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Bitcoin has not collapsed. The technology continues to work very, very well and it has a world-class development team maintaining it. Its price will continue to

by oska 8y ago

Bitcoin has not collapsed. The technology continues to work very, very well and it has a world-class development team maintaining it. Its price will continue to have large rises and large drops but it continues on its upward trend. However, focusing on bitcoin's price alone is where 99% of journalists and commentators go wrong.

yongjik 8y ago
I meant, it practically "collapsed" for those crypto-traders of Korea. If you use bitcoin for its ability to exchange money with anyone in the world, then you're right, it's doing fine. On the other hand, if you borrowed fiat money to buy bitcoin and other assorted currencies you never heard about, believing that the price will go up, and if it became 1/3 of the price you bought, then for all practical purposes, it has collapsed, in the same sense a housing market would "collapse" if price went down by 2/3. Unfortunately, the latter describes a lot of Koreans who bought cryptocurrencies last year. The number could've been much higher without government intervention.
jpatokal 8y ago
I was about to ask you to explain that upward trend in the light of bitcoin transaction volume collapsing... but interestingly enough, it's been on a pronounced upward trend again for the past quarter: https://www.blockchain.com/en/charts/n-transactions?timespan=2years https://www.blockchain.com/en/charts/n-transactions?timespan... Yet trading volume is way down: https://www.blockchain.com/charts/trade-volume?timespan=2years https://www.blockchain.com/charts/trade-volume?timespan=2yea... And this is happening despite mainstream adoption for e-commerce etc having almost completely collapsed. Where is this volume coming from? Algorithmic trading, money laundering, something else?
- icelancer 8y ago
  > mainstream adoption for e-commerce etc having almost completely collapsed ? The adoption was slow (and IS slow) but it never "collapsed." The same places I used BTC to order stuff from 9 months ago are the same places I use BTC to order stuff from now. And there are new ones popping up slowly but surely.
  - jpatokal 8y ago
    Stripe, Steam, Expedia and Microsoft all stopped accepting BTC last year. What new mainstream merchants replaced them?
    - icelancer 8y ago
      Why must more merchants replace them for transaction volume to go up? Could there not be more transactions through the existing merchants that had order flow as the use of BTC spend grows organically?
      - jpatokal 8y ago
        If accepting BTC was raking in dough for some merchants, you would expect more merchants to start adopting it. However, it appears that many merchants who did accept BTC in the past no longer do. Or put another way, can you point to some stats that show increased organic BTC spend for e-commerce?
  - arcticbull 8y ago
    It went from 5 major retailers to 3. That’s a 40% drop.
    - icelancer 8y ago
      This implies the bulk of the traffic was at the major retailers. I am not sure the data would support that assertion.
      - deleted 8y ago
        [deleted]
- zozbot123 8y ago
  BTC transaction volume is going to be kept fairly stable due to the existence of a dynamic transaction reward. If the cost per transaction goes down, this might imply that demand for "higher-value" uses of the BTC network is indeed collapsing, but by the same token this makes smaller-scale use more viable rather than less.
- swang 8y ago
  search 'tether scam' and you'll get all the answers you need. the price of bitcoin has been propped up for the entirety of its boom.
  - jpatokal 8y ago
    I'm the author of http://untether.space http://untether.space, so I'm well aware of that, but it's not clear to me what connection this has to increasing tx volumes?
- arcticbull 8y ago
  Money laundering, wash trading, tape painting and drugs. Rampant manipulation. It goes up 10% in minutes then falls back 10% a few days later, just enough time to wreck any leveraged short positions, and then wreck all the new leveraged long positions. The observers call it “barting” because the shape of all trading patterns looks like Bart’s head.
  - therealx 8y ago
    Sorry, what does tape paining mean in this context?
    - stephen_g 8y ago
      Painting the tape is exchanges or trading groups trading between themselves to create fake volume and make it look like there's a lot more activity than there actually is. It also helps the exchanges go up in the rankings on sites like CoinMarketCap. A few exchanges (including a couple of South Korean ones) have been investigated recently by regulators and fined for faking literally hundreds of billions of dollars of volume over the last year or two.
      - arcticbull 8y ago
        Is this what you were referring to? ~$250 billion USD worth of wash trading leading to arrests at Upbit (https://thenews.asia/en/2018/12/21/upbit-accused-of-fraud-with-254-trillion-krw-in-fake-orders/ https://thenews.asia/en/2018/12/21/upbit-accused-of-fraud-wi...)
        stephen_g 8y ago
        Yes, one of them. Pretty sure there were a couple more charged, and plenty of plausible allegations that other exchanges are doing it too.
    - arcticbull 8y ago
      There's a good writeup here when it happened on GDAX at the end of 2017: https://medium.com/@bitfinexed/meet-picasso-the-painter-on-gdax-c478ff8f50e5 https://medium.com/@bitfinexed/meet-picasso-the-painter-on-g...
jackcosgrove 8y ago
BTC is fundamentally flawed because it's deflationary by design. It will never be used as currency for that reason, only as a store of value. As a store of value I'm not convinced of it vs. other assets. Stocks are liquid and have good yields in a mostly regulated environment, while real estate is improvable and multi-use. Cryptocurrencies could be valuable if proof of work led to a valuable information resource, such as labeling data or hosting content in a distributed web, and if there was no cap on the amount of crypto currency that could be generated.
arcticbull 8y ago
(1) Bitcoin has not collapsed because it works well. No, it doesn't. It works only because less than 7 transactions per second worth of people want to use it. It works well because it’s collapsed. We saw how it reacted when people did want to use it. inb4 lightning, to open and close a single channel for everyone in the world will take 68 years. (2) The price is going up! Then... (3) Stop focusing on the price! Yes, everyone's got it wrong because in the same breath you tell us the price is going up then not to look at the price. Not to mention all the basic problems with it: the rampant manipulation you can't stamp out by design, the actively user-hostile nature, the massive deflation because everyone keeps losing their keys and all the features people want like chargebacks being stripped out of it. Nobody wants to be their own bank, it’s so hard. Then there’s the economics of it, my lord, ECON 101 level stuff. Inflation isn’t bad because you’re not supposed to hold cash. You’re supposed to use it to purchase productive assets, like stocks, bonds or real estate which track and exceed inflation. It’s even good for borrowers because debts become cheaper over time. It’s a regular haircut for unproductive capital, the mechanism by which capitalism allocates capital efficiently. Money isn’t supposed to become more valuable by virtue of you just having it. Under your bird bath, of course because it’s not safe anywhere else. Even the hardcore coiners on reddit have started admitting it’s sole value is hiding your wealth offshore out of reach of the long arm of the tax man. Or for the narcos! Yes, it's going swimmingly.
- r32a_ 8y ago
  your info is pretty old
  - arcticbull 8y ago
    Sure don’t provide any new info. “Wrong” doesn’t exactly inspire confidence in your case.
- topmonk 8y ago
  > Yes, everyone's got it wrong because in the same breath you tell us the price is going up then not to look at the price. You're a lot like a climate change denier. Just like there is a difference between weather and climate, there is a difference between short term volatility vs a long term trend. > Inflation isn’t bad because you’re not supposed to hold cash. You’re supposed to use it to purchase productive assets, like stocks, bonds or real estate which track and exceed inflation. It’s even good for borrowers because debts become cheaper over time. It’s a regular haircut for unproductive capital, the mechanism by which capitalism allocates capital efficiently. Money isn’t supposed to become more valuable by virtue of you just having it. Under your bird bath, of course because it’s not safe anywhere else. There isn't a "supposed to/not supposed to" argument. Cryptocurrency doesn't have to be something that is supposed to be anything. Inflation gives a currency pressure to be traded, yes, and being able to trade it easily makes it more useful, and hence adds to its popularity. But it's not the only reason a currency becomes popular, and the other benefits that cryptocurrency have over little green pieces of paper are IMO enough so it can continue to grow. > Even the hardcore coiners on reddit have started admitting it’s sole value is hiding your wealth offshore out of reach of the long arm of the tax man. Or for the narcos! It can be easily transferred anywhere in the world almost instantly, and ownership very well hidden. These are great benefits, even if they haven't been completely capitalized on yet. I'm not sure if Bitcoin or some other cryptocurrency is going to end up the leader, but I do believe that this industry is going to continue to grow. The cryptocurrency market has crashed and recovered 6 times in the last 8 or 9 years or so. All of your arguments had exactly the same amount of weight as they did the previous 5 crashes, yet the crypto market recovered and greatly surpassed even the weighty highs of the peak before the last crash. Are you really going to tell me that this time is different?

by oska 8y ago

yongjik 8y ago

I meant, it practically "collapsed" for those crypto-traders of Korea. If you use bitcoin for its ability to exchange money with anyone in the world, then you're right, it's doing fine. On the other hand, if you borrowed fiat money to buy bitcoin and other assorted currencies you never heard about, believing that the price will go up, and if it became 1/3 of the price you bought, then for all practical purposes, it has collapsed, in the same sense a housing market would "collapse" if price went down by 2/3. Unfortunately, the latter describes a lot of Koreans who bought cryptocurrencies last year. The number could've been much higher without government intervention.

jpatokal 8y ago

I was about to ask you to explain that upward trend in the light of bitcoin transaction volume collapsing... but interestingly enough, it's been on a pronounced upward trend again for the past quarter: https://www.blockchain.com/en/charts/n-transactions?timespan=2years https://www.blockchain.com/en/charts/n-transactions?timespan... Yet trading volume is way down: https://www.blockchain.com/charts/trade-volume?timespan=2years https://www.blockchain.com/charts/trade-volume?timespan=2yea... And this is happening despite mainstream adoption for e-commerce etc having almost completely collapsed. Where is this volume coming from? Algorithmic trading, money laundering, something else?

icelancer 8y ago
> mainstream adoption for e-commerce etc having almost completely collapsed ? The adoption was slow (and IS slow) but it never "collapsed." The same places I used BTC to order stuff from 9 months ago are the same places I use BTC to order stuff from now. And there are new ones popping up slowly but surely.
- jpatokal 8y ago
  Stripe, Steam, Expedia and Microsoft all stopped accepting BTC last year. What new mainstream merchants replaced them?
  - icelancer 8y ago
    Why must more merchants replace them for transaction volume to go up? Could there not be more transactions through the existing merchants that had order flow as the use of BTC spend grows organically?
    - jpatokal 8y ago
      If accepting BTC was raking in dough for some merchants, you would expect more merchants to start adopting it. However, it appears that many merchants who did accept BTC in the past no longer do. Or put another way, can you point to some stats that show increased organic BTC spend for e-commerce?
- arcticbull 8y ago
  It went from 5 major retailers to 3. That’s a 40% drop.
  - icelancer 8y ago
    This implies the bulk of the traffic was at the major retailers. I am not sure the data would support that assertion.
    - deleted 8y ago
      [deleted]
zozbot123 8y ago
BTC transaction volume is going to be kept fairly stable due to the existence of a dynamic transaction reward. If the cost per transaction goes down, this might imply that demand for "higher-value" uses of the BTC network is indeed collapsing, but by the same token this makes smaller-scale use more viable rather than less.
swang 8y ago
search 'tether scam' and you'll get all the answers you need. the price of bitcoin has been propped up for the entirety of its boom.
- jpatokal 8y ago
  I'm the author of http://untether.space http://untether.space, so I'm well aware of that, but it's not clear to me what connection this has to increasing tx volumes?
arcticbull 8y ago
Money laundering, wash trading, tape painting and drugs. Rampant manipulation. It goes up 10% in minutes then falls back 10% a few days later, just enough time to wreck any leveraged short positions, and then wreck all the new leveraged long positions. The observers call it “barting” because the shape of all trading patterns looks like Bart’s head.
- therealx 8y ago
  Sorry, what does tape paining mean in this context?
  - stephen_g 8y ago
    Painting the tape is exchanges or trading groups trading between themselves to create fake volume and make it look like there's a lot more activity than there actually is. It also helps the exchanges go up in the rankings on sites like CoinMarketCap. A few exchanges (including a couple of South Korean ones) have been investigated recently by regulators and fined for faking literally hundreds of billions of dollars of volume over the last year or two.
    - arcticbull 8y ago
      Is this what you were referring to? ~$250 billion USD worth of wash trading leading to arrests at Upbit (https://thenews.asia/en/2018/12/21/upbit-accused-of-fraud-with-254-trillion-krw-in-fake-orders/ https://thenews.asia/en/2018/12/21/upbit-accused-of-fraud-wi...)
      - stephen_g 8y ago
        Yes, one of them. Pretty sure there were a couple more charged, and plenty of plausible allegations that other exchanges are doing it too.
  - arcticbull 8y ago
    There's a good writeup here when it happened on GDAX at the end of 2017: https://medium.com/@bitfinexed/meet-picasso-the-painter-on-gdax-c478ff8f50e5 https://medium.com/@bitfinexed/meet-picasso-the-painter-on-g...

jackcosgrove 8y ago

BTC is fundamentally flawed because it's deflationary by design. It will never be used as currency for that reason, only as a store of value. As a store of value I'm not convinced of it vs. other assets. Stocks are liquid and have good yields in a mostly regulated environment, while real estate is improvable and multi-use. Cryptocurrencies could be valuable if proof of work led to a valuable information resource, such as labeling data or hosting content in a distributed web, and if there was no cap on the amount of crypto currency that could be generated.

arcticbull 8y ago

(1) Bitcoin has not collapsed because it works well. No, it doesn't. It works only because less than 7 transactions per second worth of people want to use it. It works well because it’s collapsed. We saw how it reacted when people did want to use it. inb4 lightning, to open and close a single channel for everyone in the world will take 68 years. (2) The price is going up! Then... (3) Stop focusing on the price! Yes, everyone's got it wrong because in the same breath you tell us the price is going up then not to look at the price. Not to mention all the basic problems with it: the rampant manipulation you can't stamp out by design, the actively user-hostile nature, the massive deflation because everyone keeps losing their keys and all the features people want like chargebacks being stripped out of it. Nobody wants to be their own bank, it’s so hard. Then there’s the economics of it, my lord, ECON 101 level stuff. Inflation isn’t bad because you’re not supposed to hold cash. You’re supposed to use it to purchase productive assets, like stocks, bonds or real estate which track and exceed inflation. It’s even good for borrowers because debts become cheaper over time. It’s a regular haircut for unproductive capital, the mechanism by which capitalism allocates capital efficiently. Money isn’t supposed to become more valuable by virtue of you just having it. Under your bird bath, of course because it’s not safe anywhere else. Even the hardcore coiners on reddit have started admitting it’s sole value is hiding your wealth offshore out of reach of the long arm of the tax man. Or for the narcos! Yes, it's going swimmingly.

r32a_ 8y ago
your info is pretty old
- arcticbull 8y ago
  Sure don’t provide any new info. “Wrong” doesn’t exactly inspire confidence in your case.
topmonk 8y ago
> Yes, everyone's got it wrong because in the same breath you tell us the price is going up then not to look at the price. You're a lot like a climate change denier. Just like there is a difference between weather and climate, there is a difference between short term volatility vs a long term trend. > Inflation isn’t bad because you’re not supposed to hold cash. You’re supposed to use it to purchase productive assets, like stocks, bonds or real estate which track and exceed inflation. It’s even good for borrowers because debts become cheaper over time. It’s a regular haircut for unproductive capital, the mechanism by which capitalism allocates capital efficiently. Money isn’t supposed to become more valuable by virtue of you just having it. Under your bird bath, of course because it’s not safe anywhere else. There isn't a "supposed to/not supposed to" argument. Cryptocurrency doesn't have to be something that is supposed to be anything. Inflation gives a currency pressure to be traded, yes, and being able to trade it easily makes it more useful, and hence adds to its popularity. But it's not the only reason a currency becomes popular, and the other benefits that cryptocurrency have over little green pieces of paper are IMO enough so it can continue to grow. > Even the hardcore coiners on reddit have started admitting it’s sole value is hiding your wealth offshore out of reach of the long arm of the tax man. Or for the narcos! It can be easily transferred anywhere in the world almost instantly, and ownership very well hidden. These are great benefits, even if they haven't been completely capitalized on yet. I'm not sure if Bitcoin or some other cryptocurrency is going to end up the leader, but I do believe that this industry is going to continue to grow. The cryptocurrency market has crashed and recovered 6 times in the last 8 or 9 years or so. All of your arguments had exactly the same amount of weight as they did the previous 5 crashes, yet the crypto market recovered and greatly surpassed even the weighty highs of the peak before the last crash. Are you really going to tell me that this time is different?