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The Bitcoin Bubble (economist.com)
A reader shares an Economist article: More people will trade in Bitcoin and that means more demand, and thus the price should go up. But what is the appeal of Bitcoin? There are really three strands; the limited nature of supply; fears about the long-term value of fiat currencies in an era of quantitative easing; and the appeal of anonymity. The last factor makes Bitcoin appealing to criminals creating this ingenious valuation method for the currency of around $570. These three factors explain why there is some demand for Bitcoin but not the recent surge. The supply details have if anything deteriorated (rival cryptocurrencies are emerging); the criminal community hasn't suddenly risen in size; and there is no sign of general inflation. A possible explanation is the belief that blockchain, the technology that underlines Bitcoin, will be used across the finance industry. But you can create blockchains without having anything to do with Bitcoin; the success of the two aren't inextricably linked. A much more plausible reason for the demand for Bitcoin is that the price is going up rapidly. People are not buying Bitcoin because they intend to use it in their daily lives (Editor's note: the link could be paywalled; alternative source). People are buying Bitcoin because they expect other people to buy it from them at a higher price; the definition of the greater fool theory.
I will anonymously sell you my shit in this era of fiat currencies and there is a limited supply. The bidding starts at $1,000!
Really? Dick move.
Unshorten.it reveals that the actual link is: https://getpocket.com/redirect?
Haha! a spam link to a product completely unrelated to the supposed story.
Nice "work" there msmash...
"7 cents? That's outrageous, the bubble will pop soon!"
"70 cents? Such foolishness, who would ever pay that much for a single bitcoin?!"
"7 dollars? Bitcoin is a scam, who's fool enough to fall for it? Stay away!"
"70 dollars? Look, it's definitely a bubble, it will pop anytime now."
"700 dollars? That's like the tulip mania! Don't ever touch bitcoin unless you want to lose a lot of money"
"7000 dollars? Again, it's a bubble, only a true idiot would buy bitcoins, trust me!"
When a single btc will be worth $70k, those idiots will still spew their usual nonsense.
The appeal of Bitcoin is that it is decentralised global money system that cannot be controlled or shut down by governments. The "three strands" are just a bonus. And no, Bitcoin is not anonymous, please stop repeating false claims.
The reason the bubble continues to expand because there is yet to be an easy way to short bitcoin.
It's the Fork, Stupid. There's yet another hard fork coming that will result in a doubling of coin holdings. Everyone is buying into the fork so they can get two sets of coins.
BizX is an American financial technology company that operates a digital private currency (the BizX dollar) that facilitates business-to-business exchange of goods and services.
Originally designed as a barter exchange, BizX has been upgraded to the digital private currency model, one that facilitates indirect trade by allowing members to earn BizX dollars from one member and spend them with another
The authors analysis is incomplete.
Amongst the things that add value to bitcoin are :
- Increased trust via ledger transparency compared to obscurity of the current banking systems (and by the way, anonymity isn't really a thing in bitcoin as they have been proven to be traceable)
- Independance from major financial institutions ( that doesnt mean a complete lack of regulation, but it does imply less stakeholders)
- Detached from fiat currencies (even if traded for fiat, bitcoin still lives within its own ecosystem. See usage in Venezuela or Zimbabwe for proof )
- Cheaper transactions (on large amounts in the short term, and on smaller transactions once Lightning is up and running)
- Simplicity of use in a digital era
- Network size and distribution
- Network upkeep incentive by mining mechanism
That being said, if the author believes his bitcoins are only worth $570, I will gladly take them off his hands ... even at twice or trice that emaluation.
I was hoping there would be one of the many many "this bubble will go forever because it's totally not a bubble!" folk in here. Thank you for not disappointing. :)
That said, I'll bet all my 0btc that btc will break 10k before it crashes, and if it ever stabilizes to behave like a currency it'll trade really favorably against the dollar.
How about loosing your life savings or and/or your retirement funds through Cyprusization or bankruptcies.
Or hyperinflation Zimbabwean style?
How much is that worth for "The economist" ?
If you really believe that, just short it instead of writing a slashdot article :)
There are more than three reasons. The question begging here assumes the only legitimate usage of bitcoin is among criminals. This is patently false. There are nations with less than ideal currencies where bitcoin is commonly being used as exchange currency. Even a poor nation can support more currency than the total bitcoin economy and bitcoin is global. Bitcoin has a property that no other currency is proven to have (including alt cryptocurrencies) transactions are not reversible and bitcoin cannot be counterfeited.
"People are buying Bitcoin because they expect other people to buy it from them at a higher price; the definition of the greater fool theory."
False. Bitcoin circulates, it has underlying value, and it is deflationary. Every day bitcoin goes out of circulation as people lose access to wallets. I myself have lost access to at least 25 bitcoin over the years and nobody else has access either... that would be $187,500 at the $7500 per 1.0 btc I saw the other day. Bitcoin has had a number of bubbles and when those bubbles pop people panic and sell at a loss. When those buy in to the next bubble they buy at higher prices. This create a floor where people are generally invested at a higher price and their willingness to sell stops at a higher price. Also because bitcoin has been following that bubble, pop, bigger bubble cycle consistently since it's inception with first notable bubble being dollar parity the confidence in bitcoin is increasing over time, this too will slow the selloffs and when combined with the fact that genuinely new investors eventually slow to a trickle will mean smaller and smaller bubbles.
There is no absolute reason for any particular price on bitcoin to be a ceiling so long as the market is fluid. In fact the 1.0 BTC mark needs to grow quite a bit more for price stability so that there aren't investors who can notably move the market. I believe I calculated something like $10,000 per 1.0 BTC back when SR1 was operating. If there is too great a disparity between where most people bought and the current price those people will cash out when the growth appears to slow.
The recent bubble is largely because financial institution scale investors have begun investing. I don't know how safe it is to assume that can't continue to feed for quite awhile. Bitcoin is not open to the puny little wallstreet stock market type investor, it is open to global investment on a Forex level scale. It is not unreasonable at this point to think Bitcoin is only proven cryptocurrency or blockchain implementation at this point and will not go away in the forseeable future. That leaves room for a multi-trillion dollar market, not a few billion.
When cryptocurrency ultimately gains traction, it'll be because some major institution or government decides to implement it on scale. The world is never going to trust their money to the good folks who brought us Magic The Gathering The Online Currency Exchange, Dogecoin, and "oh, that's bad--well let's just try to get everyone to agree to fork the entire danged currency." They just won't. There's a fundamental, irreparable lack of gravity, responsibility, and accountability in the cryptocurrency world today.
People on the outside see cryptocurrency as one part hobby, one part religion, one part social experiment, one part speculation, and one part black market. Frankly, they're right--and they're right not to touch it with a ten-foot pole.
Obliteracy: Words with explosions
The US dollar is a powerful world currency because it is backed by the good faith of the US government. Bitcoins will fail eventually since they are not backed by anything substantial. Read up on fiat currency and the rational will be understood.
Firstly Bitcoin is NOT anonymous and all payments CAN be tracked. The tools to do so are not terribly accessible and when they are then they are not sophisticated enough.
The WizTec team have found the Mt Gox stolen funds and that has lead to Alexander Vinnik's arrest. So No, it is not anonymous.
Gold and BTC has some commonalities. There is no particular reason to buy gold beyond a store of value. That in itself is a utility.
Yes, gold is used in other application but those are not the main reason for its price. There is a limited availability, supply rate and a finite amount of resources. That is very similar to BTC. BTC has an advantage because it's so much easier to transfer. Try moving 100kg of gold between borders as a method of payment...
As BTC demand grows because of its utility to store and transfervalue easily without a centralised authority to control flow so will its usefulness grow. More tools and methods to handle BTC will reach every day people.
BTC IS A BUBBLE. There is no doubt it is a bubble. Stocks are a bubble, bonds, the housing market and in deed the economy is a bubble too. Should we simply not invest in anything because its a bubble?
The greater fool is a classic example of the Tulip bubble mania and the psychology behind it. This does not fully apply to BTC because BTC has a utility that utility gives intrinsic value. There may be much better ways to do the same exact thing that BTC does today, indeed from a technological perspective there are except they are not as well know and are not as widely endorsed.
History is riddled with superior failed products. So BTC has the advantage, has an amazing Dev team. They are in the lead in multiple fronts and recent shakedowns with BCH and SegwitX2 etc are passed.
We know BTC is resilient, we know large financial bodies cannot crash it and we know its growing in adoption.
I recommend that each person evaluate and do their own research as to the utility of Bitcoin. You may find that buying $1000 worth of it today can make for a very nice retirement bonus.
It is unclear which currency or token will come to dominate but we all know the blockchain and by extension distributed ledgers will replace fiat money.
One parting comparison to tulips. In the tulip mania you had to buy 1 whole tulip at outrageous price without any utility. You do not have to buy a whole Bitcoin. You can buy fractions. If buying a fraction of something to sell at a greater cost, like stocks, houses etc, is only for fools then investors anywhere are fools.
A 'singular oddity' is an event that cannot be explained and only happens when you are alone.
Meinherr, tulips have risen to 3,000 guilders per bulb, and show no signs of a "bubble."
The very same characteristics are displayed by bitcoin. The most important one is increasing artificial scarcity fuelled by late comers and secondly there is no intrinsic value.
Blockchain has a future, just like the concept of joint stock companies survived the Southsea bubble.
http://www.historic-uk.com/His...
Not sure why people think Bitcoin is anonymous, but the blockchain is necessarily completely public and it's not that hard connecting transactions with real people and organizations.
I don't think that the argument you replied to suggests it will go on forever, it is a fair critique of the "soon" crowd.
That crowd always picks some subjective reason why bitcoin will fall apart. Some of them are hilarious....like that it isn't backed by a government. They also never set even a rough date when this falling apart will happen.
Essentially they are making claims that can't be disproved, which alone is enough to ignore them regardless of how many bitcoin one owns.
I would postulate that BTC is more stable and trustworthy than stocks:
* It isn't manipulable -- If someone had 51% of the BTC mining, then one would worry. Otherwise, there isn't a FED that will print out BitCoins and dilute the value.
* It is secure, and far more useful than most fiat currencies.
* The value isn't going anywhere but up.
* When you get paid, you stay paid. No bounced checks, chargebacks, or a third party just refusing to give you your dosh because they feel like it, and they know you can't/won't sue them.
* BTC only will go up in value. There are only a certain number existing, and only a certain number that will be.
* BTC is verifiable independent of a bank.
* If you avoid Mt. Gox like exchanges, your BTC is far safer than a bank.
The best way to determine whether a market is in a bubble is when the "dumb" money has not only entered the market but believes they are qualified to advise others as well. There is ample evidence of this on YouTube. Same exact thing happened during the most recent stock market and real estate bubbles. Cab drivers, hair dressers, even strippers, all talking about their investment and telling others why they can't lose.
Purchasers of Bitcoin have surplus earnings and are looking to diversify savings, same as CDs, bonds, stocks, gold coins, REITs and other investments. The argument that it's a bubble "because people don't intend to use/consume it" is just speculating on speculation. Bitcoin bubbles will probably occur, as do stock, REIT, bonds, gold coins, etc., but the summary reads like a mod 1 opinion. Even if you put surplus cash under your mattress, you taking an action not to use it, and that does not define a "bubble".
Gently reply
Actually I'm lately hearing this line of argument:
"7 cents? That's outrageous, the bubble will pop soon!"
"70 cents? Such foolishness, who would ever pay that much for a single bitcoin?!"
"7 dollars? Bitcoin is a scam, who's fool enough to fall for it? Stay away!"
"70 dollars? My barber recommends Bitcoin, and so does my dog walker..."
"700 dollars? Okay, now I'm buying in."
"7000 dollars? I'm riding this to the stars. Desert Rat Blog is calling for $100,000 BTC by 2020!"
The problem here is that someone who's an 'economist' is trying to analyze technology.
Yes, it has a 'value' but it's technology!
It seems to me that bitcoin is slightly easier to track than paper money.
I really wish they would stop linking it to crime. You know what else "the bad guys" use? Water and air
"Against the dollar" really is the key phrase. There's a scenario where bitcoin holders can basically take over the federal reserve functionality, if Fed keeps printing money and Wall st. keeps stashing it in bitcoin, inflationary signs will never appear because if they do it right they've created a parallel economy the Fed is pumping up. There's a seemingly absurd point where the valuation of bitcoin becomes higher than the valuation of the tech that supports it, but really you can't say where the ceiling is, when its taken on niches like absorbing excess printed money from the Fed.
-The art of programming is the pursuit of absolute simplicity.
http://mikemiller.net/bitcoin_...
Its a well known phenomena that investors will often buy in high and sell low. When prices are high people feel they need to get in on the action so they don't miss out.
BizX is an American financial technology company that operates a digital private currency (the BizX dollar) that facilitates business-to-business exchange of goods and services.
Originally designed as a barter exchange, BizX has been upgraded to the digital private currency model, one that facilitates indirect trade by allowing members to earn BizX dollars from one member and spend them with another
Maybe if I point it out a third time the corporate shill janitors here will wait longer than 10 minutes before downmodding it in the hopes that nobody will catch on to the clear conflict of interest they never bother pointing out in their dozen daily crypto articles.
Just like cash, but you can ship it between continents in less than a second. If this use of bitcoin rises as more people try out cryptocurrency, exchange rate against dollar will also rise. It's true that pure speculators holding lots of bitcoin passively can inflate the value further, just like with any currency. Also, bitcoin could concievably fade to obscurity because another cryptocurrency wins people over. But we can expect cryptocurrencies as a whole to appreciate as they gain adoption in the coming decades.
It's actually pretty easy when you ponder for a moment.
We're currently in a situation not unlike that of the late 1920s. There is an enormous amount of money pooled on the investment side that is sorely lacking anything to invest in, pretty much for the same reasons: WAY more supply than demand. With a lack of demand, there is nothing "normal" you can sensibly invest your money in, it is simply not very lucrative to open a business or to finance one if said business cannot make any business for a lack of demand.
Investors back then simply parked their money in shares which drove the price for shares up. That in turn caused the middle class to turn their head. Their motivation to invest was a vastly different one. They were usually not the ones to invest in shares, their form of wealth accumulation was traditionally more one of savings and maybe bonds, but with those pretty much being destroyed by a low interest policy (and back then also the fallout with war bonds that suddenly turned out to be worthless and thus destroying faith in that form of investment), they were now looking for an alternative too, and found one in shares that looked like it wasn't that risky because, hey, they keep rising and rising! And at worst, I'll lose what I put in, and I don't get any money for savings anyway.
This is basically where bitcoins are now. My hope now is that the third act isn't repeated. Because back then people thought "Hey. Interest rates are at an all time low, share revenue is between five and ten times the loan interest, the more I take out, the higher my profit!"
We know the rest.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
"The market can stay irrational longer than you can stay solvent."
Just because the price of Bitcoin keeps rising does not mean it's not a bubble. Literally every other bubble has the same evangelists spouting off the various reasons why it's not a bubble and why this time it's different.
The argument that the recent meteoric rise in Bitcoin is due to a herd speculators rather than demand for Bitcoin currency as a currency vehicle is probably the correct one. And if there's one thing that herds do is stampede. Sooner or later, they are going to stampede for the exit and your $7,000 bitcoin is going to plummet back to somewhere near what the true transactional and holding value of BC is.
If you want mine your own crypto currency, you need a motherboard with 19 PCIe 1X slots to plug in 19 GPUs and a couple of 1200W PSUs.
That's the thing about bubbles - it's very hard to predict when they bursting will actually occur. Even the guy who made billions of the 2008 bubble damn near went broke first because he was too early. You say it's going to $70k. Why? I'm not saying you're wrong, but please do show your work.
What's stopping a bunch of people from "painting the tape" - that is, making higher and higher (or lower and lower) transactions amongst themselves? Is there a mechanism? I really don't know.
The market needs saturation before it stabilizes. BTC is still in early adaption. When more than neckbeards are trading with it, the price will stabilize. How many people do you know that hold BTC? How many dont? Eventually, unless the banks around the world start issuing notes not tied to a bottomless pit of inflation, people will adopt alt currencies. BTC is the frontrunner, but not the only option. Member when the internet was "...just a fad?"
"It isn't manipulable -- If someone had 51% of the BTC mining, then one would worry."
Wrong! China holds most of the hashrate and processing power. They can easily hit a 51% attack if they wanted.
"It is secure, and far more useful than most fiat currencies."
It is digital and thus it can be hacked. People have had their bitcoins stolen through electronic means. Security is a fallacy in a chaotic system such as a computer.
"The value isn't going anywhere but up."
And anyone that paid attention to any economic history will quickly say "This is a bubble that's going to leave a lot of 'investors' high and dry."
"When you get paid, you stay paid."
WRONG. To boot, plenty of fraud involving exchanges of goods for bitcoin has already happened, leaving plenty without recourse.
"BTC only will go up in value."
That you use the qualifier 'only' demonstrates you really have no fucking clue about economics.
"BTC is verifiable independent of a bank."
Verifiably stupid with no government insurance if your bank gets robbed, like Mt. Gox.
"If you avoid Mt. Gox like exchanges, your BTC is far safer than a bank."
Given my fuzzing audits on several exchanges - you're better off with a bank. And as stated above, banks come with insurance if you lose your money.
Still waiting on Serviscope_minor to wake up to fucking reality and realize that Jessica Price isn't going to fuck him.
Yes, I really just link to goo.gl. Why? Because it's an Economist article, which sits behind a paywall.
The conventional way to post such a link is to post the link to the actual article, and then put in parentheses the alternate source.
So I instead funnelled the article through Pocket service -- a common way to break paywall -- so that most readers see an unpaywalled version of the story. Now, getpocket [dot] com wouldn't make much sense to others, but goo [dot] gl will make it clear to people that the link has been shortened.
I clicked the link and it sent me to a redirect to getpocket which sent me to a redirect to the Economist article https://www.economist.com/blog... .
So the article is still behind a paywall, but the click got there via two redirects, instead of linking there directly. I'm not sure what the advantage was.
http://www.geoffreylandis.com
"The market can stay irrational longer than you can stay solvent."
Now, that's a quotable quote.
http://www.geoffreylandis.com
That's because he was shorting. In the case of owning BTC, you better not be too late when selling.
OTOH, it's the same with every stock. The difference with a bubble is that it crashes hard.
And when it's 700000000000000000000000000?
When a single btc will be worth $70k, those idiots will still spew their usual nonsense.
Why not just say $70 bazillion gillion trillion? Oh, because maybe then everyone would see how fucking ridiculous it is to think that a commodity can go on increasing in value ad infinitum.
To have a right to do a thing is not at all the same as to be right in doing it
The value isn't going anywhere but up.
This is economically impossible.
To have a right to do a thing is not at all the same as to be right in doing it
Let's compare this to other 'speculative bubbles'.
Housing:
1930: $10,000 for a house? That's outrageous! The bubble will pop soon!
1980: $100,000 for a house? S&L is killing the housing market! It was stupid high!
2030: $1,000,000 for a house? Only a fool would buy a house! Renting is where it's at!
You left out 2007: $100,000 for a house? But I paid 5x that? What do you mean I still have to pay off my loan? The bank was giving it to me like candy. I'm fucked!
There's a difference between "worth" and "price". Bitcoin has near zero worth and lots of price. Such a disparity cannot go on forever. With so much of the supply in the hands of so few, price manipulation aimed at robbing small players is a real possibility/probability.
Tulip bulbs went through a similar price/worth mismatch.
Nota Bene: Real Estate never really loses value, since it represents a *tangible* and *useful* item that has a finite supply.
N.B. #2: Yeah, the Dow Jones Industrial Average. See also 1929, 1991, the dot-bust, etc. Very easy to get burned if you speculate on stocks, even when sticking to just the DJIA for your trading portfolio. Also, there was no war in 1930 for the US - that would have to wait at least 11 years. ;)
Quo usque tandem abutere, Nimbus, patientia nostra?
Well known term
Simple question, for you and for anyone who can answer it:
What is the currency value of the BTC you have cashed out?
I see tons of talk about holding or buying , but if you're not able to get it out, you're just financing speculators, not yourself.
Populus vult decipi, ergo decipiatur...
"Force shits upon Reason's back." - Poor Richard's Almanac
And once people realize this (ACTUALLY realize it, not the soft acknowledgement "but I can still make money right now"), it's going to course-correct SO hard.
Chas - The one, the only.
THANK GOD!!!
Also the return of exchanges and these 3rd party digital wallets makes it so much easier to trade; you know everyone panicked after MtGox.
And the fourth: veto-proof reliability. IMHO that totally overwhelms the relatively weak reasons listed above.
If you sell a product or service over the Internet, you need some way for people to pay you. Every single one of those, except cryptocurrencies, are unreliable, because it requires a third party who might say no and prevent the transaction from happening. Credit cards don't work, because they go to extra trouble to not-work. Paypal doesn't work, because they go to extra trouble to not-work. Bitcoin does work, because there's no one to maliciously prevent it from working.
The catch is that credit cards' and Paypal's unreliability is partly a function of the type of business that one of the transactors is doing. The reason they don't work is because someone is pressuring them to interfere. In some cases, these are illegal businesses, and in some cases, they're just a little shady, or maybe totally legit but unliked by someone. Once you get to "mainstream" commerce, Paypal and credit cards' unreliability, while still not quite in the league of Bitcoin, are Good Enough.
But the world is always changing. What's "legit" today might be murky tomorrow. And what isn't opposed by some powerful industry or monopoly today, is very likely to be opposed tomorrow (though whether that adversary is powerful enough to really get in your way, depends). If the adversarial power is able to influence government or the banking industry, then you're going to need some way to do business without the intermediaries saying "Sorry, I've got a gun to my head here. No can do. Account frozen." Thus, society needs Bitcoin or at least something like it, so that transactions can occur without anyone having the capacity to prevent them.
And the generic security goal is always: remove adversaries' capacity to harm you. (People need to be aware, though, that Bitcoin may ultimately fail on this. Beware the 51% attack.)
I think there's a parallel here, between the technology of financial payments, and the technology of interpersonal communication. In 1992 CALEA passed, but it "only" regulated communications providers. The solution to that problem was that people need to stop using providers (or treat them as dumb pipes which only have access to ciphertext), and be their own providers, independent. Before you communicate with someone, you think about what protocol to use, not what service to use. (The government can't ask you to wiretap yourself without telling you.) The news is constantly full of stories about people whose communications turned out to be vulnerable, because they didn't do that. (e.g. they used the whateverdu jourchat app, instead of an open crypto protocol (e.g. OpenPGP) over an open communications protocol (e.g. XMPP or SMTP)).
Similarly, 9/11 was used as a great excuse to add a bunch of laws to further regulate financial services providers. Thus, America needs a way to transact business without any service provider. Everything is going to be like this: aggressors will try to horn in between people, and people have to respond by not having anyone between them. So before you pay someone or take payment from someone, you need to decide on what protocol to use for payment, not what service. Corrupt law means everyone has to transition to the protocol-view of the world, and start severing ties with services providers. And I mean service providers in as many diverse industries as possible! As "geeks" we only normally think about one or two dimensions of all this, but it's going to be everywhere: the more money/liberties they try to skim from you, in every aspect of your life, the more it ma
"Believe me!" -- Donald Trump
The real danger is how fast the ride down is...
Cheap storage VM.
Surprised to see an article on /. acknowledge (however subtly) the way governments have historically diluted the value of their currencies
... in other words devalued the money people have.
I would have guessed a Trump administration would have slightly reduced demand.
With the stock market, it is hard to figure out what the average price folks paid for a stock is because when the stock is sold you can't see when they bought it.
With the blockchain, there may be more visibility.
Would it be possible to see the actual, average price that the folks current holding BC got in at?
If so, would it be a useful indicator for the stability of the bubble?
(Perhaps I'm searching for another reason for BC to exist.)
When a single btc will be worth $70k, those idiots will still spew their usual nonsense.
The market can stay irrational a lot longer than you can stay solvent.
Ok so all the stories are about whether one should _buy_ bitcoin or not. But let's for the sake of argument say I bought one thousand of these when they were dozen a dime. Now when I'm a sudden "millionare", how do I cash in?
exactly. buy low, sell high.
when something is soaring consistently for a YEAR, buy it and see what happens. if it starts to crash, sell it. i have a program i wrote myself, it not only monitors the price, it monitors the rate of increase or decrease. if it starts to crash too quickly, i have it set to notify me so i can sell.
why does a "bubble" mean i shouldn't invest AT ALL??
my BTC were about 2k when i bought them. they're worth 7K each now. someone tell me why this was such a terrible idea?
"...bitcoin is going to plummet back to somewhere near what the true transactional and holding value of BC is."
Which is? Gold stopped being a Currency Of Trade during the Carolingian Era, and became a Currency Of Account. It pretty much stayed in Vaults, and most people never saw any. This stayed true for some 600 years; what people actually used was Silver and Base Coins.
This was remarkably stable because the Units were reasonable. A Penny bought a "Penny" Loaf, which weighed a Statute Pound, (A Unit that did vary...), and a Penny bought a Gallon of Beer... more or less. This was not arbitrary; the same amount of Grain was used for either, with Value Added by baking or brewing.
People were payed in Pennies, or Sous in France. A worker may earn as much as an English Monetary Pound or French Livre or two in a year, which was based on Gold, but actually paid in Silver. (The idea being that Silver weighing a pound was equivalent to Gold weighing an ounce. They really did think all this out quite well.)
The Dollar works as a unit of Trade partly because it is a reasonable unit. What the hell is somebody going to actually do with a $70,000 Bitcoin? Even a $70 "mini"-Bitcoin is not a reasonable unit. (Yes, the "Wilson", a $100K Gold Certificate is still valid. Nobody uses them.)
A $70 Bitcoin might work. That would make a "mini"-Bitcoin worth around 7 Cents, which may be inherently inflationary at first, but not totally unreasonable.
Pretty much any valuation above say the mid 2013 Bitcoin tradings has been pure Speculation. And when Bitcoin does the Big Belly Flop, not much will have been lost, except a whole bunch of Megawatts and injured Libertarian Pride.
At least Tulips could be planted, and parts are marginally edible.
It will be spectacular when it does go down.
Bitcoin is different in that the global number of transactions per second is limited. Only about 7 people can sell per second, in the entire world.
Wanna sell yours? Either you sell for cents on the dollar or you ain't selling at all.
When that happens I'm gonna put in some _really_ low bids for bitcoins.
No sig today...
and I've been wrong for many years. it could crash pretty hard and still be far above where it was back when I started predicting imminent disaster. Still wouldn't touch it though.
This program was made possible by a grant from the Ultra-Humanite, and viewers like you.
How do you "trade" with it when the network is limited to single-digit transactions per second? How much will it be worth when people start getting stuck in queues, waiting several hours/days for transactions to complete?
No sig today...
Just look around - people are actually discussing gold quite often these days even without an apparent bull market. On Slashdot!!!
>Which is?
I honestly don't know. I would say north of $500 and south of $1500 but a lot of the value is contingent on things outside my planning horizon and knowledge. For example, Bitcoin has real and significant value to fairly normal people in Venezuela or similar situations. If Venezuela stabilizes their political and economic situation (and the hyperinflation), then the legitimate demand for BCs in Venezuela will go down, and the value as well. Likewise increasing currency instability and devaluation in other countries could lead to even more demand for Bitcoin.
Bitcoin at this point is like any other fiat currency, except it's not state backed: It's value is propped up by people's belief that it can be used as a store of value and a medium of exchange. In some areas (e.g., Venezuela), it fits the ideal characteristics of "money" better than the Bolivar does.
..there might be a supporting reason. With gold being manipulated by China and the U.S. to allow China to accumulate gold reserves as a hedge against the devaluation of their dollar denominated reserves, the store-of-value perception of gold may be damaged. Some may be going to Bitcoin as an alternative store-of-value that actually follows a market.
E Proelio Veritas.
candlestick painting can be only done with low volume. this market is huge
I think if more people took a good deep look at the protocol and network, they could see the value in it.
Really? So what's negative equity about, then?
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
More people will trade in Bitcoin and that means more demand, and thus the price should go up. But what is the appeal of Bitcoin? There are really three strands; the limited nature of supply; fears about the long-term value of fiat currencies in an era of quantitative easing; and the appeal of anonymity.
These are NOT factual statements; Bitcoin could have other appeals to people than acknowledge, AND this might be in error, and yet Slashdot is writing as if these are established facts, rather than stating what person's opinion this is. As a matter of fact, the "appeal of anonymity" might be even more bogus, since Bitcoin transactions are recorded and public forever.
These three factors explain why there is some demand for Bitcoin but not the recent surge. The supply details have if anything deteriorated
Because the author doesn't even bring in significant happenings and events related to the technology.
It's like "find reason to reject X other things I constructed, therefore this other theory I have must be true"
People are buying Bitcoin because they expect other people to buy it from them at a higher price; the definition of the greater fool theory.
Well, that might be true for some or not, maybe the expect to transact in it, and for it to gain in value as they transact in BTC.
Except if it was fiat inflation driving this, you would expect similar bubbles elsewhere (e.g. base metals, gold). You don't, some base metals are still near historical lows. Which is a pretty clear indicator it's not a drop in the value of fiat driving the rise in bitcoin.
Greater idiot's theory and speculative attacks. Just the fact that you can buy MDMA with bitcoin will keep it alive. Government is stupid not to recognize, embrace and extend: legalize markets, use bitcoin and regulate its use so that they do catch evil people doing evil things (selling tanks or bazookas), but leave the fucking rest of us alone.
Being first isn't everything, consider MySpace. Vendors will accept altcoins, that's a given. Hard to see those using crypto as a currency, would choose bitcoin over alternatives that are faster and cheaper. This is not like a Visa/MasterCard monopoly, barrier to entry is low.
I bought 3 BTC at about $35 each. I used them a while later to buy 2xHackRF, BeagleBone, RasberryPi and CNC servos. All in all, about $2000 of kit. And sold the rest of my BTC for about $430 I thought I'd done really well. If I hadn't sold they'd now be about $23K. Hmmm. Better to be a year early than an hour late. I keep trying to remember that.
What an obvious hit piece.
A much more plausible reason for the demand for Bitcoin is that the price is going up rapidly
Plausible WHY?
It's a brand new thing maybe there are brand new forces at work here....there is just zero reasoning in this article. "Bubble....speculation" repeated again and again.
This is just the establishment shitting its pants and trying to smear some on Bitcoin.
anonymity is good....for criminals
This is literally what it says.
"The only people who want to use Bitcoin and/or cash are criminals"
Yes, everyone who doesn't want to be a slave is a "criminal".
And as They try to codify this conception through their bought-and-paid-for bureaucracy which has infected the legislature, the executive, and the judicial, they will soon place the straw that breaks the camel's back and their empire will implode.
Lately there is a bubble in irrationality, so if you can predict irrationality, you'll be rich.
"First they came for the slanderers and i said nothing."
It's still a scam. It's the new drug designed to indoctrinate and enslave you and your family.
Only about 7 people can sell per second, in the entire world.
Wrong. When your bitcoins are on an exchange, there's no limit to how fast you can trade.
Besides, why would you want to sell ? Anybody who's been holding bitcoin over the last couple of years has already seen a crazy rollercoaster ride. People like that don't freak out easily.
When that happens I'm gonna put in some _really_ low bids for bitcoins.
And someone else will do the same, but with a slightly higher bid.
George Soros - “When I see a bubble forming, I rush in to buy, adding fuel to the fire, That is not irrational.”
George Soros = $25 billion, one of world's most successful investors
Key is to jump out before it pops.
and your $7,000 bitcoin is going to plummet back to somewhere near what the true transactional and holding value of BC is.
How do you know that the true value is less than $7000 ?
"China" is not an entity in this game.
There are many diverse interests in China and no one can compel them all to act in the same interest. The producers would scuttle their operations rather than destroy the value of the thing they built their livelihood on no matter who is telling them to do it.
Not everyone is a brainless authoritarian (like you), especially entrepreneurs.
It is digital and thus it can be hacked.
if your bank gets robbed, like Mt. Gox.
You're incredibly stupid and talking out of your ass. No it can't be hacked. It's mathematical. You can't fake transactions without doing the work and showing every step of it to everyone else. If you trust someone with your key, you are not using the security features of bitcoin. Sure every god damned computer in the world is backdoored and your key might be stolen, but people who have their lives blatantly stolen from them (by government actors, the only people able to use those backdoors) tend to take up arms and cause more damage in value than they lost. You know, they tend to topple regimes.
Bitcoin will have to be defeated some other way unless it becomes so much of a threat that civil war seems a better option for the establishment.
God DAMN this topic is being shilled to hell.
Really? So what's negative equity about, then?
Plus anyone who lived in a in-city neighborhood during the days of white flight knows that the arrival of just one of the "filthy other" can make your entire neighborhood's home values plummet even though the market as a whole is rising.
And entire neighborhoods have had their value plummet when old toxic waste dumps were found underneath, coal seam fires, and rising methane deposits.
I had an uncle whose farm got cut into two pieces by a new interstate highway - it left a 30 acre piece stranded that's now 6 miles from the nearest exit with no paved road to it. What's that worth now?
It might be worth something to someone whose land is adjacent to it ... but if that person knows it's of no use to your uncle he can drive a hard bargain.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
why does a "bubble" mean i shouldn't invest AT ALL??
Because it's gambling and gambling is stupid. You are of course free to ignore that advice, and if you come out ahead it doesn't mean you weren't stupid, it only means you were lucky.
my BTC were about 2k when i bought them. they're worth 7K each now. someone tell me why this was such a terrible idea?
"I bought a dozen lottery tickets the other day and doubled the money I spent. Someone tell me why this was such a terrible idea?"
At first I thought you said Candlejack. I haven't heard that name in
Simply because of artificial scarcity.
Unlike gold, when BC hits it's limit, the only way to increase the supply is to pay with smaller and smaller bit of the coin, At some point it will be very difficult for people to acquire BC, be it because the coins are split too much or the price of the piece is too great. Remember for every BC split, you're basically moving the decimal point to the right. In simpler terms, you are multiplying the total number of BC by 10.
So you could say that gold has a finite supply, and I'd agree 100%. The difference is that it can be recovered from prior use, and while the Earth has so much, there is more in our solar system (economics aside of finding and shipping back that gold, or the invisible issue of adding mass to the Earth).
Another problem with BC is that once lost, it's gone.
Unlike a physical object (say a $20 bill, or a gold nugget), a BC can not be recovered. I rather have a stack of partially burned bills from a house fire than a memory stick ruined. Heaven help us if we are hit by an EM.
My final thought is that while a government can always print more money, they can also print less.
You can sleep in a house.
By that logic everything that's gaining value, but might eventually lose value is in a "bubble". Cool. The term "bubble" is now meaningless.
Nobody is looking at Bitcoin for anything but currency replacement commercially. It is simply not useful for anything else. Sure, Etherium, for example, still has design problems, but once they are ironed out, it can be used for all those contract and supply-chain things, while Bitcoin will never be useful there. But Bitcoin is only useful as a currency replacement if it has a reasonably stable exchange rate. (It already fails on anonymity, which other crypto-currencies do not.) It does not. So, in essence, Bitcoin has absolutely no sane use at this time and hence it is basically a pure pyramid-scheme.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
I use it to buy things and transfer funds to international contractors. The savings over Western Union et al is substantial. It is also very portable. If you are on an exchange, it is simple to go between Cdn and USD and BTC and others.
I mined four coins when they were around $200. I cashed in two for $3600 cdn and have been slowly spending the rest.
It seems like a fine currency to me ...
Bitcoin is a bubble? so what? I bought as much as I could after the BCH fork and I sold when it hit $10K in my local currency. I paid off all my debt, got my car fixed, took my girl away for a lovely weekend and am now preparing for a nice christmas break. No regrets.
Nothing gets a nerd riled up like his love or hatred for cryptocurrency.
All the broken clocks in here will get to be right again at the next cycle of profit taking.
Some people act like when a bubble bursts you are left with nothing. This isn't always true. Bitcoin does look like a bubble but if it doesn't burst until $100,000 and you bought in at $7000 you still will be left with positive returns. The problem with Bitcoin (and most new techs) is its hard to access the true value of it. Bitcoin does offer a lot of value to many across the world. Decentralized currency has it benefits and disadvantages. Don't let something new and revolutionary pass you up just because your to proud to admit you weren't the first to see it coming. The rise in value for cars, PCs, Internet companies, social media, and many more appeared to be bubbles but yet here they still are. Hell Amazon stock looks like Bitcoin from $5-$1000+ in a short time frame. Maybe amazon stock will crash but I doubt it will go to 0 in the next 30 years. Same with Bitcoin.
I was hoping there would be one of the many many "this bubble will go forever because it's totally not a bubble!" folk in here. Thank you for not disappointing. :)
You quoted something that no-one said to make yourself feel better. Is it a bubble? Maybe maybe not, only time will tell. We're still hearing how real estate is a bubble 20 years on. Some clowns are still bitching about fiat currency being a bubble. Bring back the Gold Standard!
BTC could last 5 more minutes, 5 months or 50 years who's to say? I can't but what I have seen is that the technology is sound, and there is limited supply and increasing demand. If BTC does reach $70k what will your position be then?
Wrong! China holds most.
China isn't a person. Even if the Chinese govt cracked down the value would drop temporarily until others took up the slack (there's queues of non Chinese residents lining up for cloud mining services not in China)
Given my fuzzing audits on several exchanges - you're better off with a bank.
Ever heard of a wallet? Based on the other gibberish you wrote probably not...
Literally every other bubble has the same evangelists spouting off the various reasons why it's not a bubble and why this time it's different.
Like Real Estate and the Tech Boom etc. Oh wait...
BTC may be a bubble, it may not. But just wishing it to be one doesn't make it so...
Real Estate never really loses value
So you've never been to Detroit?
> When a single btc will be worth $70k, those idiots will still spew their usual nonsense.
It's because they didn't think to buy any when it was $100, now they just hoping it's going to crash an dpeople loose money.
Just look at some comments here.. borderline 'hate' and hope it will crash for example, from above:
"It'll be a thing of beauty. A death spiral never before seen in any other 'bubble'."
And you can see this every time there's a bitcoin news here.
Disclaimer: I don't have any bitcoins. Wish I was smart enough to invest couple of K, 5 years ago.
I wonder is their a point where the bubble is so big i.e. a trillion dollars that's its crossed a threshold to where it would become extremely difficulty to move a lot of value out fast enough to effect a crash. I.e. where would it all go, probablys 10's of 1000s of people selling off millions of dollars worth of bitcoin ?
Bitcoin may not be one of the driving forces behind the massive recession and housing crash that will start in May 2019. But if nothing else, bitcoin will get caught up in it. Hear me now and believe me later. I am always right about these things. Always. I have proven this again and again and again. I am Cassandra, the voice of doom predicting the fall of Troy. Nobody ever wants to hear about it, but it is true. The one good thing is that because there's never really any way to get rid of anything that was ever on the internet, I WILL be going back in 2019, collecting all of my negative predictions that nobody wanted to hear, and posting them all, with lots and lots of "I told you so" involved. ;)
Short answer: I don't.
Longer answer - it's a thesis premised on the fact that a lot of people are buying Bitcoin out of speculation, which is driving up demand and price, but isn't based on any underlying transactional demand (e.g., preferring to use BC for transactions over cash or credit cards) or as some other sort of vehicle (e.g., safe store of value in places like Venezuela where inflation is rampant).
>By that logic everything that's gaining value, but might eventually lose value is in a "bubble". Cool. The term "bubble" is now meaningless.
No, by that logic everything that's gaining value mostly by speculation is a bubble. Given that higher liquidity options exist for blockchain transfers, what apart from speculation do you think is driving the dramatic price/value increase in Bitcoin over the past year?
>Some people act like when a bubble bursts you are left with nothing.
>Don't let something new and revolutionary pass you up just because your to proud to admit you weren't the first to see it coming.
I'm not too proud. I missed the BC train. I wish I had bought in (or used my graphics cards to mine them) back when they were 25 cents a BC. Or bought in when they were $300 a BC. I had a friend that bought a bunch of steaks with his mined BC back when they were around 10 cents per BC. Shit happens. I missed on Apple too.
Look at the bright side, if I did buy into BC, it would be the top signal, and it would come crashing down. Me refraining from buying in is keeping your gains safe.
>Like Real Estate and the Tech Boom etc. Oh wait...
I can make a pretty decent argument why the tech boom isn't a bubble. Likewise, I can make a decent argument why blockchain currencies aren't valueless. But I can also make a pretty decent argument why blockchain currencies are probably overvalued and being pushed to unsustainable levels by speculation. FWIW, I hope you get rich/stay rich off of your investment. It's not personal, it's just my personal opinion and I could be wrong.
>Like Real Estate and the Tech Boom etc. Oh wait... Likewise, I can make a decent argument why blockchain currencies aren't valueless. But I can also make a pretty decent argument why blockchain currencies are probably overvalued and being pushed to unsustainable levels by speculation.
Let's hear it then. I don't know either way, but what I do know is how supply and demand work, and hype curves, and my gut tells me we aren't even half way there.
:)
Right now, it's only finance and tech nerds getting into CC, which is less than 1% of the market. When my mum starts talking Bitcoin then I'll get more cautious about saturation, but I think this thing still has a lot of legs left.
This is my opinion, and I'm known to wrong quite a lot. I accept that, but I don't accept it's bubble just because someone people can't believe how much it's worth.
In other news BCC doubled in price since my last post
I suggest you do more reading about Bitcoin and blockchain in general. Here's a start, about 51% attacks : https://www.youtube.com/watch?v=ncPyMUfNyVM
>Let's hear it then. [...] When my mum starts talking Bitcoin then I'll get more cautious about saturation
Let's talk about your mum. What would be the motivation for your mum to get involved in crypto currencies? It's a rhetorical question. Here's the reality (as I see it, which may be flawed). There are some core constituent users of Bitcoins that represent non-speculative demand:
- early adopters like the anti-central bank people that do it because they don't like fiat currencies, supporting the man, the Federal reserve, etc
- people operating in the black market or grey market for goods and services that may be frowned upon by the legal authorities.
- local and international money transfers
- people who live in hyper inflationary countries like Venezuela where they need something other than the Bolivar or the Zimbabwe dollar to store wealth in a currency/money like vehicle.
The reality is, outside of speculation, Bitcoin doesn't offer any material advantages over existing currencies or currency analogues (e.g., credit cards) for most people. It's harder to use, fewer vendors accept them, it takes 10-15 minutes on average for the first transfer confirmation, and longer for a complete resolution (granted, this is a Bitcoin issue rather than a overall CC issue). But, speculation - which is the root of all bubbles, is a hell of a draw to Bitcoin. If I had invested $1000 in 10 cent US dimes in 2010, I would have, in real value terms, lost about 12% of my assets in terms of purchasing power. Whereas if I had bought 4,000 Bitcoins instead, I would be a millionaire several times over.
When you tell me things like BCC has doubled in price since your last post, you aren't speaking to the utility of BCC as anything other than a speculation vehicle - and you may be right and I might be wrong about the inherent underlying value of CC overall - a lot of our respective opinions I think are based on what our guestimate is on the potential network size of CC combined with (any) uncertainty around government action / repression / taxation. For example, let's say I fix the "real" value of BC at around $500 based on my estimate of the potential network size. If I'm off by a order of magnitude - that justifies (ball park), the current valuation. If I'm off by two orders of magnitude - it means it could be worth $50,000 per BC. But it's all speculative, and the collapsing function will be time.
Now, on to the tech bubble or why it isn't a bubble (even though it was). The reality is technology has made our lives dramatically different (if not better) over the last 2 decades and dramatically changed the way we interact, shop, and work. There were and are bubble aspects to valuations, but companies that were fundamentally sound (like Amazon, for example) didn't collapse back to nothing when the tech bubble "popped". There is an inherent risk of CC popping back to close to nothing (relative to their current valuations) depending on what happens in the next couple of years or so.
There are some core constituent users of Bitcoins that represent non-speculative demand:
You missed the most important one, the one that has driven all the most profitable companies in the last 200 years, that is people who are interested in innovative and disruptive technology. Blockchain and Crypto Cuurency is the next steam engine, airplane, or car. Even if Bitcoin doesn't survive, the technology isn't going anywhere. And a lot of people in Finance and Tech are interested in that.
The reality is, outside of speculation, Bitcoin doesn't offer any material advantages over existing currencies or currency analogues (e.g., credit cards) for most people.
Right, by why is 'most people' important? The most popular shows on TV gets less than 10% of the population watching it (usually closer to 2-3%), yet TV shows are a thing (Ironically TV was considered a fad for quite a long time too)
Supply and Demand is all that matters in economics, so you all have to ask yourself is either of those things going to change anytime soon? Supply is fixed and demand is still in the hobbiest/enthusiast stage, which means it's still early days. Which is I why I made the comment about my mum. When regular people are talking about their BTC 'investment' then I'll start to worry, but right now there's plenty of movement before we get to that stage.
It's harder to use, fewer vendors accept them, it takes 10-15 minutes on average for the first transfer confirmation, and longer for a complete resolution
All true for daily transactions, not true for moving money around esp overseas where banks take much longer and charger higher fees. In this space Bitcoin is already winning which is a big driver of demand. Billions of Indians, Chinese and Russians who want to move money around.
But it's all speculative, and the collapsing function will be time.
All new technology is speculative. And the key is whether that time function is 5 minutes or 50 years. There's nothing to suggest that Crypto currencies are going away soon.
There is an inherent risk of CC popping back to close to nothing (relative to their current valuations) depending on what happens in the next couple of years or so.
Of course. there's also a chance that the real market for CC is in the hundreds of millions of people and we're not even close to that yet. Supply is fixed, so if demand continues to go up, then the price will continue to rise to the actual market value. The only question is where that actually is.
Sounds like we are in violent agreement.