3 ms·

Only if it's real growth, and not just a speculation bubble. The only way bitcoin reprsents real value is if people transact with it. My vague guess is that it

by pfraze 13y ago

Only if it's real growth, and not just a speculation bubble. The only way bitcoin reprsents real value is if people transact with it. My vague guess is that it can do that if its users can exhange to/from it per-transaction, because otherwise the value fluctuations will make it too risky.

oleganza 13y ago
It is a speculation bubble. People are betting that Bitcoin will become world money and be worth millions of products in many countries. Anything can become money only when it has value and acceptance which are created by speculators. Such bubble can pop only if some other, more promising thing may become money, or if there's a flaw in the currently hyped thing. http://unqualified-reservations.blogspot.fr/2013/04/bitcoin-is-money-bitcoin-is-bubble.html http://unqualified-reservations.blogspot.fr/2013/04/bitcoin-...
- Lerc 13y ago
  Bubbles pop because people lose confidence. The ways in which that can happen are infinitely varied. While the reasons you list can cause that, people also can lose confidence for irrational reasons or decide that their confidence was not rational. Most commonly their confidence will just align with what they perceive other people's confidence to be, causing feeback. Remember there were people who dumped a lot of money into bitcoin at $200 last bubble and then bailed at $100 an extremely short time later. Something like that will probably happen again with the current rise. The long term probably doesn't really care about the blips along the way though.
  - zamalek 13y ago
    > Bubbles pop because people lose confidence. Or, in the case of cryptocurrencies, when something goes wrong with the underlying encryption. We are very far away from that eventuality (SHA256 is pretty damn secure and ECC is in the realm of "we don't think this will ever be broken unless the NSA curve weakness is real"). Still, one day. Still, bubbles really worry me on a psychology level. All it takes on journalist to write an ignorant article on Bitcoin (which they never do) and then a whole bunch of other journalists then cite without research (which they never do) and POP!
    - Lerc 13y ago
      >Or, in the case of cryptocurrencies, when something goes wrong with the underlying encryption. I think it is actually exclusively confidence. Something could go horribly wrong with the underlying encryption and the perceived value would not drop until people recognised the implications of the problem and consequently lose confidence.
    - XorNot 13y ago
      We are on the verge of functional quantum computers. Encryption could die very suddenly.
      - Lerc 13y ago
        That is not a specific weakness of bitcoin. If encryption stops working, most of the worlds economic systems run into serious issues. Transferring money by _any_ electronic mechanism becomes problematic.
        oleganza 13y ago
        Correction: the only money that is being transferred by electronic means is Bitcoin. All the other payment channels do not transfer ownership, but promises. When your bank sends 100 bucks to another bank, there's no hard ownership being transferred, only an agreement between a bunch of people. That's why the current system is so fragile and so abused to no end.
        XorNot 13y ago
        Not really, just more risky. With a regulated financial sector and overwatch of ISP data retention, you still need to somehow gain knowledge of the encrypted bits to deploy a quantum computing attack against them. Governments have an interest in ecommerce continuuing, and there's a limited time-horizon where you can actually mount an attack - so provided you route your transactions over "known trusted" paths, everything basically continues - especially while the only quantum computers are controlled by governments to start with. BitCoin on the otherhand almost immediately runs into trouble, because it's entire basis is centered on the difficulty of cryptography problems. It can't function without distributing it's content widely (and indeed, completely), which means its immediately valueless - even if someone doesn't attack it, it's immediately known that at any point in time someone can simply create every coin that will ever exist and credit it to them.

by pfraze 13y ago

oleganza 13y ago

It is a speculation bubble. People are betting that Bitcoin will become world money and be worth millions of products in many countries. Anything can become money only when it has value and acceptance which are created by speculators. Such bubble can pop only if some other, more promising thing may become money, or if there's a flaw in the currently hyped thing. http://unqualified-reservations.blogspot.fr/2013/04/bitcoin-is-money-bitcoin-is-bubble.html http://unqualified-reservations.blogspot.fr/2013/04/bitcoin-...

Lerc 13y ago
Bubbles pop because people lose confidence. The ways in which that can happen are infinitely varied. While the reasons you list can cause that, people also can lose confidence for irrational reasons or decide that their confidence was not rational. Most commonly their confidence will just align with what they perceive other people's confidence to be, causing feeback. Remember there were people who dumped a lot of money into bitcoin at $200 last bubble and then bailed at $100 an extremely short time later. Something like that will probably happen again with the current rise. The long term probably doesn't really care about the blips along the way though.
- zamalek 13y ago
  > Bubbles pop because people lose confidence. Or, in the case of cryptocurrencies, when something goes wrong with the underlying encryption. We are very far away from that eventuality (SHA256 is pretty damn secure and ECC is in the realm of "we don't think this will ever be broken unless the NSA curve weakness is real"). Still, one day. Still, bubbles really worry me on a psychology level. All it takes on journalist to write an ignorant article on Bitcoin (which they never do) and then a whole bunch of other journalists then cite without research (which they never do) and POP!
  - Lerc 13y ago
    >Or, in the case of cryptocurrencies, when something goes wrong with the underlying encryption. I think it is actually exclusively confidence. Something could go horribly wrong with the underlying encryption and the perceived value would not drop until people recognised the implications of the problem and consequently lose confidence.
  - XorNot 13y ago
    We are on the verge of functional quantum computers. Encryption could die very suddenly.
    - Lerc 13y ago
      That is not a specific weakness of bitcoin. If encryption stops working, most of the worlds economic systems run into serious issues. Transferring money by _any_ electronic mechanism becomes problematic.
      - oleganza 13y ago
        Correction: the only money that is being transferred by electronic means is Bitcoin. All the other payment channels do not transfer ownership, but promises. When your bank sends 100 bucks to another bank, there's no hard ownership being transferred, only an agreement between a bunch of people. That's why the current system is so fragile and so abused to no end.
      - XorNot 13y ago
        Not really, just more risky. With a regulated financial sector and overwatch of ISP data retention, you still need to somehow gain knowledge of the encrypted bits to deploy a quantum computing attack against them. Governments have an interest in ecommerce continuuing, and there's a limited time-horizon where you can actually mount an attack - so provided you route your transactions over "known trusted" paths, everything basically continues - especially while the only quantum computers are controlled by governments to start with. BitCoin on the otherhand almost immediately runs into trouble, because it's entire basis is centered on the difficulty of cryptography problems. It can't function without distributing it's content widely (and indeed, completely), which means its immediately valueless - even if someone doesn't attack it, it's immediately known that at any point in time someone can simply create every coin that will ever exist and credit it to them.