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I think it is telling that in the time from when this was posted to this reply, bitcoin is up to 668.5. This is a bubble, anyone who thinks otherwise doesn't u

by Everlag 13y ago

I think it is telling that in the time from when this was posted to this reply, bitcoin is up to 668.5. This is a bubble, anyone who thinks otherwise doesn't understand that people make an effectively stupid amount of money by using bitcoin as a pump and dump scheme. If you think this bubble is helping bitcoin as a currency, then you are terrifically incorrect. For all the good that bitcoin is capable of, how the hell do you base a payment system around something that has no price stability?

a3voices 13y ago
Actually Bitcoin is following strong exponential growth from its inception. It's no more a bubble than Facebook is.
ISL 13y ago
Agreed. I'd like to purchase a cheese sandwich at my local BTC-accepting food truck, but I'm going to skip it this week precisely because I might be able to buy twice as many (or half as many) sandwiches next week. Things are so volatile this week, that even nearly-instantaneous transactions USD-->BTC-->BTC-->USD (whose utility isn't affected by the price of 1 BTC) aren't guaranteed to happen as expected. Better to wait a week for things to chill out. They will.
wellboy 13y ago
You need to understand what a bubble is and what isn't. It's a bubble when bets are made on things that have nothing backing up their immense valuation. Now, you need some smartness to understand that the value in currencies is not in it´s physical value ($100 are worth maybe $0.02 in physical value), but how many people use it. Millions of people now use bitcoin, thousands of businesses have started accepting bitcoin over the past 6 months. In a year these numbers will be 50-fold. Things that people use a lot, are not bubbles. Also, this doesn't take into consideration the potential, which is a major factor determining a valuation. And that is that Bitcoin or something similar has the potential to replace all banks and all currencies entirely. EDIT: Changed "don't have an underlying value" to have nothing backing up their immense valuation". And sorry I was a bit angry, but I've read it now a hundred times on hackernews over the past 2 years, we're in a bubble here, we're in a bubble there. It is not a bubble, when millions and millions of people are using it. The 2000 bubble was a bubble because there were 300M internet users at the time. Now we have 2B, that's the difference.
- jmduke 13y ago
  Seriously you people don´t understand what a bubble is. It´s when bets are made on things that don´t have an underlying value. This is not true. There are many bets you can make on something that doesn't have an underlying value which does not constitute a bubble -- and many bubbles can be formed from things which have underlying values (such as real estate.)
- RogerL 13y ago
  That is not what a bubble is. We have bubbles in the stock market all the time, and they are bid on things of significant "underlying value" (companies). A bubble is (roughly) when the bids are disconnected from that value, and more connected on the other bids in the system.
- VLM 13y ago
  You know, like houses. Or dotcom stocks.
- Everlag 13y ago
  So the value of bitcoin going from just around 350 to just around 700 dollars in a week is not a bubble? Have businesses using bitcoins doubled? Have users of bitcoin doubled? While possible, I must say that the chance of people investing in the currency not as a currency to be used but as a money multiplier would be a bubble. What underlying value has bitcoin shown to necessitate a 2x increase of value in a week? I'm honestly curious.
- jrs235 13y ago
  Ouch. Seriously you don't understand what a bubble is. "It's when bets are made on things that don´t have an underlying value." No. It's when speculation [betting] leads to overvaluing an "asset". Homes have an underlying value. The bubble on home prices was a result of overvaluation [due to speculation].
- genericuser 13y ago
  One of things about a 'bubble' is unfortunately that there isn't an exact way to determine what is and isn't a bubble prior to it bursting or when it finally levels off a bit because it reached an equilibrium of price and perceived value. After it levels off or busts you will have groups saying "I told you so" giving you the same 'evidence' they used now to support their claim. People that are 'sure' they know which this is should invest in either its success or failure, as arguing with people and trying to convince them you are right does little besides potentially increase the number of people you would have to share your profits with.
aryastark 13y ago
I'm not sure how people are determining this is a bubble. There are roughly 12 million bitcoins in existence. Priced at $668, that means there is a mere $8 billion in the entire Bitcoin system. That's tiny. For a global currency with the unique advantages Bitcoin has, I would expect the currency to be in the $10s to 100s of billions soon enough. In order for bitcoin to actually matter, it needs to grow. You're going to get $668 bitcoins no matter what, if people start using it. That's simple supply and demand. Network effects being what they are, it's going to grow quickly. In order for Bitcoin to remain stable, it would need to grow slowly. Thanks to the Internet and the plethora of Bitcoin news lately, I just don't see that happening.
- maxerickson 13y ago
  The actual number of bitcoin actively trading hands is a lot smaller than 12 million.
- Jtsummers 13y ago
  I'm not sure it is a bubble (I see issues with bitcoin, but not the concept in general. Better cryptocurrencies seem possible.), but the total valuation is not evidence it isn't a bubble. A bubble really boils down to expansion beyond what the fundamentals support, and (only determined in retrospect) end in a contraction. While it's small scale, a $1 widget gaining widespread popularity and ballooning to $100 is a bubble if there's no real reason other than hype or artificial scarcity for it to reach that price. The total value of BTC being only 8 billion USD doesn't mean it isn't a bubble, it just means most economies will be unscathed should it turn out to be one.

by Everlag 13y ago

a3voices 13y ago

Actually Bitcoin is following strong exponential growth from its inception. It's no more a bubble than Facebook is.

ISL 13y ago

Agreed. I'd like to purchase a cheese sandwich at my local BTC-accepting food truck, but I'm going to skip it this week precisely because I might be able to buy twice as many (or half as many) sandwiches next week. Things are so volatile this week, that even nearly-instantaneous transactions USD-->BTC-->BTC-->USD (whose utility isn't affected by the price of 1 BTC) aren't guaranteed to happen as expected. Better to wait a week for things to chill out. They will.

wellboy 13y ago

You need to understand what a bubble is and what isn't. It's a bubble when bets are made on things that have nothing backing up their immense valuation. Now, you need some smartness to understand that the value in currencies is not in it´s physical value ($100 are worth maybe $0.02 in physical value), but how many people use it. Millions of people now use bitcoin, thousands of businesses have started accepting bitcoin over the past 6 months. In a year these numbers will be 50-fold. Things that people use a lot, are not bubbles. Also, this doesn't take into consideration the potential, which is a major factor determining a valuation. And that is that Bitcoin or something similar has the potential to replace all banks and all currencies entirely. EDIT: Changed "don't have an underlying value" to have nothing backing up their immense valuation". And sorry I was a bit angry, but I've read it now a hundred times on hackernews over the past 2 years, we're in a bubble here, we're in a bubble there. It is not a bubble, when millions and millions of people are using it. The 2000 bubble was a bubble because there were 300M internet users at the time. Now we have 2B, that's the difference.

jmduke 13y ago
Seriously you people don´t understand what a bubble is. It´s when bets are made on things that don´t have an underlying value. This is not true. There are many bets you can make on something that doesn't have an underlying value which does not constitute a bubble -- and many bubbles can be formed from things which have underlying values (such as real estate.)
RogerL 13y ago
That is not what a bubble is. We have bubbles in the stock market all the time, and they are bid on things of significant "underlying value" (companies). A bubble is (roughly) when the bids are disconnected from that value, and more connected on the other bids in the system.
VLM 13y ago
You know, like houses. Or dotcom stocks.
Everlag 13y ago
So the value of bitcoin going from just around 350 to just around 700 dollars in a week is not a bubble? Have businesses using bitcoins doubled? Have users of bitcoin doubled? While possible, I must say that the chance of people investing in the currency not as a currency to be used but as a money multiplier would be a bubble. What underlying value has bitcoin shown to necessitate a 2x increase of value in a week? I'm honestly curious.
jrs235 13y ago
Ouch. Seriously you don't understand what a bubble is. "It's when bets are made on things that don´t have an underlying value." No. It's when speculation [betting] leads to overvaluing an "asset". Homes have an underlying value. The bubble on home prices was a result of overvaluation [due to speculation].
genericuser 13y ago
One of things about a 'bubble' is unfortunately that there isn't an exact way to determine what is and isn't a bubble prior to it bursting or when it finally levels off a bit because it reached an equilibrium of price and perceived value. After it levels off or busts you will have groups saying "I told you so" giving you the same 'evidence' they used now to support their claim. People that are 'sure' they know which this is should invest in either its success or failure, as arguing with people and trying to convince them you are right does little besides potentially increase the number of people you would have to share your profits with.

aryastark 13y ago

I'm not sure how people are determining this is a bubble. There are roughly 12 million bitcoins in existence. Priced at $668, that means there is a mere $8 billion in the entire Bitcoin system. That's tiny. For a global currency with the unique advantages Bitcoin has, I would expect the currency to be in the $10s to 100s of billions soon enough. In order for bitcoin to actually matter, it needs to grow. You're going to get $668 bitcoins no matter what, if people start using it. That's simple supply and demand. Network effects being what they are, it's going to grow quickly. In order for Bitcoin to remain stable, it would need to grow slowly. Thanks to the Internet and the plethora of Bitcoin news lately, I just don't see that happening.

maxerickson 13y ago
The actual number of bitcoin actively trading hands is a lot smaller than 12 million.
Jtsummers 13y ago
I'm not sure it is a bubble (I see issues with bitcoin, but not the concept in general. Better cryptocurrencies seem possible.), but the total valuation is not evidence it isn't a bubble. A bubble really boils down to expansion beyond what the fundamentals support, and (only determined in retrospect) end in a contraction. While it's small scale, a $1 widget gaining widespread popularity and ballooning to $100 is a bubble if there's no real reason other than hype or artificial scarcity for it to reach that price. The total value of BTC being only 8 billion USD doesn't mean it isn't a bubble, it just means most economies will be unscathed should it turn out to be one.