryptocurrency, expect for another cryptocurrency.

clircle 8y ago

Those red lines on the graph are just awful: arbitrarily drawn to make things look worse. Fit an actual model and drawn on prediction intervals next time. I have never owned crypto currency, I'm just easily triggered by bad graphs.

agumonkey 8y ago
Welcome to crypto, land of the arbitrary graph. pro tip: never read twitter streams from "crypto trader" your IQ will drop like that \

ataturk 8y ago

About time, the whole thing has been a complete and total scam from Day Uno.

fullshark 8y ago

Unless there's more analysis than what's quoted in the article, this appears to be nothing more than trend analysis based on the last few months.

pavlov 8y ago

An important harbinger of trouble to come is that the Tether (USDT) coin, which is supposed to be pegged 1:1 to USD, is now trading substantially below $1: https://www.bloomberg.com/news/articles/2018-10-15/dollar-peg-that-underpins-20-of-crypto-trades-is-under-pressure https://www.bloomberg.com/news/articles/2018-10-15/dollar-pe... Billions of Tethers were printed seemingly out of thin air and used to purchase Bitcoin. It's part of the foundation of the house of cards that keeps Bitcoin at its current price: "Despite their modest total market value of about $2.4 billion, Tether’s coins play an outsized role on cryptocurrency exchanges. They were the second-most traded among all digital currencies after Bitcoin as of Oct. 15, according to data compiled by CoinMarketCap.com." https://www.bloomberg.com/news/articles/2018-10-14/why-crypto-traders-are-so-worried-about-tether-quicktake-q-a https://www.bloomberg.com/news/articles/2018-10-14/why-crypt...

kjullien 8y ago
Tether isn't what cryptocurrencies was/is supposed to be. It's as if you took Herbalife as a valuable/honest/model player in the dietary supplement market...
- jayalpha 8y ago
  " It's as if you took Herbalife as a valuable/honest/model player in the dietary supplement market..." Are they not? Shakes can be a decent way to lose weight. Seems to be that people are willing to pay a premium for the "community". But IMHO saying their stuff is overpriced is like saying beer in a bar is overpriced because you can buy a beer for one dollar in the supermarket. Yes, it is correct. In some way.
  - blang 8y ago
    Not the parent, but I imagine what they are talking about is the Herbalife depends more on recruiting new members than they are from selling product. I would link but just googling "bill ackman herbalife" will lead you down infinite rabbit holes.
    - 8y ago

mindfulplay 8y ago

Getting my popcorn ready... This is the silliest human endeavor that somehow seems to attract a few smart people too.

gph 8y ago
The early smart people are now rich smart people. The late smart people aren't very smart after all.
gibsons77 8y ago
Perhaps there's a reason why smart people are attracted to it.
kickopotomus 8y ago
I wouldn't call it silly. The idea behind cryptocurrency (distributed agreement) remains a difficult problem to solve efficiently and securely. If nothing else, it is a worthwhile thought experiment. As for whether or not any cryptocurrency will ever be stable and widespread enough to be usable in the western world remains to be seen.
- floatboth 8y ago
  Trustless distributed agreement. It's an interesting algorithm, but not actually useful. Society is literally built on trust. So "anti-government" (or "anti-social"?) currency is the only use for it.
megaman8 8y ago
Do you also think it's silly that credit card companies can charge merchant fees from 2.5% to 5% for everything you purchase. Whether or not you use a credit card, you still end up paying the fee because it still gets passed on to you. the future may not be Bitcoin. But, Alot of smart people saw this opportunity: I wouldn't write it off just yet.

decentralised 8y ago

In general, if you pick the all time high as a starting point for your "research" it's all the way down from there. Bitcoin's daily transaction volume is moving to second layer so the metric used is not very useful. More importantly, and I can't stress this enough, the FX value of a cryptocurrency is not directly related to the project's status (developer activity or security track record, etc) but it is correlated to public perception of its value, which is why these sort of article pops up every now and again at regular intervals. https://www.reddit.com/r/Bitcoin/comments/9niw8x/lightning_network_at_the_senate_counterargument/ https://www.reddit.com/r/Bitcoin/comments/9niw8x/lightning_n...

pkulak 8y ago
By "second layer" do you mean lightning? Is that project off the ground yet? It's been a while since I paid attention.
- decentralised 8y ago
  I meant a number of second layer solutions, but lightning is one of the best examples right now. Check this visualisation for a current view of the size of the network: https://www.easyzoom.com/image/126770 https://www.easyzoom.com/image/126770
  - arcticfox 8y ago
    not a great sign when "NO NOOBS" is one of your more central nodes
    - decentralised 8y ago
      Well, the network is made of volunteering techies and imho it's still a work in progress.
- arcticfox 8y ago
  lightning is a nightmare, there are a lot of sad-humorous fails associated with trying to use it: https://twitter.com/Don_wonton/status/1050260801175597058 https://twitter.com/Don_wonton/status/1050260801175597058

mogadsheu 8y ago

Wasn’t there a HackerNews post last week about Bloomberg journalists getting paid for articles that move markets? This one seems like one of those articles.

anonymouswacker 8y ago
Bingo, Bango. Manufactured market manipulation.
atomical 8y ago
Because you don't agree with it?
- mogadsheu 8y ago
  I don't disagree with it, my focus is more on it being a sensationalist piece of news, which makes the content less trustworthy because I know their goal is to make me move.

coliveira 8y ago

Bitcoin and similars are the biggest waste of computing power and energy in the history of the planet. It will be nice for the environment when this is all over.

fastball 8y ago
Quite the claim. Obviously you haven't heard of the NSA or the US Military.
- superkuh 8y ago
  For anyone downvoting this I'll expand what he said so you can understand it before reflex downvoting. Nationstate backed fiat currencies require enormous amounts of energy waste in the form of standing armies and other tools of power. Compared to the energy Bitcoin uses to protect itself from attack or fraud this energy is very large.
  - mancerayder 8y ago
    The implication now is that there'd be no standing armies or other, as you say, tools of power? Do you believe this?
    - superkuh 8y ago
      Not sure where you are going with this, but yeah, Bitcoin does not have a standing army. It secures itself from attack by proof of work.
      - s73v3r_ 8y ago
        Ok, cool. How does that secure the rest of us?
        OedipusRex 8y ago
        It doesn't, Bitcoin is as safe as the security of the person who holds it. And as someone who had Bitcoin on Mt Gox, this is a moot point to argue.

bluedevil2k 8y ago

Is there even any reason the world needs more than 1 cryptocurrency? I know there are dozens (hundreds?), but they all effectively do the same thing, right? Allow decentralized currency that can be used for legal and illegal transactions.

chrisco255 8y ago
Ethereum is Turing-complete. Bitcoin is not. Many more differences among the cryptos, including governance, privacy, etc.
sleepless_on 8y ago
I guess people always have preferences. For example privacy, speed, decentralised vs centralised etc. We also don't need 10 different messaging apps.
LyndsySimon 8y ago
There are some goals that are mutually exclusive. or instance: a government might issue a cryptocurrency and require that their authority maintain the ability to issue new coins at their direction; another cryptocurrency (like Bitcoin) has "no centralized issuing authority" as a core design decision. The vast majority of existing cryptocurrencies are just copies of others, or just sit atop Ethereum. Those will certainly end up being worthless or nearly so. That doesn't require that all future cryptocurrencies will necessarily meet the same fate.
oelmekki 8y ago
Just as programming languages are all (well mostly) doing the same thing. Cryptocurrencies are tech products, various projects try various ideas. You'll have the initial blockchain idea from bitcoin, the privacy blockchain from monero, the programming contracts from ethereum, the decentralized exchange from stellar, etc. I'm perfectly fine with that, I prefer to see people create new projects to test new ideas rather than to hear them complain bitcoin is not doing what they want.
lawn 8y ago
You can have different approaches on how to make a cryptocurrency. For example let's look at two, Bitcoin Cash (BCH) and Monero (XMR). * BCH as a fixed coin limit at 21 million. XMR has a tail emission so the coin supply will always increase * BCH has a POW backed by ASICs and XMR has been doing all they can to brick existing ASICs and keep the mining on CPUs and GPUs * BCH prioritizes scaling on-chain aggressively while XMR has more hope on second layer solutions * BCH allows more script functionality (for example allowing you to store Twitter message, see memo.cash) while XMR disallows all that * BCH has a transparent blockchain where all transactions can be traced while XMR tries to shield all senders and receivers Of course other coins can make other trade-offs. Ethereum for example explores the extreme end of scripts on-chain, even having a Turing complete scripting language. Other coins are experimenting with alternatives to mining like proof-of-stake (POS). Etc...

superkuh 8y ago

Bloomberg absolutely loves writing these "Anything not a central bank is on the brink of implosion" scare articles. They must generate a tons of views. Unfortunately Bloomberg as a whole doesn't know anything about cryptocurrency beyond the speculation side which is similar to their existing competencies. But that's all they see. We have a blind man feeling an elephant's ass and telling us it's shitty. While true, it only describes a tiny part of what cryptocurrencies are or do.

atomical 8y ago
> Unfortunately Bloomberg as a whole doesn't know anything about cryptocurrency beyond the speculation side which is similar to their existing competencies. But that's all they see. They don't know anything? Even though they partnered with Mike Novogratz to create an index? https://www.bloomberg.com/professional/product/indices/bloomberg-galaxy-crypto-index/ https://www.bloomberg.com/professional/product/indices/bloom...
- superkuh 8y ago
  I never said they don't know anything about finance or speculation markets. But if you (and they) think that's all cryptocurrency is then you're missing 90% of what's up. Bloomberg keeps trying to predict crypto's behavior based entirely on the most traditional looking speculation markets. Speculation markets aren't really a part of cryptocurency at all (they aren't on the blockchain(s)) but they are the only part of the concept that traditional finance people can (or will try to) understand.
  - atomical 8y ago
    I'm sure Bloomberg has a huge archive of speculative articles on stocks. Why are blockchain advocates so emotional? They should understand these articles because speculation is a core feature of the ICO boom and cryptocurrency in general.
    - JAlexoid 8y ago

ramblerouser 8y ago

>Echoing sentiments of mainstream economists Yea, Paul Krugman has been saying "Bitcoin is doomed" since 2012. He'll always be wrong because this is all politically motivated. The banking and political establishment are scared shitless by alternative currencies, crypto or otherwise. Google the "Liberty Dollar". Mouth pieces for the financial industry like Bloomberg will attack alternatives to the petrodollar no matter what they really think, and obviously they know Bitcoin has a future because Goldman-Sachs has bought tons of them.

__Joker 8y ago
I am not sure Paul Krugman is scared or politically motivated. One of the strongest argument Paul Krugman makes against bitcoin is about trust. Like, he says dollar has value because US government backs it and you can pay taxes with it. Basically, he is questioning can bitcoin gain that level of trust among its users to be successful. Not the current level of some transaction around dark markets. Personally, I don't know.
- ramblerouser 8y ago
  >US government backs it Yes, by putting people in jail who put forward viable alternatives to USD, like Liberty Dollar. And making Bitcoin impossible to use legally as a currency by applying strict capital gains tax reporting requirements. >Can Bitcoin gain that level of trust amoung its users to be successful. The massive public and institutional buy-in over the past 5 years suggests that trust in its cryptographic security is not what is holding it back. Bitcoin, from its inception, is part of a political battle, not a technological or economic one. Read the Satoshi white paper. Paul Krugman is saying that it wont be successful because the banks and government will fight it, and his social status is dependant on him being part of that fight. Do you think Krugman would keep all his exposure and prestige if he went off the reservation and criticized the banks and the petrodollar? No way.
  - floatboth 8y ago
    > Paul Krugman is saying that it wont be successful because the banks and government will fight it He's wrong. It won't be successful because it's pretty much unusable by regular people, difficult to secure (surprise, "be your own bank" implies "be your own security guard" — and 99% of people want to be neither of those things), extremely wasteful, slow and full of scams. Most people's first encounter with buttcoins is literally RANSOMWARE. Do you really think mass adoption is coming?

root_axis 8y ago

I doubt it. There is nothing to implode. Most of the activity in the "industry" is shuffling around tokens between the various blockchains as their respective cheerleaders hype their chosen coin and spread FUD about competing ones. All of the "real" economic activity surrounding cryptocurrencies (e.g. darknet commerce) will continue regardless of the price since darknet prices are pegged against the value of government currency anyway. The cryptocurrency world will continue to churn with activity indefinitely because creating the appearance of activity is what the industry does

ttul 8y ago
... and that economic value is tiny when compared with the speculative value. The untethering of tether portends a crash, IMHO.
- root_axis 8y ago
  Well, it depends on your definition of crash. We know that large price fluctuations are not uncommon in cryptotoken land so it's important to be clear about exactly what we mean. Personally, I'd consider a definitive crash to be a sub 1k BTC/USD price. I don't see that happening any time soon because the "speculative value" is very cheap to maintain with lots of enthusiasts broadcasting hype across every popular tech platform and the various exchanges generating superficial traffic and trading activity with very little cost.

liftbigweights 8y ago

Two anti-crypto stories on the same day? "Blockchain isn't about democracy and decentralisation – it's about greed " https://news.ycombinator.com/item?id=18219256 https://news.ycombinator.com/item?id=18219256 I'm not a fan of cryptos, but it's fascinating how so much of the media ( even in different countries ) push the same narrative in almost a coordinated fashion.

s73v3r_ 8y ago
Or maybe they just show up here because the community is interested in cryptocurrency.
LyndsySimon 8y ago
I'm a somewhat early adopter of Bitcoin, and believe in its long-term utility. Even so, I've been bearish for some time due to the influx of people who are buying coins or nothing more than speculation. I don't think that's "bad" per se, but it's not a sustainable means of growth. I'm seeing more an more of these "the end is near" articles popping up. After witnessing a half dozen or so boom/bust cycle firsthand, my spidey sense is beginning to tingle that we're about to enter another one. After ten months of decreasing volatility and regression toward a mean price of $6,500 +/- 5%, I'm expecting a run-up any day now. It may not be another "to the moon!" run, but it'll happen. When it does, the new value will stabilize higher than it is right now.
- LyndsySimon 8y ago
  Ha! After writing this comment, I checked the price history for the first time in a month or two. There was a spike in price and volume about 12 hours ago, that at first glance appears to be the largest in six months or so.

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Aqueous 8y ago

According to the finance industry and finance media, the cryptocurrency industry, and cryptocurrencies in particular, have been on the brink of collapse since 2008, when Bitcoin first surfaced and was worth $0. I guess they're going all-in on the whole 'stopped-clock' prediction strategy, no?

sodafountan 8y ago
It's fascinating to watch these patterns repeat themselves over and over. It's almost like we're all investing in an algorithm and everything's playing out according to its specifications. - Sincerely, a guy who's been buying bitcoin since 2013

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labbyz 8y ago

Thanks Bloomberg for this advertorial summary of a 1250$ research .pdf. Saves me some money to invest (in crypto or otherwise). Would you believe that the author of this research was harping about blockchain adoption by large companies less than a year ago? A lot has changed in 11 months, such as a slow price drop from the 2017 December insanity. Isn't it a bit rich to first make companies anxious to join in on the bandwagon, then to turn around and say they are investing into something that is on the very brink of destruction? Based on pretending that Bitcoin was invented at its height in December 2017? Heck, I did not sell any of my market research, I gave it away for free (silly me). Sure, sure, I made a few million here and there, but nothing like charging 0.5 BTC to tell you the financial world is collapsing, because John McAffee is so irrationally bullish. This time it is real though. I can feel it too. Bitcoin is over! I hope you made out like a bandit, because soon, the only way to make money is to sell research about the impending bounce-back of crypto. Of course the early adopters of Bitcoin are critical about its demise. They have a vested financial interest in seeing it succeed. Unlike these researchers, who only stumbled upon Bitcoin when they realized that people are willing to pay for their objective expert opinion on something they themselves missed the boat on.

sodafountan 8y ago
Gold
rstuart4133 8y ago
> Heck, I did not sell any of my market research, I gave it away for free Don't work for Bloomberg, eg? Bloomberg News Pays Reporters More If Their Stories Move Markets: https://news.ycombinator.com/item?id=18162440 https://news.ycombinator.com/item?id=18162440

jessriedel 8y ago

I'm uninformed and bearish on bitcoins, but I find it helpful to look at the historic bitcoin price on a log scale. https://bitcoincharts.com/charts/bitstampUSD#tgSzm1g10zm2g25zl https://bitcoincharts.com/charts/bitstampUSD#tgSzm1g10zm2g25... Bitcoin has had relative declines this big and lasting this long (late 2013 to mid 2015) only to bounce back later.

CyberDildonics 8y ago
That's a very simplistic way to look at it. Before the latest huge price increase, bitcoin had very little real competition. Now it has proved that its artificially crippled capacity of 1MB is an enormous problem and that the limited throughput couldn't even come close to handling the last bubble smoothly.
- jessriedel 8y ago
  My comment is intended to speak to cryptocurrency as a whole (the OP topic) rather than Bitcoin specifically relative to other cryptocurrencies. I welcome links to charts that show, e.g., total crypto market cap on a log scale.
  - CyberDildonics 8y ago
    > My comment is intended to speak to cryptocurrency as a whole (the OP topic) rather than Bitcoin specifically You said bitcoin twice and linked to btc's price over time, I'm not sure why anyone would take that to mean crypto-currencies in general. This seems like a textbook example of moving goal posts.
    - jessriedel 8y ago
      This isn't a competition. I intended my comment to make one point, you interpreted it as another.
      - CyberDildonics 8y ago

CyberDildonics 8y ago

Here is Bitfenix's cold wallet address: https://bitinfocharts.com/bitcoin/address/3D2oetdNuZUqQHPJmcMDDHYoqkyNVsFk9r https://bitinfocharts.com/bitcoin/address/3D2oetdNuZUqQHPJmc... They have about 934 Million in BTC, having had as little as 869 Million USD recently. Their tether liabilities are between 2.5 and 3 Billion USD: https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/ It has long been asked how a token can be pegged to 1 USD without any actual USD. The reality is that it can work if your balance in other currencies doesn't go below the average price you bought them at. The more the price of btc goes down, the more btc they have to give back when people exchange their tethers for btc (you can't exchange them for USD). Two dynamics work in their favor: First, exchanging tethers for btc means buying btc, which makes the price of btc go up. If people buy the btc so that they can exchange it at real exchanges for USD, then this effect would be temporary and you would see a disconnect between the price of btc at Bitfinex and real exchanges like coinbase. Two days ago the premium on Bitfinex was about $100, now it is about $400 higher than coinbase and bitstamp. Second, what many think originally happened due to the stark correlation between tether creation and btc price jumps on bitfinex, was that the creation of tethers and subsequent transfer in bulk to bitfinex's exchange caused the btc price to rise. Now not only do they benefit from creating tethers out of nothing, they get the exchange commission on top AND get to create the illusion of demand. This illusion of demand was seen to work extremely well on unsophisticated investors during the run up to 20,000 USD per btc, helping to create articles, fear of missing out and general hysteria that brought in more unsophisticated investors buying in to something they did not understand.

wickoff 8y ago

It's interesting that an article like this pops up now. From a technical analysis perspective the entire crypto market had been exhibiting classical accumulation properties for two months now. Before critics show up - technical analysis is not meant to predict the future, but rather to pick the more probable outcome.

Tsubasachan 8y ago

Instead of inventing bitcoin because evil banks maybe people should do some consumer rights stuff? I have become painfully aware that using an ATM in America costs money... Whose idea was that anyway. Why is Mastercard making billions? A percentage based fee instead of a flat fee. As if it matters if you use your CC to buy a carton of milk or a car. Hocus pocus Capitol Hillus make usury illegal spell. I really don't want to use cash anymore.

fredgrott 8y ago

I have a new BS rule when its a crypto currency headline just replace with Pharm Industry..you get the same exact meaning

PinkMilkshake 8y ago

Another one for the Bitcoin Obituaries https://99bitcoins.com/bitcoinobituaries https://99bitcoins.com/bitcoinobituaries Honestly I have no idea whats going to happen. I threw some money into Bitcoin I was okay with loosing and check on it every few months. It's been fun. Maybe some perfect storm of the Lightning Network, Web Payments and dodgy banks or failing economies will bring about some crypto-utopia. Or maybe it will implode and in the end all we have done is collectively purchased a metric shit ton of GPU's. Actually, that's not all we would have done. It didn't work out but at least we ran the experiment.