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I can totally believe how Bitcoin, Ethereum and the rest of the cryptocurrency space could go through another bubble (the last one was quite small if you compar

by bhaak 6y ago

I can totally believe how Bitcoin, Ethereum and the rest of the cryptocurrency space could go through another bubble (the last one was quite small if you compare it to the DotCom bubble and consider how much money is floating around nowadays). So I can imagine that this will turn into a big profit for them but the arguments are hilariously weak. Granted they will get a lot of PR out of it.

lifty 6y ago
Hilariously weak? I think they lay out a reasonable argument considering the amount of debt around the world and the fragility of the economy. The big question is: will we have deflation or inflation? I am not sure, but I doubt the USG will let itself go bankrupt.
- DSingularity 6y ago
  Correction: the world won’t let the USG go bankrupt. American generals won’t just stand down, disband their forces, and turn in their boots. If the USG goes bankrupt a massive war will breakout. In the business world things have been going pretty well so if more taxes become necessary to prop up the USG they will happily oblige.
  - lifty 6y ago
    I agree with what you are saying, but even before that point, the USG which is sovereign over its money supply, will be able cover any liabilities it has by creating the necessary money. This is what I was alluding to when I mentioned that the USG won’t let itself go bankrupt. They will destroy the USD before going bankrupt, because the repercussions of going bankrupt are much worse than a lower valued USD. Also, the whole debt ceiling is a charade; the FED can and has monetized treasury debt without any fuss.
  - martinko 6y ago
    Inflating the debt away would actually be the opposite of bankruptcy.
- betterunix2 6y ago
  "I doubt the USG will let itself go bankrupt." The federal government cannot go bankrupt. In theory the government can default on debts, but in reality there is never a situation where the government would be forced to do so (it is always due to political dysfunction) -- as others have stated the US government is able to issue more money whenever it needs to do so, and thus can always satisfy any monetary obligations (though there may be negative consequences to doing so). Even if the government does default on its debts, it would not truly be bankrupt, because bankruptcy means that some higher authority has stepped in to decide what will be repaid and how, but the federal government is the highest authority. Likewise for the states, which cannot issue money but which cannot actually go bankrupt (as they have the authority to decide what obligations to meet or to fail to meet), something which has become relevant due to the enormous cost of dealing with COVID.
  - nostrademons 6y ago
    I think that was the grandparent's point. The USG can always issue more currency and inflate away the value of its debt. Doing so is preferable to default (and the fiscal & political crisis that would bring), and so they will. Thus, we're going to get more inflation.
    - parasubvert 6y ago
      We watched one of the US political parties threaten default at least three times in the past 12 years. I think creating political/fiscal crises is part of the point.
      - frank2 6y ago
        I had no idea. Where can I learn more about this? Are you sure they threatened to default of _Treasury_ instruments?
        betterunix2 6y ago
        Basically it came down to a refusal to raise the debt ceiling, which forces the Treasury to take "extraordinary" measures to meet debt obligations. In several cases the Treasury was warning that they were running out of such measures and that if the debt ceiling was not raised there would be a default.
9nGQluzmnq3M 6y ago
"Could"? We're already in a bubble. Most notably, the Bitcoin price rally coincides with Tether printing out $10B of their "stablecoin", fully backed with what very much appears to be nothing at all. Here's a primer from HN's very own patio11, from back in late 2019 when they had only printed $4B: https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/ https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/
- martinko 6y ago
  This has been debunked time and time again, at this point you are just shitposting.
f00zz 6y ago
> go through another bubble I don't know. I remember a few years ago when people on reddit would get excited when some cafe in Bratislava or wherever started accepting bitcoin, or when Steam started accepting bitcoin. Now cryptocurrencies seem... boring. I see lots of people talking about "store of value", but actual use of bitcoin for what it was intended seems to be decreasing. And now people who want to gamble can just buy NKLA or SPCE or options on zero-fee brokers, which weren't a thing when bitcoin hit all-time high. This is just my impression as an outsider, of course.
- drcode 6y ago
  The counterargument to this is that IF people are willing to pay for something, they must care about it. For both Bitcoin and Ethereum, the amount of money people are willing to pay in fees to propagate on the network are extremely high at the moment... so in theory at least, somebody thinks these networks are "worth" using, or they wouldn't spend this money.
  - cortesoft 6y ago
    That isn’t necessarily true... people also buy things if they think OTHER people care about it.... they think someone else will buy it from them later for a higher price. https://en.wikipedia.org/wiki/Greater_fool_theory https://en.wikipedia.org/wiki/Greater_fool_theory
  - gruez 6y ago
    >For both Bitcoin and Ethereum, the amount of money people are willing to pay in fees to propagate on the network are extremely high at the moment Just to add here, the transaction fees you have to pay are highly variable, see chart fee chart for the last 30 days[1]. As of this posting the market clearing rate for a typical transaction is about 0.000325 BTC[2], or around $3.73. However, a few hours ago it was as low as 0.000005 BTC for a typical transaction, or around ($0.058). [1] https://i.imgur.com/FYpGpES.png https://i.imgur.com/FYpGpES.png [2] a random google search says a typical bitcoin transaction 250 bytes. this is a different unit than the one in the linked chart, which uses satoshis (0.00000001 BTC) per byte.
nickbauman 6y ago
The bitcoin network is much too slow for real economic behavior. I don't understand this, but then I've been ignoring bitcoin for a couple of years. Did they change the proof-of-work requirements? (If they did, they're just competing with other fiat currency)

by bhaak 6y ago

lifty 6y ago

Hilariously weak? I think they lay out a reasonable argument considering the amount of debt around the world and the fragility of the economy. The big question is: will we have deflation or inflation? I am not sure, but I doubt the USG will let itself go bankrupt.

DSingularity 6y ago
Correction: the world won’t let the USG go bankrupt. American generals won’t just stand down, disband their forces, and turn in their boots. If the USG goes bankrupt a massive war will breakout. In the business world things have been going pretty well so if more taxes become necessary to prop up the USG they will happily oblige.
- lifty 6y ago
  I agree with what you are saying, but even before that point, the USG which is sovereign over its money supply, will be able cover any liabilities it has by creating the necessary money. This is what I was alluding to when I mentioned that the USG won’t let itself go bankrupt. They will destroy the USD before going bankrupt, because the repercussions of going bankrupt are much worse than a lower valued USD. Also, the whole debt ceiling is a charade; the FED can and has monetized treasury debt without any fuss.
- martinko 6y ago
  Inflating the debt away would actually be the opposite of bankruptcy.
betterunix2 6y ago
"I doubt the USG will let itself go bankrupt." The federal government cannot go bankrupt. In theory the government can default on debts, but in reality there is never a situation where the government would be forced to do so (it is always due to political dysfunction) -- as others have stated the US government is able to issue more money whenever it needs to do so, and thus can always satisfy any monetary obligations (though there may be negative consequences to doing so). Even if the government does default on its debts, it would not truly be bankrupt, because bankruptcy means that some higher authority has stepped in to decide what will be repaid and how, but the federal government is the highest authority. Likewise for the states, which cannot issue money but which cannot actually go bankrupt (as they have the authority to decide what obligations to meet or to fail to meet), something which has become relevant due to the enormous cost of dealing with COVID.
- nostrademons 6y ago
  I think that was the grandparent's point. The USG can always issue more currency and inflate away the value of its debt. Doing so is preferable to default (and the fiscal & political crisis that would bring), and so they will. Thus, we're going to get more inflation.
  - parasubvert 6y ago
    We watched one of the US political parties threaten default at least three times in the past 12 years. I think creating political/fiscal crises is part of the point.
    - frank2 6y ago
      I had no idea. Where can I learn more about this? Are you sure they threatened to default of _Treasury_ instruments?
      - betterunix2 6y ago
        Basically it came down to a refusal to raise the debt ceiling, which forces the Treasury to take "extraordinary" measures to meet debt obligations. In several cases the Treasury was warning that they were running out of such measures and that if the debt ceiling was not raised there would be a default.

9nGQluzmnq3M 6y ago

"Could"? We're already in a bubble. Most notably, the Bitcoin price rally coincides with Tether printing out $10B of their "stablecoin", fully backed with what very much appears to be nothing at all. Here's a primer from HN's very own patio11, from back in late 2019 when they had only printed $4B: https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/ https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/

martinko 6y ago
This has been debunked time and time again, at this point you are just shitposting.

f00zz 6y ago

> go through another bubble I don't know. I remember a few years ago when people on reddit would get excited when some cafe in Bratislava or wherever started accepting bitcoin, or when Steam started accepting bitcoin. Now cryptocurrencies seem... boring. I see lots of people talking about "store of value", but actual use of bitcoin for what it was intended seems to be decreasing. And now people who want to gamble can just buy NKLA or SPCE or options on zero-fee brokers, which weren't a thing when bitcoin hit all-time high. This is just my impression as an outsider, of course.

drcode 6y ago
The counterargument to this is that IF people are willing to pay for something, they must care about it. For both Bitcoin and Ethereum, the amount of money people are willing to pay in fees to propagate on the network are extremely high at the moment... so in theory at least, somebody thinks these networks are "worth" using, or they wouldn't spend this money.
- cortesoft 6y ago
  That isn’t necessarily true... people also buy things if they think OTHER people care about it.... they think someone else will buy it from them later for a higher price. https://en.wikipedia.org/wiki/Greater_fool_theory https://en.wikipedia.org/wiki/Greater_fool_theory
- gruez 6y ago
  >For both Bitcoin and Ethereum, the amount of money people are willing to pay in fees to propagate on the network are extremely high at the moment Just to add here, the transaction fees you have to pay are highly variable, see chart fee chart for the last 30 days[1]. As of this posting the market clearing rate for a typical transaction is about 0.000325 BTC[2], or around $3.73. However, a few hours ago it was as low as 0.000005 BTC for a typical transaction, or around ($0.058). [1] https://i.imgur.com/FYpGpES.png https://i.imgur.com/FYpGpES.png [2] a random google search says a typical bitcoin transaction 250 bytes. this is a different unit than the one in the linked chart, which uses satoshis (0.00000001 BTC) per byte.

nickbauman 6y ago

The bitcoin network is much too slow for real economic behavior. I don't understand this, but then I've been ignoring bitcoin for a couple of years. Did they change the proof-of-work requirements? (If they did, they're just competing with other fiat currency)