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Here's the cold take: What explains this price doubling? Certainly it's not actual use of BTC as said in the article. Similarly, if BTC was somehow underprice

Here's the cold take: What explains this price doubling? Certainly it's not actual use of BTC as said in the article. Similarly, if BTC was somehow underpriced all this time, why would it see such a rapid price correction upwards? The gains can be explained by nothing else than mania and speculation.

deeeeplearning 6y ago
>The gains can be explained by nothing else than mania and speculation. This was always the case for Bitcoin. Why would ever use it as a currency when its value can swing +/- 20% in a single day, that would be ridiculous.
- apta_ 6y ago
  The hypothesis is that its value will stabilize eventually. Many are using it as a store of value to resist government induced inflation.
  - deeeeplearning 6y ago
    Whose? Bulls trot out the "Bitcoin to $1M" trope all the time, that hardly seems stabilized to me.
dleslie 6y ago
BTC has no intrinsic use as a commodity; its value is as much on faith as any fiat. Perhaps more so, since it lacks the force of a state to support it and defend its use as a currency. Sure, some folks purchase narcotics and other folks send money to Venezuela with it, but the vast majority of BTC holdings are playing their part in a multi-level marketing scheme for tech nerds. Every schmo who pumps the price with their fractional purchases pads the value of the whales' holdings.
PKop 6y ago
>Certainly it's not actual use of BTC You have to drop the idea that scarce/finite assets can, should or need to be used as "currency". Currencies are necessarily able to be increased in supply easily. Even though there are debates about the actual description of central banks expanding their balance sheets as literal "money printing", this is mostly a debate about where this liquidity flows. For the wealthy and corporations who can borrow at extremely low rates, of course this means they have access to this "printing" and will then inject this liquidity into assets. >The gains can be explained by nothing else than mania and speculation. Sure, sort of. But finite assets are doing their job if they rise in price (in reference to fiat currency units of account) as fiat quantities increase, and the people who have access to this fiat look for a place to put it. This is literally the use case of Bitcoin, and so it is absolutely "being used". But since the expansion of BTC has no flexibility (strict supply schedule regardless of economic conditions or price), unlike gold mining or central bank open market operations, it makes BTC very volatile both on the way up and on the way down. But long term (so far) it is doing its job (of absorbing expanding fiat liquidity and supply).
- notahacker 6y ago
  > You have to drop the idea that scarce/finite assets can, should or need to be used as "currency". Sure, but the whole premise that Bitcoin is an asset is that it has theoretical use as currency. There are plenty of other things which are limited in quantity and fungible which nobody is paying $30k for because nobody believes that they are future of money.
  - chillacy 6y ago
    From a podcast I listened to, Michael Saylor does not have "future of money" in his investment thesis at all. He doesn't see this as currency. Instead, he sees bitcoin as something more like gold, but much easier to move around (and across borders), easier to audit, easier to liquidate, etc. That this is not what was in the original bitcoin whitepaper doesn't seem to have stopped him.
  - gge 6y ago
    No. BTC is a store of value.
- kelchqvjpnfasjl 6y ago
  Why does the supply need to increase? Bitcoin can be subdivided to 100,000,000 times. If the value of one satoshi gets too high to be a practicable then a change can be introduced to make smaller units possible. This is like a stock split.
hanniabu 6y ago
Supply shock. Take a minute and read about S2F: https://link.medium.com/IeD1uR5y5ab https://link.medium.com/IeD1uR5y5ab
aent 6y ago
>The gains can be explained by nothing else than mania and speculation And almost 22 billion fake tether dollars injected into the space.
- pontus 6y ago
  Could you expand on this? I've heard many times that tether is what underlies a lot of the infrastructure of bitcoin trading on exchanges and that the company responsible for backing them is particularly unclear about what's going on and likely engaging in fraud. As someone who is an amateur looking in, could you help fill in the holes in this picture? Why do we need tether? Why does it matter if tether is not backed 1:1 by USD? If the fraud really is so obvious and impactful, why 1) isn't BTC tanking and 2) why aren't there charges filed against the company?
  - CapmCrackaWaka 6y ago
    The Gist is that Tether is a cryptocurrency that is supposed to trade at 1:1 USDT:USD. Every tether (their currency denomination) issued is theoretically backed by 1 USD. In 2017, Bitcoin prices soared in large part to the fact that so many people were trading tether for Bitcoin. It turns out that Tether may have arbitrarily issued more USDT than USD they have on hand. Therefore, the buys of bitcoin were essentially fake - trading $0.75 USD worth of tether for $1 of Bitcoin (a Tether lawyer said that Tether only had 75% of the cash necessary to back their supply of USDT). I'm not sure how it's supposed to affect current prices, however. Tethers are still around, and as far as I know, they have not submitted to an audit, but 1 USDT is still trading for 1 USD.
    - microtherion 6y ago
      > Tethers are still around, and as far as I know, they have not submitted to an audit They promised to produce documentation that should shed significant light on the situation by January 15 of this year [0]. In recent days, they have issued up to $800M tokens a day [1]. Which either means that everything is going just swimmingly, or that somebody is stuffing a few more suitcases with cash while heading for the airport. We may soon find out. [0] https://cointelegraph.com/news/ny-attorney-general-expects-documents-within-weeks-in-bitfinex-tether-case https://cointelegraph.com/news/ny-attorney-general-expects-d... [1] https://twitter.com/usdcoinprinter/status/1346128042905792513 https://twitter.com/usdcoinprinter/status/134612804290579251...
janoside 6y ago
My guess is you have no idea of the underlying dynamics because you haven't done your research before deciding for yourself and stating confidently "can be explained by nothing else than..." Here are a couple of threads describing the dynamics in play. Feel free to agree or disagree after reading but, contrary to your statement above, these can explain the price increase: https://twitter.com/Croesus_BTC/status/1319734166557081600 https://twitter.com/Croesus_BTC/status/1319734166557081600 https://twitter.com/real_vijay/status/1143070383261638656 https://twitter.com/real_vijay/status/1143070383261638656 Here's Lyn Alden, regarded by many to be one of the best macroeconomic thinkers working today (who is now very bullish on BTC), playfully echoing the same idea from above: https://twitter.com/LynAldenContact/status/1345854513945706500 https://twitter.com/LynAldenContact/status/13458545139457065... And, just in case the tone of Lyn Alden's tweet confuses you about the caliber of thinker you're encountering here, this is a recent article of hers with relevance to BTC macroeconomically: https://www.lynalden.com/fraying-petrodollar-system/ https://www.lynalden.com/fraying-petrodollar-system/ And another covering several BTC misconceptions: https://www.lynalden.com/misconceptions-about-bitcoin/ https://www.lynalden.com/misconceptions-about-bitcoin/ As I started: I believe you have not done your research to understand what you're looking at. This would be an excusable situation 5 years ago, but the BTC space is now teeming with high quality, pre-digested material that you can use to build a foundation of knowledge and understanding. I believe you'll regret your hubris...sooner rather than later.
- chillacy 6y ago
  > regarded by many to be one of the best macroeconomic thinkers By whom? She doesn't seem to have a wikipedia page.
  - lifty 6y ago
    I follow a lot of macroeconomic and investment personas on Twitter and in the past 2 years Lyn Alden has been a rising star. But she is still young and fairly new so it will take a while before you see her more often on CNBC.
gge 6y ago
Holding BTC is a use case.

deeeeplearning 6y ago

>The gains can be explained by nothing else than mania and speculation. This was always the case for Bitcoin. Why would ever use it as a currency when its value can swing +/- 20% in a single day, that would be ridiculous.

apta_ 6y ago
The hypothesis is that its value will stabilize eventually. Many are using it as a store of value to resist government induced inflation.
- deeeeplearning 6y ago
  Whose? Bulls trot out the "Bitcoin to $1M" trope all the time, that hardly seems stabilized to me.

dleslie 6y ago

BTC has no intrinsic use as a commodity; its value is as much on faith as any fiat. Perhaps more so, since it lacks the force of a state to support it and defend its use as a currency. Sure, some folks purchase narcotics and other folks send money to Venezuela with it, but the vast majority of BTC holdings are playing their part in a multi-level marketing scheme for tech nerds. Every schmo who pumps the price with their fractional purchases pads the value of the whales' holdings.

PKop 6y ago

>Certainly it's not actual use of BTC You have to drop the idea that scarce/finite assets can, should or need to be used as "currency". Currencies are necessarily able to be increased in supply easily. Even though there are debates about the actual description of central banks expanding their balance sheets as literal "money printing", this is mostly a debate about where this liquidity flows. For the wealthy and corporations who can borrow at extremely low rates, of course this means they have access to this "printing" and will then inject this liquidity into assets. >The gains can be explained by nothing else than mania and speculation. Sure, sort of. But finite assets are doing their job if they rise in price (in reference to fiat currency units of account) as fiat quantities increase, and the people who have access to this fiat look for a place to put it. This is literally the use case of Bitcoin, and so it is absolutely "being used". But since the expansion of BTC has no flexibility (strict supply schedule regardless of economic conditions or price), unlike gold mining or central bank open market operations, it makes BTC very volatile both on the way up and on the way down. But long term (so far) it is doing its job (of absorbing expanding fiat liquidity and supply).

notahacker 6y ago
> You have to drop the idea that scarce/finite assets can, should or need to be used as "currency". Sure, but the whole premise that Bitcoin is an asset is that it has theoretical use as currency. There are plenty of other things which are limited in quantity and fungible which nobody is paying $30k for because nobody believes that they are future of money.
- chillacy 6y ago
  From a podcast I listened to, Michael Saylor does not have "future of money" in his investment thesis at all. He doesn't see this as currency. Instead, he sees bitcoin as something more like gold, but much easier to move around (and across borders), easier to audit, easier to liquidate, etc. That this is not what was in the original bitcoin whitepaper doesn't seem to have stopped him.
- gge 6y ago
  No. BTC is a store of value.
kelchqvjpnfasjl 6y ago
Why does the supply need to increase? Bitcoin can be subdivided to 100,000,000 times. If the value of one satoshi gets too high to be a practicable then a change can be introduced to make smaller units possible. This is like a stock split.

hanniabu 6y ago

Supply shock. Take a minute and read about S2F: https://link.medium.com/IeD1uR5y5ab https://link.medium.com/IeD1uR5y5ab

aent 6y ago

>The gains can be explained by nothing else than mania and speculation And almost 22 billion fake tether dollars injected into the space.

pontus 6y ago
Could you expand on this? I've heard many times that tether is what underlies a lot of the infrastructure of bitcoin trading on exchanges and that the company responsible for backing them is particularly unclear about what's going on and likely engaging in fraud. As someone who is an amateur looking in, could you help fill in the holes in this picture? Why do we need tether? Why does it matter if tether is not backed 1:1 by USD? If the fraud really is so obvious and impactful, why 1) isn't BTC tanking and 2) why aren't there charges filed against the company?
- CapmCrackaWaka 6y ago
  The Gist is that Tether is a cryptocurrency that is supposed to trade at 1:1 USDT:USD. Every tether (their currency denomination) issued is theoretically backed by 1 USD. In 2017, Bitcoin prices soared in large part to the fact that so many people were trading tether for Bitcoin. It turns out that Tether may have arbitrarily issued more USDT than USD they have on hand. Therefore, the buys of bitcoin were essentially fake - trading $0.75 USD worth of tether for $1 of Bitcoin (a Tether lawyer said that Tether only had 75% of the cash necessary to back their supply of USDT). I'm not sure how it's supposed to affect current prices, however. Tethers are still around, and as far as I know, they have not submitted to an audit, but 1 USDT is still trading for 1 USD.
  - microtherion 6y ago
    > Tethers are still around, and as far as I know, they have not submitted to an audit They promised to produce documentation that should shed significant light on the situation by January 15 of this year [0]. In recent days, they have issued up to $800M tokens a day [1]. Which either means that everything is going just swimmingly, or that somebody is stuffing a few more suitcases with cash while heading for the airport. We may soon find out. [0] https://cointelegraph.com/news/ny-attorney-general-expects-documents-within-weeks-in-bitfinex-tether-case https://cointelegraph.com/news/ny-attorney-general-expects-d... [1] https://twitter.com/usdcoinprinter/status/1346128042905792513 https://twitter.com/usdcoinprinter/status/134612804290579251...

janoside 6y ago

My guess is you have no idea of the underlying dynamics because you haven't done your research before deciding for yourself and stating confidently "can be explained by nothing else than..." Here are a couple of threads describing the dynamics in play. Feel free to agree or disagree after reading but, contrary to your statement above, these can explain the price increase: https://twitter.com/Croesus_BTC/status/1319734166557081600 https://twitter.com/Croesus_BTC/status/1319734166557081600 https://twitter.com/real_vijay/status/1143070383261638656 https://twitter.com/real_vijay/status/1143070383261638656 Here's Lyn Alden, regarded by many to be one of the best macroeconomic thinkers working today (who is now very bullish on BTC), playfully echoing the same idea from above: https://twitter.com/LynAldenContact/status/1345854513945706500 https://twitter.com/LynAldenContact/status/13458545139457065... And, just in case the tone of Lyn Alden's tweet confuses you about the caliber of thinker you're encountering here, this is a recent article of hers with relevance to BTC macroeconomically: https://www.lynalden.com/fraying-petrodollar-system/ https://www.lynalden.com/fraying-petrodollar-system/ And another covering several BTC misconceptions: https://www.lynalden.com/misconceptions-about-bitcoin/ https://www.lynalden.com/misconceptions-about-bitcoin/ As I started: I believe you have not done your research to understand what you're looking at. This would be an excusable situation 5 years ago, but the BTC space is now teeming with high quality, pre-digested material that you can use to build a foundation of knowledge and understanding. I believe you'll regret your hubris...sooner rather than later.

chillacy 6y ago
> regarded by many to be one of the best macroeconomic thinkers By whom? She doesn't seem to have a wikipedia page.
- lifty 6y ago
  I follow a lot of macroeconomic and investment personas on Twitter and in the past 2 years Lyn Alden has been a rising star. But she is still young and fairly new so it will take a while before you see her more often on CNBC.

gge 6y ago

Holding BTC is a use case.