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This time could end up being a bubble, but it is very different for many reasons. The first is that Bitcoin is thriving as a store of value. It hasn't seen muc
by gge 6y ago
This time could end up being a bubble, but it is very different for many reasons.
The first is that Bitcoin is thriving as a store of value. It hasn't seen much adoption as a payments system and is unlikely to do so in the future, but 2020 saw many notable people using adopting Bitcoin as a store of value. See MassMutual, Paul Tudor Jones, Stan Druckenmiller, Tesla, among many other examples.
The second reason is that defi protocols grew in usage by an insane amount in 2020. Decentralized exchanges like Uniswap are beating centralized exchanges in volume and lending protocols like Aave have billions deposited in them. These defi protocols are generating huge cash flows. This is real people using decentralized technologies built on blockchains like Ethereum.
Even if the 2021 bull run ends up like a bubble, 2021 will be different in that a lot of the price rises will be based on fundamentals, not pure speculation like in 2017. One thing to note though is that a Bubble is not necessarily a bad thing. In every past Bitcoin "bubble" (2011, 2014, 2017 etc) the price Bitcoin crashed to has always been higher than the price it started the run up at.
- 4a3f35b5a 6y ago> These defi protocols are generating huge cash flows. This is real people using decentralized technologies built on blockchains like Ethereum. I'm fairly new to Crypto so I don't understand this: it's looking like all cool new things are built on Ethereum (which, itself has grown quite a lot) so why is Bitcoin rising? How are Bitcoin & advances in Ethereum-based techonologies correlated?
- gge 6y agoDefi does bring more value to Bitcoin since BTC can be put to use in defi protocols. Bitcoin is mainly rising for the first reason though, the growth in defi isn't the main driver.
- snug 6y agoBitcoin was the first and is still the most famous cryptocurrency. So good news for any cryptocurrency is good news for bitcoin. Most people at this point know that btc exist, they probably don't know what eth is. Bitcoin as collateral. Given many people got extremely rich off of bitcoin, they can use bitcoin as collateral for altcoins. Wrapped bitcoin. Bitcoin can be wrapped in a ERC-20 ETH token backed be an actual bitcoin, similar to stablecoins (USDT, USDC, etc.) and traded using smart contracts
- graeme 6y ago> Decentralized exchanges like Uniswap are beating centralized exchanges in volume and lending protocols like Aave have billions deposited in them. These defi protocols are generating huge cash flows. This is real people using decentralized technologies built on blockchains like Ethereum. What are people doing on these systems? Usually to say “generating cashflows” means some kind of productive business activity. Are people actually touching the real economy or just trading coins amongst other people in the crypto world?