6 ms·

Betting Against Bitcoin

83 points by JoachimS 5y ago

luciusdomitius 5y ago
Yet another bunch of arguments that had been made many times over the last years. Sad to watch, frankly.
- lolsal 5y ago
  Do you have any constructive criticisms or feedback about the article or the article's position?
  - protoax 5y ago
    Note the ironic reflection of one of the article’s points: A cringey us-versus-them mentality in the clearly condescending quote “Sad to watch, frankly.”
jmole 5y ago
The article is thinking about mining in the wrong way. Mining is the reason that the price of bitcoin didn't collapse over the last few bear cycles. The raw energy cost to mine bitcoin (coupled with investor FOMO & buy-the-dip mentality) sets a price floor that's hard to overcome because it's tied to physical assets and production. Once you have a mining farm, it takes nothing but electricity to keep it going, & electricity is cheap.
- Tenoke 5y ago
  I don't see how it creates a price floor. The profits from mining are tied to the price but not vice versa. If the price drops there's no mining-related mechanism to increase it and buyers and sellers have no reason to care or be affected by how profitable mining is or what the hashrate is.
  - bdcravens 5y ago
    There is a price floor, but it's much, much lower than most people realize. They need only turn a profit to keep their miners on. Over the long term the mining difficulty does shift, which presumably would attract more miners (and vice versa) that would affect the elasticity. However, that's not the creation of a price floor that Bitcoin advocates claim.
    - ALittleLight 5y ago
      That's not a price floor though. A price floor would be some reason Bitcoin wouldn't go below a specific price. If Bitcoin falls below the price you can profitably mine it that means people will stop mining it, it doesn't mean that anyone will buy more Bitcoin and support the price.
      - megameter 5y ago
        The actual supply coming into the market remains the same while the mining difficulty shifts according to network hashrate(determined by the time between new blocks), hence assuming demand for Bitcoin is static, there is an equilibration mechanism creating a break-even price floor. Bitcoin's price appreciation has demonstrated that demand can be sustained through multiple market cycles, and nothing in particular has changed that assessment. Bigger worries for Bitcoiners stem from centralization of hash power, and whether transaction fees alone will sustain the network as it exits the inflationary period.
bko 5y ago
I have to hand it to the author that at least he stands by his convictions through a short position. And betting against miners is probably the cleanest short Bitcoin position you can get. A lot of his arguments against Bitcoin are based on the idea that proof of work and mining in general are unnecessary and don't serve any purpose. He also talks about how mining fees are basically a tax. But the miners are securing the network. The larger the network grows in value (ie Bitcoin price), the more important the function of securing the network is. Proof of stake is talked about as a plug in alternative, but what that really means is that the people with the most money have the most amount of control over the protocol (sound familiar?). With proof of work on the other hand, anyone can start participating and its much more democratic than proof of stak. > It’s all wealth redistribution, not value creation. The argument that digital gold has no value outside of speculation usually comes from people in rich developed countries with a strong financial system. They can't imagine anyone lives in a country where it's illegal to hold certain currencies or assets. Where they see their wealth shrink double digit amount every year. Where they have to go through great lengths to spend their money as soon as they get it due to inflation. Bitcoin is obviously too volatile to be used in transactions or a safe store of value, but theres a lot of work to be done in expanding financialization to the developing world
- RNCTX 5y ago
  > The argument that digital gold has no value outside of speculation usually comes from people in rich developed countries with a strong financial system. They can't imagine anyone lives in a country where it's illegal to hold certain currencies or assets. Whereas they could simply buy 10 million dollars worth of video cards, and thus solve their economic problems, lol.
  - GDC7 5y ago
    How much money do these developing countries have to pump the price of Bitcoin from 0 to 65k?? This is New York and San Francisco buying , don’t kid yourself. For sure it ain’t Lagos and and Caracas pumping the price to 65k
    - 5y ago
deleted 5y ago
[deleted]
Ecstatify 5y ago
Is betting against crypto a smart move? How much could you earn potentially going with the whole crypto movement instead of betting against it. Some people love being right other people like making money.
- nuerow 5y ago
  > How much could you earn potentially going with the whole crypto movement instead of betting against it. Not far ago, bitcoin's market price tanked down to around half it's value in a matter of days, and it stayed down for a long time. That would have been a nice payday for a shorter with good timing.
bob229 5y ago
Cryptos are for idiots

83 points by JoachimS 5y ago

luciusdomitius 5y ago

Yet another bunch of arguments that had been made many times over the last years. Sad to watch, frankly.

lolsal 5y ago
Do you have any constructive criticisms or feedback about the article or the article's position?
- protoax 5y ago
  Note the ironic reflection of one of the article’s points: A cringey us-versus-them mentality in the clearly condescending quote “Sad to watch, frankly.”

jmole 5y ago

The article is thinking about mining in the wrong way. Mining is the reason that the price of bitcoin didn't collapse over the last few bear cycles. The raw energy cost to mine bitcoin (coupled with investor FOMO & buy-the-dip mentality) sets a price floor that's hard to overcome because it's tied to physical assets and production. Once you have a mining farm, it takes nothing but electricity to keep it going, & electricity is cheap.

Tenoke 5y ago
I don't see how it creates a price floor. The profits from mining are tied to the price but not vice versa. If the price drops there's no mining-related mechanism to increase it and buyers and sellers have no reason to care or be affected by how profitable mining is or what the hashrate is.
- bdcravens 5y ago
  There is a price floor, but it's much, much lower than most people realize. They need only turn a profit to keep their miners on. Over the long term the mining difficulty does shift, which presumably would attract more miners (and vice versa) that would affect the elasticity. However, that's not the creation of a price floor that Bitcoin advocates claim.
  - ALittleLight 5y ago
    That's not a price floor though. A price floor would be some reason Bitcoin wouldn't go below a specific price. If Bitcoin falls below the price you can profitably mine it that means people will stop mining it, it doesn't mean that anyone will buy more Bitcoin and support the price.
    - megameter 5y ago
      The actual supply coming into the market remains the same while the mining difficulty shifts according to network hashrate(determined by the time between new blocks), hence assuming demand for Bitcoin is static, there is an equilibration mechanism creating a break-even price floor. Bitcoin's price appreciation has demonstrated that demand can be sustained through multiple market cycles, and nothing in particular has changed that assessment. Bigger worries for Bitcoiners stem from centralization of hash power, and whether transaction fees alone will sustain the network as it exits the inflationary period.

bko 5y ago

I have to hand it to the author that at least he stands by his convictions through a short position. And betting against miners is probably the cleanest short Bitcoin position you can get. A lot of his arguments against Bitcoin are based on the idea that proof of work and mining in general are unnecessary and don't serve any purpose. He also talks about how mining fees are basically a tax. But the miners are securing the network. The larger the network grows in value (ie Bitcoin price), the more important the function of securing the network is. Proof of stake is talked about as a plug in alternative, but what that really means is that the people with the most money have the most amount of control over the protocol (sound familiar?). With proof of work on the other hand, anyone can start participating and its much more democratic than proof of stak. > It’s all wealth redistribution, not value creation. The argument that digital gold has no value outside of speculation usually comes from people in rich developed countries with a strong financial system. They can't imagine anyone lives in a country where it's illegal to hold certain currencies or assets. Where they see their wealth shrink double digit amount every year. Where they have to go through great lengths to spend their money as soon as they get it due to inflation. Bitcoin is obviously too volatile to be used in transactions or a safe store of value, but theres a lot of work to be done in expanding financialization to the developing world

RNCTX 5y ago
> The argument that digital gold has no value outside of speculation usually comes from people in rich developed countries with a strong financial system. They can't imagine anyone lives in a country where it's illegal to hold certain currencies or assets. Whereas they could simply buy 10 million dollars worth of video cards, and thus solve their economic problems, lol.
- GDC7 5y ago
  How much money do these developing countries have to pump the price of Bitcoin from 0 to 65k?? This is New York and San Francisco buying , don’t kid yourself. For sure it ain’t Lagos and and Caracas pumping the price to 65k
  - 5y ago

deleted 5y ago

[deleted]

Ecstatify 5y ago

Is betting against crypto a smart move? How much could you earn potentially going with the whole crypto movement instead of betting against it. Some people love being right other people like making money.

nuerow 5y ago
> How much could you earn potentially going with the whole crypto movement instead of betting against it. Not far ago, bitcoin's market price tanked down to around half it's value in a matter of days, and it stayed down for a long time. That would have been a nice payday for a shorter with good timing.

bob229 5y ago

Cryptos are for idiots