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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, y
by 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 agoSeriously 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 agoThat 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 agoYou know, like houses. Or dotcom stocks.
- Everlag 13y agoSo 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 agoOuch. 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 agoOne 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.