6 ms·

Why bitcoin will rise in price again, but it will take years

37 points by gasull 15y ago

nextparadigms 15y ago
I don't think Bitcoin dropping in price to the $3 level or whatever level it's at now, means it's the end of Bitcoin. I was very surprised when it had the value of just $1 back April I believe. A currency needs to be supported by real economy, not just speculation. It seems all the speculators are gone now, and Bitcoin will continue its normal course of growing at the pace of its own economy. I believe one of the catalysts for Bitcoin will be NFC payments, because that would remove a huge obstacle for Bitcoin, and it would allow many merchants of real products to sell them for Bitcoin very easily. Of course, it would help if merchants wouldn't have to be afraid that FBI will come knocking at their door questioning them about it, or if the Government wouldn't immediately freak out about it if its usage explodes in the marketplace. You'd need a president that supports currency competition, too, and might even allow something like this in the market (Ron Paul could be such a president).
- blendergasket 15y ago
  I agree. I also think (possibly somewhat antagonizing your idea of pacifying merchants) that things like the banking embargo against Wikileaks and the probably inevitable expansion of those kinds of actions against whatever the antagonizer of established power of the day is. Bitcoin is building a start point for what will inevitably be a cat and mouse game future of supporting unpopular (with Power at least) movements.
- fhars 15y ago
  But would the customer who wants to pay wth BitC using NFC technology accept that he must wait for some confirmations before he can take his merchandize home? And would merchants, especially large stores that go to substantive effort to streamline checkout processes, accept a payment protocol that by design adds a one hour delay (IIRC, people seem to regard six confirmations as definitive proof of payment, and the work factor is adjusted to give one confirmation per ten minutes on average) to every checkout? Even requiring just one confirmation would mean that a supermarket cashier could only process about four or five customers per hour if you want to keep the process sequential.
  - nazgulnarsil 15y ago
    unnecessary. transactions don't have to be bitcoin transactions. two people with accounts with mtgox can have instant transfers for instance.
    - wladimir 15y ago
      Right. People tend to forget that bitcoin is just the base layer, the first step. Like the kernel would be to an OS. Its goal is to support sending value from A to B reliably. All kinds of functionality needed to run a full-fledged economy can be built on-top without affecting the core system too much. For example using Open Transactions.
    - taken11 15y ago
      why would you use bitcoin below that though? requiring a both vendor and customer have an account at some paypal like site just makes it paypal. it will have the same problems. so what does bitcoin add? nothing
      - nextparadigms 15y ago
        Lower transaction fees maybe? Like in the 0.x%.
Helianthus 15y ago
I'm seeing a lot of posts on HN supportive of Bitcoin, and honestly, I just don't get it. Someone explain. 1) I don't see that Bitcoin can escape any boom-bust cycle. I don't. Arguably the dollar can't either, but I think that's part of my point: that's with people _trying_ to regulate it. Bitcoin ultimately has a finite economy, which means that it's only stable if it is constantly deflationary (unless the population size stays the same I guess? I'm not going to make _that_ assumption) and _that_ motivates hoarding, which locks down currency. You can _maybe_ construct some differential equation where the amount of hoarding is balanced out by the amount of 'cashing out' as people give up hoarding to spend freely, but that's a _heck_ of a wild guess to base a currency on. And anything _less than that perfection_ will inevitably result in boom-bust: freeze until you sell your dough, therefore simultaneous motivation to sell, therefore flooding of market, therefore crash. Which tangentially brings up: 2) In the above example, Bitcoin is (like any other currency) a surrogate of value for the things you can _do_ with it, which tells us that value lies outside of currency altogether and that currency is just a measuring stick. And therefore... 3) Bitcoin is essentially _still_ a fiat currency, but without the benefits of, you know, a significant support base. Sorry, you can go into almost any bank in the world and exchange an American dollar for local coin. I'd rather just _abolish money_ than supplant it with even _more_ imaginary money. Sure, some counterculture activity subsists on Bitcoin. Sure, it's a neat thought experiment. But I can't see it becoming practical (read: successful).
- gregschlom 15y ago
  > But I can't see it becoming practical (read: successful). And to add one more point: if it were to become successful, governments would likely make it illegal. Yes, it's decentralized, but they could still sue random people for using it, just like with people downloading music. So, yes, neat thought experiment, revolutionary idea, but very unlikely to be used by more than a handful of people.
  - vectorpush 15y ago
    I feel like this is the real achilies' heel of bitcoin. Once governments start losing tax revenue they're going to pull out all the stops. Beyond that, US law enforcement is already concerned with bitcoin because of its use in drug trafficking, online poker, and other dubious crimes then you add in the omnipotent banking lobby who have an obvious agenda to assert. I can't imagine a world where a successful bitcoin would be allowed to thrive.
wccrawford 15y ago
I looked at mining BTC when it was $7/coin, and I couldn't make it work economically. Now that it's $3/coin, I certainly couldn't. And the fact that it hit $17/coin makes it even worse. You see, the more miners there are, the harder it is to mine each BTC. So in order for it to be worth my electricity and hardware, a LOT of people would have to stop mining. I don't see how it could possibly make sense for me to start mining while so many people are quitting, either.

37 points by gasull 15y ago

I don't think Bitcoin dropping in price to the $3 level or whatever level it's at now, means it's the end of Bitcoin. I was very surprised when it had the value of just $1 back April I believe. A currency needs to be supported by real economy, not just speculation. It seems all the speculators are gone now, and Bitcoin will continue its normal course of growing at the pace of its own economy. I believe one of the catalysts for Bitcoin will be NFC payments, because that would remove a huge obstacle for Bitcoin, and it would allow many merchants of real products to sell them for Bitcoin very easily. Of course, it would help if merchants wouldn't have to be afraid that FBI will come knocking at their door questioning them about it, or if the Government wouldn't immediately freak out about it if its usage explodes in the marketplace. You'd need a president that supports currency competition, too, and might even allow something like this in the market (Ron Paul could be such a president).

blendergasket 15y ago
I agree. I also think (possibly somewhat antagonizing your idea of pacifying merchants) that things like the banking embargo against Wikileaks and the probably inevitable expansion of those kinds of actions against whatever the antagonizer of established power of the day is. Bitcoin is building a start point for what will inevitably be a cat and mouse game future of supporting unpopular (with Power at least) movements.
fhars 15y ago
But would the customer who wants to pay wth BitC using NFC technology accept that he must wait for some confirmations before he can take his merchandize home? And would merchants, especially large stores that go to substantive effort to streamline checkout processes, accept a payment protocol that by design adds a one hour delay (IIRC, people seem to regard six confirmations as definitive proof of payment, and the work factor is adjusted to give one confirmation per ten minutes on average) to every checkout? Even requiring just one confirmation would mean that a supermarket cashier could only process about four or five customers per hour if you want to keep the process sequential.
- nazgulnarsil 15y ago
  unnecessary. transactions don't have to be bitcoin transactions. two people with accounts with mtgox can have instant transfers for instance.
  - wladimir 15y ago
    Right. People tend to forget that bitcoin is just the base layer, the first step. Like the kernel would be to an OS. Its goal is to support sending value from A to B reliably. All kinds of functionality needed to run a full-fledged economy can be built on-top without affecting the core system too much. For example using Open Transactions.
  - taken11 15y ago
    why would you use bitcoin below that though? requiring a both vendor and customer have an account at some paypal like site just makes it paypal. it will have the same problems. so what does bitcoin add? nothing
    - nextparadigms 15y ago
      Lower transaction fees maybe? Like in the 0.x%.

Helianthus 15y ago

I'm seeing a lot of posts on HN supportive of Bitcoin, and honestly, I just don't get it. Someone explain. 1) I don't see that Bitcoin can escape any boom-bust cycle. I don't. Arguably the dollar can't either, but I think that's part of my point: that's with people _trying_ to regulate it. Bitcoin ultimately has a finite economy, which means that it's only stable if it is constantly deflationary (unless the population size stays the same I guess? I'm not going to make _that_ assumption) and _that_ motivates hoarding, which locks down currency. You can _maybe_ construct some differential equation where the amount of hoarding is balanced out by the amount of 'cashing out' as people give up hoarding to spend freely, but that's a _heck_ of a wild guess to base a currency on. And anything _less than that perfection_ will inevitably result in boom-bust: freeze until you sell your dough, therefore simultaneous motivation to sell, therefore flooding of market, therefore crash. Which tangentially brings up: 2) In the above example, Bitcoin is (like any other currency) a surrogate of value for the things you can _do_ with it, which tells us that value lies outside of currency altogether and that currency is just a measuring stick. And therefore... 3) Bitcoin is essentially _still_ a fiat currency, but without the benefits of, you know, a significant support base. Sorry, you can go into almost any bank in the world and exchange an American dollar for local coin. I'd rather just _abolish money_ than supplant it with even _more_ imaginary money. Sure, some counterculture activity subsists on Bitcoin. Sure, it's a neat thought experiment. But I can't see it becoming practical (read: successful).

gregschlom 15y ago
> But I can't see it becoming practical (read: successful). And to add one more point: if it were to become successful, governments would likely make it illegal. Yes, it's decentralized, but they could still sue random people for using it, just like with people downloading music. So, yes, neat thought experiment, revolutionary idea, but very unlikely to be used by more than a handful of people.
- vectorpush 15y ago
  I feel like this is the real achilies' heel of bitcoin. Once governments start losing tax revenue they're going to pull out all the stops. Beyond that, US law enforcement is already concerned with bitcoin because of its use in drug trafficking, online poker, and other dubious crimes then you add in the omnipotent banking lobby who have an obvious agenda to assert. I can't imagine a world where a successful bitcoin would be allowed to thrive.

wccrawford 15y ago

I looked at mining BTC when it was $7/coin, and I couldn't make it work economically. Now that it's $3/coin, I certainly couldn't. And the fact that it hit $17/coin makes it even worse. You see, the more miners there are, the harder it is to mine each BTC. So in order for it to be worth my electricity and hardware, a LOT of people would have to stop mining. I don't see how it could possibly make sense for me to start mining while so many people are quitting, either.