35 ms·

Bitcoin hits $1T in market value

52 points by johnyzee 6y ago

PragmaticPulp 6y ago
It will be interesting to see Bitcoin sentiment shift as newcomers realize that the bulk of Bitcoin value is held by a small handful of early adopters, and that the bulk of Bitcoin mining capacity is held by a small handful of large mining companies. Cryptocurrency proponents are trying to get ahead of this by reframing Bitcoin as the people's currency, or an opportunity for average people to get rich while sticking it to evil governments. It's interesting to watch people with $1000 of Bitcoin in their Robinhood accounts feel like they're on the winning end of this deal when they see their $1000 investment go to $1300 in the span of a week. So much of the investment frenzy is driven by "what if" scenarios where Bitcoin takes over the world and that $1000 investment eventually makes early adopters millionaires in the new Bitcoin world order. The problem with that hypothetical endgame is that reallocating the world's wealth according to how early someone went all-in on a cryptocurrency gamble (and how much capital they had to invest at the time) would create inequality at unimaginable scale, not to mention completely disconnecting wealth from societal value creation. Our current market-based system isn't perfect, but a hypothetical Bitcoin economy would be downright absurd. If we end up with a crypto economy, it won't be underpinned by a currency where people switched over at values ranging from $0.01 to $1,000,000 per coin.
- ratsmack 6y ago
  Comparing the Gamestop fiasco to Bitcoin, Gamestop just looks like normal market activity, where Bitcoin looks like criminal pump and dump activity... in my opinion.
  - t0mbstone 6y ago
    But bitcoin has been "pumped and dumped" so many times now that most of the people who were early investors have already cashed out long ago. What you are left with now is all the people who bought the bitcoin after it had already been pumped and dumped, and they aren't willing to sell it for less than they bought it for. This means that the perceived value of the asset is now based on the notions held by millions of people who are holding and don't want to sell.
    - notwedtm 6y ago
      How does this track with the fact that it's at the ATH right now, and has been steadily going up for some time?
      - ratsmack 6y ago
        Irrational exuberance is an amazing phenomenon... I've seen this before.
        alwillis 6y ago
        You haven’t seen a new form of money (not currency) go from $0 to $1 trillion before. You haven’t seen something in the process of overtaking the market cap of gold—approximately $10 trillion. The first trillion takes the longest; the next trillion will probably happen in far less time.
- TekMol 6y ago
  Would it be much different from inheritance? Right from birth, one person is destined to be poor while the other destined to be a millionaire.
  - DamnYuppie 6y ago
    So I as a parent from the fruit of my labors have no right to help my children through life? Also please note most millionaires in the world are self made, with over 80%. Of the other 20% most made it to millionaire status before receiving an inheritance. Also note the people you most worry about, the ones who get money young, usually plow through it and leave nothing for their children.
    - justicezyx 6y ago
      Wow, it's not unusual to see comments being contradicting each other by switching the side in the distance of one smartphone's screen. You cannot just state one thing from the side of later comer, and later switch to the side of early comer. That way you are saying 2 things...
      - DamnYuppie 6y ago
        I am aware that they are two separate thoughts but they don't, to me, conflict with each other. The main theme of both of them was to not worry about what others get from their parents. The first was recognizing that that inheritance mostly came from the labors of someone and they have a right to do with their money as they see fit. The second is acknowledging that the person who didn't work for their wealth usually squanders it so don't waste time being jealous of them. So focus on being the person who creates wealth for themselves and try to educate your children so they will have good money habits later on in life and will squander less of what you leave them.
        0xfaded 6y ago
        I want to put this out as a thought experiment. Given that current taxation policy is primarily derived from incomes, and an inheritance is by strict definition an income, then wouldn't it make sense for all incomes to be taxed equally? I'd be more sympathetic to inheritance if the primary source of taxation was wealth.
- adhoc32 6y ago
  You assume that early adopters still hold their Bitcoins. You are (mostly) wrong.
  - Arrath 6y ago
    Has anyone ever estimated how many btc might be locked up in early adopter wallets who have since lost the passwords or the hard drive, etc?
    - deleted 6y ago
      [deleted]
    - iso1210 6y ago
      That number will only ever increase - bitcoin not only fails to grow in size with productivity and population, it actually shrinks. It's massively deflationary, which is a terrible thing for a currency.
    - thedudeabides5 6y ago
      Depends on Satoshi.
  - BiteCode_dev 6y ago
    I concur, I had 140 btc 10 years ago. Sold it all when it reached $800, which I though was peak. I doubt the guy who sold the 5000 btc pizzas still have them.
  - iso1210 6y ago
    Take this guy https://mobile.twitter.com/GregSchoen/status/70261648811761665 https://mobile.twitter.com/GregSchoen/status/702616488117616... Who lamented making $400 instead of $13k back in 2011. Those coins would today be worth about $95m, but there's no way he'd have kept them -- same as the buy who bought the pizzas (or the guy who sold them) This guy was bored of $14/coin, it wasn't moving https://twitter.com/rockerest/status/91885405368098816?lang=en https://twitter.com/rockerest/status/91885405368098816?lang=... So he took the loss (in July 2011 they were at a peak, jumping from 77 cents to $15 in 3 months) Had someone found an old laptop with the coins, they'd have been looking for it in the 2017 craze (ala Big Bang Theory) and sold then. Bitcoin is currently 3 times the peak in December 2017.
- young_unixer 6y ago
  > Bitcoin value is held by a small handful of early adopters, and that the bulk of Bitcoin mining capacity is held by a small handful of large mining companies. Yes. So what? I don't think the typical Bitcoin proponent is the kind of person to get outraged at Pareto distributions. They are against governments, they don't hate wealthy people just for being wealthy. > The problem with that hypothetical endgame is that reallocating the world's wealth according to how early someone went all-in on a cryptocurrency gamble (and how much capital they had to invest at the time) would create inequality at unimaginable scale, not to mention completely disconnecting wealth from societal value creation. How is that different from having invested in Amazon, Google or Apple in the early 00's? Bitcoin (and other cryptocurrencies) does bring value to our society as a store of wealth that's not easy for governments to control.
  - deleted 6y ago
    [deleted]
  - boh 6y ago
    > store of wealth It's funny how people keep saying this as if it's true. 99% of the market isn't buying crypto to "store value". This along with the idea that somehow it's a great currency bcs "no gov't" etc. is also a lie no one believes. Most of the market isn't actually making real-world transactions or storing value but somehow other people will start doing it in the future for some reason so gainz etc.
  - jhanschoo 6y ago
    > Bitcoin (and other cryptocurrencies) does bring value to our society as a store of wealth that's not easy for governments to control. My personal take on this is that it's a temporary state of affairs. You might draw an analogy to the wild west of the Internet in the past, or e-mail. As Bitcoin goes mainstream, if it does, you will see familiar institutions built on it including fractional reserve banking that honor all the comfortable consumer things if you remain within their system.
  - deleted 6y ago
    [deleted]
  - 6y ago
- samatman 6y ago
  Your problem with this hypothetical endgame is an appeal to fairness. I understand why you'd want that, fairness is a strong human instinct, but I don't see where it has any bearing on the likelihood of this future occurring. People don't enjoy having a high number in their accounting system, they enjoy being wealthy. If, say, African central banks start purchasing BTC, and India joins them, early adopters will cash out at whatever value makes them feel like they got their money's worth. Some people will only trade for real property. Some are in a position to hodl until they can buy a whole cruise ship or whatever. Or they could lose it all when BTC crashes to the natural value of any completely hypothetical asset, which is zero. This still seems more likely to me than central banks taking up a position in BTC, but sadly, I lack the ability to predict the future. Is it really that different from buying the first iPod, and thinking to yourself, "y'know this is a brand new Apple, I'm putting a few thousand bucks into their stock"?
  - loceng 6y ago
    "Or they could lose it all when BTC crashes to the natural value of any completely hypothetical asset, which is zero." It'll be interesting who's left "holding the bag" once its the end of the MLM-ponzi scheme of who you can convince to buy into it - save regulatory capture somehow forcing the rest of society to buy into it.
    - iso1210 6y ago
      > save regulatory capture somehow forcing the rest of society to buy into it. That's what happens, some little scheme gets too big to fail, so the taxpayer bails it out. Those that are in the schemes win, those that felt the scheme was stupid lose. I remember seeing adverts on the London underground for icelandic banks offer 5% more than any other savings account. I chuckled and thought "surely nobody's that gullible". There were many. Both individuals, who got bailed out by me (the taxpayer), and many councils (who lost money which belonged to the taxpayer) For 20 years I laughed at these various get quick schemes. Then I realised that they don't fail. Profits are privitised, losses are socialised, and they taxpayer always loses. When you realise that, you have to look at dodgy schemes in a whole separate light. Sure bitcoin is stupid, but as it gets larger and larger the chance of it failing without bailing out large institutions reduces, meaning the chance of me riding on the coattails increases.
- GoldenMonkey 6y ago
  Oh, it's a lot more than $1,000 to $1,300 in a week. If you had invested your $1,200 stimulus check in Bitcoin. It would now be worth $7,200. Where else can the average person make 6x's their money. And, it has already made plenty of average people. Millionaires.
  - pjc50 6y ago
    People were saying this about Gamestop, and I need to remind you that the value can go down as well as up: https://www.dailymail.co.uk/news/article-9219447/GameStop-losses-pile-small-investors-stock-plunged-70-two-days.html https://www.dailymail.co.uk/news/article-9219447/GameStop-lo...
  - vkou 6y ago
    > Where else can the average person make 6x's their money Go to Vegas, bet on red three times. Or, if you don't want to get on a plane during a pandemic, trade on margin.
  - justin_oaks 6y ago
    It's only worth that much if you sell now. Same thing with stocks. It kills me to hear of people talk about how they "lost money" when a stock they own comes down from a temporary high price. No, you only lost money relative to your hypothetical self who sold at the top of the stock's price.
  - creepto 6y ago
    Not a millionaire till you sell. I don't care about a crypto millionaire, show me the FIAT baby.
- iamben 6y ago
  All the "what if" is always pegged to another currency. I don't know anyone that prices anything in just BTC (it's all BTC converted from USD or whatever, because anything else would be madness) - and I don't know anyone that doesn't peg their bitcoin to what they'd get if they sold it for "real money". Which makes me think any endgame isn't going to be the utopian, governmentless, money-freedom future I keep hearing promised.
  - tux1968 6y ago
    Not sure if it means anything, but the first thing I do when reading about the price of say some huge tunnel built in Europe is mentally convert the quoted Euro price to USD. Doesn't make the Euro any less real as a currency.
    - Jtsummers 6y ago
      The fact that a European project was priced in Euros suggests that Euros are more of a currency than BTC. Converting to USD is a matter of convenience for you. But within the European economy that same project would have a near comparable EUR price in 12 months as it does today. That is not true for things priced in BTC as the value of the BTC is wildly fluctuating (though generally trending up). Please find a contemporary (don't look to someone selling alpaca wool socks in 2010 and 2011), stable priced product line in BTC. Anything that I can be confident I will pay +/- 5% of the same BTC for over a 3 month period (I'm deliberately selecting a short period, most currencies are stable for 12+ months at a time when used to price goods and services).
      - tux1968 6y ago
        This is all new to me, and I don't have any interest in BTC at all. But volatility and crazy inflation does happen in the realm of real currencies. BTC is unique because it's happening at the start of its existence rather than in the traditional death-spiral. Nor is currency speculation unique to BTC, it happens every day with traditional currencies. But maybe BTC can be forgiven for its volatility since it's such a unique and new concept? As I understand it at some point there will be no new bitcoin left to mine, and it will just be available as a store-of-value currency -- if I have the concept correct. And the early adopters will be financially rewarded for helping to get it off the ground as they spend their BTC away into circulation.
- dandanua 6y ago
  > not to mention completely disconnecting wealth from societal value creation. You forget to mention that a lot of early adopters are actual criminals. Yeah, go make them the rulers of the world. Let's see how this ends.
  - errantmind 6y ago
    Do you have a citation for this?
    - dandanua 6y ago
      Silk Road is just one example, there a lot more. Though, you can use logic. Money transfers without governments control is what criminals want the most.
- kryptiskt 6y ago
  I wouldn't worry, in a world where Bitcoin takes over, the economic logic is such that no power can be used for non-Bitcoin purposes until profitable mining has been arbitraged away. This means that the vast majority of power generation will be dedicated to hashing while the oceans rise and the environment dies. The people with the bitcoin will not find a whole lot to buy for the coins in the wasteland when it all has played out.
  - throwawayyy1986 6y ago
    > This means that the vast majority of power generation will be dedicated to hashing while the oceans rise and the environment dies. You have no evidence for this claim, it's just a profusely fantastic image that cleaves to your political bias.
bpodgursky 6y ago
Calculation of market cap is interesting, because we (almost certainly) know that a good fraction — as much as 20% — of mined bitcoins are lost forever through accidental key destruction. So you have to adjust this market cap by the remaining, probably liquid, pool.
- vmception 6y ago
  There are some indexing sites that do that.
  - adhoc32 6y ago
    How? It's impossible to know if someone has lost his private keys or the address is dormant.
    - vmception 6y ago
      They guess/assume with some addresses, like Satoshi's or the EC2 instance that was destroyed with the private key and all the customer's funds haven't moved since 2012
    - 627467 6y ago
      Probabilistically, you probably can estimate that. Is a permanently dormant address just dormant or is it "burnt"?
      - bpodgursky 6y ago
        To a degree, but there are some real whale accounts in question. Satoshi alone may have access to 1.1mm coins — or maybe not.
- mamon 6y ago
  Ok, so now I get why Bitcoin is regarded as "deflationary": on long enough timescale almost all bitcoins will be lost this way, and the last man that still possesses his wallet keys will be a trillionaire. /s
hntrader 6y ago
Question about energy usage: roughly how much does it increase as a function of transaction volume? If 10x the number of people start getting involved and transaction volume increases 10x as a result, will the network use 10x the energy?
- jonathanaird 6y ago
  It has no relation to transaction volume. It is related to the price of BTC and the block reward every 10 minutes. The higher the price, the more miners compete to find a block. Transaction volume can never increase because they have capped the block size at 1mb.
  - hntrader 6y ago
    Good to know, appreciate the explanation. So these estimates that it uses about the same energy as Argentina are probably based on a rather old price and we could get to many multiples of that if the price keeps increasing?
    - jonathanaird 6y ago
      It also depends on the available market for asics. In bear markets, asics are very affordable as miners go out of business but the price can go up quite a lot in bull markets which affects the profitability of buying new machines.
      - hntrader 6y ago
        I wonder what the observed relationship is if we were to plot energy usage vs price over the last 3 years
        jonathanaird 6y ago
        In case you’re interested the two bitcoin forks BCH and BSV have unlimited block size and so energy/transaction validated can scale very well. Eventually all forks will have to rely on transaction fees as the block reward has a halving schedule. If something like BSV succeeds the hash rate and thus energy consumption will be a complicated combination of transaction volume, and variable transaction fees. It will essentially be a race to the bottom to see who can provide the cheapest transactions while still being profitable. I think one should expect much higher energy efficiency than something like Visa just from pure scale and the intense competition.
raziel2701 6y ago
~2.3% of addresses own ~95% of all bitcoins. [1] How is a cryptocurrency with this type of wealth inequality supposed to help the common person? It's already centralized, thus easy to manipulate. Bitcoin is reproducing the same type of wealth distribution we see in real life. What exactly does btc offer? I don't understand how one can look at this distribution of bitcoins, where essentially the 1% owns most of it and people conclude that somehow this is different? That this in your favor as a newcomer? To me this looks like if you buy in now, you're going to become a bagholder for the 1%. [1] https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html https://bitinfocharts.com/top-100-richest-bitcoin-addresses....
- weird-eye-issue 6y ago
  Why do you think it is "supposed to help the common person"? That seems like a weird assumption to start at.
  - raziel2701 6y ago
    Because its proponents claim it's gonna make you rich. That you gotta board this rocket before it takes off to the moon. A lot of the propaganda I remember about bitcoin is that it was going to help bank the unbanked. What I see about btc is that people will tell you anything to get you to buy. The goalposts get moved and depending on who you talk to: "it's a store of value, no it's like a stock! No it's a currency! No it's the instrument of world peace!" Every time I go through comment sections it's like a magic 8 ball is coming up with the arguments in its favor. All I see is that data above, about how heavily centralized bitcoin is. What's the reason to buy into something that's heavily weighed against you?
    - BurningFrog 6y ago
      Never seek wisdom in comment sections.
      - chokeartist 6y ago
        One should frame this quote and hang it in a hallway.
the_giraffe 6y ago
Call me old fashioned but I feel like bitcoin is similar to fiat currencies simply because it's not backed by anything. It has invented scarcity. If I just created giraffe coin and there were only 5 coins it doesn't mean it has any value. Would someone please explain why on earth I want to own bitcoin? I really don't understand the bull case for it.
- iso1210 6y ago
  The US Dollar is backed by 20 aircraft carriers, thousands of nuclear weapons, 350 million Americans who think they have a manifest destiny, and a government with a long history of invading countries that threaten the dollar. What's bitcoin backed by?
  - the_giraffe 6y ago
    CNBC and Grayscale Bitcoin Trust
  - hackernudes 6y ago
    Source code and miners.
  - creepto 6y ago
    Bitcoin is backed by the printer called Tether.
  - dmtroyer 6y ago
    carbon emissions.
- RyanShook 6y ago
  Bitcoin is valuable as an investment in the same way that gold is valuable. It is scarce and the benefit it currently has over gold is it is completely portable and can be instantly be used as a means of exchange if necessary. Bitcoin has very little value as a currency.
- rcoveson 6y ago
  You don’t have to want it, other people want it. You want to have a pile of lightweight, secure doodads that other people want, because that’s easier to exchange than terminal wants like cars and sheep. What’s really crazy is the only reason other people want it is this same reason; it’s circular. It takes coordination to bootstrap, but once it’s set up it can be stable. Like those circles of people all sitting on each-others laps.
acover 6y ago
For context: global equities market cap is $89.5 trillion https://www.visualcapitalist.com/the-worlds-10-largest-stock-markets/ https://www.visualcapitalist.com/the-worlds-10-largest-stock...
- RyanShook 6y ago
  Gold's market cap is approximately $9 trillion and I think BTC is a more attractive investment. https://cointelegraph.com/news/pomp-thinks-btcs-market-cap-will-exceed-golds-in-less-than-a-decade https://cointelegraph.com/news/pomp-thinks-btcs-market-cap-w...
api 6y ago
Is there any good information on what set off this current bull run? The timing with the US election seems odd, but I can't see any causal mechanism that could link the two. Is it Robinhood adding crypto?
- iso1210 6y ago
  The most recent run seemed to start about the same time as GME - presumably people decided to hedge their bets. Maybe they sold GME at the peak and put it into things like BTC, coupled with a lot of new money trying to recover their losses from GME Musk tweeted about it on Feb 8th which pushed it up, and then news stories of it hitting 50k, and now 1T, keeps the money coming in. Stocks are massively overvalued, wouldn't surprise me if people are diversifying too.
- deleted 6y ago
  [deleted]
- hahahahe 6y ago
  Second US stimulus package plus inflation fears in recent weeks. A lot of it is speculation to be fair. As gold didn’t perform and lagged bitcoin, most institutional players bet on bitcoin instead.
- dwaltrip 6y ago
  One likely factor is that the block reward cut in half recently, which lowers the inflation rate.
fabiofzero 6y ago
* Fictional market value
deleted 6y ago
[deleted]

52 points by johnyzee 6y ago

It will be interesting to see Bitcoin sentiment shift as newcomers realize that the bulk of Bitcoin value is held by a small handful of early adopters, and that the bulk of Bitcoin mining capacity is held by a small handful of large mining companies. Cryptocurrency proponents are trying to get ahead of this by reframing Bitcoin as the people's currency, or an opportunity for average people to get rich while sticking it to evil governments. It's interesting to watch people with $1000 of Bitcoin in their Robinhood accounts feel like they're on the winning end of this deal when they see their $1000 investment go to $1300 in the span of a week. So much of the investment frenzy is driven by "what if" scenarios where Bitcoin takes over the world and that $1000 investment eventually makes early adopters millionaires in the new Bitcoin world order. The problem with that hypothetical endgame is that reallocating the world's wealth according to how early someone went all-in on a cryptocurrency gamble (and how much capital they had to invest at the time) would create inequality at unimaginable scale, not to mention completely disconnecting wealth from societal value creation. Our current market-based system isn't perfect, but a hypothetical Bitcoin economy would be downright absurd. If we end up with a crypto economy, it won't be underpinned by a currency where people switched over at values ranging from $0.01 to $1,000,000 per coin.

ratsmack 6y ago
Comparing the Gamestop fiasco to Bitcoin, Gamestop just looks like normal market activity, where Bitcoin looks like criminal pump and dump activity... in my opinion.
- t0mbstone 6y ago
  But bitcoin has been "pumped and dumped" so many times now that most of the people who were early investors have already cashed out long ago. What you are left with now is all the people who bought the bitcoin after it had already been pumped and dumped, and they aren't willing to sell it for less than they bought it for. This means that the perceived value of the asset is now based on the notions held by millions of people who are holding and don't want to sell.
  - notwedtm 6y ago
    How does this track with the fact that it's at the ATH right now, and has been steadily going up for some time?
    - ratsmack 6y ago
      Irrational exuberance is an amazing phenomenon... I've seen this before.
      - alwillis 6y ago
        You haven’t seen a new form of money (not currency) go from $0 to $1 trillion before. You haven’t seen something in the process of overtaking the market cap of gold—approximately $10 trillion. The first trillion takes the longest; the next trillion will probably happen in far less time.
TekMol 6y ago
Would it be much different from inheritance? Right from birth, one person is destined to be poor while the other destined to be a millionaire.
- DamnYuppie 6y ago
  So I as a parent from the fruit of my labors have no right to help my children through life? Also please note most millionaires in the world are self made, with over 80%. Of the other 20% most made it to millionaire status before receiving an inheritance. Also note the people you most worry about, the ones who get money young, usually plow through it and leave nothing for their children.
  - justicezyx 6y ago
    Wow, it's not unusual to see comments being contradicting each other by switching the side in the distance of one smartphone's screen. You cannot just state one thing from the side of later comer, and later switch to the side of early comer. That way you are saying 2 things...
    - DamnYuppie 6y ago
      I am aware that they are two separate thoughts but they don't, to me, conflict with each other. The main theme of both of them was to not worry about what others get from their parents. The first was recognizing that that inheritance mostly came from the labors of someone and they have a right to do with their money as they see fit. The second is acknowledging that the person who didn't work for their wealth usually squanders it so don't waste time being jealous of them. So focus on being the person who creates wealth for themselves and try to educate your children so they will have good money habits later on in life and will squander less of what you leave them.
      - 0xfaded 6y ago
        I want to put this out as a thought experiment. Given that current taxation policy is primarily derived from incomes, and an inheritance is by strict definition an income, then wouldn't it make sense for all incomes to be taxed equally? I'd be more sympathetic to inheritance if the primary source of taxation was wealth.
adhoc32 6y ago
You assume that early adopters still hold their Bitcoins. You are (mostly) wrong.
- Arrath 6y ago
  Has anyone ever estimated how many btc might be locked up in early adopter wallets who have since lost the passwords or the hard drive, etc?
  - deleted 6y ago
    [deleted]
  - iso1210 6y ago
    That number will only ever increase - bitcoin not only fails to grow in size with productivity and population, it actually shrinks. It's massively deflationary, which is a terrible thing for a currency.
  - thedudeabides5 6y ago
    Depends on Satoshi.
- BiteCode_dev 6y ago
  I concur, I had 140 btc 10 years ago. Sold it all when it reached $800, which I though was peak. I doubt the guy who sold the 5000 btc pizzas still have them.
- iso1210 6y ago
  Take this guy https://mobile.twitter.com/GregSchoen/status/70261648811761665 https://mobile.twitter.com/GregSchoen/status/702616488117616... Who lamented making $400 instead of $13k back in 2011. Those coins would today be worth about $95m, but there's no way he'd have kept them -- same as the buy who bought the pizzas (or the guy who sold them) This guy was bored of $14/coin, it wasn't moving https://twitter.com/rockerest/status/91885405368098816?lang=en https://twitter.com/rockerest/status/91885405368098816?lang=... So he took the loss (in July 2011 they were at a peak, jumping from 77 cents to $15 in 3 months) Had someone found an old laptop with the coins, they'd have been looking for it in the 2017 craze (ala Big Bang Theory) and sold then. Bitcoin is currently 3 times the peak in December 2017.
young_unixer 6y ago
> Bitcoin value is held by a small handful of early adopters, and that the bulk of Bitcoin mining capacity is held by a small handful of large mining companies. Yes. So what? I don't think the typical Bitcoin proponent is the kind of person to get outraged at Pareto distributions. They are against governments, they don't hate wealthy people just for being wealthy. > The problem with that hypothetical endgame is that reallocating the world's wealth according to how early someone went all-in on a cryptocurrency gamble (and how much capital they had to invest at the time) would create inequality at unimaginable scale, not to mention completely disconnecting wealth from societal value creation. How is that different from having invested in Amazon, Google or Apple in the early 00's? Bitcoin (and other cryptocurrencies) does bring value to our society as a store of wealth that's not easy for governments to control.
- deleted 6y ago
  [deleted]
- boh 6y ago
  > store of wealth It's funny how people keep saying this as if it's true. 99% of the market isn't buying crypto to "store value". This along with the idea that somehow it's a great currency bcs "no gov't" etc. is also a lie no one believes. Most of the market isn't actually making real-world transactions or storing value but somehow other people will start doing it in the future for some reason so gainz etc.
- jhanschoo 6y ago
  > Bitcoin (and other cryptocurrencies) does bring value to our society as a store of wealth that's not easy for governments to control. My personal take on this is that it's a temporary state of affairs. You might draw an analogy to the wild west of the Internet in the past, or e-mail. As Bitcoin goes mainstream, if it does, you will see familiar institutions built on it including fractional reserve banking that honor all the comfortable consumer things if you remain within their system.
- deleted 6y ago
  [deleted]
- 6y ago
samatman 6y ago
Your problem with this hypothetical endgame is an appeal to fairness. I understand why you'd want that, fairness is a strong human instinct, but I don't see where it has any bearing on the likelihood of this future occurring. People don't enjoy having a high number in their accounting system, they enjoy being wealthy. If, say, African central banks start purchasing BTC, and India joins them, early adopters will cash out at whatever value makes them feel like they got their money's worth. Some people will only trade for real property. Some are in a position to hodl until they can buy a whole cruise ship or whatever. Or they could lose it all when BTC crashes to the natural value of any completely hypothetical asset, which is zero. This still seems more likely to me than central banks taking up a position in BTC, but sadly, I lack the ability to predict the future. Is it really that different from buying the first iPod, and thinking to yourself, "y'know this is a brand new Apple, I'm putting a few thousand bucks into their stock"?
- loceng 6y ago
  "Or they could lose it all when BTC crashes to the natural value of any completely hypothetical asset, which is zero." It'll be interesting who's left "holding the bag" once its the end of the MLM-ponzi scheme of who you can convince to buy into it - save regulatory capture somehow forcing the rest of society to buy into it.
  - iso1210 6y ago
    > save regulatory capture somehow forcing the rest of society to buy into it. That's what happens, some little scheme gets too big to fail, so the taxpayer bails it out. Those that are in the schemes win, those that felt the scheme was stupid lose. I remember seeing adverts on the London underground for icelandic banks offer 5% more than any other savings account. I chuckled and thought "surely nobody's that gullible". There were many. Both individuals, who got bailed out by me (the taxpayer), and many councils (who lost money which belonged to the taxpayer) For 20 years I laughed at these various get quick schemes. Then I realised that they don't fail. Profits are privitised, losses are socialised, and they taxpayer always loses. When you realise that, you have to look at dodgy schemes in a whole separate light. Sure bitcoin is stupid, but as it gets larger and larger the chance of it failing without bailing out large institutions reduces, meaning the chance of me riding on the coattails increases.
GoldenMonkey 6y ago
Oh, it's a lot more than $1,000 to $1,300 in a week. If you had invested your $1,200 stimulus check in Bitcoin. It would now be worth $7,200. Where else can the average person make 6x's their money. And, it has already made plenty of average people. Millionaires.
- pjc50 6y ago
  People were saying this about Gamestop, and I need to remind you that the value can go down as well as up: https://www.dailymail.co.uk/news/article-9219447/GameStop-losses-pile-small-investors-stock-plunged-70-two-days.html https://www.dailymail.co.uk/news/article-9219447/GameStop-lo...
- vkou 6y ago
  > Where else can the average person make 6x's their money Go to Vegas, bet on red three times. Or, if you don't want to get on a plane during a pandemic, trade on margin.
- justin_oaks 6y ago
  It's only worth that much if you sell now. Same thing with stocks. It kills me to hear of people talk about how they "lost money" when a stock they own comes down from a temporary high price. No, you only lost money relative to your hypothetical self who sold at the top of the stock's price.
- creepto 6y ago
  Not a millionaire till you sell. I don't care about a crypto millionaire, show me the FIAT baby.
iamben 6y ago
All the "what if" is always pegged to another currency. I don't know anyone that prices anything in just BTC (it's all BTC converted from USD or whatever, because anything else would be madness) - and I don't know anyone that doesn't peg their bitcoin to what they'd get if they sold it for "real money". Which makes me think any endgame isn't going to be the utopian, governmentless, money-freedom future I keep hearing promised.
- tux1968 6y ago
  Not sure if it means anything, but the first thing I do when reading about the price of say some huge tunnel built in Europe is mentally convert the quoted Euro price to USD. Doesn't make the Euro any less real as a currency.
  - Jtsummers 6y ago
    The fact that a European project was priced in Euros suggests that Euros are more of a currency than BTC. Converting to USD is a matter of convenience for you. But within the European economy that same project would have a near comparable EUR price in 12 months as it does today. That is not true for things priced in BTC as the value of the BTC is wildly fluctuating (though generally trending up). Please find a contemporary (don't look to someone selling alpaca wool socks in 2010 and 2011), stable priced product line in BTC. Anything that I can be confident I will pay +/- 5% of the same BTC for over a 3 month period (I'm deliberately selecting a short period, most currencies are stable for 12+ months at a time when used to price goods and services).
    - tux1968 6y ago
      This is all new to me, and I don't have any interest in BTC at all. But volatility and crazy inflation does happen in the realm of real currencies. BTC is unique because it's happening at the start of its existence rather than in the traditional death-spiral. Nor is currency speculation unique to BTC, it happens every day with traditional currencies. But maybe BTC can be forgiven for its volatility since it's such a unique and new concept? As I understand it at some point there will be no new bitcoin left to mine, and it will just be available as a store-of-value currency -- if I have the concept correct. And the early adopters will be financially rewarded for helping to get it off the ground as they spend their BTC away into circulation.
dandanua 6y ago
> not to mention completely disconnecting wealth from societal value creation. You forget to mention that a lot of early adopters are actual criminals. Yeah, go make them the rulers of the world. Let's see how this ends.
- errantmind 6y ago
  Do you have a citation for this?
  - dandanua 6y ago
    Silk Road is just one example, there a lot more. Though, you can use logic. Money transfers without governments control is what criminals want the most.
kryptiskt 6y ago
I wouldn't worry, in a world where Bitcoin takes over, the economic logic is such that no power can be used for non-Bitcoin purposes until profitable mining has been arbitraged away. This means that the vast majority of power generation will be dedicated to hashing while the oceans rise and the environment dies. The people with the bitcoin will not find a whole lot to buy for the coins in the wasteland when it all has played out.
- throwawayyy1986 6y ago
  > This means that the vast majority of power generation will be dedicated to hashing while the oceans rise and the environment dies. You have no evidence for this claim, it's just a profusely fantastic image that cleaves to your political bias.

bpodgursky 6y ago

Calculation of market cap is interesting, because we (almost certainly) know that a good fraction — as much as 20% — of mined bitcoins are lost forever through accidental key destruction. So you have to adjust this market cap by the remaining, probably liquid, pool.

vmception 6y ago
There are some indexing sites that do that.
- adhoc32 6y ago
  How? It's impossible to know if someone has lost his private keys or the address is dormant.
  - vmception 6y ago
    They guess/assume with some addresses, like Satoshi's or the EC2 instance that was destroyed with the private key and all the customer's funds haven't moved since 2012
  - 627467 6y ago
    Probabilistically, you probably can estimate that. Is a permanently dormant address just dormant or is it "burnt"?
    - bpodgursky 6y ago
      To a degree, but there are some real whale accounts in question. Satoshi alone may have access to 1.1mm coins — or maybe not.
mamon 6y ago
Ok, so now I get why Bitcoin is regarded as "deflationary": on long enough timescale almost all bitcoins will be lost this way, and the last man that still possesses his wallet keys will be a trillionaire. /s

hntrader 6y ago

Question about energy usage: roughly how much does it increase as a function of transaction volume? If 10x the number of people start getting involved and transaction volume increases 10x as a result, will the network use 10x the energy?

jonathanaird 6y ago
It has no relation to transaction volume. It is related to the price of BTC and the block reward every 10 minutes. The higher the price, the more miners compete to find a block. Transaction volume can never increase because they have capped the block size at 1mb.
- hntrader 6y ago
  Good to know, appreciate the explanation. So these estimates that it uses about the same energy as Argentina are probably based on a rather old price and we could get to many multiples of that if the price keeps increasing?
  - jonathanaird 6y ago
    It also depends on the available market for asics. In bear markets, asics are very affordable as miners go out of business but the price can go up quite a lot in bull markets which affects the profitability of buying new machines.
    - hntrader 6y ago
      I wonder what the observed relationship is if we were to plot energy usage vs price over the last 3 years
      - jonathanaird 6y ago
        In case you’re interested the two bitcoin forks BCH and BSV have unlimited block size and so energy/transaction validated can scale very well. Eventually all forks will have to rely on transaction fees as the block reward has a halving schedule. If something like BSV succeeds the hash rate and thus energy consumption will be a complicated combination of transaction volume, and variable transaction fees. It will essentially be a race to the bottom to see who can provide the cheapest transactions while still being profitable. I think one should expect much higher energy efficiency than something like Visa just from pure scale and the intense competition.

raziel2701 6y ago

~2.3% of addresses own ~95% of all bitcoins. [1] How is a cryptocurrency with this type of wealth inequality supposed to help the common person? It's already centralized, thus easy to manipulate. Bitcoin is reproducing the same type of wealth distribution we see in real life. What exactly does btc offer? I don't understand how one can look at this distribution of bitcoins, where essentially the 1% owns most of it and people conclude that somehow this is different? That this in your favor as a newcomer? To me this looks like if you buy in now, you're going to become a bagholder for the 1%. [1] https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html https://bitinfocharts.com/top-100-richest-bitcoin-addresses....

weird-eye-issue 6y ago
Why do you think it is "supposed to help the common person"? That seems like a weird assumption to start at.
- raziel2701 6y ago
  Because its proponents claim it's gonna make you rich. That you gotta board this rocket before it takes off to the moon. A lot of the propaganda I remember about bitcoin is that it was going to help bank the unbanked. What I see about btc is that people will tell you anything to get you to buy. The goalposts get moved and depending on who you talk to: "it's a store of value, no it's like a stock! No it's a currency! No it's the instrument of world peace!" Every time I go through comment sections it's like a magic 8 ball is coming up with the arguments in its favor. All I see is that data above, about how heavily centralized bitcoin is. What's the reason to buy into something that's heavily weighed against you?
  - BurningFrog 6y ago
    Never seek wisdom in comment sections.
    - chokeartist 6y ago
      One should frame this quote and hang it in a hallway.

the_giraffe 6y ago

Call me old fashioned but I feel like bitcoin is similar to fiat currencies simply because it's not backed by anything. It has invented scarcity. If I just created giraffe coin and there were only 5 coins it doesn't mean it has any value. Would someone please explain why on earth I want to own bitcoin? I really don't understand the bull case for it.

iso1210 6y ago
The US Dollar is backed by 20 aircraft carriers, thousands of nuclear weapons, 350 million Americans who think they have a manifest destiny, and a government with a long history of invading countries that threaten the dollar. What's bitcoin backed by?
- the_giraffe 6y ago
  CNBC and Grayscale Bitcoin Trust
- hackernudes 6y ago
  Source code and miners.
- creepto 6y ago
  Bitcoin is backed by the printer called Tether.
- dmtroyer 6y ago
  carbon emissions.
RyanShook 6y ago
Bitcoin is valuable as an investment in the same way that gold is valuable. It is scarce and the benefit it currently has over gold is it is completely portable and can be instantly be used as a means of exchange if necessary. Bitcoin has very little value as a currency.
rcoveson 6y ago
You don’t have to want it, other people want it. You want to have a pile of lightweight, secure doodads that other people want, because that’s easier to exchange than terminal wants like cars and sheep. What’s really crazy is the only reason other people want it is this same reason; it’s circular. It takes coordination to bootstrap, but once it’s set up it can be stable. Like those circles of people all sitting on each-others laps.

acover 6y ago

For context: global equities market cap is $89.5 trillion https://www.visualcapitalist.com/the-worlds-10-largest-stock-markets/ https://www.visualcapitalist.com/the-worlds-10-largest-stock...

RyanShook 6y ago
Gold's market cap is approximately $9 trillion and I think BTC is a more attractive investment. https://cointelegraph.com/news/pomp-thinks-btcs-market-cap-will-exceed-golds-in-less-than-a-decade https://cointelegraph.com/news/pomp-thinks-btcs-market-cap-w...

api 6y ago

Is there any good information on what set off this current bull run? The timing with the US election seems odd, but I can't see any causal mechanism that could link the two. Is it Robinhood adding crypto?

iso1210 6y ago
The most recent run seemed to start about the same time as GME - presumably people decided to hedge their bets. Maybe they sold GME at the peak and put it into things like BTC, coupled with a lot of new money trying to recover their losses from GME Musk tweeted about it on Feb 8th which pushed it up, and then news stories of it hitting 50k, and now 1T, keeps the money coming in. Stocks are massively overvalued, wouldn't surprise me if people are diversifying too.
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hahahahe 6y ago
Second US stimulus package plus inflation fears in recent weeks. A lot of it is speculation to be fair. As gold didn’t perform and lagged bitcoin, most institutional players bet on bitcoin instead.
dwaltrip 6y ago
One likely factor is that the block reward cut in half recently, which lowers the inflation rate.

fabiofzero 6y ago

* Fictional market value

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