Stocks have tangible assets that generate earnings to justify their investment. Bitcoin, however, generates no real returns beyond its exploding popularity resulting in a higher price. While that doesn't automatically doom its fate (see: traditional currency pairs), Bitcoin is different in that its only real use so far is as an alternative bank account. It will likely remain this way until people can live their lives on Bitcoin in the way people live their lives on a traditional, centralized currency. Many people who simply use it as a bank account may deposit their money for a long period of time, resulting in a sustainable price; for simplicity's sake, we can give the benefit of the doubt and assume that 100% of those looking for an alternative bank rather than an investment will hold it indefinitely.
The question is: Of those pushing the price from ~$750 to ~$10,000 in one year, after several years of stability in the ~$500 area, how many are looking to hold it as a bank account alternative, and how many are looking at it as an investment to eventually sell for a profit? Given the trajectory, it's hard to believe individuals are adopting it this rapidly for purposes other than investment; it seems like this 'mainstream adoption' is really just primarily mainstream investment. Is it sustainable when the majority of people are just buying in expectation of others buying? With companies like TSLA it can be sustainable, as investors believe that future earnings will justify the valuation. Here, there's nothing but a hope that others will buy because the price keeps going up.
The only way this bubble doesn't pop is if the money being pumped into Bitcoin results in commercial adoption as a viable currency, however that seems unlikely in the meantime.
Disclaimer: Most of my cypto money are in bitcoins.
My biggest problem with Bitcoin these days is the developers pushing Bitcoin to become 'store of value'.
Originally Bitcoin became popular because it simply let people transact over the internet quickly with low cost. This was what gave Bitcoin its utility, and thus value.
Now that the Core team has decided that ease-of-use is not important, they are literally trying to hype Bitcoin as something intrinsically worthless except for people's perception of it. Bitcoin is now coasting on its reputation it accumulated in its first 5 years of life. So what makes Bitcoin _not_ a pyramid scheme?
Other cyptocurrencies have their own uses-
Litecoin - Buy stuff over internet cheaply and quickly
Ethereum - ICO and contracts
Ripple/Steem - Pseudo-decentralization allows for huge number of transactions.
Monero/ZCash - Privacy
Gold - People have liked shiny and non-degradable stuff since the stone age
Stocks/Bonds - Dividend/Interests
Tulips bulbs - Grow tulip flowers
Bitcoin in 2017 - ??? Store of value
The first 4 example cryptos actually have real world usage that could potentially justify their prices. What use does Bitcoin have right now? Every transaction costs >$1 and takes hours to process. What could Bitcoin do that other cryptocurrencies couldn't do better?
>Originally Bitcoin became popular because it simply let people transact over the internet quickly with low cost. This was what gave Bitcoin its utility, and thus value.
It is a severe misunderstanding to think a coins market cap is a reflection of its current utility. "Potential" drives valuations, and bitcoin has the greatest potential to be the currency of the future, despite its limited current utility. The fact that almost every alt-coin has cheaper/faster transactions, and yet are worth tiny fractions compared to bitcoin should clue you in. Bitcoin is still the most valuable because it has by far the most name recognition, and this name recognition will carry it to success down the road when things like the lightnight network are implemented and in widespread use.
You're right that Bitcoin is only a store of value (thanks for reminding me of that word, btw!). It could definitely be successful with that purpose, particularly for short-term storage or for those in physical danger.
As a sibling comment mentioned, it could be a gold alternative. Bitcoin is much more volatile, however, and it already has a $160b market cap. The total value of all gold ever mined, from what I've found, is $1190b. Gold has gone up in value while Bitcoin has been rallying, which is a small but nonetheless existent indicator that people are not changing their store of value.
Bitcoin will only be stable when most of those invested in it view it as that store of value, however even then it will be shaky compared to gold. Though it may receive commercial adoption due to its popularity, the slow transactions you mentioned really disable that.
In conclusion: Thanks for the list of cryptocurrencies, as I'll certainly be looking into buying them rather than Bitcoin ;)
Litecoin is really the future. It is almost the exact same as Bitcoin (different hashing algorithm, more in supply, faster transactions) but the most important thing is it has crystal clear guidance on SegWit/POS/POW and how it is developed. It has probably one of the most influential people in all of crypto behind it (Charlie Lee) AND it is a fair coin, it was not premined. It has actually been used as a "testbed" for some of the SegWit Bitcoin testing if that gives you any indication of its stability.
I think the biggest benefit though, is name recognition. When people think of crypto, they think Bitcoin. That's the biggest issues Litecoin and Ethereum have now.
Counterpoint: it is difficult and expensive to buy or sell gold, and it can't easily be used as a currency (at least not in the modern world). However, it has held its value remarkably well.
Counter counterpoint : When the panic comes and everyone runs for the door, crypto hits a bottleneck of conversion to fiat. Gold is easily exchanged for any kind of goods, service or fiat money (WE BUY GOLD!).
You usually pay a 3-5% premium over spot to a reputable coin dealer to buy gold coins, and you are paid spot when you sell them. With Bitcoin, you usually pay 2-4% transaction fees to get your fiat into an exchange, 0.25% fees per trade, and 2-4% transaction fees to get your fiat out of an exchange.
I'm actually a little surprised that local coin shops haven't gotten into the cryptocurrency market.
True, and the illiquidity of gold is part of what makes it a great store of value.
Bitcoin will certainly survive, at least, as a niche alternative for short-term storage (easy transactions) and/or those in physical danger (decentralized and without a physical existence).
Botcoin value is dependent on and pumped by exchanges. In case of larger sale run they will cease to payout with cash or other cryptocurrencies because they are out of money to cover most payouts. I think at most 1% is available in US$ cash -- the rest is gone in tax heavens. There is no law control over these entities and their financial fitness.
So as the value is going to collapse and with low value the cost of transactions will explode to an extent that exhanging is going to stale and mining will become worthless.
I agree the block-chain and smart contract technology is interesting, but this pioneer execution is simply a Ponzi scheme. Newcomers are funding payouts and nobody asks where the real cash goes. Scared merchants can pull a "cryptocurrency payment" plug overnight, and there is no goverment to call bailout to save this financial system. This will be epic bail-in.
> Bitcoin is different in that its only real use so far is as an alternative bank account.
Only? Thats not true though.
> With companies like TSLA it can be sustainable, as investors believe that future earnings will justify the valuation.
Why do you keep using stock and equity analogies when talking about a completely different asset class that behaves more like a commodity?
So so strange.
What does a "pop" and "doom" mean to you? Bitcoin has swung 90% downwards multiple times and all tearful holders at any point in history have a profit right now. The people that are using bitcoin for more than an alternative bank account will still have uses for bitcoin.
limited supply cryptographic hashes have utility for a variety of reasons at any price to various market participants, just like oil and gold has utility for a variety of reasons at any price.
but yes I can see why that might be confusing when your only valuation model requires revenues and earnings.
Several years ago during the MTGox collapse, /r/bitcoin over on reddit had a suicide hotline pinned to the top as multiple evangelicals had sunken their life savings into BTC. It's going to be a very difficult situation if / when BTC crashes again, and it won't end well for just about anyone.
Given the recent uptick in posts about people investing their life savings into bitcoin and bragging to friends and relatives about their wealth, it seems like the community hasn't learned anything from past turbulent times.
Literally the same line about tulips has been repeated for the last 4 years. It's probably true, but at this point I'm curious why anyone is interested in yet another article saying exactly the same thing with no new information, content, evidence, anything.
Ironically, the news works in the same way as BTC prices. There doesn't have to be any intrinsic value as long as people are talking about it.
The tulip mania comparison is lazy. It's just a way for pass of FUD as a "scholars approach", when in reality nobody knows if it is a bubble or not since it hasn't yet crashed.
When the price sinks down to <1k/btc and stays there, we can look back and laugh over the tulip mania. Until then its all speculation, on both sides.
> It's just a way for pass of FUD as a "scholars approach", when in reality nobody knows if it is a bubble or not since it hasn't yet crashed.
No horses in the race (except a sense of regret I didn't buy more sooner), but isn't this exactly what the majority opinion is about every contemporaneous bubble? I was a Finance major back before the crash when my professors used to say homes were the only asset that always increased in value.
people are idiots. The tulip bubble (and most every bubble since) have ended in a lot of tears because of leveraged trading. While there is some leveraging going on in the cryptocurrency market today, it's far less than any we've seen of late (and far less than the tulip bubble).
If you don't want to end up crying about bitcoins or crypto you do the following: 1) make a plan that you're happy with. 2) if it fails, oh well 3) consider your assets lost as soon as you put into cryptocurrency.
At some point, bitcoin is going to have to be worth more than just n USD... right? Other than buying in and cashing out, what is bitcoin useful for right now? What makes BTC today better than my cash?
I am aware of the potential for cryptocurrency and I am aware of it's increasing value. But if all my money is tomorrow BTC instead of USD, for instance, how will I survive without converting it back into USD every time I needed to use it?
Not trying to be facetious, just curious as to what the bitcoin crowd is using BTC for. If not to pay for goods and services, then isn't it a misnomer at this point to keep calling it a currency?
1. As a buyer, sending money via Bitcoin means whoever I'm buying goods/services from won't be able to bill me monthly, they won't be able to lose my credit card info, and they can't overcharge me.
2. Also as a buyer, there are also no "restrictions" on who I can send money to, and how much. Nobody can close my account because they don't approve of what I bought,
or can restrict where i'm able to send money to (ignoring custodial wallets, which can do all of those things to some extent).
3. As a "merchant", receiving payment in Bitcoin means that I don't need to worry about "chargebacks", "reversals" or any other way that the money could be taken back after it's been sent.
4. As a developer, Bitcoin is a fantastic way to receive tips and donations. I don't need to maintain an account with some service that might go under or get hacked. I can create an address for donations securely once, and can put it everywhere knowing that it will work indefinitely.
Yeah, I agree that at this point people trying to live on Bitcoin are a little crazy, but if more and more places start accepting it it's a fantastic way to buy and sell things that is a lot more "safe" feeling for all involved.
> 3. As a "merchant", receiving payment in Bitcoin means that I don't need to worry about "chargebacks", "reversals" or any other way that the money could be taken back after it's been sent.
This is why I wouldn't use BTC to buy anything. Banking and consumer protection regulations did not just come out of thin air. They came out pain that occurred at some point. BTC will never replace the bulk of traditional transactions until remediation can happen.
Drugs, ransomware, and maybe web hosting or a remote shell.
>if all my money is tomorrow BTC instead of USD, for instance, how will I survive without converting it back into USD every time I needed to use it?
You won't. Crypto-libertarian dweebs are convinced that someday somebody will accept their Dunning-Krugerrands in exchange for goods and services, but right now the price is so volatile that everyone who owns them won't spend them to pay for milk and bread if it's likely they will be worth twice as much next week as they were this week, and nobody selling real world necessities gives enough of a shit to go out of their way to accept them.
I'll start by echoing another comment below -- Bitcoin is immune to direct central bank intervention.
> ... what is bitcoin useful for right now? ... all my money is tomorrow BTC ... what the bitcoin crowd _is_ using ...
I would contend that this isn't the right question -- value right now is not based on utility right now; it's based on an estimate of discounted future utility. Unfortunately, that future utility includes a component of "price momentum", which may or may not actually exist, or may just be in part a self-fulfilling limited-timeframe prophecy (or a bubble, as some call it). There's even, in some quarters, worries that onroads to cryptocurrencies may become more difficult in the future as AML laws start to focus on it, so better to have some on hand so that when the "one true cryptocurrency" emerges, you'll be able to get in on it despite your government's reluctance to allow it.
> What makes BTC today better than my cash?
Today, I would say the immunity to politically-directed manipulation of value. As compared to "cash" as in folding paper money that you hold on your person, I would say it gains the advantage of being electronically transferable, and arguably, easier to secure. As compared to "cash" as in money on deposit in a demand deposit account, it offers the liquidity of cash (no bank to tell you "you can't take out that much right now), and immunity from other failures: bank runs do happen (rarely), banks do fail (less rarely), "identities" are stolen (not rarely at all), and accounts are closed because of violations of terms of service or because of suspicious activity (which may just involve transactions over a certain dollar amount). If you're sufficiently paranoid, concerns about a cause you support being labelled as "terrorist" and having money laundering protections slapped on it, or a country that you have relatives in being labelled a "rogue state", or even (true story!) a neighboring country being artificially branded a terrorist state to blackmail them into building a wall.
> isn't it a misnomer at this point to keep calling it a currency?
Maybe. But if it walks like a duck and quacks like a duck... I mean, this ends up just being a semantic game where we're fighting over the definition of the word "currency". If it makes you feel better, call it a crypt o'currency, which is its own thing distinct from currency; it just shares some attributes of currencies.
My thinking is this: bitcoin and other digital currencies are becoming more and more “popular” (literally). More and more “ordinary” people start investing, the barriers of participation are coming down. As long as there is a large enough pool of people willing to join the party, prices will continue to rise. The question is when to pull out. I always get nervous when cab drivers start giving me free stock advice. Hasn’t happened yet with coins. So: way to go!
I've got people on my Facebook feed posting regularly about how we all need to buy BTC now while it is on the rise. They brag about their winnings and encourage others to play too...
Came up at family gathering over Thanksgiving. The masses know about it because of its massive increase in value and are all afraid that they are missing out.
What really underlies this issue is whether you think Bitcoin is over or undervalued. Griffin leads off saying this is a bubble understanding that the people at Blomberg already believe this.
Without a real justification for why Griffin values Bitcoin at less than the current market price this article is nothing but fluff.
Of course if it is a bubble, this is a bad thing for those invested in Bitcoin. That is not up for debate. If it does burst, there will be plenty of tears, but the value of the entire Bitcoin ecosystem is still tiny compared to classic commodities like gold or real estate.
I have seen several articles here on HN recently that have seem to all confirm that Bitcoin is a bubble, but I haven't read anything that dives into the real substance behind the claim that Bitcoin is overvalued.
I understand the scaling issues, but I am confident that something like the lightning network can solve those. I don't believe that all transactions can be on-chain as this would make running a full-node and verification of the entire chain very difficult over time.
Well it's obvious Bitcoin is a bubble. It's basically unusable as a currency or payment processor and the only markets that use it are very small. It's not even a good choice for those use cases.
Alright guys, let's plot. How can we crash Bitcoin?
Bitcoin is obviously a bit of a new bird when it comes to what sort of financial instrument it is. To me it seems to be half gold, a hedge against currency and other economic troubles and half ponzi scheme, a lot of the valuation is driven by the belief that there are more people in line behind you than there are in front of you.
So if we take it that there is a bubbley aspect to bitcoin built upon ponzi scheme psychology but also the new aspect which is that many participants are aware it's a ponzi scheme and still believe in it anyway - is there anyway to pop it? It seems all the normal methods of popping a bubble like this have been eliminated by the completely decentralized nature of it. Is it even a bubble anymore if that's true?
The normal way this goes is: Asset X has good fundamental utility/value. Investors see that, and put money in X. X goes up. That's not a bubble.
Other investors see X going up, and put money in X because it's going up. That's the start of a bubble - when people buy, not because they think the fundamentals are good, but because it's going up and they don't want to miss out. So of course X goes up more because of all the new money coming in.
The next stage comes when, because X is reliably going up, people borrow money to put in X. Now X really shoots up, because there's so much money going in. This keeps going while new money keeps coming in, but the investors are more nervous, because it's borrowed money. They're in trouble if they can't pay it back. And the more recently they invested, the more nervous they are, because they've got less room for it to fall before they owe the bank money.
This falls apart in panic selling when the price of X drops. The price drops either when nobody can believe the current price of X any more, or else when banks won't lend any more money for buying X.
So, if my understanding of bubbles is correct, and if Bitcoin is going to be a typical bubble, the relevant question is, how much of the money invested in Bitcoin is borrowed?
>>> Other investors see X going up, and put money in X because it's going up. That's the start of a bubble - when people buy, not because they think the fundamentals are good, but because it's going up and they don't want to miss out. So of course X goes up more because of all the new money coming in.
That isn't just the start of the bubble, that's pretty much the definition - asset trading at the price that exceeds the asset's intrinsic value. If people are buying on speculation and not for it's utility, it's a bubble.
>>> So, if my understanding of bubbles is correct, and if Bitcoin is going to be a typical bubble, the relevant question is, how much of the money invested in Bitcoin is borrowed?
The amount of borrowed money used to purchase Bitcoin is certainly a lot greater than zero, which while not strictly a characteristic of a bubble, probably is a sign of nearing critical levels.
Readit News
Stocks have tangible assets that generate earnings to justify their investment. Bitcoin, however, generates no real returns beyond its exploding popularity resulting in a higher price. While that doesn't automatically doom its fate (see: traditional currency pairs), Bitcoin is different in that its only real use so far is as an alternative bank account. It will likely remain this way until people can live their lives on Bitcoin in the way people live their lives on a traditional, centralized currency. Many people who simply use it as a bank account may deposit their money for a long period of time, resulting in a sustainable price; for simplicity's sake, we can give the benefit of the doubt and assume that 100% of those looking for an alternative bank rather than an investment will hold it indefinitely.
The question is: Of those pushing the price from ~$750 to ~$10,000 in one year, after several years of stability in the ~$500 area, how many are looking to hold it as a bank account alternative, and how many are looking at it as an investment to eventually sell for a profit? Given the trajectory, it's hard to believe individuals are adopting it this rapidly for purposes other than investment; it seems like this 'mainstream adoption' is really just primarily mainstream investment. Is it sustainable when the majority of people are just buying in expectation of others buying? With companies like TSLA it can be sustainable, as investors believe that future earnings will justify the valuation. Here, there's nothing but a hope that others will buy because the price keeps going up.
The only way this bubble doesn't pop is if the money being pumped into Bitcoin results in commercial adoption as a viable currency, however that seems unlikely in the meantime.
My biggest problem with Bitcoin these days is the developers pushing Bitcoin to become 'store of value'.
Originally Bitcoin became popular because it simply let people transact over the internet quickly with low cost. This was what gave Bitcoin its utility, and thus value.
Now that the Core team has decided that ease-of-use is not important, they are literally trying to hype Bitcoin as something intrinsically worthless except for people's perception of it. Bitcoin is now coasting on its reputation it accumulated in its first 5 years of life. So what makes Bitcoin _not_ a pyramid scheme?
Other cyptocurrencies have their own uses-
Litecoin - Buy stuff over internet cheaply and quickly
Ethereum - ICO and contracts
Ripple/Steem - Pseudo-decentralization allows for huge number of transactions.
Monero/ZCash - Privacy
Gold - People have liked shiny and non-degradable stuff since the stone age
Stocks/Bonds - Dividend/Interests
Tulips bulbs - Grow tulip flowers
Bitcoin in 2017 - ??? Store of value
The first 4 example cryptos actually have real world usage that could potentially justify their prices. What use does Bitcoin have right now? Every transaction costs >$1 and takes hours to process. What could Bitcoin do that other cryptocurrencies couldn't do better?
It is a severe misunderstanding to think a coins market cap is a reflection of its current utility. "Potential" drives valuations, and bitcoin has the greatest potential to be the currency of the future, despite its limited current utility. The fact that almost every alt-coin has cheaper/faster transactions, and yet are worth tiny fractions compared to bitcoin should clue you in. Bitcoin is still the most valuable because it has by far the most name recognition, and this name recognition will carry it to success down the road when things like the lightnight network are implemented and in widespread use.
As a sibling comment mentioned, it could be a gold alternative. Bitcoin is much more volatile, however, and it already has a $160b market cap. The total value of all gold ever mined, from what I've found, is $1190b. Gold has gone up in value while Bitcoin has been rallying, which is a small but nonetheless existent indicator that people are not changing their store of value.
Bitcoin will only be stable when most of those invested in it view it as that store of value, however even then it will be shaky compared to gold. Though it may receive commercial adoption due to its popularity, the slow transactions you mentioned really disable that.
In conclusion: Thanks for the list of cryptocurrencies, as I'll certainly be looking into buying them rather than Bitcoin ;)
I'm actually a little surprised that local coin shops haven't gotten into the cryptocurrency market.
Bitcoin will certainly survive, at least, as a niche alternative for short-term storage (easy transactions) and/or those in physical danger (decentralized and without a physical existence).
Only? Thats not true though.
> With companies like TSLA it can be sustainable, as investors believe that future earnings will justify the valuation.
Why do you keep using stock and equity analogies when talking about a completely different asset class that behaves more like a commodity?
So so strange.
What does a "pop" and "doom" mean to you? Bitcoin has swung 90% downwards multiple times and all tearful holders at any point in history have a profit right now. The people that are using bitcoin for more than an alternative bank account will still have uses for bitcoin.
limited supply cryptographic hashes have utility for a variety of reasons at any price to various market participants, just like oil and gold has utility for a variety of reasons at any price.
but yes I can see why that might be confusing when your only valuation model requires revenues and earnings.
Edit: changed "has" to "as", as it was a typo.
Is it though ....?
https://www.smithsonianmag.com/history/there-never-was-real-...
The tulip mania comparison is lazy. It's just a way for pass of FUD as a "scholars approach", when in reality nobody knows if it is a bubble or not since it hasn't yet crashed.
When the price sinks down to <1k/btc and stays there, we can look back and laugh over the tulip mania. Until then its all speculation, on both sides.
No horses in the race (except a sense of regret I didn't buy more sooner), but isn't this exactly what the majority opinion is about every contemporaneous bubble? I was a Finance major back before the crash when my professors used to say homes were the only asset that always increased in value.
If you don't want to end up crying about bitcoins or crypto you do the following: 1) make a plan that you're happy with. 2) if it fails, oh well 3) consider your assets lost as soon as you put into cryptocurrency.
I am aware of the potential for cryptocurrency and I am aware of it's increasing value. But if all my money is tomorrow BTC instead of USD, for instance, how will I survive without converting it back into USD every time I needed to use it?
Not trying to be facetious, just curious as to what the bitcoin crowd is using BTC for. If not to pay for goods and services, then isn't it a misnomer at this point to keep calling it a currency?
1. As a buyer, sending money via Bitcoin means whoever I'm buying goods/services from won't be able to bill me monthly, they won't be able to lose my credit card info, and they can't overcharge me.
2. Also as a buyer, there are also no "restrictions" on who I can send money to, and how much. Nobody can close my account because they don't approve of what I bought, or can restrict where i'm able to send money to (ignoring custodial wallets, which can do all of those things to some extent).
3. As a "merchant", receiving payment in Bitcoin means that I don't need to worry about "chargebacks", "reversals" or any other way that the money could be taken back after it's been sent.
4. As a developer, Bitcoin is a fantastic way to receive tips and donations. I don't need to maintain an account with some service that might go under or get hacked. I can create an address for donations securely once, and can put it everywhere knowing that it will work indefinitely.
Yeah, I agree that at this point people trying to live on Bitcoin are a little crazy, but if more and more places start accepting it it's a fantastic way to buy and sell things that is a lot more "safe" feeling for all involved.
This is why I wouldn't use BTC to buy anything. Banking and consumer protection regulations did not just come out of thin air. They came out pain that occurred at some point. BTC will never replace the bulk of traditional transactions until remediation can happen.
Drugs, ransomware, and maybe web hosting or a remote shell.
>if all my money is tomorrow BTC instead of USD, for instance, how will I survive without converting it back into USD every time I needed to use it?
You won't. Crypto-libertarian dweebs are convinced that someday somebody will accept their Dunning-Krugerrands in exchange for goods and services, but right now the price is so volatile that everyone who owns them won't spend them to pay for milk and bread if it's likely they will be worth twice as much next week as they were this week, and nobody selling real world necessities gives enough of a shit to go out of their way to accept them.
Someone already will, most notably for illegal goods and services.
> ... what is bitcoin useful for right now? ... all my money is tomorrow BTC ... what the bitcoin crowd _is_ using ...
I would contend that this isn't the right question -- value right now is not based on utility right now; it's based on an estimate of discounted future utility. Unfortunately, that future utility includes a component of "price momentum", which may or may not actually exist, or may just be in part a self-fulfilling limited-timeframe prophecy (or a bubble, as some call it). There's even, in some quarters, worries that onroads to cryptocurrencies may become more difficult in the future as AML laws start to focus on it, so better to have some on hand so that when the "one true cryptocurrency" emerges, you'll be able to get in on it despite your government's reluctance to allow it.
> What makes BTC today better than my cash?
Today, I would say the immunity to politically-directed manipulation of value. As compared to "cash" as in folding paper money that you hold on your person, I would say it gains the advantage of being electronically transferable, and arguably, easier to secure. As compared to "cash" as in money on deposit in a demand deposit account, it offers the liquidity of cash (no bank to tell you "you can't take out that much right now), and immunity from other failures: bank runs do happen (rarely), banks do fail (less rarely), "identities" are stolen (not rarely at all), and accounts are closed because of violations of terms of service or because of suspicious activity (which may just involve transactions over a certain dollar amount). If you're sufficiently paranoid, concerns about a cause you support being labelled as "terrorist" and having money laundering protections slapped on it, or a country that you have relatives in being labelled a "rogue state", or even (true story!) a neighboring country being artificially branded a terrorist state to blackmail them into building a wall.
> isn't it a misnomer at this point to keep calling it a currency?
Maybe. But if it walks like a duck and quacks like a duck... I mean, this ends up just being a semantic game where we're fighting over the definition of the word "currency". If it makes you feel better, call it a crypt o'currency, which is its own thing distinct from currency; it just shares some attributes of currencies.
But it isn’t, and while it does get used to buy things it’s hardly the most common use.
Which is why most critics liken it to investments, and why it’s a problem.
Question: On what principles do you base this assertion?
- Transferring "value" to another person without oversight.
That's pretty much it. And the latter wouldn't exist if you couldn't do the former.
Without a real justification for why Griffin values Bitcoin at less than the current market price this article is nothing but fluff.
Of course if it is a bubble, this is a bad thing for those invested in Bitcoin. That is not up for debate. If it does burst, there will be plenty of tears, but the value of the entire Bitcoin ecosystem is still tiny compared to classic commodities like gold or real estate.
I have seen several articles here on HN recently that have seem to all confirm that Bitcoin is a bubble, but I haven't read anything that dives into the real substance behind the claim that Bitcoin is overvalued.
I understand the scaling issues, but I am confident that something like the lightning network can solve those. I don't believe that all transactions can be on-chain as this would make running a full-node and verification of the entire chain very difficult over time.
Bitcoin is obviously a bit of a new bird when it comes to what sort of financial instrument it is. To me it seems to be half gold, a hedge against currency and other economic troubles and half ponzi scheme, a lot of the valuation is driven by the belief that there are more people in line behind you than there are in front of you.
So if we take it that there is a bubbley aspect to bitcoin built upon ponzi scheme psychology but also the new aspect which is that many participants are aware it's a ponzi scheme and still believe in it anyway - is there anyway to pop it? It seems all the normal methods of popping a bubble like this have been eliminated by the completely decentralized nature of it. Is it even a bubble anymore if that's true?
Other investors see X going up, and put money in X because it's going up. That's the start of a bubble - when people buy, not because they think the fundamentals are good, but because it's going up and they don't want to miss out. So of course X goes up more because of all the new money coming in.
The next stage comes when, because X is reliably going up, people borrow money to put in X. Now X really shoots up, because there's so much money going in. This keeps going while new money keeps coming in, but the investors are more nervous, because it's borrowed money. They're in trouble if they can't pay it back. And the more recently they invested, the more nervous they are, because they've got less room for it to fall before they owe the bank money.
This falls apart in panic selling when the price of X drops. The price drops either when nobody can believe the current price of X any more, or else when banks won't lend any more money for buying X.
So, if my understanding of bubbles is correct, and if Bitcoin is going to be a typical bubble, the relevant question is, how much of the money invested in Bitcoin is borrowed?
That isn't just the start of the bubble, that's pretty much the definition - asset trading at the price that exceeds the asset's intrinsic value. If people are buying on speculation and not for it's utility, it's a bubble.
>>> So, if my understanding of bubbles is correct, and if Bitcoin is going to be a typical bubble, the relevant question is, how much of the money invested in Bitcoin is borrowed?
The amount of borrowed money used to purchase Bitcoin is certainly a lot greater than zero, which while not strictly a characteristic of a bubble, probably is a sign of nearing critical levels.