7 ms·

For 12 years, just bubbles? First it was over 1 cent, then over $1, over $1000, now over $50k.... when will you consider the possibility you may have been wrong

by 1996 6y ago

For 12 years, just bubbles? First it was over 1 cent, then over $1, over $1000, now over $50k.... when will you consider the possibility you may have been wrong? At $100k? At $1M? (which most models indicate as a plausible target price in 10 years) Let me give you my favorite quote, pulled from another HNer comment: "I enjoy reading comments about Bitcoin here because even without any venture backing, it achieved a bigger valuation than all of the Y Combinator companies COMBINED, yet people still think it is unstable and has no future."

maxerickson 6y ago
Plenty of venture dollars have been invested in bitcoin related services, or even just used to buy bitcoin directly. It's not really the same relationship as investment in a company, but it's not absent either.
- seibelj 6y ago
  Traditional VC is a red flag for me to avoid a project given they are dumb money. Crypto VC is a different story though, they can be very helpful. And they are 100% nothing alike so if you are reading this thing crypto VC is just like traditional VC “except crypto!” you are very mistaken.
seibelj 6y ago
My crypto friends have raised millions outside of VC and then became very rich once their projects launched basically over night. Liquid immediately and never paid a lawyer. Truly is a paradigm shift and I think a big problem on HN is that VC can’t see they are being disrupted and have no way of avoiding it, plus they think they are untouchable geniuses, so being wrong this hard isn’t pleasant for them.
- CyberDildonics 6y ago
  Which part of the $28 average transaction fee is the paradigm shift?
  - jsutton 6y ago
    You're missing the forest for the trees. Transaction fees aren't important. In this case, it's the ability to raise funds for a project outside of an elite class of investors, and not have to wait 5-10 years for a liquidation event.
    - CyberDildonics 6y ago
      Transaction fees are pretty important when trying to do transactions, which is pretty much all bitcoin does.
- PragmaticPulp 6y ago
  > Truly is a paradigm shift and I think a big problem on HN is that VC can’t see they are being disrupted and have no way of avoiding it, On the contrary, VCs are making bank on cryptocurrency. Retail investors are just along for the ride. > plus they think they are untouchable geniuses, so being wrong this hard isn’t pleasant for them. Again, VCs were all over cryptocurrency investments in recent years. They're ecstatic when the price goes up, because retail investors are pumping an investment they were in long ago. I don't know how we arrived at this narrative that crypto was a win for the little guys at the expense of institutions.
grapehut 6y ago
Another good example, one of the the then top HN users by karma: 2015: "Most advantages of Bitcoin which matter are captured by, and improved upon by, a LAMP app which simply holds account balances." 2019: "I acknowledge that when Bitcoin was $17 I said it had no use case, should be worthless, and likely would be at some point in the future. No evidence has come up which would make me change my view. (Though my is it taking a while.)"
JumpCrisscross 6y ago
> For 12 years, just bubbles? Counterfactual: asset prices and incomes have been rising, almost uninterruptedly, for 12 years. Exhibit A is Tether being able to publicly admit that they don't have the cash they said they had and keep going.
- DSingularity 6y ago
  Every time its something. Transaction malleability, segwit, tether, tether again. Something drummed up forcing people to fearfully sell their bitcoin.
onepointsixC 6y ago
All the Y Combinator companies combined have created value. What has Bitcoin created? I struggle to come up with an answer which isn't overwhelmingly just a way to fund illicit activities, for which sure there's always been a market, but it's a far cry of it's origins. Who actually uses bitcoin for transactions today other than extortionists hackers and drug dealers? Everyone who owns is just planning to HODL and hope that it will become equivalent to an infinitely high fiat equivalent. Had bitcoin succeeded we wouldn't be talking about insane valuations. We would be using it every day no different from a credit card.
- r3dk1ng 6y ago
  I am neither a drug dealer nor an extortionist. I used bitcoin to buy a router from Newegg a month ago.
  - onepointsixC 6y ago
    Then you're in the overwhelming minority of bitcoin users.
    - hanniabu 6y ago
      Not at all, you're just wrong.
  - akvadrako 6y ago
    You paid a $20 transaction fee for a router?
    - saalweachter 6y ago
      Please, the anecdote alone is worth far more than $20.
- koolba 6y ago
  > What has Bitcoin created? The biggest impact on the world from bitcoin's creation was not a democratization of finance, it was a widespread mechanism to facilitate payment of blackmail.
pjc50 6y ago
The value of a valuation may go down as well as up. https://www.businessinsider.com/wework-valuation-falls-47-billion-to-less-than-3-billion-2020-5?r=US&IR=T https://www.businessinsider.com/wework-valuation-falls-47-bi... (I don't think WeWork was YC, but it does drive home that achieving a valuation is primarily a reflection of your ability to convince investors to give you money)
GrumpyNl 6y ago
What is payed for bitcoin has nothing to do with the value. When its worth $100k or 1M its just a bigger bubble.
Ologn 6y ago
> First it was over 1 cent, then over $1, over $1000, now over $50k.... when will you consider the possibility you may have been wrong? At $100k? At $1M? (which most models indicate as a plausible target price in 10 years) This is the wrong metric. A million dollar market cap bubble is not hard to sustain, even a billion dollar market cap is a footnote to the rest of the economy. The entire worth of Bitcoin is still less than half of the worth of the market cap of one company such as Apple. At some point it becomes large enough that its real value has to be considered, which in my opinion is zero. Stocks like pets.com had long runs in 2000, subprime mortgages had long runs in 2008 and people were saying then what you are saying. Stocks and real estate are frothy now so Bitcoin and Dogecoin have company. I would rather own a house than 10 bitcoins though.
audunw 6y ago
> when will you consider the possibility you may have been wrong? At $100k? At $1M? Personally I think Bitcoin has at least two bubbles left before it pops permanently. So $1M price could be achievable. The real question is what happens when it does reach a ceiling. At some point there's not going to much more potential interest for Bitcoin, and what then? Are people gonna start moving their pension funds to Bitcoin? I think the governments will crack hard down on that, because you really want investments in building the economy, not in a pure investment/gambling scheme. If most people start thinking there's no one else interested in buying their Bitcoin down the line, it'll crash hard, and the crash will likely be permanent. Because there's no real value behind Bitcoin. The money you invested is already spent by someone on something else. The reason why it's interesting that Bitcoin keeps having bubbles is that there's not much reason to think that will stop. Yeah, the value keeps growing over longer time periods, but eventually a bubble will be so large that it'll seriously disrupt the economy, and that's when you'll start to see governments and peoples attitudes change. > I enjoy reading comments about Bitcoin here because even without any venture backing, it achieved a bigger valuation than all of the Y Combinator companies COMBINED, yet people still think it is unstable and has no future. The problem is that the valuation is more imaginary than the valuation of any company except for those that are just Ponzi-schemes. Most money put into Bitcoin has been cashed out or used for mining expenses. If everyone tried to cash out, the price would very quickly race back down to zero. If the same happened with a stocks in a corporation, at some price level someone would just buy up a controlling stake of the shares and liquidate all the assets for a profit.
- ur-whale 6y ago
  > Because there's no real value behind Bitcoin You post was very interesting (what happens to Bitcoin when it becomes so big it's capable of tilting G7 type economies) up to the argument above, which is: a) wrong because Bitcoin does have some actual utility b) wrong because "value" is only something that carries any kind of meaning in a supply and demand framework c) parroting an argument that has been trumpeted on HN almost as much as "oooh, bad for the environment" and has also been thoroughly debunked.
- RestlessMind 6y ago
robjan 6y ago
Which models? The only thing I can find to support your claim is random people tweeting that they think it will be worth 1M. I guess when enough people say something it becomes a "fact"
- intev 6y ago
  Plan B's (in)famous model: https://digitalik.net/btc/ https://digitalik.net/btc/ Notice how the trend is eerily aligned? Just because you couldn't find it doesn't mean you have to be snarky about it.
  - robjan 6y ago
    Please refrain from assuming that anyone asking a question is being "snarky"
    - intev 6y ago
      Definition of snarky: critical or mocking in an indirect or sarcastic way. What you said. The 3rd sentence in particular: I guess when enough people say something it becomes a "fact" So that was just simply asking a question? No mocking or sarcasm? Without the last sentence you would have just been asking a question. With it, you are being snarky.
  - graeme 6y ago
    That model appears to be nonsense. There’s no “stock to flow” price relationship in economics or investing. The author made it up for their piece, looked at gold, and extrapolated. They say in the piece: > Now contrast Bitcoin's dynamic stock-to-flow with Gold's, who's stock-to-flow of 62 is not likely in increase. As a thought experiment, try to imagine what would happen to the price of gold if were to be halved one day? That did happen, in 1940! Gold production fell in half for years. And the gold price subsequently fell.
    - intev 6y ago
      > That did happen, in 1940! Gold production fell in half for years. And the gold price subsequently fell. Can I see evidence of this? Using this[1] paper and this[2] article I can see gold production by no means halved and gold prices did not fall. [1] https://ies.princeton.edu/pdf/E15.pdf https://ies.princeton.edu/pdf/E15.pdf [2] https://www.thebalance.com/gold-price-history-3305646 https://www.thebalance.com/gold-price-history-3305646

by 1996 6y ago

maxerickson 6y ago

Plenty of venture dollars have been invested in bitcoin related services, or even just used to buy bitcoin directly. It's not really the same relationship as investment in a company, but it's not absent either.

seibelj 6y ago
Traditional VC is a red flag for me to avoid a project given they are dumb money. Crypto VC is a different story though, they can be very helpful. And they are 100% nothing alike so if you are reading this thing crypto VC is just like traditional VC “except crypto!” you are very mistaken.

seibelj 6y ago

My crypto friends have raised millions outside of VC and then became very rich once their projects launched basically over night. Liquid immediately and never paid a lawyer. Truly is a paradigm shift and I think a big problem on HN is that VC can’t see they are being disrupted and have no way of avoiding it, plus they think they are untouchable geniuses, so being wrong this hard isn’t pleasant for them.

CyberDildonics 6y ago
Which part of the $28 average transaction fee is the paradigm shift?
- jsutton 6y ago
  You're missing the forest for the trees. Transaction fees aren't important. In this case, it's the ability to raise funds for a project outside of an elite class of investors, and not have to wait 5-10 years for a liquidation event.
  - CyberDildonics 6y ago
    Transaction fees are pretty important when trying to do transactions, which is pretty much all bitcoin does.
PragmaticPulp 6y ago
> Truly is a paradigm shift and I think a big problem on HN is that VC can’t see they are being disrupted and have no way of avoiding it, On the contrary, VCs are making bank on cryptocurrency. Retail investors are just along for the ride. > plus they think they are untouchable geniuses, so being wrong this hard isn’t pleasant for them. Again, VCs were all over cryptocurrency investments in recent years. They're ecstatic when the price goes up, because retail investors are pumping an investment they were in long ago. I don't know how we arrived at this narrative that crypto was a win for the little guys at the expense of institutions.

grapehut 6y ago

Another good example, one of the the then top HN users by karma: 2015: "Most advantages of Bitcoin which matter are captured by, and improved upon by, a LAMP app which simply holds account balances." 2019: "I acknowledge that when Bitcoin was $17 I said it had no use case, should be worthless, and likely would be at some point in the future. No evidence has come up which would make me change my view. (Though my is it taking a while.)"

JumpCrisscross 6y ago

> For 12 years, just bubbles? Counterfactual: asset prices and incomes have been rising, almost uninterruptedly, for 12 years. Exhibit A is Tether being able to publicly admit that they don't have the cash they said they had and keep going.

DSingularity 6y ago
Every time its something. Transaction malleability, segwit, tether, tether again. Something drummed up forcing people to fearfully sell their bitcoin.

onepointsixC 6y ago

All the Y Combinator companies combined have created value. What has Bitcoin created? I struggle to come up with an answer which isn't overwhelmingly just a way to fund illicit activities, for which sure there's always been a market, but it's a far cry of it's origins. Who actually uses bitcoin for transactions today other than extortionists hackers and drug dealers? Everyone who owns is just planning to HODL and hope that it will become equivalent to an infinitely high fiat equivalent. Had bitcoin succeeded we wouldn't be talking about insane valuations. We would be using it every day no different from a credit card.

r3dk1ng 6y ago
I am neither a drug dealer nor an extortionist. I used bitcoin to buy a router from Newegg a month ago.
- onepointsixC 6y ago
  Then you're in the overwhelming minority of bitcoin users.
  - hanniabu 6y ago
    Not at all, you're just wrong.
- akvadrako 6y ago
  You paid a $20 transaction fee for a router?
  - saalweachter 6y ago
    Please, the anecdote alone is worth far more than $20.
koolba 6y ago
> What has Bitcoin created? The biggest impact on the world from bitcoin's creation was not a democratization of finance, it was a widespread mechanism to facilitate payment of blackmail.

pjc50 6y ago

The value of a valuation may go down as well as up. https://www.businessinsider.com/wework-valuation-falls-47-billion-to-less-than-3-billion-2020-5?r=US&IR=T https://www.businessinsider.com/wework-valuation-falls-47-bi... (I don't think WeWork was YC, but it does drive home that achieving a valuation is primarily a reflection of your ability to convince investors to give you money)

GrumpyNl 6y ago

What is payed for bitcoin has nothing to do with the value. When its worth $100k or 1M its just a bigger bubble.

Ologn 6y ago

> First it was over 1 cent, then over $1, over $1000, now over $50k.... when will you consider the possibility you may have been wrong? At $100k? At $1M? (which most models indicate as a plausible target price in 10 years) This is the wrong metric. A million dollar market cap bubble is not hard to sustain, even a billion dollar market cap is a footnote to the rest of the economy. The entire worth of Bitcoin is still less than half of the worth of the market cap of one company such as Apple. At some point it becomes large enough that its real value has to be considered, which in my opinion is zero. Stocks like pets.com had long runs in 2000, subprime mortgages had long runs in 2008 and people were saying then what you are saying. Stocks and real estate are frothy now so Bitcoin and Dogecoin have company. I would rather own a house than 10 bitcoins though.

audunw 6y ago

> when will you consider the possibility you may have been wrong? At $100k? At $1M? Personally I think Bitcoin has at least two bubbles left before it pops permanently. So $1M price could be achievable. The real question is what happens when it does reach a ceiling. At some point there's not going to much more potential interest for Bitcoin, and what then? Are people gonna start moving their pension funds to Bitcoin? I think the governments will crack hard down on that, because you really want investments in building the economy, not in a pure investment/gambling scheme. If most people start thinking there's no one else interested in buying their Bitcoin down the line, it'll crash hard, and the crash will likely be permanent. Because there's no real value behind Bitcoin. The money you invested is already spent by someone on something else. The reason why it's interesting that Bitcoin keeps having bubbles is that there's not much reason to think that will stop. Yeah, the value keeps growing over longer time periods, but eventually a bubble will be so large that it'll seriously disrupt the economy, and that's when you'll start to see governments and peoples attitudes change. > I enjoy reading comments about Bitcoin here because even without any venture backing, it achieved a bigger valuation than all of the Y Combinator companies COMBINED, yet people still think it is unstable and has no future. The problem is that the valuation is more imaginary than the valuation of any company except for those that are just Ponzi-schemes. Most money put into Bitcoin has been cashed out or used for mining expenses. If everyone tried to cash out, the price would very quickly race back down to zero. If the same happened with a stocks in a corporation, at some price level someone would just buy up a controlling stake of the shares and liquidate all the assets for a profit.

ur-whale 6y ago
> Because there's no real value behind Bitcoin You post was very interesting (what happens to Bitcoin when it becomes so big it's capable of tilting G7 type economies) up to the argument above, which is: a) wrong because Bitcoin does have some actual utility b) wrong because "value" is only something that carries any kind of meaning in a supply and demand framework c) parroting an argument that has been trumpeted on HN almost as much as "oooh, bad for the environment" and has also been thoroughly debunked.
RestlessMind 6y ago

robjan 6y ago

Which models? The only thing I can find to support your claim is random people tweeting that they think it will be worth 1M. I guess when enough people say something it becomes a "fact"

intev 6y ago
Plan B's (in)famous model: https://digitalik.net/btc/ https://digitalik.net/btc/ Notice how the trend is eerily aligned? Just because you couldn't find it doesn't mean you have to be snarky about it.
- robjan 6y ago
  Please refrain from assuming that anyone asking a question is being "snarky"
  - intev 6y ago
    Definition of snarky: critical or mocking in an indirect or sarcastic way. What you said. The 3rd sentence in particular: I guess when enough people say something it becomes a "fact" So that was just simply asking a question? No mocking or sarcasm? Without the last sentence you would have just been asking a question. With it, you are being snarky.
- graeme 6y ago
  That model appears to be nonsense. There’s no “stock to flow” price relationship in economics or investing. The author made it up for their piece, looked at gold, and extrapolated. They say in the piece: > Now contrast Bitcoin's dynamic stock-to-flow with Gold's, who's stock-to-flow of 62 is not likely in increase. As a thought experiment, try to imagine what would happen to the price of gold if were to be halved one day? That did happen, in 1940! Gold production fell in half for years. And the gold price subsequently fell.
  - intev 6y ago
    > That did happen, in 1940! Gold production fell in half for years. And the gold price subsequently fell. Can I see evidence of this? Using this[1] paper and this[2] article I can see gold production by no means halved and gold prices did not fall. [1] https://ies.princeton.edu/pdf/E15.pdf https://ies.princeton.edu/pdf/E15.pdf [2] https://www.thebalance.com/gold-price-history-3305646 https://www.thebalance.com/gold-price-history-3305646