So it sounds like lemming group think. It seems like someone one should hold “just in case,” but no real valid reason to do so yet (that I’ve heard). We know transactions are slow and expensive, so it’s not a good replacement for ordinary commerce. It can be used to transfer across borders, but there often is asymmetry in capital movement that makes this difficult in the places you need it most (poor countries with rapid inflation, who aren’t buying Bitcoin but rather only selling), and it’s often regulated such that it needs to be fully declared (removing the whole anti-gov part). It also lacks a lot of the controls that traditional banks have for good reasons, so fraud becomes harder to tackle, and things like refunds are just at the mercy of the other side of the transaction (making commerce even harder, as well as basic banking). So then it becomes a digital store of value, one that is only as valued as the market gives it, and typically markets eventually correct when there’s no underlying true value proposition (as we can see with $GME). It also pushes only towards deflation, so it’s terrible as a wide spread value store because it removes an important tool that governments have to handle the economy (dealt with debt via inflation aka printing money, which can be executed “well” (US) and really poorly (Zimbabwe)).
The forefront of the Bitcoin frenzy isn't even on the blockchain, it's at the exchanges.
Hardcore tech people and those who don't (or can't) trust institutions with their Bitcoin will pay the transaction fees to get their money out of exchanges and into their own wallet. The average retail investor, however, doesn't want to be their own bank. They just want in on the price action, while letting the exchange manage their money. Does anyone really think the person buying crypto $100 at a time in their Robinhood account wants to pay $18 (current average transaction fee) every time they want to move that BTC into their wallet? Of course not, which is one reason why Robinhood doesn't even have an option to withdraw Bitcoin.
As with any frenzy, the misinformation being circulated by people who want everyone to buy Bitcoin is getting out of control. How many average people buy Bitcoin because they think Bitcoin is the only way to avoid losing purchasing power? Meanwhile, everyone else has been protecting against inflation by purchasing stocks, real estate, or virtually any other investment long before Bitcoin was even invented. (Yes, I'm aware of the 21 million maximum BTC cap). The current Bitcoin narratives are more like a religion than reality.
That said, Tesla's Bitcoin purchase does make a lot of sense. Elon Musk went on Twitter and called Bitcoin "BS" to drive the price down so they could buy at a discount. They then announced their Bitcoin purchase with fanfare that drove the price up, marking a quick return on their investment. They used Elon's influence to make a quick profit on the frenzy.
> That said, Tesla's Bitcoin purchase does make a lot of sense ... They then announced their Bitcoin purchase with fanfare that drove the price up, marking a quick return on their investment.
Tesla is a car manufacturer! It doesn't make any sense at all! At any company that made sense, a CEO would lose his job for gambling $1B of company money in a casino totally unrelated to the company's business interests.
> That said, Tesla's Bitcoin purchase does make a lot of sense. Elon Musk went on Twitter and called Bitcoin "BS" to drive the price down so they could buy at a discount. They then announced their Bitcoin purchase with fanfare that drove the price up, marking a quick return on their investment. They used Elon's influence to make a quick profit on the frenzy.
Is that even legal? It sounds like pumping and dumping.
Title: Reddit Post Reporting Tesla's Bitcoin Purchase From a Month Ago Was a Hoax
Reportedly, the person claiming to be a Tesla insider with intel on the bitcoin purchase was actually some political science major college student tripping on acid. Crazy how so many people ate this story up.
>"Does anyone really think the person buying crypto $100 at a time in their Robinhood account wants to pay $18 (current average transaction fee) every time they want to move that BTC into their wallet?"
I'm curious is this the transaction per $100 or is $18 a flat fee regardless of transfer amount?
I am pretty sure you don't own Bitcoin if it is not in your own wallet regardless of what T&C may be saying. They can always find a way to snatch your coins under any made up reason. They cannot do that if you have all the keys.
> Elon Musk went on Twitter and called Bitcoin "BS" to drive the price down so they could buy at a discount. They then announced their Bitcoin purchase with fanfare that drove the price up, marking a quick return on their investment. They used Elon's influence to make a quick profit on the frenzy.
I don't see an inherent problem with this. People who were too gullible to believe influencer crap and caused bitcoin's price to go down by panic selling are now gone from the market, and the believers stayed in and made money. That's a good thing, and weeds out gullible people from the system. This isn't the stock market where fundamentals matter.
>So it sounds like lemming group think. It seems like someone one should hold “just in case,” but no real valid reason to do so yet (that I’ve heard).
Honestly what more do most people have? You could work your entire life but even all the earnings and scrimping and saving isn't even be a tiny fraction to what you would have if you had been the one to fulfil the order for the bitcoin pizza and just held.
Think a lot of people misunderstand just how hopeless the world is for most people.
GME and Doge are just the start, get used to hearing people are sinking their entire savings into far flung gambles multiple times a year from here on out. Especially in a post pandemic world where people are been completely downtrodden to their limit. Property is so exorbitant, pay is so low we're now entering a world where just gambling seems the smarter option than living within your means because anyone who has tried that can tell you it gets you nowhere. Pay just hasn't increased enough in line with property and your dollars are worth less and less every day.
We used to call them Ponzi schemes. This is the same but in slow motion. People are going to start taking their profits at some point and whoever takes them last will be holding the bag.
I personally think that the huge increase in the money supply and all of the stimulus money that has went out to people is the primary fuel to speculative investing (like GME and Crypto). Savings rates in the pandemic have never been higher.
I see it less as desperation and more of 'whoa, i have more money now, i want to put it into things that go up in value!'. I haven't seen the data (so do correct me), but I would suspect that less sophisticated retail investing is on the rise over the last year, correlating with increased savings.
But that’s not even remotely true. People’s standard of living is better than ever before and their chances of success higher than ever.
The narratives we craft define how we move in this world. This is a toxic way of thinking. It takes about $500/month throughout a working life to retire comfortably investing in just VTSAX.
I know you don't control who upvotes your comment, but I find it funny this is the top rated comment.
It has become a total HN cliché that the top comment is a negative takedown of the tech or startup in question. From Dropbox, to Coinbase, to Ethereum, and now to Bitcoin at 50k.
Not refuting anything you're saying here. Just find it amusing to have seen this pattern play out so many times here on HN.
entrepreneur works in blockchain sector and makes millions with no VCs: exists
engineer working at morally dubious ad-retargeting analytics company: "this has no utility whatsoever ($30), I could do that with a database ($7,500)! I'm going to ignore this for entire decades! ($50,000)"
Isn't it pure survivorship bias ? The dropbox thing keeps on being mentioned but for 1 wrong comment about dropbox there are thousands negative valid comments about stupid and failed startups/ideas.
When "the market" does something that somebody considers to be irrational, the explanation is almost certainly that they either simply don't understand it, or that they do understand it and they're just being judgemental about the motives at play.
The reason it has value is because people have demand for it. People have demand for it for a variety of reasons. I think it's reasonable to presume that a non-trivial portion of that demand is driven by the features that make it a rather good black market currency. It's also obviously quite appealing to certain groups of privacy conscious individuals. I've heard it's somewhat popular for international remittances, which makes sense given the economic stability issues various places have around the world. On top of those fundamentals, demand is further inflated by speculators.
Your biggest criticism seems to be that it would be a bad national currency because you can't implement a bitcoin monetary policy. But none of the demand for bitcoin is driven by that factor, so the observation is simply irrelevant.
> it’s terrible as a wide spread value store because it removes an important tool that governments have to handle the economy (dealt with debt via inflation aka printing money
How does a static rather than unconstrained supply make something a LESS good store of value?
Econ 101: the value of ordinary goods are determined both by supply and demand.
Bitcoin-fanatic-USD-bears claim that Bitcoin is a good store of value because it has constrained supply. But they miss the demand side of the equation. Similarly, they claim that the USD is a bad source of value because it has "unlimited" supply. That also misses the demand side.
The demand for USD is robust because people need USD to pay taxes and to purchase most goods and services offered by US-based organizations. The demand for Bitcoin is based on... how many people Bitcoin-fanatics can get to buy and hodl Bitcoin.
(I don't count organizations that accept Bitcoin as payment because almost all of them exchange received Bitcoin into the local currency, negating the demand effects of the original Bitcoin purchase. In the US, that's usually USD.)
Bitcoin's constrained supply is almost a red herring at this point.
The usual fallacy is when proponents claim that Bitcoin is the only asset able to escape inflation due to fiscal policy interventions. This couldn't be more false. The very definition of inflation is an increases in prices, or a decrease in buying power. However, investors have been buying assets and investments to avoid inflation long before Bitcoin was even invented.
Bitcoin isn't a particularly good store of value because the price is driven purely by demand, which is currently in a state of market mania. It's not even the first market mania around Bitcoin. Past bubbles were also met with a "this time it's different" attitude before the inevitable sharp losses.
Bitcoin has value not because someone coded a 21 million coin limit in the code somewhere. Bitcoin has value because people want Bitcoin. Why do people want Bitcoin? Because the price goes up up. Why does the price go up? Because people want Bitcoin. As soon as something breaks that cycle, it doesn't matter what the maximum number of coins is. Without demand from the belief of future increases due to increasing demand, the price will go down. The purchasing power decreases.
Everyone likes to demonize fiscal intervention, but the reality is that counter-cyclical fiscal intervention tends to benefit the average person. Running inflation too hot is bad, but swinging to a full deflationary currency (Bitcoin) would also be bad for the economy.
It might be a good store of value (aside from its extreme volatility), but the GP comment would be correct if you substitute "medium of exchange" for "store of value".
> How does a static rather than unconstrained supply make something a LESS good store of value?
Because a healthy capitalist economy needs an incentive to invest. A steady, low, positive inflation rate is essential to encouraging those with capital to rent that capital out to those who need it for productive uses.
When I read a message like this, I conclude that bitcoin has another 10x to go since gold has a 10 trillion market cap.
(Preemptively I'm going to say that gold market cap has almost nothing to do with its usage as a commodity, google it)
And the GDP of New Zealand will go up 100x because the USA has a $21T GDP. (Preemtively I’m going to say that US’s market cap has almost nothing to do with its sheep population, google it.)
> but no real valid reason to do so yet (that I’ve heard).
I hold because i expect us to continue approaching the game-theoretic attractor. I've held for years and will keep holding. Every year, i see more and more people coming around to my perspective.
How many years can you watch the price keep going up before you'll eventually consider that you might be missing something?
> We know transactions are slow and expensive,
lightning network obviates this problem
> it’s often regulated such that it needs to be fully declared (removing the whole anti-gov part)
The government still can't print more bitcoin, which is the main appeal for me.
They also cant technically block anyone from recieving coins. They can make doing so a crime, but don't have the technical ability to, say, freeze funds.
> typically markets eventually correct when there’s no underlying true value proposition
Given that bitcoin is over 10 years old, shouldn't its longevity be taken as evidence that there is, indeed, a true value proposition?
> which can be executed “well”
Why is 'well' in quotes here?
Are you open to the hypothesis that money printing exacerbates might cause long term issues in society?
> They can make doing so a crime, but don't have the technical ability to, say, freeze funds.
If the governments of the world made it a crime for miners to include transactions involving certain blacklisted addresses in their blocks that could be a big step towards a freeze.
> So then it becomes a digital store of value, one that is only as valued as the market gives it, and typically markets eventually correct when there’s no underlying true value proposition (as we can see with $GME).
You're not missing anything, you said it yourself it's a store of value. Maybe markets eventually correct, but in the last 10 years Bitcoin has only gone up, so if you had planned to use it to store value for 10 years a decode ago, then it worked pretty well.
> It also pushes only towards deflation, so it’s terrible as a wide spread value store because it removes an important tool that governments have to handle the economy
Well it's a store of value, not a tool for the gov to handle the economy.
Every minute, there are thousands of bitcoin transactions happening at dozens of exchanges, and it's happening instantly with very low cost. Because it's off-chain.
That's what you're missing here, not everything needs to be on-chain to be valuable. Exchanges and businesses and services can aggregate.
The whole point of bitcoin was to be decentralized. If bitcoin transactions are loaded up on an app like robinhood, then it’s no different than robinhoodbux
Why would you hedge against something like inflation, which is relatively constant over a year, by putting your money into a highly speculative risk asset with absolutely insane volatility over that same timeframe? Like many arguments for Bitcoin, this one just doesn't make sense.
* Cross-border transactions which would take days for Swift are instant
* Expensive: no not really. In the filled mempool days, yes prices shot up, but that was a few years ago. Fees are incredibly low now.
* Non-int transactions are still just about the same speed as a Visa cc/debit swipe. Again, when the mempool is going insane (hasn't happened in some time), yes TXs could take time vs. fees. However, nowadays it's just about as quick to reach a "basically verified" TX as it whatever risk mgmt balancing Visa is doing in the background. This time, instead of Visa's fraud department doing some checks, it's 1 or 2 blocks to very likely confirmed, 6 blocks to definite. Just different ways of skinning the same cat.
You're correct on this
> also lacks a lot of the controls that traditional banks have for good reasons,
But you're blending some arguments that are counterfactual if taken together as something cohesive. It's fast because it doesn't have these controls, for instance.
Do you really want an answer to that question? Feels more like your are taking the temperature of the top minds of HN to decide if it's cool to like bitcoin yet.
Its got momentum as a crypto, in theory it could update itself to whatever would start being more valuable if needed.
Also, I don't know if all investment need to make sense based on economic fundamentals, bitcoin makes sense at a psychological level why it is a good investment for now, as more and more people slowly decide they need to dip their toes in it as well.
Criminal and black market transactions are a sizable fraction of the economy and bitcoin is a major financial innovation for this “sector.” The only problem is the price volatility, you don’t want to collect some money for Fat Tony and have it drop in value by 20% by the time you get it to him.
I'm also still wrapping my head around this just like you, but I think I understand enough to answer some of your questions.
> We know transactions are slow and expensive, so it’s not a good replacement for ordinary commerce.
I don't think that this is obviously true. Digital transfer of the US Dollar is similarly slow and expensive (see: ACH, Wire, SWIFT). The response you'll hear the most frequently is that BTC (and digital currencies) should be compared to the US Dollar, not to Visa and Stripe and Venmo etc. Right now, if you want to send US dollars to somebody and you're unable to do it through PayPal/Venmo/Square/Visa/MasterCard, your best bet is to literally mail cash to the recipient. BTC solves that problem; you now have the option to send someone "cash" in a trust-less way, but that's probably not how the majority of people would use BTC.
The blockchain doesn't have to be used to settle every single transaction in real-time, just like you don't have to use ACH/Wire to send $5 to someone electronically for every transaction. Just like banks today send a batched ACH files of all money movement at the end of the day, they may do the same on the blockchain hourly/daily. The benefit of BTC over USD is that there is a way to "mail someone a briefcase of cash" without having to actually mail them; instead you can "mail" it to them on the blockchain and have it take a few hours rather than 3-5 business days. If you want to send US dollars faster, you can rely on centralized institutions that build financial products on top of the US Dollar, but the same can happen on top of other non-government-backed currencies. Just like you have a bank account where you can see in Dollars or Yen or Pounds what your bank balance is, one ought to be able to open an account and see what their balance is in BTC or ETH or Nano...or so the argument goes.
> It also lacks a lot of the controls that traditional banks have for good reasons, so fraud becomes harder to tackle, and things like refunds are just at the mercy of the other side of the transaction (making commerce even harder, as well as basic banking)
Again, you want to compare BTC/ETH to the actual currencies, rather than the institutions that engage with those currencies. All of what you said is true of any fiat currency: I can physically hand you a $20 bill, and that transaction can happen in a totally un-traceable way already. There’s a common saying that if cash were invented today, it would be illegal, since it’s hard for the government to track and they wouldn’t like it.
> So then it becomes a digital store of value, one that is only as valued as the market gives it, and typically markets eventually correct when there’s no underlying true value proposition (as we can see with $GME).
"We have talked a lot recently about the Reddit-fueled rally in meme stocks like GameStop Corp. One thing I have said about this rally is that it reflected Reddit traders’ correct understanding of a simple market dynamic, which is that if they all bought the same stock at once then it would go up. So they did. Institutional Bitcoin adoption, as we have also discussed, has a somewhat similar dynamic: Each time a big institution says “we like Bitcoin now,” Bitcoin goes up, because widespread mainstream institutional adoption is clearly bullish for Bitcoin at this point. So if you are a big institution or corporation, you can make some free money by (1) buying Bitcoin, (2) announcing “we like Bitcoin now,” (3) watching Bitcoin go up, and (4) selling the Bitcoins you bought for a quick profit. (Or keep them as a bet that other institutions will do the same thing and you’ll make even more profits.)
This dynamic, separate from any particular institutional decision, is good for Bitcoin: If it’s in every big bank’s and corporation’s short-term financial interest to quietly buy some Bitcoins and then noisily make a show of adopting Bitcoin, then a lot of them will, which will have the effect of pushing up the price (both because of their buying and because of their announcements). Unlike meme stocks, there is no underlying business, no cash flows that do or don’t make the price make sense: The price of Bitcoin makes sense or not purely as a social fact; if there are “fundamentals,” they are things like “widespread mainstream adoption,” which you can provide. “The fundamentals of Bitcoin are strong, look, Morgan Stanley is buying some,” Morgan Stanley could plausibly say, after buying some Bitcoins. So it might as well do that.
With the meme stocks the natural thing was to worry about the endgame for that process; you can’t have a stock price that is divorced from fundamental value forever. With Bitcoin, you ... can? Like if the endgame for Bitcoin was “universal adoption by corporations and institutions as a digital store of value,” then that sounds like a good and permanent and somehow fundamental result?"
> so it’s terrible as a wide spread value store because it removes an important tool that governments have to handle the economy (dealt with debt via inflation aka printing money, which can be executed “well” (US) and really poorly (Zimbabwe)).
This is very debatable, and you've more or less illustrated the controversy by pointing to a "good" version and a "bad" version. The political question is whether the possibility of "bad" means that the concept of government-controlled inflationary assets is inherently bad. I won't pretend that there's an objective answer, but neither should you; the fact that it removes the tool you describe can both be described as a feature or a bug, depending on your political leaning.
> Digital transfer of the US Dollar is similarly slow and expensive
And with ACH, wires, swift, the slowness is a feature not a bug. It's one of the ways fraud is combated, for example. I seriously doubt it's fundamentally a technical limitation of the technology used, but rather a choice.
But as you said people aren't doing this with BTC -- and if they're not, then this removes one of the use cases that would warrant it's value, so you're only arguing my point.
> The benefit of BTC over USD is that there is a way to "mail someone a briefcase of cash" without having to actually mail them
You also seem to forget about checks -- no one ever sends bricks of cash in USPS unless you're a drug dealer running a YOLO life. But you also ignore ACH/wires/credit cards and all the ways most money moves today. What is the fundamental issue there that Bitcoin solves?
> Again, you want to compare BTC/ETH to the actual currencies, rather than the institutions that engage with those currencies
You're right, however regulations exist that enforce institutions use USD. Those are largely good things.
> With Bitcoin, you ... can? Like if the endgame for Bitcoin was “universal adoption by corporations and institutions as a digital store of value,” then that sounds like a good and permanent and somehow fundamental result?"
But is/will that happen? These issues that I point to make it a less good option.
> I won't pretend that there's an objective answer, but neither should you; the fact that it removes the tool you describe can both be described as a feature or a bug, depending on your political leaning.
It's a tool that gets removed. Being global means there's no local way to adjust things to current circumstances. Just look at Greece in the EU -- because they went on the Euro, with a totally different economy than Western Europe, they got all of the deflation with a GDP that couldn't keep up, and as they piled on the debt they didn't have any levers to pull. Unifying global currency is a terrible idea when you have very uneven economic realities around the globe.
lemming group think? do you have this concept of all crypto proponents as stupid lemmings all following each other not capable of independent, rational thought?
i call a bunch of people serving 1% of the population without question lemmings. to try and falsely frame a legitimate worldwide, grassroots counterculture movement as just a bunch of stupid lemmings betrays your prejudice and makes it hardly surprising that you don't see any value in the space.
i can't believe a bunch of "hackers" shit on the open source, decentralized internet of money. it's a currency created by real hackers for the internet. it is the first of an entirely new asset class that allows any person to be their own bank and has a hard cap on supply. Yes it's slow, but it's also extremely secure and resistant to change.
>it’s often regulated such that it needs to be fully declared (removing the whole anti-gov part)... so fraud becomes harder to tackle
which one is it? cash is the king of fraud and illegal activities anyway: fungible, anonymous, hard to trace. a public immutable database ought to make fraud much easier to weed out in the long run...
>no underlying true value proposition
it has outperformed every other asset in the world over the last decade, maybe you need to look a little closer to understand the value proposition. just because a bunch of bigots decide it has no value proposition doesn't make it true and obviously the market strongly disagrees with this sentiment.
>It also pushes only towards deflation
you mean poor people can have their money appreciate over time instead of having their meager savings robbed by an unseen, man-made market force? you mean people won't be so eager to waste their money on crap that causes pollution and ends up as landfill? i've never really understood the deflation argument, it's a textbook slippery slope.
> removes an important tool that governments have to handle the economy
if the government were truly democratic and benevolent this would be the case. unfortunately we live under a bunch of warmongering kleptocrats who need to be kept in check.
more like an important tool to bail out themselves and their cronies after they fuck up the economy so badly with their corrupt, short-sighted practices.
the people who seem to screech the loudest against cryptos seem to have a massive vested interest in maintaining the status quo. you really can't get how the economy might actually function better for most people if it wasn't serving as a welfare state for the elite?
meanwhile the btc supercomputer keeps producing blocks, just like it has since day one.
By the time you understand Bitcoin/crypto, it will be too late for you to make profit from it. Get in now - lot more smarter people are in there and doing wonders for themselves. Look at your friends. Look at colleagues in your company. A lot of them are in. And here you are trying to make sense of it from your perspective. Even Ray Dalio is opening up and fair to say he knows a lot more things about finance and economics than you. Just get in.
This is exactly why there are so many skeptics. Too many people trying to sell it as a "get rich quick" investment without downsides while there are so few concrete use-cases so far.
They were all over in 2017 before the price dropped to 3k,I admit I was a bit of a savage when that happened.
In all seriousness with the scam you re running online, be careful and protect your family for when it goes back from 50k to 3k. A lot of people will have lost a lot of money :(
Pets.com was a business that could actually grow so it could still be considered an investment. Bitcoin is purely based on speculation. Gold is pretty much the same thing except it has some intrinsic value. The value of gold and bitcoin only moves because of peoples' feelings.
The valid reason is that Bitcoin is the best money that has ever emerged in human history. The denationalization of money is inevitable and long predicted. Check out Nobel prize winning economist Hayek's Denationalization of Money https://en.wikipedia.org/wiki/The_Denationalization_of_Money
“Stability in value is presumed to be the decisive factor for acceptance. Hayek makes the assumption that competition will favor currencies with the greatest stability in value since a devalued currency hurts creditors, and an upward-revalued currency hurts debtors.”
Except you can't spend it very well and would be crazy to borrow it. Imagine the disaster if there had been a large market for bitcoin loans a few years ago.
What helps me sleep at night is that even had I entered all this time ago with BTC I would have exited 100 times by now. There have indeed been many 2x,3x,5x multipliers with BTC but there have been so many instances when it was unclear how everything is going to turn out which would personally prompt me to consider exiting with what I had.
As my friend nicely put it: only way we could have gotten rich from BTC is had we bought it when it was pennies and forgotten about it up until last year
Yup, same. Hell if I put in money now and it did 2x and went to $100k, I'd get out, too.
There's just no way I see myself not getting out at $100k or say $200k. And I'm not risking my money on an investment that can 'only' do 2x or 4x. Bitcoin was cool as it could do 10x or 100x in the span of 1-2 years. But with the numbers where they're at and knowing myself, I'd cash out way before that.
In the end because bitcoin isn't being used by virtually anyone, and is only valuable because of the momentum/hype (i.e., the reason I'd buy it is only because other people buying it solely for the purpose of thinking even more others will buy it only for speculation and not use, and the price rises), it's just not an interesting investment for me long-term. Short-term it could be but I'd be as not surprised if it did -50% as if it did +50% in the next year. Not really interested in that kind of exposure, given that I don't think I'll ever hold enough to enjoy the extreme potential upside.
That's exactly my attitude towards it too. But this has also given me a strong lesson for the future. If I get in on the ground floor of anything and decide to sell out, always keep a little skin the game that you don't touch.. because you never know if it'll go big.
If the GP had sold 99% of his 3650 coins and kept 1% till now, that would still be $1.8m.
Same thing here, I made a good profit a while back. To believe that I would be a millionaire today requires ignoring everything I know about my risk tolerance and while Bitcoin worked, it could've gone the Ponzi scheme way and crash to 0$ overnight. There were risks of Chinese miners going for a 51% attack, regulation in the US to downright outlawing mining in Canada.
Well, if you have the power to go back in time and change your decision to buy BTC, you might as well also go back in time and change your decision to then not sell it. :)
That's basically what the "hodl" meme is: just decide to not sell until you need the money or until the money could significantly change your life. Of course, that's not exactly a new "investment" idea: there's always been a big difference between day-trading and just buying stocks (and index funds, etc.) with the intention to hold essentially indefinitely.
Or if you have totally unshakeable faith in it, because you see us heading towards a game-theoretic attractor where bitcoin is the primary global store of value. That's worked for me :)
Haha, yes. In 2011, a guy on my team was all about bitcoin and dogecoin and such. I think bitcoin was like 11 cents a coin, or maybe a dollar by that point. I just plain didn't get it. Still barely do. I could have easily picked up a few hundred dollars of coin or, if I was a believer, a grand or two. Had I held onto it, I would be worth hundreds of millions of dollars. However, if I got in at 10 cents, I would have sold at a dollar. And if I didn't sell there, I would have sold at 10 dollars, 100, 1000, etc. I would never, ever have ridden it to 10k, 20k, 30k. Still not putting money on it.
A similar principle applies to tech stocks too. I know some Tesla and Apple millionaires. After reading The Psychology of Money I’m trying to be a more “buy and hold” investor and “let my winners ride”.
A long long time ago, I mined 3650 coins on a single cpu in a month. Bitcoin was worthless at the time, and I thought the idea was interesting. After a month, I went back to folding at home. A little over a year later bitcoin hit a dollar and I sold it all.
On one hand I made a few thousand from nothing. However if I held it I would have been a pretty rich right now.
I truly believe that bitcoin is something that cannot work, so I have not and will not reinvest in it. But the sting of it doing so much better does bother me at times.
Do you ever think that you losing out on tens of millions of dollars might have affected your desire to challenge your believes that "bitcoin is something that cannot work"? I know I'd probably cope in a similar manner
I feel similar. I bought 1 BTC when they cost tens of pounds because I was interested in it. I spent about 0.2 BTC, some on goods and some I donated to charitable causes. I sold the rest when it was ten thousand. I also tried to buy a second BTC but lost my money on an exchange.
I still believe, as I did then, that Bitcoin is worthless because it's not scalable. I do think if someone can solve the scalability issues then decentralised currency is extremely valuable. But I've tried investing in those and they've all tanked. Crypto is entirely driven by speculation. There is very little real value.
But yeah, it sucks a bit to think if I would've waited until now I'd actually have what amounts to a life-changing amount to me. I just remind myself that I'm rich anyway. I have a warm house, enough food to make me fat, a home cinema, loads of computers and a fast car. So why would I lose sleep over it?
> However if I held it I would have been a pretty rich right now.
Or you'd have lost the hard drive. Maybe you encrypted it, forgot the password, and spend your evenings typing iterations of your birthday, middle name, favorite song, and 69 while you watch Family Guy reruns. There are things worse than not being rich.
I once bought a pair of alpaca wool socks from some alpaca farmers somewhere for 75 BTC, because I liked supporting people who accepted BTC for online payments.
Remember that pizza you bought in 2013? You could have invested that money into TSLA and it would be worth a heck of a lot more now. Opportunities like that exist today also. Does that make you not want to eat pizza?
I bought BTC at $20. I sold at $1000. When I sold I had something like 1.95 BTC (had a bit of it stolen from poorly secured exchanges, lost some trying my hand at bot trading). Still happy with it because what I bought at the time with with it made me happy (Sonos speakers and photo gear). Would it have been nice to hold onto it until it was $50k? Maybe. But I have been enjoying the benefits of what I got for far longer.
Having said that, I think XLM is in a good position to jump up in price and I still have their free initial allotment.
I bought like 200 BTC back when it was $10 and ended up selling half of it when it hit $1000.
I liquidated the remaining ~90 BTC until 2018 when it was approaching $10,000.
I have no positions in crypto anymore. Lot of people are going to be caught holding the bag now. It's not common to hear somebody moving a big chunk of their savings in to this "digital gold". I am worried that this is going to result in a lot of broken dreams. Doubly more worried about people over leveraged in real estate.
Bitcoin is a poor storage of value and the cognitive dissonance is profound-the more they hype it as "digital gold" the more it deviates from that description.
I realized that Bitcoin, cryptocurrency is largely a vehicle for money laundering, in particular moving money out of China, Russia and other similar countries.
But what will TSLA be worth when Elon finally goes to prison for something?
There was buying his cousin's company, the bit with the SEC, selling not-a-flamethrowers. The guy he called "pedo guy" sued him but lost because apparently nothing Elon says is credible. There's a 20% chance he sees prison time by the end of the decade.
I have had this conversation with many a friend, who actually view Bitcoin as a Ponzi, and therefore decide not to play the game (a ponzi ca be lucrative if : a) you know it's a ponzi b) you're smart in your timing and not too greedy but it's still a crapshoot).
The real questions are:
- what if it isn't a Ponzi ?
- how much will your "won't touch it with a 10 feet pole" attidude cost you then ?
It is a ponzi scheme. I think eventually majority of investors will participate in it. At present, total stock + gold market is $100T. If you expect 5% of this diverted to BTC then upper bound on BTC market cap is $5T. This means upper bound on BTC price is $250K. When that price arrives, suddenly things will become stagnant. People will wait for few years in the hope something will happen and then sell out for more appreciating assets. This will eventually cause BTC prices to oscillate between $100K-$200K.
In addition, you have couple of major risks such as feds making it illegal or taxing it heavily or some other coin that Elon Musk starts preaching heavily. At this point, if you do have BTC, you should sell out at $70K-100K range just to be safe. If you keep holding after that then you are taking increasingly bigger risks but much less reward.
The same can be said of any investment opportunity. It comes down to the amount you have available to invest, and how much effort you want to put into it.
For those who want a low effort fairly safe hedge against inflation and currency changes an index tracker fund is probably the way to go.
A small percentage on risky investments is probably fine, but then you do have to choose the correct risky ones =)
When everything is going up, you can feel like everyone is winning but you. There's many get-rich-quick-schemes available right now and if you put in the effort to know where to go, you can get "rich" quick too.
Or, you can continue enjoying your life the way you are without worrying what others are doing. Many times, they are only projecting one side of the story.
Kind of. But it's a thing with a lot of investments; if one invested in Apple ten years ago their investment would have been 10x now. If one invested in Tesla ten years ago it would be worth 100x now (I think? there was a split at some point. Yahoo Finance's chart indicates it's gone up 10x in a year).
Jumping in now is a bad idea because it's at peak hype; never buy at peak hype. It MIGHT go up a bit more, but it won't be a 10x increase at this point - you should've bought a year ago in that case.
But a year ago, nobody could have predicted it would go up 10x.
Judging by the sentiment in this thread it is definitely not at peak hype.
That's what everybody said when it was $17k and crashed to $5k. I loaded up on it, now its $50k. I bet there were a lot of similar comments saying that it would never be 10x. I also seem to recall a lot of people 10 years ago saying TSLA was overpriced and they would never hit their production goals. Time will tell.
I would have slept a lot worse if people thought that I held millions in an asset that can be easily stolen by invading my home and putting my family at risk.
I would only be happy if I was very careful with not revealing who I was, ever (hard to do if a exchange gets compromised).
It helps that I have all my necessities well covered.
Why not just buy a small amount of bitcoins now, something you won't mind losing? If they increase 100 fold you won't feel like you're missing out. And if they don't just think of it as insurance.
I personally hate the idea of bitcoin and avoided it for a long time, but I feel better having a little just to avoid the thought I let my personal feelings get in the way of an opportunity with a good risk/reward ratio.
Luckily I'm absolutely terrible with money. I was talking about bitcoin to everyone in 2011, but didn't invest myself as I thought I didn't have enough to put for it to matter.
Had I invested, I'd have wasted the coins long time ago, and would be just kicking myself daily or on suicide watch.
I was aware of Bitcoin back when it all started and thought it didn't have any tangible value. I still believe it has no real value. While I wish I could foresee playing the market to make some money, at the end of the day "magical internet money" is just smoke and mirrors.
To make meaningful amounts of money on BTC, you'd need to invest a significant amount. My feeling is, yes, maybe it go up 50%, or double, or whatnot, but mostly it can go down to 0 any time. If you want to bet a tiny bit and hope it tentuples, you still won't be rich.
I'm always tempted to make some kind of agent simulation, where all agents know they are in a bubble, but hope they can get out before everyone else. Then eventually the price pops and, pop.
It helps to think that odds for not selling during the first peak are quite close to 0%, at least for me. Other outcome would have meant very stressful last years.
But regardless of your opinion on crypto you haven’t missed your opportunities. Projects still 100x.
Next time it’s off everyone’s mind and not in the news, just pick 3 or 4 newer projects that have a decent sounding team, put $1000 in on each, and forget about it. Check back when everyone is manic again.
That's exactly how I feel. But is there a way to actually cash out? I mean, suppose you had 2 BTC for years. Can you literally get $100K right now in your bank account and can you actually exchange them easily for the fiat currency?
Easily cash out yes, but would have you kept track of that BTC for years is another question. There were plenty of gotchas along the way with BTC before it went completely mainstream. Buggy hardware wallets, scams, exchanges going bankrupt/stealing btc, people's hard drives dying, etc... mean for anyone to have held from $1 to $50k they were prescient and a bit lucky.
Yes, you could easily do this for 10s of millions of dollar right now on a number of exchanges. As you go up, you might need to find OTC desks, etc, but it's still very doable.
Yes and no. I'm sure I wouldn't have hodled, so I didn't really "miss" anything. You also couldn't be too technically inclined because you'd fall in love with blockchain, cash out, but it all in ETH, and go work for a company building a computer architecture that runs at 100 Hz on Etherium for $1 per Hz that pays you a below-market rate, get acquiried when the company fails, and find yourself at FAANG, only to fail the acquihire interview. You also couldn't be too too technically inclined because you realize how inefficient the whole thing is.
Yes on both counts. In roughly 2013, the shared office building I was working in installed a BTC vending machine. It advertised itself with a graph showing BTC rising close to exponentially, with a strong implication that it would keep doing so, which immediately made me think “irrational growth optimism, probably doomed to bubble and burst”.
Had I spent £1k of spare cash then, I would now have enough to buy another house.
EDIT: And I’ve just now remembered that someone gave me £0.50 of BTC as a “thank you” on Twitter, which I sold to a friend for £25 and which is probably now worth £250.
I’ve definitely missed the opportunity to get rich but I still jumped in.
I started putting a small amount into BTC each month on Coinbase. It’s money I can lose and that I would have spent on a vacation this year if not for COVID. I figure I’ll pull it out at the end of the year and if it’s gone up, then next year’s vacation will be a bit better.
I don’t understand BTC at all and consider it gambling. But like Nick the Greek said, the next best thing to gambling and winning is gambling and losing.
Just like when you go to Vegas: put $500 cash in your pocket, leave all other means of payment at home.
You'll either come back with $0 or more than $500.
In both case, you'll definitely have had $500 worth of entertainment.
Bitcoin is like that: only invest money you don't need (assuming you have any) and meantime, just enjoy the feeling of having your stomach crawl up to the back of your throat on the roller coaster.
You're also obviously allowed to enjoy yourself when/if you become rich.
I mined in 2011 and sold at $5500. It was enough for a down payment on a house in a major metropolitan area but had I kept holding I would be a millionaire now. :(
Yeah, which is one of the reasons why I continue to not buy into the whole thing. The only reason there is any temptation at all for me is FOMO from the rising price, and that's a terrible sign. Worse, it comes with a bunch of negatives, slow transaction rate, huge power cost, etc.
Yup. That reminds me, I need to sell the free Stellar Lumens I got from Keybase. If I can work out how to do that without a scam or a disaster, I might consider touching the rest of the ecosystem.
I'm in a similar position - though for various reasons I did a bit of a username landgrab early on, so I have about 10x what most people got 'for free'.
The price fluctuations are wild, and because we're not talking megabucks (a couple of thousand USD equiv) and I'm not actually out of pocket in any real sense, they're fascinating to watch, and incur no great temptation to do anything with.
While Lumens are extremely unlikely to go the way of BTC, watching what's going on with bitcoins the past decade does make me want to just sit on these.
It's a bit worrisome that we are inching towards the scenario where companies may be tempted at an economy wide scale to reduce investment in production in order to hoard cryptocoins instead. It caused the great depression when businesses switched to hoarding gold tied currency instead of producing in the 1930s.
Now I'm not sure that crypto coins without being jacked up by central banks (like gold was during the great depression) are a powerful enough force to cause the type of havoc that gold did.
Then again, the potentially stronger network/memetic effects of cryptocoins, along with the amplification factor from markets being synchronized through instant all-encompassing global communications nowadays might make them dangerous to the economy even without central bank involvement. We saw how much people can get hypnotized by these things during the Gamestop episode. I don't think unsophisticated investors' hoarding is enough to cause big problems but it is a bit unsettling that Tesla and other companies are jumping on the cryptocoin train. If enough businesses follow suit, you get into scary territory (It would also be worrisome if companies widely moved to add billions in gold to their balance sheet but I thought the lesson had been learned in the 1930s with gold).
In theory, if central banks stay stimulative enough through all this, you can have growth in both crypto and businesses. As long as these central banks don't blink at the sight of what may look like crypto bubbles.
> It's a bit worrisome that we are inching towards the scenario where companies may be tempted at an economy wide scale to reduce investment in production
Yes, fully agree. But then ask yourself: aside from COVID, who created the economic conditions that lead corporations to decide that stashing treasury as Bitcoin is better than investing in the "productive" part of the economy.
QE, interests rates at near zero, corporate bonds near worthless, stock market at stratospheric 2000-like levels, real estate easily taxed to death ... how do you protect your treasury other than stashing it in hard assets (crypto, gold, commodities)?
The important thing for the aggregate economy is that when people want "hard assets", that these assets can tangibly support future consumption, not just something everybody hopes to trade later for consumption but real stuff such as businesses, inventory, production capacity etc. When too many people hoard pure financial promises or crypto tokens and all believe that it's true wealth, bad things happens. People indirectly owe each other all their savings.
I think the second order effect will be from companies that accumulate too much cryptocurrency - only to see its value vaporize. Impact could be systemic if companies start to essentially gamble with their treasure chests.
Example: what happens if other companies followed the likes of Tesla and MicroStrategy? Sure the $1.5B Tesla invested is pittance in the context of their market capitalization, but if Bitcoin price crashes 80% then they've lost $1.2B. Even Microstrategy, with its alleged 85% of its cash reserves in Bitcoin, might well go under if the Bitcoin price drops even 50%.
A "run on Bitcoin" could become a real thing and as impacted companies are forced to cut production and expenses to offset the losses, it creates a domino effect across the economy.
Note that in a way, this is a best case scenario, at least if it happens early.
Extra volatility in the crypto coin market disincentivizes hoarding. So while it might hurt specific companies that over do it, it may prevent an economy wide gridlock where all companies are hoarding coins instead of investing in real production.
In a way, volatility caused by corrections is a natural cure for the bad Nash equilibrium. It's when the correction mechanism stops happening that things can build up into dangerous situations. That's why when governments tried to stabilize gold in the 1930s, preventing it from naturally correcting into a volatile asset, it caused the great depression.
I had been looking recently for a way to invest in companies doing interesting things with the blockchain. I came across the ETF called BLOK. It’s largest holding is with Microstrategy .... because they hold a lot of Bitcoin. It’s really unfortunate to see something like that. They aren’t doing anything with the blockchain (that I know of), yet are the largest holding in a blockchain ETF because they have a bunch of Bitcoin. Hopefully we don’t start seeing more and more companies hodling in hopes of making their balance sheets look better.
Well, I don't know about where you are, but over in the UK the Government isn't doing us any favours on this front.
We've just been through a year of businesses being forced to close whilst their landlords continue to collect rent, and everyone seems to think the latter is just an amusing oversight.
In that sort of environment, it's far more logical for me to just buy hard assets and sit on them; it's been made very clear that we're going to just force that to be the winning side of the trade via legislation.
They are just moving non-productive cash sitting around doing nothing and swapping it for an asset. It's just diversification, not diverting from production.
Bitcoin has been around for a while now and it has been down talked quite a bit on HN whenever it comes up. It now has a larger market cap as Facebook - so the market sees more value in Bitcoin than Facebook.
The sentiment on HN seem still be mostly against it whenever it comes up. I wonder why that is? I'd imagine 10 years from now Bitcoin will still be around and likely much larger than today - I'm less positive about Facebook outlook and posture in 10 years actually.
I wonder what will change the opinion of the skeptics?
My opinion of Bitcoin will change when it stops using more electricity than entire countries, for something Visa can do for comparatively nothing. I would hold the same opinion of any technology which used so much energy when there was a less wasteful alternative.
I also happen to be skeptical of Bitcoin's long-term outlook, but that's not why I'm actively against it as a technology. If it wasn't for the planet, I'd say people could put their money wherever they wanted. Actually, I still think they can—as long as they're willing to pay for the negative externalities they create. But then no one would actually use Bitcoin...
>My opinion of Bitcoin will change when it stops using more electricity than entire countries, for something Visa can do for comparatively nothing.
To be fair, Bitcoin does not do what Visa does. Visa uses trust in existing institutions to accomplish transactions. Bitcoin mining creates trust out of electricity. And trust is a valuable resource, no different than any other form of value creation.
A carbon price wouldn't damage Bitcoin. Electricity costs for some miners would go up, some would drop out, hash rate goes down, difficulty adjusts to keep blocks coming out every ten minutes, and everything continues as before.
(Still think proof-of-stake is big improvement though.)
Visa is no medium of exchange - only a payment network. CO2 emissions are bad for sure. CO2 tax would help with the migration to green energy. Energy consumption however also has a reason -> security. I don't think there is a secure alternative and I don't think anyone wants to continue staying in central banking hell.
there is a lot of fuss about bitcoin energy needs, but plenty of proof that it's not well founded.
You compare it to Visa, but actually visa does only part of what bitcoin does (transactions), and does it using _other_ systems themselves also using energy (security, banking, etc).
Nowadays bitcoin is mostly seen as a store of value, to which it should then be compared to gold. Gold has a much higher carbon footprint than bitcoin, both for mining, storing, transactions, etc.
Many people on HN who talk down against Bitcoin are indoctrinated into the current ideology. Anything that goes against the current ideology is refuted, ignored, dismissed as fads, bubbles, scams..etc Ideology is a powerful thing and it's hard to break out of it.
If you want to learn more about this concept, you should research about Slavoj Zizek's work on ideology. Bitcoin is not just technology, but a multi-faceted ideology founded around cypherpunks ideas, liberty, sovereignty, austrian economic system, free markets.
Even the way Bitcoin is developed (slow, methodical) and Bitcoin apps are built is different to SV way which is move fast, break things, iterate.
>Bitcoin is not just technology, but a multi-faceted ideology founded around cypherpunks ideas, liberty, sovereignty, austrian economic system, free markets.
This is the narrative that people use to make it seem more savory. But it's just about the money. No one cares enough about any of those ideals for them to be a meaningful part of what Bitcoin is. Those ideas have existed forever in the back channels of the web, and are memorialized in the endless plethora of abandoned decentralized technologies that were never profitable. It's money, plain and simple. There's nothing wrong with that, but for whatever reason the crypto community has some kind of chip on their shoulder about hiding the fact that it is just about profit.
I invested, work in, and continue to believe in bitcoin / Ethereum / crypto ecosystem because of my beliefs in exactly those things. Austrian economics made so much sense to me the first time I sat down and properly studied it. Keynesian / mainstream economics was always shoved down my throat but it came down to “there is a man with a money printer and when shit gets bad he will print money” which made no sense to me logically. I think many of society’s problems come down to easy money which has caused enormous malinvestment and warped incentives.
I didn’t buy crypto as a Ponzi. I bought it because it makes perfect sense if you have a libertarian / Austrian / free market / individualist / free people mindset. Which I do!
I agree that Bitcoin is here to stay and has utility. The issues that I have are
1) It is volatile and impossible to value; any price is as reasonable as any other. What is my benchmark here? The amount of USD in circulation? The value of outstanding U.S. Government debt? (if it is indeed going to replace Treasuries as reserve currency / safe haven asset). Can someone more knowledgable than me chime in?
2) Its utility as a currency is inversely proportional to its utility as a speculative instrument. And speculation appears to be 99% of the interest and discussion.
All currencies are volatile against other currencies.
Volatility of currency goes away (or rather, gets abstracted) within the context of locales where that currency is used as a unit of account and goods and services are directly priced in it. So far, this hasn't happened yet for bitcoin, because there is no central authority forcing it upon people.
Nobody knows if, when, where, or how this unit of account transition will happen. Maybe Tesla prices the new roadster or cybertruck in bitcoin as a publicity stunt that starts a cascade. Maybe some country with a failing currency decides to issue a new currency backed with bitcoin, or their people start using it without permission and pricing emerges organically. Maybe Iran, Turkey, Venezuela, North Korea, Syria, and Cuba start using it as their currency for international trade.
Or maybe it never will become a unit of account, and bitcoin will just find a role as an inflation hedge and long term store of value like gold, which is currently 10x as valuable as bitcoin.
Facebook has been down talked plenty here too so I’m not sure it’s a good comparator.
A lot of the proponents of Bitcoin are pushing it in the same way people push MLM and ponzi schemes and for the same reasons, which is unfortunate.
For many, including me, it seems a great shame to be consuming so much computing power (and energy) to solve increasingly difficult mathematical problems for no human benefit when the same effort might be used for better ends.
People waste their entire lives working for the govt to print away everything they have saved for - wasted energy. I think its worth it and still a noble cause.
There are often arguments (with merit) over Bitcoins wasteful use of energy, but I expect a lot of it is from hindight of 'why the hell did I not buy some'.
Just virtue signaling. If bitcoin replaces gold it would be a net win for the environment. And btc uses mostly renewables and excess energy. Also there are many other random applications that use more energy than btc like HFT, gaming, video rendering, but we dont persecute individual liberty, expression, or advancement. A society moving forward simply takes more energy. The solution is to tackle the entire energy space, not persecute energy users which is a band-aid "solution" and counter to a progressive society.
It's factually a horrific waste of energy. People pointing that out are not looking back in "hindsight", but are actually concerned with the damages it is doing to our planet.
One can think both that it's a shame they aren't rich because of Bitcoin and that it's a horrific waste of energy, I don't think one really takes away from the other.
The energy usage (and its side effects to the environment) seems like a problematic and valid aspect, and it seems that is the price to pay to have truly permissionless, decentralized system (proof of work).
But I imagine there is also a lot of opportunity for innovation in that realm to move to clean solutions for instance.
For anything you want to do with btc|fb, there is something else that does it better. But not enough people use those other things, they aren't trustworthy, they're more difficult to use, too fragmented, I already use x why would I use y, nobody knows about them, etc.
> I'd imagine 10 years from now Bitcoin will still be around and likely much larger than today
I agree it will be around in 10 years, but think it will always be highly volatile. Between now and then, I could see it being worth much more and worth much less than today's price.
Hopefully we will see some stabilisation but the current rally will definitely come crashing down. Everyone comparing gold to BTC should take a look at long term gold price charts. Spikey.
I don't know if Bitcoin will outperform Facebook, but can explain why they're fundamentally different assets. Facebook is a "productive asset". It's a business that sells to customers and generated 29 billion in profit in 2020.
One can argue that Facebook is detrimental to society, so it's worse than an unproductive asset. It's strange seeing people take an environmental stance against Bitcoin, and then blindly defending unethical money making schemes, as long as it's a traditional company.
I'm a skeptic, as I would certainly prefer to hold $10,000 of FB shares than $10,000 worth of Bitcoin.
The problem is that Bitcoin is not productive, so it only makes sense to own it if someone will pay more for it in future. But how do I estimate that without any long-term price history? I can see that the demand for gold increased in, say, 7 of the last 10 decades so that would give me some confidence about demand over the next decade.
So to answer your question: the only thing I can see that will change my opinion of Bitcoin is if demand generally increases over many decades.
Bitcoin itself has its value, but the current price surge is a bubble, it can be easily explained why the growth is exponential:
1. BTC price increases
4. There is media attention about the price raise
5. More people buy BTC, because FOMO
6. Back to point 1, but now a bigger group
This loop is a pump, increasing the price as long as the loop isn't broken.
The same pump can reverse, very quickly. Once the loop is pumping there is no way out.
1. BTC price drops
2. There is news out that that the price drops
3. More people sell bitcoin
4. Back to point 2, but now a bigger group
The fact that there is a limited supply will ensure the prices keeps raising, because nobody can "make more bitcoin"..
But this part of the BTC system causes it volatility, it's inherently baked into the system.
It's not the underlying performance of bitcoin, or the profit the system is making. Its pure viral loops logic that cause pumps and dumps.
You can impact it, if you hold a lot of assets. Just PUMP or DUMP a lot. It triggers a pump in the direction of your choosing.
Next to that, ETH is a factor better in design and utility, and still the price is lower. Why? Cause there is less news about it. Not because BTC is a better product.
> The fact that there is a limited supply will ensure the prices keeps raising, because nobody can "make more bitcoin"..
This is a common claim, but nothing is ensured here.
Almost everything else we put a value to has a more real underlying value that's also growing. Gold has uses in technology, with stocks most companies have real assets that could be sold off, even with art I think most people would be willing to buy an art-piece for the right price. The value of a Monet for me might be a tiny fraction of its valuation, but it's there. But nobody has any underlying interest in a Bitcoin. Its value as a currency for paying for products and services seems to be diminishing as well.
You can't make more Bitcoin, but you can easily make more cryptocurrencies, all with the same limited supply (which according to some people means the value MUST increase). And they're all equally interesting. The one exception with Bitcoin is that it was first. You could say it has a tiny bit of underlying historical value.
To me, I think it implies that it's inevitable that Bitcoin will have a crash that's very deep and very long lasting. It's impossible to predict when though. In the very long term it'll probably increase due to hits historical value. But by that point I doubt it'll significantly outperform other investments.
I also think there's a very high likelihood that many governments will regulate cryptocurrency exchanges to death at some point. A rally against Bitcoin specifically can easily be justified as part of the fight against climate change, since it wastes so much energy.
The "price" of two coins in terms of fiat currency is not comparable. It depends on the total supply. The current total supply of ETH is ~120M vs BTC's 21M. If ETH was limited to, say, a total supply of 1000 coins the price would be astronomical.
Also ETH doesn't have an upper limit to the total supply, therefore its scarcity is not the same as BTC.
It can get worse. When the price is going up, up, up, people borrow money to buy. That makes the bubble blow even faster - it's not limited to peoples' cash on hand. But when the price dips, and people bought with borrowed money, they sprint for the exit. The crash is much faster than it would be if "I could lose some of my gains" is the motivation.
Even worse: If people can't get out fast enough, and the banks didn't judge the risk properly, it can threaten banks - see 2008 for how this works.
Exactly. Like in 2017, it's mostly fueled by hype. All big companies that invest in BTC are NOT "hodlers", after a threshold they sell everything or a majority. I don't believe tesla will keep bitcoin if goes below 30%-50% of what they bought at.
When the panic selling starts is game over.
The limited supply logic has meaning if people hold, if they don't, nobody will care it's limited in supply because there's no demand for it.
This time could end up being a bubble, but it is very different for many reasons.
The first is that Bitcoin is thriving as a store of value. It hasn't seen much adoption as a payments system and is unlikely to do so in the future, but 2020 saw many notable people using adopting Bitcoin as a store of value. See MassMutual, Paul Tudor Jones, Stan Druckenmiller, Tesla, among many other examples.
The second reason is that defi protocols grew in usage by an insane amount in 2020. Decentralized exchanges like Uniswap are beating centralized exchanges in volume and lending protocols like Aave have billions deposited in them. These defi protocols are generating huge cash flows. This is real people using decentralized technologies built on blockchains like Ethereum.
Even if the 2021 bull run ends up like a bubble, 2021 will be different in that a lot of the price rises will be based on fundamentals, not pure speculation like in 2017. One thing to note though is that a Bubble is not necessarily a bad thing. In every past Bitcoin "bubble" (2011, 2014, 2017 etc) the price Bitcoin crashed to has always been higher than the price it started the run up at.
> Decentralized exchanges like Uniswap are beating centralized exchanges in volume and lending protocols like Aave have billions deposited in them. These defi protocols are generating huge cash flows. This is real people using decentralized technologies built on blockchains like Ethereum.
What are people doing on these systems? Usually to say “generating cashflows” means some kind of productive business activity.
Are people actually touching the real economy or just trading coins amongst other people in the crypto world?
> These defi protocols are generating huge cash flows. This is real people using decentralized technologies built on blockchains like Ethereum.
I'm fairly new to Crypto so I don't understand this: it's looking like all cool new things are built on Ethereum (which, itself has grown quite a lot) so why is Bitcoin rising? How are Bitcoin & advances in Ethereum-based techonologies correlated?
This definitely seems like bubble territory, but on the other hand will the next crash follow the "this time it's different" line? Bitcoin has seen extreme price crashes many times and far exceeded the price later on. I doubt the likely next crash is somehow special.
For 12 years, just bubbles? First it was over 1 cent, then over $1, over $1000, now over $50k.... when will you consider the possibility you may have been wrong? At $100k? At $1M? (which most models indicate as a plausible target price in 10 years)
Let me give you my favorite quote, pulled from another HNer comment: "I enjoy reading comments about Bitcoin here because even without any venture backing, it achieved a bigger valuation than all of the Y Combinator companies COMBINED, yet people still think it is unstable and has no future."
Another good example, one of the the then top HN users by karma:
2015: "Most advantages of Bitcoin which matter are captured by, and improved upon by, a LAMP app which simply holds account balances."
2019: "I acknowledge that when Bitcoin was $17 I said it had no use case, should be worthless, and likely would be at some point in the future. No evidence has come up which would make me change my view. (Though my is it taking a while.)"
All the Y Combinator companies combined have created value.
What has Bitcoin created?
I struggle to come up with an answer which isn't overwhelmingly just a way to fund illicit activities, for which sure there's always been a market, but it's a far cry of it's origins. Who actually uses bitcoin for transactions today other than extortionists hackers and drug dealers? Everyone who owns is just planning to HODL and hope that it will become equivalent to an infinitely high fiat equivalent. Had bitcoin succeeded we wouldn't be talking about insane valuations. We would be using it every day no different from a credit card.
> when will you consider the possibility you may have been wrong? At $100k? At $1M?
Personally I think Bitcoin has at least two bubbles left before it pops permanently. So $1M price could be achievable.
The real question is what happens when it does reach a ceiling. At some point there's not going to much more potential interest for Bitcoin, and what then? Are people gonna start moving their pension funds to Bitcoin? I think the governments will crack hard down on that, because you really want investments in building the economy, not in a pure investment/gambling scheme.
If most people start thinking there's no one else interested in buying their Bitcoin down the line, it'll crash hard, and the crash will likely be permanent. Because there's no real value behind Bitcoin. The money you invested is already spent by someone on something else.
The reason why it's interesting that Bitcoin keeps having bubbles is that there's not much reason to think that will stop. Yeah, the value keeps growing over longer time periods, but eventually a bubble will be so large that it'll seriously disrupt the economy, and that's when you'll start to see governments and peoples attitudes change.
> I enjoy reading comments about Bitcoin here because even without any venture backing, it achieved a bigger valuation than all of the Y Combinator companies COMBINED, yet people still think it is unstable and has no future.
The problem is that the valuation is more imaginary than the valuation of any company except for those that are just Ponzi-schemes.
Most money put into Bitcoin has been cashed out or used for mining expenses. If everyone tried to cash out, the price would very quickly race back down to zero. If the same happened with a stocks in a corporation, at some price level someone would just buy up a controlling stake of the shares and liquidate all the assets for a profit.
My crypto friends have raised millions outside of VC and then became very rich once their projects launched basically over night. Liquid immediately and never paid a lawyer.
Truly is a paradigm shift and I think a big problem on HN is that VC can’t see they are being disrupted and have no way of avoiding it, plus they think they are untouchable geniuses, so being wrong this hard isn’t pleasant for them.
Which models? The only thing I can find to support your claim is random people tweeting that they think it will be worth 1M. I guess when enough people say something it becomes a "fact"
(I don't think WeWork was YC, but it does drive home that achieving a valuation is primarily a reflection of your ability to convince investors to give you money)
> First it was over 1 cent, then over $1, over $1000, now over $50k.... when will you consider the possibility you may have been wrong? At $100k? At $1M? (which most models indicate as a plausible target price in 10 years)
This is the wrong metric. A million dollar market cap bubble is not hard to sustain, even a billion dollar market cap is a footnote to the rest of the economy. The entire worth of Bitcoin is still less than half of the worth of the market cap of one company such as Apple. At some point it becomes large enough that its real value has to be considered, which in my opinion is zero.
Stocks like pets.com had long runs in 2000, subprime mortgages had long runs in 2008 and people were saying then what you are saying.
Stocks and real estate are frothy now so Bitcoin and Dogecoin have company. I would rather own a house than 10 bitcoins though.
I am as skeptical of TSLA as the next fellow, but at least the company can capitalize on its rising stock price to convert it into physical infrastructure that provides a certain floor to the company value.
TSLA is high now, it might go higher but it's past peak hype at this point so even if you jump in now, you might end up with 2x your investment if it keeps going, but not 10 or 100x.
I believe Bitcoin is the experimental precursor to proper distributed money.
For some reason, even though BTC was meant to be "money", it is now being treated as an asset (at a basic level, an asset is something you hold onto, as it produces additional value, unlike money, which tends to devalue if not put to work).
It's almost as if the next big idea in distributed money will be around disincentivising "asset" like behaviour.
Assets are terrible things to use for everyday transactions, which is why I don't quite consider Bitcoin "money" just yet.
If we're just passing money around, why do we need a separate currency at all? Stablecoins already exist, but they're not popular because all of the speculative value has been removed.
Bitcoin's real invention was censorship resistance, by incentivizing distributed miners to arrive at consensus about transactions in a way that no single miner could control. Sadly, that same distributed incentive is responsible for Bitcoin's ever-increasing energy usage.
Stable coins are incredible for cashing gains when you are unsure of future movements. All without having to transact back into fiat. You can then earn generous interest rates on your stable coins (Uniswap, etc.), far higher than any bank currently offers.
The eventual distributed money could be bitcoin-associated without being bitcoin itself. For example, DAI[1] is (AFAICT) a derivative of Ethereum, but pinned to USD. It relies on the underlying store of value that Ethereum represents, but isn't tied to the value.
DAI isn't so much a derivative of Ethereum, rather it is a dApp (decentralised app) that runs on the Ethereum smart contract technology.
ERC-20 tokens are the magic that enable second-layer "currencies" such as DAI and others to work on top of Ethereum. There are other tokens, even WBTC (Wrapped Bitcoin).
DAI itself is backed by a basket of token-based assets such as WBTC, WETH, USDC, USDT etc.
The Ethereum dApps are definitely a fun rabbit-hole to dive into, e.g. UniSwap, Synthetix and other DeFi applications.
The main problem as I see it is the transaction costs are very high (I looked into using UniSwap but it was going to cost > $50 to transact what I wanted). However, in the next few years the Eth2 improvements will help scale the network and hopefully see transaction prices fall.
I think the way to discourage hoarding behavior is inflation. Cryptocurrency follows similar models of scarcity like Bitcoin. Some cryptos have tail emission. None of them has any meaningful inflation.
I designed Bitflate. It's a cryptocurrency with 7% inflation. The rate is moderately high to make it the opposite of Bitcoin. But it's not too high to cause hyperinflation. Bitflate is a Bitcoin software fork. So there are possibilities to create hybrid cryptos that have inflation rates between 0 and 7%.
Bitcoin has shifted in the mind of investors from a currency to an “asset class”. What this means is that to investors it is more like gold than dollars.
Gold’s value is not linked with its usage in the industry or jewelry. Holding gold doesn’t yield interest. its value comes mostly from people scared of devaluation.
While the interest rates are still low and the economy is not doing great, it makes sense to diversify one’s cash in various “refuge” values.
That Bitcoin is becoming a refuge value while its volatility is still insanely high is somewhat weird. It mostly indicates that there are many cash-rich people/companies out there who dont really know what to do with it.
This. There is a wide wealth inequality gap and a lot of excess savings that even at close to zero interest rates people don't know how to invest it. IMO this says a lot about our technological progress rate; which despite what many here might believe has been declining and bar a few outliers has been mostly evolutionary barely keeping pace with the world's increased population growth.
Its like the low hanging fruit of engineering has been picked, or we are waiting for the next big technological breakthrough to come about. I look at even the lifestyle 30-40 years ago, and despite more efficient engines in cars (which isn't a problem with cheaper fuel anyway), the mobile phone and the internet (which isn't all good news IMO) not much has changed lifestyle wise. In some measures such as food prices, house prices, deep social connections, and other more base needs its gotten worse for the average middle class worker in a typical Western country.
IMO it feels like we've hit a stagnation which is reflected in investor preference to hoard value.
Readit News
What am I missing?
Hardcore tech people and those who don't (or can't) trust institutions with their Bitcoin will pay the transaction fees to get their money out of exchanges and into their own wallet. The average retail investor, however, doesn't want to be their own bank. They just want in on the price action, while letting the exchange manage their money. Does anyone really think the person buying crypto $100 at a time in their Robinhood account wants to pay $18 (current average transaction fee) every time they want to move that BTC into their wallet? Of course not, which is one reason why Robinhood doesn't even have an option to withdraw Bitcoin.
As with any frenzy, the misinformation being circulated by people who want everyone to buy Bitcoin is getting out of control. How many average people buy Bitcoin because they think Bitcoin is the only way to avoid losing purchasing power? Meanwhile, everyone else has been protecting against inflation by purchasing stocks, real estate, or virtually any other investment long before Bitcoin was even invented. (Yes, I'm aware of the 21 million maximum BTC cap). The current Bitcoin narratives are more like a religion than reality.
That said, Tesla's Bitcoin purchase does make a lot of sense. Elon Musk went on Twitter and called Bitcoin "BS" to drive the price down so they could buy at a discount. They then announced their Bitcoin purchase with fanfare that drove the price up, marking a quick return on their investment. They used Elon's influence to make a quick profit on the frenzy.
Tesla is a car manufacturer! It doesn't make any sense at all! At any company that made sense, a CEO would lose his job for gambling $1B of company money in a casino totally unrelated to the company's business interests.
Is that even legal? It sounds like pumping and dumping.
Better thought of as a configuration value set by people with most of the mining power, which last time I checked was PRC
Title: Reddit Post Reporting Tesla's Bitcoin Purchase From a Month Ago Was a Hoax
Reportedly, the person claiming to be a Tesla insider with intel on the bitcoin purchase was actually some political science major college student tripping on acid. Crazy how so many people ate this story up.
I'm curious is this the transaction per $100 or is $18 a flat fee regardless of transfer amount?
I don't see an inherent problem with this. People who were too gullible to believe influencer crap and caused bitcoin's price to go down by panic selling are now gone from the market, and the believers stayed in and made money. That's a good thing, and weeds out gullible people from the system. This isn't the stock market where fundamentals matter.
Honestly what more do most people have? You could work your entire life but even all the earnings and scrimping and saving isn't even be a tiny fraction to what you would have if you had been the one to fulfil the order for the bitcoin pizza and just held.
Think a lot of people misunderstand just how hopeless the world is for most people.
GME and Doge are just the start, get used to hearing people are sinking their entire savings into far flung gambles multiple times a year from here on out. Especially in a post pandemic world where people are been completely downtrodden to their limit. Property is so exorbitant, pay is so low we're now entering a world where just gambling seems the smarter option than living within your means because anyone who has tried that can tell you it gets you nowhere. Pay just hasn't increased enough in line with property and your dollars are worth less and less every day.
I see it less as desperation and more of 'whoa, i have more money now, i want to put it into things that go up in value!'. I haven't seen the data (so do correct me), but I would suspect that less sophisticated retail investing is on the rise over the last year, correlating with increased savings.
The narratives we craft define how we move in this world. This is a toxic way of thinking. It takes about $500/month throughout a working life to retire comfortably investing in just VTSAX.
It has become a total HN cliché that the top comment is a negative takedown of the tech or startup in question. From Dropbox, to Coinbase, to Ethereum, and now to Bitcoin at 50k.
Not refuting anything you're saying here. Just find it amusing to have seen this pattern play out so many times here on HN.
engineer working at morally dubious ad-retargeting analytics company: "this has no utility whatsoever ($30), I could do that with a database ($7,500)! I'm going to ignore this for entire decades! ($50,000)"
The reason it has value is because people have demand for it. People have demand for it for a variety of reasons. I think it's reasonable to presume that a non-trivial portion of that demand is driven by the features that make it a rather good black market currency. It's also obviously quite appealing to certain groups of privacy conscious individuals. I've heard it's somewhat popular for international remittances, which makes sense given the economic stability issues various places have around the world. On top of those fundamentals, demand is further inflated by speculators.
Your biggest criticism seems to be that it would be a bad national currency because you can't implement a bitcoin monetary policy. But none of the demand for bitcoin is driven by that factor, so the observation is simply irrelevant.
The question to ask is, do the fundamentals you mentioned justify the valuation?
How does a static rather than unconstrained supply make something a LESS good store of value?
Bitcoin-fanatic-USD-bears claim that Bitcoin is a good store of value because it has constrained supply. But they miss the demand side of the equation. Similarly, they claim that the USD is a bad source of value because it has "unlimited" supply. That also misses the demand side.
The demand for USD is robust because people need USD to pay taxes and to purchase most goods and services offered by US-based organizations. The demand for Bitcoin is based on... how many people Bitcoin-fanatics can get to buy and hodl Bitcoin.
(I don't count organizations that accept Bitcoin as payment because almost all of them exchange received Bitcoin into the local currency, negating the demand effects of the original Bitcoin purchase. In the US, that's usually USD.)
The usual fallacy is when proponents claim that Bitcoin is the only asset able to escape inflation due to fiscal policy interventions. This couldn't be more false. The very definition of inflation is an increases in prices, or a decrease in buying power. However, investors have been buying assets and investments to avoid inflation long before Bitcoin was even invented.
Bitcoin isn't a particularly good store of value because the price is driven purely by demand, which is currently in a state of market mania. It's not even the first market mania around Bitcoin. Past bubbles were also met with a "this time it's different" attitude before the inevitable sharp losses.
Bitcoin has value not because someone coded a 21 million coin limit in the code somewhere. Bitcoin has value because people want Bitcoin. Why do people want Bitcoin? Because the price goes up up. Why does the price go up? Because people want Bitcoin. As soon as something breaks that cycle, it doesn't matter what the maximum number of coins is. Without demand from the belief of future increases due to increasing demand, the price will go down. The purchasing power decreases.
Everyone likes to demonize fiscal intervention, but the reality is that counter-cyclical fiscal intervention tends to benefit the average person. Running inflation too hot is bad, but swinging to a full deflationary currency (Bitcoin) would also be bad for the economy.
Because a healthy capitalist economy needs an incentive to invest. A steady, low, positive inflation rate is essential to encouraging those with capital to rent that capital out to those who need it for productive uses.
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https://goldprice.com/project/facts-about-gold/
There’s no such reserve value for Bitcoin. You can’t look at it or hold it or do anything with it other than as a currency.
I’ve seen widely varying stats estimating gold’s jewelry share but all of them are large.
I hold because i expect us to continue approaching the game-theoretic attractor. I've held for years and will keep holding. Every year, i see more and more people coming around to my perspective.
How many years can you watch the price keep going up before you'll eventually consider that you might be missing something?
> We know transactions are slow and expensive,
lightning network obviates this problem
> it’s often regulated such that it needs to be fully declared (removing the whole anti-gov part)
The government still can't print more bitcoin, which is the main appeal for me.
They also cant technically block anyone from recieving coins. They can make doing so a crime, but don't have the technical ability to, say, freeze funds.
> typically markets eventually correct when there’s no underlying true value proposition
Given that bitcoin is over 10 years old, shouldn't its longevity be taken as evidence that there is, indeed, a true value proposition?
> which can be executed “well”
Why is 'well' in quotes here?
Are you open to the hypothesis that money printing exacerbates might cause long term issues in society?
Make your money the way you want, but I wont participate in something I have no chance to control.
I first heard someone mention this circa 2014. What happened? If anything fewer people try to use bitcoin for transactions since then.
And if the point is to hold and never sell why buy anything with bitcoin?
If the governments of the world made it a crime for miners to include transactions involving certain blacklisted addresses in their blocks that could be a big step towards a freeze.
You're not missing anything, you said it yourself it's a store of value. Maybe markets eventually correct, but in the last 10 years Bitcoin has only gone up, so if you had planned to use it to store value for 10 years a decode ago, then it worked pretty well.
> It also pushes only towards deflation, so it’s terrible as a wide spread value store because it removes an important tool that governments have to handle the economy
Well it's a store of value, not a tool for the gov to handle the economy.
It was $19k in Dec 2017 and $3k in Dec 2018.
That's what you're missing here, not everything needs to be on-chain to be valuable. Exchanges and businesses and services can aggregate.
If you never actually use the blockchain, then you don't really know if those BTC you 'bought' even exist.
> We know transactions are slow and expensive
^ You're missing this.
* Cross-border transactions which would take days for Swift are instant
* Expensive: no not really. In the filled mempool days, yes prices shot up, but that was a few years ago. Fees are incredibly low now.
* Non-int transactions are still just about the same speed as a Visa cc/debit swipe. Again, when the mempool is going insane (hasn't happened in some time), yes TXs could take time vs. fees. However, nowadays it's just about as quick to reach a "basically verified" TX as it whatever risk mgmt balancing Visa is doing in the background. This time, instead of Visa's fraud department doing some checks, it's 1 or 2 blocks to very likely confirmed, 6 blocks to definite. Just different ways of skinning the same cat.
You're correct on this
> also lacks a lot of the controls that traditional banks have for good reasons,
But you're blending some arguments that are counterfactual if taken together as something cohesive. It's fast because it doesn't have these controls, for instance.
As you have made a totally new account you probably weren’t around for this.
Also, I don't know if all investment need to make sense based on economic fundamentals, bitcoin makes sense at a psychological level why it is a good investment for now, as more and more people slowly decide they need to dip their toes in it as well.
> We know transactions are slow and expensive, so it’s not a good replacement for ordinary commerce.
I don't think that this is obviously true. Digital transfer of the US Dollar is similarly slow and expensive (see: ACH, Wire, SWIFT). The response you'll hear the most frequently is that BTC (and digital currencies) should be compared to the US Dollar, not to Visa and Stripe and Venmo etc. Right now, if you want to send US dollars to somebody and you're unable to do it through PayPal/Venmo/Square/Visa/MasterCard, your best bet is to literally mail cash to the recipient. BTC solves that problem; you now have the option to send someone "cash" in a trust-less way, but that's probably not how the majority of people would use BTC.
The blockchain doesn't have to be used to settle every single transaction in real-time, just like you don't have to use ACH/Wire to send $5 to someone electronically for every transaction. Just like banks today send a batched ACH files of all money movement at the end of the day, they may do the same on the blockchain hourly/daily. The benefit of BTC over USD is that there is a way to "mail someone a briefcase of cash" without having to actually mail them; instead you can "mail" it to them on the blockchain and have it take a few hours rather than 3-5 business days. If you want to send US dollars faster, you can rely on centralized institutions that build financial products on top of the US Dollar, but the same can happen on top of other non-government-backed currencies. Just like you have a bank account where you can see in Dollars or Yen or Pounds what your bank balance is, one ought to be able to open an account and see what their balance is in BTC or ETH or Nano...or so the argument goes.
> It also lacks a lot of the controls that traditional banks have for good reasons, so fraud becomes harder to tackle, and things like refunds are just at the mercy of the other side of the transaction (making commerce even harder, as well as basic banking)
Again, you want to compare BTC/ETH to the actual currencies, rather than the institutions that engage with those currencies. All of what you said is true of any fiat currency: I can physically hand you a $20 bill, and that transaction can happen in a totally un-traceable way already. There’s a common saying that if cash were invented today, it would be illegal, since it’s hard for the government to track and they wouldn’t like it.
> So then it becomes a digital store of value, one that is only as valued as the market gives it, and typically markets eventually correct when there’s no underlying true value proposition (as we can see with $GME).
This is a good point, but I found a good "counter-point" in Matt Levine's latest Bloomberg Money blog post: https://www.bloomberg.com/opinion/articles/2021-02-16/goldma...
Here is the relevant bit:
"We have talked a lot recently about the Reddit-fueled rally in meme stocks like GameStop Corp. One thing I have said about this rally is that it reflected Reddit traders’ correct understanding of a simple market dynamic, which is that if they all bought the same stock at once then it would go up. So they did. Institutional Bitcoin adoption, as we have also discussed, has a somewhat similar dynamic: Each time a big institution says “we like Bitcoin now,” Bitcoin goes up, because widespread mainstream institutional adoption is clearly bullish for Bitcoin at this point. So if you are a big institution or corporation, you can make some free money by (1) buying Bitcoin, (2) announcing “we like Bitcoin now,” (3) watching Bitcoin go up, and (4) selling the Bitcoins you bought for a quick profit. (Or keep them as a bet that other institutions will do the same thing and you’ll make even more profits.)
This dynamic, separate from any particular institutional decision, is good for Bitcoin: If it’s in every big bank’s and corporation’s short-term financial interest to quietly buy some Bitcoins and then noisily make a show of adopting Bitcoin, then a lot of them will, which will have the effect of pushing up the price (both because of their buying and because of their announcements). Unlike meme stocks, there is no underlying business, no cash flows that do or don’t make the price make sense: The price of Bitcoin makes sense or not purely as a social fact; if there are “fundamentals,” they are things like “widespread mainstream adoption,” which you can provide. “The fundamentals of Bitcoin are strong, look, Morgan Stanley is buying some,” Morgan Stanley could plausibly say, after buying some Bitcoins. So it might as well do that.
With the meme stocks the natural thing was to worry about the endgame for that process; you can’t have a stock price that is divorced from fundamental value forever. With Bitcoin, you ... can? Like if the endgame for Bitcoin was “universal adoption by corporations and institutions as a digital store of value,” then that sounds like a good and permanent and somehow fundamental result?"
> so it’s terrible as a wide spread value store because it removes an important tool that governments have to handle the economy (dealt with debt via inflation aka printing money, which can be executed “well” (US) and really poorly (Zimbabwe)).
This is very debatable, and you've more or less illustrated the controversy by pointing to a "good" version and a "bad" version. The political question is whether the possibility of "bad" means that the concept of government-controlled inflationary assets is inherently bad. I won't pretend that there's an objective answer, but neither should you; the fact that it removes the tool you describe can both be described as a feature or a bug, depending on your political leaning.
And with ACH, wires, swift, the slowness is a feature not a bug. It's one of the ways fraud is combated, for example. I seriously doubt it's fundamentally a technical limitation of the technology used, but rather a choice.
But as you said people aren't doing this with BTC -- and if they're not, then this removes one of the use cases that would warrant it's value, so you're only arguing my point.
> The benefit of BTC over USD is that there is a way to "mail someone a briefcase of cash" without having to actually mail them
You also seem to forget about checks -- no one ever sends bricks of cash in USPS unless you're a drug dealer running a YOLO life. But you also ignore ACH/wires/credit cards and all the ways most money moves today. What is the fundamental issue there that Bitcoin solves?
> Again, you want to compare BTC/ETH to the actual currencies, rather than the institutions that engage with those currencies
You're right, however regulations exist that enforce institutions use USD. Those are largely good things.
> With Bitcoin, you ... can? Like if the endgame for Bitcoin was “universal adoption by corporations and institutions as a digital store of value,” then that sounds like a good and permanent and somehow fundamental result?"
But is/will that happen? These issues that I point to make it a less good option.
> I won't pretend that there's an objective answer, but neither should you; the fact that it removes the tool you describe can both be described as a feature or a bug, depending on your political leaning.
It's a tool that gets removed. Being global means there's no local way to adjust things to current circumstances. Just look at Greece in the EU -- because they went on the Euro, with a totally different economy than Western Europe, they got all of the deflation with a GDP that couldn't keep up, and as they piled on the debt they didn't have any levers to pull. Unifying global currency is a terrible idea when you have very uneven economic realities around the globe.
i call a bunch of people serving 1% of the population without question lemmings. to try and falsely frame a legitimate worldwide, grassroots counterculture movement as just a bunch of stupid lemmings betrays your prejudice and makes it hardly surprising that you don't see any value in the space.
i can't believe a bunch of "hackers" shit on the open source, decentralized internet of money. it's a currency created by real hackers for the internet. it is the first of an entirely new asset class that allows any person to be their own bank and has a hard cap on supply. Yes it's slow, but it's also extremely secure and resistant to change.
>it’s often regulated such that it needs to be fully declared (removing the whole anti-gov part)... so fraud becomes harder to tackle
which one is it? cash is the king of fraud and illegal activities anyway: fungible, anonymous, hard to trace. a public immutable database ought to make fraud much easier to weed out in the long run...
>no underlying true value proposition
it has outperformed every other asset in the world over the last decade, maybe you need to look a little closer to understand the value proposition. just because a bunch of bigots decide it has no value proposition doesn't make it true and obviously the market strongly disagrees with this sentiment.
>It also pushes only towards deflation
you mean poor people can have their money appreciate over time instead of having their meager savings robbed by an unseen, man-made market force? you mean people won't be so eager to waste their money on crap that causes pollution and ends up as landfill? i've never really understood the deflation argument, it's a textbook slippery slope.
> removes an important tool that governments have to handle the economy
if the government were truly democratic and benevolent this would be the case. unfortunately we live under a bunch of warmongering kleptocrats who need to be kept in check.
more like an important tool to bail out themselves and their cronies after they fuck up the economy so badly with their corrupt, short-sighted practices.
the people who seem to screech the loudest against cryptos seem to have a massive vested interest in maintaining the status quo. you really can't get how the economy might actually function better for most people if it wasn't serving as a welfare state for the elite?
meanwhile the btc supercomputer keeps producing blocks, just like it has since day one.
Dead Comment
They were all over in 2017 before the price dropped to 3k,I admit I was a bit of a savage when that happened.
In all seriousness with the scam you re running online, be careful and protect your family for when it goes back from 50k to 3k. A lot of people will have lost a lot of money :(
“Stability in value is presumed to be the decisive factor for acceptance. Hayek makes the assumption that competition will favor currencies with the greatest stability in value since a devalued currency hurts creditors, and an upward-revalued currency hurts debtors.”
Stability is not the observed behaviour in BTC.
- they've missed an opportunity to get rich with minimal effort from crypto
- still have absolutely no interest in jumping in at this point?
As my friend nicely put it: only way we could have gotten rich from BTC is had we bought it when it was pennies and forgotten about it up until last year
There's just no way I see myself not getting out at $100k or say $200k. And I'm not risking my money on an investment that can 'only' do 2x or 4x. Bitcoin was cool as it could do 10x or 100x in the span of 1-2 years. But with the numbers where they're at and knowing myself, I'd cash out way before that.
In the end because bitcoin isn't being used by virtually anyone, and is only valuable because of the momentum/hype (i.e., the reason I'd buy it is only because other people buying it solely for the purpose of thinking even more others will buy it only for speculation and not use, and the price rises), it's just not an interesting investment for me long-term. Short-term it could be but I'd be as not surprised if it did -50% as if it did +50% in the next year. Not really interested in that kind of exposure, given that I don't think I'll ever hold enough to enjoy the extreme potential upside.
If the GP had sold 99% of his 3650 coins and kept 1% till now, that would still be $1.8m.
That's basically what the "hodl" meme is: just decide to not sell until you need the money or until the money could significantly change your life. Of course, that's not exactly a new "investment" idea: there's always been a big difference between day-trading and just buying stocks (and index funds, etc.) with the intention to hold essentially indefinitely.
On one hand I made a few thousand from nothing. However if I held it I would have been a pretty rich right now.
I truly believe that bitcoin is something that cannot work, so I have not and will not reinvest in it. But the sting of it doing so much better does bother me at times.
I still believe, as I did then, that Bitcoin is worthless because it's not scalable. I do think if someone can solve the scalability issues then decentralised currency is extremely valuable. But I've tried investing in those and they've all tanked. Crypto is entirely driven by speculation. There is very little real value.
But yeah, it sucks a bit to think if I would've waited until now I'd actually have what amounts to a life-changing amount to me. I just remind myself that I'm rich anyway. I have a warm house, enough food to make me fat, a home cinema, loads of computers and a fast car. So why would I lose sleep over it?
Or you'd have lost the hard drive. Maybe you encrypted it, forgot the password, and spend your evenings typing iterations of your birthday, middle name, favorite song, and 69 while you watch Family Guy reruns. There are things worse than not being rich.
Don't sweat it.
I bought BTC at $20. I sold at $1000. When I sold I had something like 1.95 BTC (had a bit of it stolen from poorly secured exchanges, lost some trying my hand at bot trading). Still happy with it because what I bought at the time with with it made me happy (Sonos speakers and photo gear). Would it have been nice to hold onto it until it was $50k? Maybe. But I have been enjoying the benefits of what I got for far longer.
Having said that, I think XLM is in a good position to jump up in price and I still have their free initial allotment.
I liquidated the remaining ~90 BTC until 2018 when it was approaching $10,000.
I have no positions in crypto anymore. Lot of people are going to be caught holding the bag now. It's not common to hear somebody moving a big chunk of their savings in to this "digital gold". I am worried that this is going to result in a lot of broken dreams. Doubly more worried about people over leveraged in real estate.
Bitcoin is a poor storage of value and the cognitive dissonance is profound-the more they hype it as "digital gold" the more it deviates from that description.
I realized that Bitcoin, cryptocurrency is largely a vehicle for money laundering, in particular moving money out of China, Russia and other similar countries.
There was buying his cousin's company, the bit with the SEC, selling not-a-flamethrowers. The guy he called "pedo guy" sued him but lost because apparently nothing Elon says is credible. There's a 20% chance he sees prison time by the end of the decade.
I have had this conversation with many a friend, who actually view Bitcoin as a Ponzi, and therefore decide not to play the game (a ponzi ca be lucrative if : a) you know it's a ponzi b) you're smart in your timing and not too greedy but it's still a crapshoot).
The real questions are:
In addition, you have couple of major risks such as feds making it illegal or taxing it heavily or some other coin that Elon Musk starts preaching heavily. At this point, if you do have BTC, you should sell out at $70K-100K range just to be safe. If you keep holding after that then you are taking increasingly bigger risks but much less reward.
For those who want a low effort fairly safe hedge against inflation and currency changes an index tracker fund is probably the way to go.
A small percentage on risky investments is probably fine, but then you do have to choose the correct risky ones =)
I wish I had bought Tesla shares in 2011 too.
Or, you can continue enjoying your life the way you are without worrying what others are doing. Many times, they are only projecting one side of the story.
Jumping in now is a bad idea because it's at peak hype; never buy at peak hype. It MIGHT go up a bit more, but it won't be a 10x increase at this point - you should've bought a year ago in that case.
But a year ago, nobody could have predicted it would go up 10x.
That's what everybody said when it was $17k and crashed to $5k. I loaded up on it, now its $50k. I bet there were a lot of similar comments saying that it would never be 10x. I also seem to recall a lot of people 10 years ago saying TSLA was overpriced and they would never hit their production goals. Time will tell.
It helps that I have all my necessities well covered.
That scenario only holds if you go around blabbing about your BTC holdings ... why would you ever do something like that?
And I've repeated that thought on 1.000, 10.000, 20.000 and again now.
So yes, you are not alone in feeling this is a missed opportunity.
I personally hate the idea of bitcoin and avoided it for a long time, but I feel better having a little just to avoid the thought I let my personal feelings get in the way of an opportunity with a good risk/reward ratio.
Had I invested, I'd have wasted the coins long time ago, and would be just kicking myself daily or on suicide watch.
I'm not exactly interested in risking enough money for it to be worth it long term anyways.
Now if only I still had my original wallet...
I'm always tempted to make some kind of agent simulation, where all agents know they are in a bubble, but hope they can get out before everyone else. Then eventually the price pops and, pop.
But regardless of your opinion on crypto you haven’t missed your opportunities. Projects still 100x.
Next time it’s off everyone’s mind and not in the news, just pick 3 or 4 newer projects that have a decent sounding team, put $1000 in on each, and forget about it. Check back when everyone is manic again.
Had I spent £1k of spare cash then, I would now have enough to buy another house.
EDIT: And I’ve just now remembered that someone gave me £0.50 of BTC as a “thank you” on Twitter, which I sold to a friend for £25 and which is probably now worth £250.
I started putting a small amount into BTC each month on Coinbase. It’s money I can lose and that I would have spent on a vacation this year if not for COVID. I figure I’ll pull it out at the end of the year and if it’s gone up, then next year’s vacation will be a bit better.
I don’t understand BTC at all and consider it gambling. But like Nick the Greek said, the next best thing to gambling and winning is gambling and losing.
Just like when you go to Vegas: put $500 cash in your pocket, leave all other means of payment at home.
You'll either come back with $0 or more than $500.
In both case, you'll definitely have had $500 worth of entertainment.
Bitcoin is like that: only invest money you don't need (assuming you have any) and meantime, just enjoy the feeling of having your stomach crawl up to the back of your throat on the roller coaster.
You're also obviously allowed to enjoy yourself when/if you become rich.
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The price fluctuations are wild, and because we're not talking megabucks (a couple of thousand USD equiv) and I'm not actually out of pocket in any real sense, they're fascinating to watch, and incur no great temptation to do anything with.
While Lumens are extremely unlikely to go the way of BTC, watching what's going on with bitcoins the past decade does make me want to just sit on these.
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Now I'm not sure that crypto coins without being jacked up by central banks (like gold was during the great depression) are a powerful enough force to cause the type of havoc that gold did.
Then again, the potentially stronger network/memetic effects of cryptocoins, along with the amplification factor from markets being synchronized through instant all-encompassing global communications nowadays might make them dangerous to the economy even without central bank involvement. We saw how much people can get hypnotized by these things during the Gamestop episode. I don't think unsophisticated investors' hoarding is enough to cause big problems but it is a bit unsettling that Tesla and other companies are jumping on the cryptocoin train. If enough businesses follow suit, you get into scary territory (It would also be worrisome if companies widely moved to add billions in gold to their balance sheet but I thought the lesson had been learned in the 1930s with gold).
In theory, if central banks stay stimulative enough through all this, you can have growth in both crypto and businesses. As long as these central banks don't blink at the sight of what may look like crypto bubbles.
Yes, fully agree. But then ask yourself: aside from COVID, who created the economic conditions that lead corporations to decide that stashing treasury as Bitcoin is better than investing in the "productive" part of the economy.
QE, interests rates at near zero, corporate bonds near worthless, stock market at stratospheric 2000-like levels, real estate easily taxed to death ... how do you protect your treasury other than stashing it in hard assets (crypto, gold, commodities)?
Example: what happens if other companies followed the likes of Tesla and MicroStrategy? Sure the $1.5B Tesla invested is pittance in the context of their market capitalization, but if Bitcoin price crashes 80% then they've lost $1.2B. Even Microstrategy, with its alleged 85% of its cash reserves in Bitcoin, might well go under if the Bitcoin price drops even 50%.
A "run on Bitcoin" could become a real thing and as impacted companies are forced to cut production and expenses to offset the losses, it creates a domino effect across the economy.
Extra volatility in the crypto coin market disincentivizes hoarding. So while it might hurt specific companies that over do it, it may prevent an economy wide gridlock where all companies are hoarding coins instead of investing in real production.
In a way, volatility caused by corrections is a natural cure for the bad Nash equilibrium. It's when the correction mechanism stops happening that things can build up into dangerous situations. That's why when governments tried to stabilize gold in the 1930s, preventing it from naturally correcting into a volatile asset, it caused the great depression.
We've just been through a year of businesses being forced to close whilst their landlords continue to collect rent, and everyone seems to think the latter is just an amusing oversight.
In that sort of environment, it's far more logical for me to just buy hard assets and sit on them; it's been made very clear that we're going to just force that to be the winning side of the trade via legislation.
The sentiment on HN seem still be mostly against it whenever it comes up. I wonder why that is? I'd imagine 10 years from now Bitcoin will still be around and likely much larger than today - I'm less positive about Facebook outlook and posture in 10 years actually.
I wonder what will change the opinion of the skeptics?
I also happen to be skeptical of Bitcoin's long-term outlook, but that's not why I'm actively against it as a technology. If it wasn't for the planet, I'd say people could put their money wherever they wanted. Actually, I still think they can—as long as they're willing to pay for the negative externalities they create. But then no one would actually use Bitcoin...
To be fair, Bitcoin does not do what Visa does. Visa uses trust in existing institutions to accomplish transactions. Bitcoin mining creates trust out of electricity. And trust is a valuable resource, no different than any other form of value creation.
(Still think proof-of-stake is big improvement though.)
You compare it to Visa, but actually visa does only part of what bitcoin does (transactions), and does it using _other_ systems themselves also using energy (security, banking, etc).
Nowadays bitcoin is mostly seen as a store of value, to which it should then be compared to gold. Gold has a much higher carbon footprint than bitcoin, both for mining, storing, transactions, etc.
there are a lot of writings about this, some answering a recent article posted on HN here https://www.coindesk.com/what-bloomberg-gets-wrong-about-bit...
If you want to learn more about this concept, you should research about Slavoj Zizek's work on ideology. Bitcoin is not just technology, but a multi-faceted ideology founded around cypherpunks ideas, liberty, sovereignty, austrian economic system, free markets.
Even the way Bitcoin is developed (slow, methodical) and Bitcoin apps are built is different to SV way which is move fast, break things, iterate.
This is the narrative that people use to make it seem more savory. But it's just about the money. No one cares enough about any of those ideals for them to be a meaningful part of what Bitcoin is. Those ideas have existed forever in the back channels of the web, and are memorialized in the endless plethora of abandoned decentralized technologies that were never profitable. It's money, plain and simple. There's nothing wrong with that, but for whatever reason the crypto community has some kind of chip on their shoulder about hiding the fact that it is just about profit.
I didn’t buy crypto as a Ponzi. I bought it because it makes perfect sense if you have a libertarian / Austrian / free market / individualist / free people mindset. Which I do!
If you were to sell 50% of all the bitcoin floating around in the world, how much would you impact the price? Would it remain above 40k? 30k? 20k?
What's the cost basis of all the bitcoin holdings in the world?
If the US government cracks down on bitcoin purchases by public companies, what happens to the price of bitcoin?
Skeptics aren't skeptical because of lacking adoption, so they aren't going to be swayed by increasing adoption either.
Also, Facebook isn't some magical Rubicon for asset valuation. It's a company that sells ads.
One of the fundamental problems with "things are going good, what could go wrong?" is that inevitably, every crash is clearest in retrospect.
Facebook on the other hand, is deeply entrenched in half the world's daily entertainment routine.
I understand the hype around BTC, but I don't know if it'll all come crumbling down if a few big fish get irked and decide to liquidate.
1) It is volatile and impossible to value; any price is as reasonable as any other. What is my benchmark here? The amount of USD in circulation? The value of outstanding U.S. Government debt? (if it is indeed going to replace Treasuries as reserve currency / safe haven asset). Can someone more knowledgable than me chime in?
2) Its utility as a currency is inversely proportional to its utility as a speculative instrument. And speculation appears to be 99% of the interest and discussion.
Volatility of currency goes away (or rather, gets abstracted) within the context of locales where that currency is used as a unit of account and goods and services are directly priced in it. So far, this hasn't happened yet for bitcoin, because there is no central authority forcing it upon people.
Nobody knows if, when, where, or how this unit of account transition will happen. Maybe Tesla prices the new roadster or cybertruck in bitcoin as a publicity stunt that starts a cascade. Maybe some country with a failing currency decides to issue a new currency backed with bitcoin, or their people start using it without permission and pricing emerges organically. Maybe Iran, Turkey, Venezuela, North Korea, Syria, and Cuba start using it as their currency for international trade.
Or maybe it never will become a unit of account, and bitcoin will just find a role as an inflation hedge and long term store of value like gold, which is currently 10x as valuable as bitcoin.
I think the opinion changed from favourable to skeptical as no use cases emerged.
A lot of the proponents of Bitcoin are pushing it in the same way people push MLM and ponzi schemes and for the same reasons, which is unfortunate.
For many, including me, it seems a great shame to be consuming so much computing power (and energy) to solve increasingly difficult mathematical problems for no human benefit when the same effort might be used for better ends.
But I imagine there is also a lot of opportunity for innovation in that realm to move to clean solutions for instance.
For anything you want to do with btc|fb, there is something else that does it better. But not enough people use those other things, they aren't trustworthy, they're more difficult to use, too fragmented, I already use x why would I use y, nobody knows about them, etc.
I agree it will be around in 10 years, but think it will always be highly volatile. Between now and then, I could see it being worth much more and worth much less than today's price.
https://goldprice.org/charts/history/gold_all_data_o_usd_x.p...
Bitcoin, like gold, is not a productive asset. It doesn't pay interest (like bonds), dividends (like stocks), or rental income (like real estate). Warren Buffett has a good explanation: https://www.youtube.com/watch?v=LtITDtZPYEw&%3Bab_channel...
The problem is that Bitcoin is not productive, so it only makes sense to own it if someone will pay more for it in future. But how do I estimate that without any long-term price history? I can see that the demand for gold increased in, say, 7 of the last 10 decades so that would give me some confidence about demand over the next decade.
So to answer your question: the only thing I can see that will change my opinion of Bitcoin is if demand generally increases over many decades.
Nothing. It's an ugly system, for soulless players: it's eating up hardware production capacities, energy supply, and the money of the ordinary folks.
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Because it tops out at four transactions per second while consuming as much power as Argentina. It's not rocket science.
>I wonder what will change the opinion of the skeptics?
All of the following are necessary but not sufficient:
1. Bitcoin users must panic when Bitcoin experiences deflation rather than celebrating it going TO THE MOOOOOON!
2. Someone has to find a way to make it scale.
3. Tether must be audited.
1. BTC price increases
4. There is media attention about the price raise
5. More people buy BTC, because FOMO
6. Back to point 1, but now a bigger group
This loop is a pump, increasing the price as long as the loop isn't broken.
The same pump can reverse, very quickly. Once the loop is pumping there is no way out.
1. BTC price drops
2. There is news out that that the price drops
3. More people sell bitcoin
4. Back to point 2, but now a bigger group
The fact that there is a limited supply will ensure the prices keeps raising, because nobody can "make more bitcoin"..
But this part of the BTC system causes it volatility, it's inherently baked into the system.
It's not the underlying performance of bitcoin, or the profit the system is making. Its pure viral loops logic that cause pumps and dumps.
You can impact it, if you hold a lot of assets. Just PUMP or DUMP a lot. It triggers a pump in the direction of your choosing.
Next to that, ETH is a factor better in design and utility, and still the price is lower. Why? Cause there is less news about it. Not because BTC is a better product.
This is a common claim, but nothing is ensured here.
Almost everything else we put a value to has a more real underlying value that's also growing. Gold has uses in technology, with stocks most companies have real assets that could be sold off, even with art I think most people would be willing to buy an art-piece for the right price. The value of a Monet for me might be a tiny fraction of its valuation, but it's there. But nobody has any underlying interest in a Bitcoin. Its value as a currency for paying for products and services seems to be diminishing as well.
You can't make more Bitcoin, but you can easily make more cryptocurrencies, all with the same limited supply (which according to some people means the value MUST increase). And they're all equally interesting. The one exception with Bitcoin is that it was first. You could say it has a tiny bit of underlying historical value.
To me, I think it implies that it's inevitable that Bitcoin will have a crash that's very deep and very long lasting. It's impossible to predict when though. In the very long term it'll probably increase due to hits historical value. But by that point I doubt it'll significantly outperform other investments.
I also think there's a very high likelihood that many governments will regulate cryptocurrency exchanges to death at some point. A rally against Bitcoin specifically can easily be justified as part of the fight against climate change, since it wastes so much energy.
Also ETH doesn't have an upper limit to the total supply, therefore its scarcity is not the same as BTC.
https://en.wikipedia.org/wiki/OneCoin
Even worse: If people can't get out fast enough, and the banks didn't judge the risk properly, it can threaten banks - see 2008 for how this works.
When the panic selling starts is game over.
The limited supply logic has meaning if people hold, if they don't, nobody will care it's limited in supply because there's no demand for it.
"This time it's different" isn't an argument I find compelling for why something that is known to have bubbles and manipulation isn't in a bubble.
The first is that Bitcoin is thriving as a store of value. It hasn't seen much adoption as a payments system and is unlikely to do so in the future, but 2020 saw many notable people using adopting Bitcoin as a store of value. See MassMutual, Paul Tudor Jones, Stan Druckenmiller, Tesla, among many other examples.
The second reason is that defi protocols grew in usage by an insane amount in 2020. Decentralized exchanges like Uniswap are beating centralized exchanges in volume and lending protocols like Aave have billions deposited in them. These defi protocols are generating huge cash flows. This is real people using decentralized technologies built on blockchains like Ethereum.
Even if the 2021 bull run ends up like a bubble, 2021 will be different in that a lot of the price rises will be based on fundamentals, not pure speculation like in 2017. One thing to note though is that a Bubble is not necessarily a bad thing. In every past Bitcoin "bubble" (2011, 2014, 2017 etc) the price Bitcoin crashed to has always been higher than the price it started the run up at.
What are people doing on these systems? Usually to say “generating cashflows” means some kind of productive business activity.
Are people actually touching the real economy or just trading coins amongst other people in the crypto world?
I'm fairly new to Crypto so I don't understand this: it's looking like all cool new things are built on Ethereum (which, itself has grown quite a lot) so why is Bitcoin rising? How are Bitcoin & advances in Ethereum-based techonologies correlated?
Let me give you my favorite quote, pulled from another HNer comment: "I enjoy reading comments about Bitcoin here because even without any venture backing, it achieved a bigger valuation than all of the Y Combinator companies COMBINED, yet people still think it is unstable and has no future."
2015: "Most advantages of Bitcoin which matter are captured by, and improved upon by, a LAMP app which simply holds account balances."
2019: "I acknowledge that when Bitcoin was $17 I said it had no use case, should be worthless, and likely would be at some point in the future. No evidence has come up which would make me change my view. (Though my is it taking a while.)"
What has Bitcoin created?
I struggle to come up with an answer which isn't overwhelmingly just a way to fund illicit activities, for which sure there's always been a market, but it's a far cry of it's origins. Who actually uses bitcoin for transactions today other than extortionists hackers and drug dealers? Everyone who owns is just planning to HODL and hope that it will become equivalent to an infinitely high fiat equivalent. Had bitcoin succeeded we wouldn't be talking about insane valuations. We would be using it every day no different from a credit card.
Personally I think Bitcoin has at least two bubbles left before it pops permanently. So $1M price could be achievable.
The real question is what happens when it does reach a ceiling. At some point there's not going to much more potential interest for Bitcoin, and what then? Are people gonna start moving their pension funds to Bitcoin? I think the governments will crack hard down on that, because you really want investments in building the economy, not in a pure investment/gambling scheme.
If most people start thinking there's no one else interested in buying their Bitcoin down the line, it'll crash hard, and the crash will likely be permanent. Because there's no real value behind Bitcoin. The money you invested is already spent by someone on something else.
The reason why it's interesting that Bitcoin keeps having bubbles is that there's not much reason to think that will stop. Yeah, the value keeps growing over longer time periods, but eventually a bubble will be so large that it'll seriously disrupt the economy, and that's when you'll start to see governments and peoples attitudes change.
> I enjoy reading comments about Bitcoin here because even without any venture backing, it achieved a bigger valuation than all of the Y Combinator companies COMBINED, yet people still think it is unstable and has no future.
The problem is that the valuation is more imaginary than the valuation of any company except for those that are just Ponzi-schemes.
Most money put into Bitcoin has been cashed out or used for mining expenses. If everyone tried to cash out, the price would very quickly race back down to zero. If the same happened with a stocks in a corporation, at some price level someone would just buy up a controlling stake of the shares and liquidate all the assets for a profit.
Truly is a paradigm shift and I think a big problem on HN is that VC can’t see they are being disrupted and have no way of avoiding it, plus they think they are untouchable geniuses, so being wrong this hard isn’t pleasant for them.
It's not really the same relationship as investment in a company, but it's not absent either.
https://www.businessinsider.com/wework-valuation-falls-47-bi...
(I don't think WeWork was YC, but it does drive home that achieving a valuation is primarily a reflection of your ability to convince investors to give you money)
Counterfactual: asset prices and incomes have been rising, almost uninterruptedly, for 12 years.
Exhibit A is Tether being able to publicly admit that they don't have the cash they said they had and keep going.
This is the wrong metric. A million dollar market cap bubble is not hard to sustain, even a billion dollar market cap is a footnote to the rest of the economy. The entire worth of Bitcoin is still less than half of the worth of the market cap of one company such as Apple. At some point it becomes large enough that its real value has to be considered, which in my opinion is zero.
Stocks like pets.com had long runs in 2000, subprime mortgages had long runs in 2008 and people were saying then what you are saying.
Stocks and real estate are frothy now so Bitcoin and Dogecoin have company. I would rather own a house than 10 bitcoins though.
For some reason, even though BTC was meant to be "money", it is now being treated as an asset (at a basic level, an asset is something you hold onto, as it produces additional value, unlike money, which tends to devalue if not put to work).
It's almost as if the next big idea in distributed money will be around disincentivising "asset" like behaviour.
Assets are terrible things to use for everyday transactions, which is why I don't quite consider Bitcoin "money" just yet.
Bitcoin's real invention was censorship resistance, by incentivizing distributed miners to arrive at consensus about transactions in a way that no single miner could control. Sadly, that same distributed incentive is responsible for Bitcoin's ever-increasing energy usage.
In the last 24 hours, there's been $108B traded.
https://www.coingecko.com/en/stablecoins
Also, I don't quite understand your first question. Care to elaborate?
Monetary policy
https://docs.nano.org/protocol-design/introduction/#abstract
[1] https://en.wikipedia.org/wiki/Dai_(cryptocurrency)
ERC-20 tokens are the magic that enable second-layer "currencies" such as DAI and others to work on top of Ethereum. There are other tokens, even WBTC (Wrapped Bitcoin).
DAI itself is backed by a basket of token-based assets such as WBTC, WETH, USDC, USDT etc.
The Ethereum dApps are definitely a fun rabbit-hole to dive into, e.g. UniSwap, Synthetix and other DeFi applications.
The main problem as I see it is the transaction costs are very high (I looked into using UniSwap but it was going to cost > $50 to transact what I wanted). However, in the next few years the Eth2 improvements will help scale the network and hopefully see transaction prices fall.
I designed Bitflate. It's a cryptocurrency with 7% inflation. The rate is moderately high to make it the opposite of Bitcoin. But it's not too high to cause hyperinflation. Bitflate is a Bitcoin software fork. So there are possibilities to create hybrid cryptos that have inflation rates between 0 and 7%.
Check out my project: https://bitflate.org/.
But how can this encourage adoption?
Who would want to hold an asset that is designed to lose purchasing power?
If nobody wants to hold it, then nobody wants to get it as payment.
http://freico.in
Bitcoin has shifted in the mind of investors from a currency to an “asset class”. What this means is that to investors it is more like gold than dollars.
Gold’s value is not linked with its usage in the industry or jewelry. Holding gold doesn’t yield interest. its value comes mostly from people scared of devaluation.
While the interest rates are still low and the economy is not doing great, it makes sense to diversify one’s cash in various “refuge” values.
That Bitcoin is becoming a refuge value while its volatility is still insanely high is somewhat weird. It mostly indicates that there are many cash-rich people/companies out there who dont really know what to do with it.
Its like the low hanging fruit of engineering has been picked, or we are waiting for the next big technological breakthrough to come about. I look at even the lifestyle 30-40 years ago, and despite more efficient engines in cars (which isn't a problem with cheaper fuel anyway), the mobile phone and the internet (which isn't all good news IMO) not much has changed lifestyle wise. In some measures such as food prices, house prices, deep social connections, and other more base needs its gotten worse for the average middle class worker in a typical Western country.
IMO it feels like we've hit a stagnation which is reflected in investor preference to hoard value.
https://youtu.be/_93CXTt2K7c - There is an associated research paper on this Ted talk.