The Case that Bitcoin Is a Bubble (economist.com)

An anonymous reader shares an excerpt from the Economist: It seems that every day, Bitcoin seems to hit a new high. But the reported price can move up and down by $1,000 or so within a few hours. This might have made it a great investment for those who got in at the right price and are nimble enough to get out in time. But it doesn't make it a useful means of exchange (Editor's note: the link could be paywalled; alternative source). When the price is rising fast, those who use bitcoin will be reluctant to part with it; when the price falls, those who sell goods will be reluctant to accept it.

Comments

Makes stable pricing impossible.

[ScentCone]

Though not AS volatile, it's the same sort of problem that would come with trying to use actual gold or silver to buy stuff. The vendor would have to be constantly adjusting the price to reflect the day's pricing whims. Very inefficient.

Re:Makes stable pricing impossible.

[Anonymous Coward]

Physical metal dealers introduce a spread that soaks up the second-by-second changes in gold price. Sometimes they just use a single gold price for the day.
Gasoline sellers adjust their prices daily.
You're going to run into the same "very inefficient" problem if you keep trying to buy items priced in USD with CAD because the exchange rate is subject to the day's pricing whims. Exchange rates can (and do) change at any second while trading is active, and on some days can move by 1% in a matter of minutes. Foreign exchange trading is in the trillions of dollars per day, and lots of it is speculative.
If *everything* was priced in gold and people did not "think in dollars" then vendors would not constantly adjust their price, because gold would be the standard and they wouldn't be adjusting to reflect some other price like dollars or bitcoins. Kind of like how now vendors don't change bread prices down to the second. But the price of bread at the store can still change due to supply changes, inflation, increased or lowered shipping costs, changing tax regimes, etc.

Re:Makes stable pricing impossible.

[arth1]

Yes. Bitcoin does come with some risk associated with it. You can get hacked and lose everything. The value could drop. But why is Wallstreet and the traditional currency peddlers putting in so much effort to denounce it? Hmmmm...

That many are against it for their own greedy reasons does not constitute evidence that it isn't flawed.

If it looks like a tulip and smells like a tulip...

Re:Makes stable pricing impossible.

[thaylin]

Bitcoin is not valuable. Gold and silver are valuable because it has uses outside of money, but bitcoin does not. That is the difference between gold/silver and fiat currency.

Unstable is a matter of degree. Is the dollar unstable? relative to what? Relative to bitcoin it is one of the most stable things you can get. I doubt you will see a price swing of nearly 50% ever, as we have seen with bitcoin.

Re:Makes stable pricing impossible.

[PopeRatzo]

Bitcoin is a currency that's beyond the reach of banks and governments that wish to manipulate it for their own gains.

That's the insane rambling of someone who read Ayn Rand as an undergrad and never got over it.

Banks and governments could easily manipulate Bitcoin. Just because banks and the government can't print Bitcoin doesn't mean they can't manipulate its value. Have you ever heard of the forex scandal? The United States has manipulated the currency of Japan even though the US Mint doesn't print Yen.

All it would take is a well-placed government regulation here or a series of derivative trades there to destroy Bitcoin utterly. The only reason it hasn't happened yet is that there are some powerful people trying to see if they can make a fortune or two before they pull the rug out.

Re:Makes stable pricing impossible.

[religionofpeas]

Only 10% of gold that's mined is going to industry. The rest is for investing. Explain why we are paying $1200 for an ounce that only cost $400 to get out of the ground, while supply is 10x bigger than demand, and we already have 50 years worth of above-ground stockpiles.

Re:Makes stable pricing impossible.

[religionofpeas]

All it would take is a well-placed government regulation here or a series of derivative trades there to destroy Bitcoin utterly

If I hold one bitcoin, and someone starts messing with derivatives, I still have one bitcoin. What if I just simply choose to ignore the derivatives ?

Re:Makes stable pricing impossible.

[Cacadril]

I second this - almost.

If this is not a bubble yet, it may well become one. Even if there is a utility in this currency, there is a risk that the price goes higher than this utility dictates.

One day perhaps the pattern of usage stabilizes globally, and Bitcoin attains an equilibrium value. It's hard to say we have reached this point yet. As long as it's value is so volatile, it remains a vehicle of speculation, and that destroys it's stability.

Re:Makes stable pricing impossible.

[PopeRatzo]

If I hold one bitcoin, and someone starts messing with derivatives, I still have one bitcoin. What if I just simply choose to ignore the derivatives ?

What happens with derivatives affects the underlying value of instrument from which it is derived.

Remember the economic crash in 2007-2008? Look what the trading of derivatives in mortgages did to the value of a house. Yes, if you owned a house before the crash, you still owned a house after the crash. It was just worth a hell of a lot less.

Re:Makes stable pricing impossible.

[DarkOx]

But that is only because stuff has been nominally priced in dollars. If we instead had stuff nominally priced in 10th oz gold units, or something you'd make the same argument about accepting dollars.

The fact is gold and silver are stable enough in terms of total supply, liquidity ( in the sense people are willing to part with it ), and distribution, that either could probably work as medium of exchange either directly or backing some paper/electronic system. We can have a debate about if a gold standard would be good for our society not. I see both positives and negatives of that but that is a tangent. It could be made to work through.

Btc on the other hand has some major problems. The total supply is fixed, as a practical matter there will always be more gold to mine, if deflation gets strong enough to justify it; on the other hand all practically discoverable bitcoins will be found at some point. The money supplies growth isn't just limited it essentially has a hard cap. The next problem is because its new its kinda illiquid and forces of volatility, deflation, and block-chain limitations in terms of settlements, isn't helping. People can't gain trust in for trading real tangible property beyond a speculator class. Finally the distribution is entirely to narrow currently with 1000 or so people controlling most of the market. It over incentivized the early adopters.

I don't Btc is ever going be the currency Joe Sixpack, actually buys a six pack with for these reasons. Blockchain tech is her to stay. Some future crypto currency might become ascendant and see wide use, but Btc aint going to be it.

Re:Makes stable pricing impossible.

[bobbied]

So... probably not a bubble, unless the desire to move money around with no traceability ceases to be desireable

Seriously? Not traceable?

You just *might* want to take a look at how a bitcoin changes hands and how long the block chain exists. EVERY bitcoin transaction from the beginning of time is traceable and will be as long as it remains a "thing".

What BitCoin allows you to do is to remain anonymous, if you are careful, and if you never try to convert your BitCoin into something else that can be traced, and what's a BitCoin worth if you cannot convert it to something else?

So, the traceability idea is a misstatement and the anonymous ownership is not guaranteed. BitCoin may not be what you want to hold as a criminal or you don't want traceability for what you are doing. Cash might be better for you. Cash IS untraceable (assuming nobody knows the serial numbers in question), nearly universal and anonymous if you are careful.

Re:Makes stable pricing impossible.

[religionofpeas]

derivatives affects the underlying value of instrument from which it is derived

They can only affect the underlying asset if people trade that asset. And the asset price can only go down as long as people are selling it. While the big traders are selling, and pushing the price down, the real believers will accumulate the artificially cheap coins. At some point, the big traders are running out of coins to sell, and the market can go back to its normal value.

Re:Makes stable pricing impossible.

[Anonymous Coward]

90% of mined gold goes into JEWELRY. Gold and silver (to a lesser degree) are almost unique suited for jewelry since they are naturally anti-septic and non-reactive. You may not personally see jewelry as being an inherently valuable application, but enough people do that it legitimizes the price.

Re:Makes stable pricing impossible.

[vtcodger]

Funny you should mention Silver, because the only thing I recall in the past six decades that remotely resembles the cryptocurrency whackiness was the Hunt Brother's abortive attempt to corner the Silver markets in 1979. See https://en.wikipedia.org/wiki/... I think anyone seriously considering playing this stuff should strongly consider the possibility that these markets are being manipulated and that some somebodies somewhere are planning to (or very likely already have) make off with pallets of non-crypto currencies leaving everybody else with vast holdings of worthless zeros and ones.

Re:Makes stable pricing impossible.

[squiggleslash]

So... probably not a bubble, unless the desire to move money around with no traceability ceases to be desireable

What you're looking for if you want something with no traceability is called "cash". Last I heard, dollar bills and coins didn't have lists of IP addresses of people who used them permanently engraved upon them.

Re:Makes stable pricing impossible.

[religionofpeas]

Why don't you go and mine gold if you know how to get the ounce for $400?

I don't own any gold bearing property. And nobody's selling theirs for $400/ounce.

Re:Makes stable pricing impossible.

[Rei]

No. 50% of gold is used in jewelry. The 40% that's used for investments is backed by the fact that people want it for jewelry and similar.

How's your new bitcoin necklace looking?

This said, it's not that bitcoin doesn't have a base market. It does. Buying illegal things, paying ransoms, and laundering money. Of course, that's not exactly the sort of base you want if your hope is that governments will never take measures against your "currency".

Re:Makes stable pricing impossible.

[Darinbob]

The two things propping up the bitcoin bubble are ideologues and those with a need for a money laundering outlet. One group is pouring more money into it than the other group will ever see; and onegroup is doing more effort in marketing the legitimacy of bitcoin than the other has the capability of doing. Symbiosis.

Re:Makes stable pricing impossible.

[religionofpeas]

Gold and silver (to a lesser degree) are almost unique suited for jewelry since they are naturally anti-septic and non-reactive.

Titanium, brass, copper, (anodized) aluminum, stainless steel, tungsten. Or if you don't want to restrict yourself to metals: plenty of plastics, rubber, or minerals. All cheaper than gold. There are stainless brass alloys that look like gold. And of course, if you really want to look at gold, there's always gold plated.

but enough people do that it legitimizes the price.

A lot of people care about the price. They don't want to get married with a cheap plastic ring, even if it looks really nice and shiny. They want *real* gold. Not because it's nice to look at, but mainly because it's scarce and expensive. It's not just decoration. It's a wearable investment.

Re:Makes stable pricing impossible.

[GameboyRMH]

It's very easy to maintain that anonymity between a wallet address and your identity, including when converting it to something else. Ransomware and illegal markets on the darknet couldn't operate otherwise.

There are already laws around cash, and moving large amounts of it quickly becomes impractical (less so with 500 Euro notes, which I think should be phased out for this reason).

Re:Makes stable pricing impossible.

[religionofpeas]

I count jewelry as investment. If you just wanted a pretty necklace, there are plenty of cheaper materials that look just as nice.

When aluminum was just invented, people made jewelry out of it. Now that aluminum is plentiful and cheap, it has lost its attractiveness as jewelry.

Re:Makes stable pricing impossible.

[140Mandak262Jamuna]

At some point, the big traders are running out of coins to sell, and the market can go back to its normal value.

And the normal value will be determined by people who are willing to accept it, who are not the "real believers" of bit coin, who has seen how the value has been manipulated downwards by other big players.

So what do you think the new normal will be?

Re:Makes stable pricing impossible.

[PopeRatzo]

They can only affect the underlying asset if people trade that asset. And the asset price can only go down as long as people are selling it.

The financial markets over the past 20 years have proven every thing you said is wrong.

After telling us why Bitcoins are not like precious metals or stocks, you want to pretend that Bitcoins are just like precious metals or stocks. The value of Bitcoin can be manipulated without a big sell-off simply by making them impossible to sell.

Re:Makes stable pricing impossible.

[religionofpeas]

And the normal value will be determined by people who are willing to accept it, who are not the "real believers" of bit coin

The real believers will use it amongst themselves. There are 7 billion people. If only 1% believes in bitcoin, that means 70 million people fighting over 21 million coins.

how the value has been manipulated downwards by other big players.

After the big players have dumped everything they can, they can't manipulate it again.

Re:Makes stable pricing impossible.

[religionofpeas]

The value of Bitcoin can be manipulated without a big sell-off simply by making them impossible to sell.

How are you going to prevent me from sending my bitcoin to someone else in return for money or goods ?

Re:Makes stable pricing impossible.

[Mindragon]

http://www.usdebtclock.org/gol...

Re:Makes stable pricing impossible.

[Mindragon]

Bah the last post messed up.

Here's a link to where all of the Gold goes... (Gold demand by country)

http://www.usdebtclock.org/gol...

Re:Makes stable pricing impossible.

[rjstanford]

Jewelry on the secondary market often trades even with or slightly below raw materials value.

Re:Makes stable pricing impossible.

[religionofpeas]

Which is a good reason for people to want real gold jewelry. When things go bad, you always have the option of selling/pawning it.

Re:Makes stable pricing impossible.

[religionofpeas]

Gold looks like gold from every angle and does not change color. Brass changes color with angle.

Ah, so that's why people prefer rings with pieces of cheap window glass, because it looks like glass from every angle, and does not change color. Diamond changes color with angle.

Re:Makes stable pricing impossible.

[religionofpeas]

My guess, they make it a felony plus mandatory harsh sentencing similar to possession of certain substances on a certain list.

Yes, that's possible, but the argument was about destroying value with derivatives trading.

Re:Makes stable pricing impossible.

[jwhyche]

What you're looking for if you want something with no traceability is called "cash". Last I heard, dollar bills and coins didn't have lists of IP addresses of people who used them permanently engraved upon them.

Even cash can be traced to some degree. Each bill has a unique serial attached to it. I'm positive each bill is tracked as it goes through the banking system. Once it hits the streets though all bets are off.

Of course we have heard rumors that the feds have attached RF tags to each bill. That they can tell how much and what individual bills you have in your pocket from stealth satellites in orbit. Personally, that is so much hogwash but I suppose if they wanted to track a single bill they could.

Re:Makes stable pricing impossible.

[teg]

The value of Bitcoin can be manipulated without a big sell-off simply by making them impossible to sell.

How are you going to prevent me from sending my bitcoin to someone else in return for money or goods ?

If the price is tumbling quicly downwards, the problem will be finding anyone who will accept it as payment. Since fewer sellers would accept it as payment, the price of bitcoin in real money would fall even quicker.

Re:Makes stable pricing impossible.

[bobbied]

Ah, but the post I was responding to said "traceable". BTC is the definition of online traceability because we have a list of *every* transaction ever made in the public domain.. If I *ever* discover your wallet ID and tie it to you, I can go into the block chain and trace EVERY transaction that wallet has ever made and know it was you. It's like a bank that publishes every transaction in every account by account number on the web for all to see and verify. It would be totally traceable... All you need to do is associate an account number with an individual and volia, you know every transaction made on the account they own.

You run the risk of exposing your relationship to that wallet ID with every transaction you make that converts BTC into something else. Eventually, somebody will want something with real value for that BTC and THAT is where the risk is. Such transactions are NOT anonymous. If you want to buy something you need to have it delivered someplace right? Convert it to cash and you will have to some how physically get the cash into your hand. All these activities are where your true identity could come to light and your whole transaction history laid bare for some criminal investigation or some thing.

Re:Makes stable pricing impossible.

[brantondaveperson]

The real believers will use it amongst themselves. There are 7 billion people. If only 1% believes in bitcoin, that means 70 million people fighting over 21 million coins.

Sometimes I hear this argument at work. There are 7 billion people, if only 1% of them buy into my crazy notion of value, or my bonkers product idea, then I'll make a mint.

What gives you the idea that one percent is a small number? You just pulled that quantity completely out of thin air, the only justification you have for this is that one percent appears small. You may as well try to justify a trade in antique pokemon cards, and this becoming a significant "currency".

Re:Makes stable pricing impossible.

[LynnwoodRooster]

And even with all that, and mainly as an investment vehicle - it's seen a maximum of 16% volatility this year (from it's peak to its minimum). Gold is actually relatively stable - which is why it IS a good investment vehicle, it's relatively solid and stable, generally tracks inflation, not a lot of downside present - but not the potential for massive upside like the BTC bubble. It's also why gold is easy to convert to cash pretty much anywhere - because the price typically changes no more that a few dollars per ounce per day. Not effectively hundreds of dollars in a day like BTC.

Re:Makes stable pricing impossible.

[PopeRatzo]

Derivatives were what screwed over the banks because the ponzi scheme ran out of fuel.

The Bitcoin is designed to have a fixed amount of fuel.

Re:Makes stable pricing impossible.

[Gussington]

If it looks like a tulip and smells like a tulip...

You know the tulip thing is mostly myth right? And whenever anyone mentions it they are merely displaying their ignorance for both the original Tulip story and complete lack of understanding of disruptive technologies
I miss the days when comments were from people who actually knew the subject matter....

Re:Makes stable pricing impossible.

[piojo]

Are you actually retarded? Do I really have to explain to you why plastic or rubber jewelry isn't practical?

Not all plastics are like the junk CD cases are made out of. You can get sufficiently durable/inert plastic. Lack of heft is the big problem I see.

Re:Makes stable pricing impossible.

[arth1]

You know that the tulip is just a parable, right?
Its usefulness is as a symbol for greed based crazes. What the craze is about and how they differ is irrelevant - it's the psychological drive to jump on a craze in the belief that you'll become rich that's the issue.
Any such speculative mania inevitably fails, no matter what the subject of the speculation is.

Disruptive technologies? Well, so was railroads and the internet, but that didn't prevent the railroad mania and dot.com bubbles.
It's irrelevant what is speculated on; the issue is that once it becomes a loop feeding on itself, attracting more and more people, it becomes a certainty that it will end badly, and the losers will be those who had the highest hopes and least understanding that it was a risk.
People who don't learn from history are doomed to repeat it.

Re:Makes stable pricing impossible.

[Gussington]

You know that the tulip is just a parable, right?

Used incorrectly by people who neither understand the original Tulip story nor the technology behind Cryptocurrency. Yes I absolutely know that 100%.

Its usefulness is as a symbol for greed based crazes.

It's only useful if you can predict something with reasonable accuracy. Since it can't, its useless.

What the craze is about and how they differ is irrelevant

It's absolutely relevant. Otherwise any idiot can just shout Apple shares = Tulips. Berkshire Hathaway = Tulips, Standard Oil = Tulips etc etc.

- it's the psychological drive to jump on a craze in the belief that you'll become rich that's the issue.

I have some news for you, some people do get rich from things.

Any such speculative mania inevitably fails, no matter what the subject of the speculation is.

Of course, over time all things fail. The universe ends in the big crunch apparently so this statement is also useless at predicting anything.
Like with say the Pyramids, Sailing ships, Gold mining, Oil, the Railway, Steel, Electricity, Phone, TV, Internet, a lot of people got wealthy out of those industries. The common trend is the early adopters made the most gains.

Disruptive technologies? Well, so was railroads and the internet, but that didn't prevent the railroad mania and dot.com bubbles.

And vast, vast profits....

It's irrelevant what is speculated on; the issue is that once it becomes a loop feeding on itself, attracting more and more people, it becomes a certainty that it will end badly, and the losers will be those who had the highest hopes and least understanding that it was a risk.

It will end badly for some, and will end well for others, like every other new innovative technology. Blockchain isn't just feeding on itself, it is innovative technology for distributed transaction and payment industries. Industries worth Trillions of dollars. Even if some speculators lose in the short term, this isn't going away..

People who don't learn from history are doomed to repeat it.

True. One thing I've learned from history is that innovative disruptive technologies (this is where the tulip analogy breaks down) have the potential to create massive opportunities and wealth.
I've also learned that when these new technologies were invented, there was no end of luddites who didn't get it, and would claim loudly that it was just a fad.

News For Bitcoin..

[Anonymous Coward]

Stuff that matters?

Re:News For Bitcoin..

[Freischutz]

Stuff that matters?

Yes, if only to teach the less savvy not to get into a market at the peak of a bubble.

Re:News For Bitcoin..

[ctilsie242]

It does matter. Like tulips, Beenz, and Flooz, this is history in the making. Bitcoin has a useful place, but where its value winds up stabilizing at... who knows.

Re:News For Bitcoin..

[arth1]

Yes, if only to teach the less savvy not to get into a market at the peak of a bubble.

Don't get into a market before the peak either, unless you're an unscrupulous jerk who like to take money from others who don't understand as much as you do. Anyone with an iota of sympathy for fellow man will steer clear of anything that smells like a bubble.

Re:News For Bitcoin..

[Wycliffe]

$2m at least. Then I'll pay my mortgage off and send my kid to private school because I'm no longer paying a house off. kthx.

Do you realize that if bitcoin reaches $2M/coin that the amount of electricity consumed by mining would be more than double the total amount of electricity currently used in the USA?

Re:News For Bitcoin..

[religionofpeas]

Are you taking into account the regular halving of the reward ?

The big boys aren't playing

[SlaveToTheGrind]

I found this part of TFA a bit more illuminating than the summary:

The arrival of bitcoin futures on the CBOE and the CME might have been expected to bring maturity to the market, and to establish a reliable price. But the FT reports that some of the biggest banks including JP Morgan and Citigroup are unwilling to act as market-makers. That is not too surprising. Any market-maker has to hedge its own positions and that looks very hard when the underlying market has such wild swings.

Re:The big boys aren't playing

[gweihir]

And that means no stability and basically anything can trigger the inevitable crash, just as before. The hope was that the big players that actually have enough financial clout to ensure stability would do so. That seems to have failed, likely because the big players actually understand what is going on. Might be because they have some experience with bubbles.

No more tulip bulbs as go-to example

[Anonymous Coward]

I think future economics textbooks are going to use bitcoin as the go-to example of a bubble. It's a currency that is not backed by the power and might of a government and not tied to a physical asset. On top of that, very few people are actually using it to buy goods and services and its trading is purely on speculation that there will be a greater fool to buy it at a higher price.

Re:No more tulip bulbs as go-to example

[Berkyjay]

The fact that it's not backed by a government is a good thing. Name a government right now that isn't being run like shit?

Regardless of your personal opinion, the US generates a GDP of $18.5 Trillion (with a big T) per year. No amount of mismanagement is going to change that value overnight or even over several decades. The USD's ups and downs are like a straight line relative to bitcoin's. So why should anyone trust bitcoin? Because that's all money is, trust in solid form, even bitcoin. Why should any retailer take bitcoin as payment? Where is the guarantee that they can take that currency down the street and buy food with it? Can they pay their rent or their bills? The only thing they can 100% do with it is exchange it for USD.......imagine that!

So I think that maybe instead of trying to understand why no one can wrap their head around your ideas. Maybe you should studying economics a bit more so you can understand how fiat currencies actually work.

Re:No more tulip bulbs as go-to example

[bobbied]

You can bet that if BTC became illegal to trade in the USA (unlikely I know, but follow me) that the perceived value would crash, mining would stop and the currency would choke and die. BTC mining has to be profitable, or transaction fees enough to make BTC transactions happen fast enough to be reasonable. Right now, we are barely keeping transaction confirmation times short enough. There are too many other currencies that are more profitable to mine, sucking up all the hashing hardware.

Problem for BTC is that as we keep raising transaction fees and confirmation times, it's going to become unusable. The "make work" that is the mining operation, that keeps getting more expensive and time consuming to do will eventually snuff out BTC. More's law won't be able to save it.

BTC may rise and fall between now and when the general public realizes what it actually is, but eventually, it will either crash under it's own weight slowly or a government or two will mortally wound it and it will die quickly.

Re:No more tulip bulbs as go-to example

[religionofpeas]

the US generates a GDP of $18.5 Trillion (with a big T) per year

You should look at the trade balance instead. Since the '70s the US has been a net importer of goods, and exporter of promises written on green pieces of paper.

Do you think that is sustainable forever ?

Re:No more tulip bulbs as go-to example

[Berkyjay]

You should look at the trade balance instead. Since the '70s the US has been a net importer of goods, and exporter of promises written on green pieces of paper.

Do you think that is sustainable forever ?

Nothing is sustainable forever. But what makes you think this isn't a stable system? Have you studied this issue and determined that the US economy will collapse in the near future? Or do you just "feel" like it's unstable and untenable?

Re:No more tulip bulbs as go-to example

[PPH]

written on green pieces of paper.

In fact, forget the green coloring. And the blackjack.

Re:No more tulip bulbs as go-to example

[religionofpeas]

But what makes you think this isn't a stable system?

Better question: what makes you think it is a stable system. You have two parties, one of them gives valuable stuff to the other, and they get intrinsically worthless tokens in return.

Have you studied this issue and determined that the US economy will collapse in the near future?

Yes, I have studied it. And no, the US economy isn't going to collapse in the near future.

Re:No more tulip bulbs as go-to example

[Berkyjay]

Please answer my question first.

Re:No more tulip bulbs as go-to example

[Darinbob]

There are a lot of people who seem to have been studying their economics in ideological chat rooms. There is no way to change any of those minds.

No future as it stands now

[Excelcia]

Bitcoin, with the limitation is has on the final number which can be issued, has no real future. Governments are reluctant to legislate it right now for several reasons. One reason is because of the lobby of exchanges who are currently making a killing off it. The other is that legislators, as stiff and out of touch as they may seem on the outside, are quite well aware of the ability of this to go underground and they don't want that. However, once bitcoin's ability to increase is exhausted, it has no real future. Legislators will have no choice but to step in and either modify it, or ban it.

To see this, look at the best case scenario for bitcoin. Let's say that it is 100% successful and becomes the de facto world currency. Can you really have a world currency where a few individuals control a set percentage of the world wealth? Owning even one bitcoin in that scenario means you own one 21 millionth of the entire wealth of the world. Now think of those individuals and institutions that own chunks of this.

No, bitcoin cannot continue without an extension. The split that was going to happen was averted when greed got the better of common sense of those who were going to expand it. They think if they can just hold on, if they can just get it accepted by enough people, that they will have a shot at becoming fabulously nouveau riche - as in world-class monetary controlling rich. Not going to happen. The existing money structure will kill it from behind the scenes before this happens. You'll see a sudden spate of exchange breaches financial manipulations (or both) that make it volatile and end up tanking the value, then legislators will step in to protect the market from the failed experiment.

Re:No future as it stands now

[Baron_Yam]

>Bitcoin, with the limitation is has on the final number which can be issued

Also the incredible resource wastage, no way to adjust it to affect the economy, lack of mechanisms for consumer protection, impossibility to use securely in any practical way, the transaction rate limit, the transaction time problem, the transaction cost issue, the storage needs, and bandwidth requirements.

But if you can get past all that, it's ALMOST as good as a debit card.

Re:No future as it stands now

[brantondaveperson]

How will it be possible then, given the list of crytocurrencies available, for any one of them to become accepted everywhere?

Re:Does it even matter?

[Anonymous Coward]

If I use cash, I pay some money on the transaction, but that goes to roads, schools, defense, police, and other necessary parts of living in a society. If I pay BTC, it goes to a "miner", basically someone running a server farm eating up electricity, probably moaning about how Rey was created using the force by ghost Obi-wan as a "counter" to the darkness he saw in Kylo.

So those transaction fees matter. They're far too high, and always will be. And couple that with the fact BTC varies in value by a significant percentage each day, and you're looking at something that cannot be used "to buy a pack of gum", at least, not in a way that's more practical than literally any other form of mainstream currency.

Re:Does it even matter?

[ctilsie242]

It is infinitely divisible, but each blockchain transaction can be expensive, especially if you want to see it posted anytime in the next few days. Things like the Lightning Network are trying to help with that... but stuff like that is still alpha quality.

The CASE?

[Baron_Yam]

It doesn't even need to be argued; if you're not willfully blinded by greed or some bent philosophy, it's obvious.

And I'm kind of happy regulators aren't doing much about it. There are people who know it's gambling and I don't care about them. So long as Bitcoin isn't big enough to harm the economy in general, the bag holders can suffer for their stupidity (it's not like they haven't been repeatedly warned).

On the other hand, I'm not particularly keen on letting the scammers 'get away with it'. The people running crooked exchanges, deliberately misleading fools into buying in so they can sell at a profit... not a fan.

A nice solution where the bad guys lose and the idiots suffer would be great.

Re:The CASE?

[Mashiki]

You're right it doesn't need to be, because everything like this has a bubble of some kind. The real question is just what will the ripple be when this bubble pops. How many people have say mortgaged off equity in their house to try riding the bubble? You can bet your ass that people have. How many companies have sunk short-term possible high-loss futures into this as well?

30 years ago people were selling equity in their homes at high interest rates to try cashing in on the condo bubble happening in major cities around the world. Believing that they could "sell out" and still get a head. Now just think what happens if you have a several thousand people in a major city who've done the same with the stupidly low interest rates we have and were already say $50-100/mo difference from going under, but believed they saw this as a quick way to cash out. And directly lied on the line of credit for this. People did the same thing with NORTEL stocks.

Not really gonna know just how much of a mess this is going to be until that bubble pops, but as a warning to anyone who knows someone who's done something stupid like buy into this believing that "it can only go up" when they've lost all that money, they'll probably become suicidal.

Re:The CASE?

[Baron_Yam]

> they'll probably become suicidal.

In which case I feel for their family, but I have an amazing lack of sympathy for them.

"Ignore the world telling me this is a bad idea, I could get rich quick. If it fails, instead of taking responsibility I just kill myself and leave my dependents to suffer for my stupidity".

I really don't miss people like that when they die.

Re:The CASE?

[reanjr]

I don't think anything like a systemic critical mass of people have been buying BTC on leverage. People buy BTC with credit cards, sure, but that's just because that's how people buy everything. The rumblings of a leveraged BTC collapse are probably specious. Every step of the way, everyone and everything is warning you that BTC prices can crash at any moment. Not too many people have the balls to risk their house on something like that.

30 years ago, people thought of real estate and telecoms as a safe investment. No one has ever thought of BTC that way.

Re:The CASE?

[Mashiki]

Real estate has never been a safe investment. If you think it is, you're simply showing that you've already fallen into the trap of believing that a "physical object" will always have intrinsic value. Let's look at the condo bubble, which was based on the belief that more people would move into those buildings and away from the burbs. Didn't happen. Look at the houses built in areas that were "resource only" industry towns. That $70k-140k last year is worth $10 this year.

Hell I've heard advertisements on the radio in the last month pushing "prime foreclosure" buy-in opportunities. Which is no different then buying BTC, you're buying on the basis that the value of said property will increase, when in most cases it will decrease further and the original purchaser is trying to get 15% on their initial foreclosure buyout.

Re:The CASE?

[Mashiki]

In which case I feel for their family, but I have an amazing lack of sympathy for them.

I'm sure you feel the same way when it's your brother/sister. Yeah the lack of that empathy, so good, so caring.

Re:The CASE?

[david_thornley]

Real estate is often a safe investment. Avoid bubbles. My house is still going to be a nice house in its neighborhood twenty years from now, and that has inherent value. The cost of real estate will generally go up over time, with obvious exceptions. Moreover, my house is not only more valuable than it was before the bubble, it's provided my family with a nice place to live over the years.

Re:The CASE?

[Mashiki]

Real estate is often a safe investment. Avoid bubbles.

US, AUS, NZ, CDN, Norway, UK, Sweden, Denmark, Germany, France are all in real estate bubbles. There is zero chance of avoiding them, the bubble now is worse then it was in 2008. The amount of "loss" from those countries in small prime rate moves could lead to the loss of 110T USD in economic value.

Hat Trick

[xxxJonBoyxxx]

Please give us one more BitCoin story today. I want the hat trick.

Re:Hat Trick

[squiggleslash]

That's hard because of the way Bitcoin stories work.

As Slashdot mines the news for more Bitcoin stories, they become more and more computationally expensive to find. While there may seem a lot right now, especially as more and more submitters join the craze, mining Twitter feeds, various libertarian blogs, and Reddit for undiscovered Bitcoin stories, there will eventually be an equilibrium where they just stop being profitable to find. At that point the number of stories posted to Slashdot will decrease.

Advocates of Slashdot covering Bitcoin claim that when this happens, the stories published will be more and more valuable, but many feel that the very act of reaching this equilibrium will mean that there just aren't any interesting posts left, resulting in a complete collapse of interest in this shitty "currency that's not a currency".

Re:Does it even matter?

[arth1]

It's infinitely divisible, so if the transaction fees are small enough I can still use bitcoin to buy a pack of gum.

Not if it takes an hour for the transaction to be verified.

My non-investor view

[cloud.pt]

Full disclosure: I dont invest in btc, but have seen some friends get in on the action and make some safe cash by exitting precautiously. I don't have any regrets not investing myself, as I don't have that much cash to gamble, even now that I knew it raised so much from the moments I considered it. I always saw it as gambling my family's future in a feeling, and being in IT, I like more deterministic ways of spending my hard-earned savings.

Opinion: I think cryptocurrency is being the victim of professional investor shenanigans just like the real estate/mortgage economy was before the 2007 crash - speculation over econo-babble like the subprime bonds packaging is nothing more than the equivalent speculation over techno-babble blockchain, smart-contracts and whatnot. People are basically investing in something that someone is ensuring them will have value, yet WE ALL KNOW its worth is, at present time, only based on demand and not in actual use. all investors knows this but hope they might exit before it stabilizes. They are just being too greedy.

But this is exactly why I, unlike the 2007 crash, don't think all the fuzz is actually bad for crypto - only greedy investors will lose when crypto stabilizes, i.e. crashes. Because it likely WILL CRASH according to MOST savvy sources, such as Warren Buffet. Even the notables that do support crypto aren't stating verbatim it won't crash - they just state they believe in the concept for what it was made. And that's not growing in value exponentially to make people rich, but to provide fiat to those that do not want to depend on the centralized, yet divergent supervision of standard fiat.

When it crashes, people that really trully do use crypto for goods/services transactions will swarm to acquire it. And that's the beauty of it's purpose.

I believe only the really dumb, really greedy people will lose A LOT with the burst of the bubble - those that really can't see the writtings on the wall, keep their money "there" expecting unlimited growth. I will even provide a tongue-in-cheek commentaire: the largest BTC portfolio is currently in the hands of people that invented and let Facebook slide right under their noses (the Winklevoss twins). That surely has to mean something, and it's beyond me how they haven't sold their position yet with their experience on being late to the party.

Re:My non-investor view

[squiggleslash]

What?? The Winklevoss twins are currently BILLIONAIRES because of their vision.

They are now, yes. They won't be on Thursday at 2.31pm EST. (They'll be respectable millionaires though I guess.)

The cashing out is going to be glorious. The entire Bitcoin network processing millions of transactions as millions of suckers try to exit their positions, at one person a second... makes bank runs look positively organized.

Re:My non-investor view

[GameboyRMH]

"crypto" as shorthand for cryptocurrency

GET OUT

Re:My non-investor view

[Darinbob]

Bitcoin also has a very inefficient blockchain. Remove the ideology from it and many of the other crypto currency schemes look a lot better.

Re:My non-investor view

[cloud.pt]

As I said, they haven't sold most of those bitcoins. That's the beauty of the blockchain - you can see the money flowing. Billionaires change everyday and current investment volatility is mainly what makes the top tiers change on whatever rich list you'd like to use this week.

I personally love the way you whishful think your way out of the argument, and end it with something that shows all over the previous text. Your example of a bubble alone says much about the rest of your logic, so I will rest my case now.

Re:My non-investor view

[cloud.pt]

taxes are pretty irrelevant in most countries still - in most scenarios people simply don't have to post gains in their anual forms, because there is no legislation for such matters.

In everything else you say, you're likely right. But currently, I doubt they are probing the blockchain for criminal activity, as many of the transactions of late are trading activity and it would be to hard to really pinpoint criminality.

Re:My non-investor view

[david_thornley]

In the US, if you acquire and hold bitcoins, there are no tax consequences. There are if you cash out, and spending the coins is functionally cashing out.

Re:My non-investor view

[david_thornley]

have seen some friends get in on the action and make some safe cash by exitting precautiously

They didn't make safe profits. They bought in at a time when the value was going up. Nobody knows when the bubble will burst and Bitcoin value falls. Heck, nobody knows what the stable value will be. It could be quite low, as it's only worthwhile as a flaky method of payment and something to invest in.

The Great Bitcoin "Bubble"

[Mike]

http://thegreatbitcoinbubble.c...

Right conclusion but wrong reasoning

[amorsen]

The fundamental problem with BitCoin is not its volatility. The volatility will eventually go away if the underlying technology turns out to be sound.

The fundamental problem with BitCoin is that the number of transactions it can handle is orders of magnitude below what is necessary for a reasonably liquid currency with a total value in the billions of dollars. As it is, BitCoin only works as long as most of that money either sits still or moves around in huge transactions of at least thousands of dollars at a time.

It is entirely possible that the problems get solved. However, a quadrupling like BitCoin Cash has done is just nowhere near orders of magnitude improvement.

Re:Right conclusion but wrong reasoning

[religionofpeas]

The world has $7 trillion worth of gold, most of it sitting quietly in vaults. Bitcoin could survive in a similar fashion.

Re:Right conclusion but wrong reasoning

[iggymanz]

The software algorithm is part of the tech, and the designers of bitcoin chose poorly for making a scalable system. The crash of bitcoin will make most people think the other better designed systems are too risky. Bitcoin will ruin the concept of "cryptocurrency" even though it never attained the status of a real currency.

Re:Right conclusion but wrong reasoning

[religionofpeas]

Eventually mining mostly dries up and the miners have to make money from transactions instead

There will always be transactions of course. At 100 sat/byte, a full 1MB block is worth 1 BTC in transaction fees. Make the blocks a little bigger, the coin price a bit higher, and that's plenty of money to secure the network.

Re:Right conclusion but wrong reasoning

[ElizabethGreene]

>> The fundamental problem with BitCoin is that the number of transactions it can handle is orders of magnitude below what is necessary for a reasonably liquid currency with a total value in the billions of dollars.

Parent is spot on. The root problems are that there aren't enough transactions in blocks and the blocks aren't frequent enough. The people that insist that Bitcoin should just be a settlement mechanism are stunting the most revolutionary technology in the last 20 years.

I can't understand why miners don't get behind this. The last block to get mined had 4BTC in fees in it. More transactions means more fees. If you triple the number of transactions in the block, that could be 12 BTC or double the block reward. Why is that even a question?

Re:Right conclusion but wrong reasoning

[brantondaveperson]

But this will only work if the price continues to rise. Once all the coins are found, who's going to bother continuing to run their mining rigs? The only answers that I've found are that running the blockchain will become so cheap that everyone's smartphones are doing it all the time (which will fairly obviously never happen, it's not like you're going to get any better algorithms for hashing - it's brute force, and if it ever becomes cheaper than brute force, then the entire thing will collapse anyway, because mining being hard is the entire basis of the enterprise), and that transaction fees will cover maintaining the blockchain.

If the system becomes centralised, then you'll basically have this form of currently, with a completely limited supply, and no backing of any sort whatever. Not assets, not a government, nothing. I find this hard to imagine.

Gold standard

[saltydogdesign]

The next time you're casting around for arguments against fixed-supply currencies, you can just reprint this line: "When the price is rising fast, those who use bitcoin will be reluctant to part with it; when the price falls, those who sell goods will be reluctant to accept it."

Bitcoin are not tulips

[SuperKendall]

From Twitter:

Tulips are not durable, not scarce, not programmable, not fungible, not verifiable, not divisible, and hard to transfer. But tell me more about your analogy...

Re:Bitcoin are not tulips

[Anonymous Coward]

You forgot that you can't tiptoe through bitcoins

Re:Bitcoin are not tulips

[Wycliffe]

From Twitter:

Tulips are not durable, not scarce, not programmable, not fungible, not verifiable, not divisible, and hard to transfer. But tell me more about your analogy...

The idea that bitcoin is scarce is the biggest lie there is. Every other item you list is something that all cryptocurrencies share. There are over 100 cyptocurrencies and that number is rapidly growing. A person could easily create their own cryptocurrency. All it takes is a handful of other people to also agree to settle debts with your new cryptocurrency and you've got a new currency. The only thing that makes bitcoin slightly unique is the first mover advantage so it has higher acceptance but there are several other cryptocurrencies gaining fast.

Re: Bitcoin are not tulips

[AvitarX]

Bitcoins aren't really fungible either.

If they were, you wouldn't risk getting kicked off coinbase for spending them in the wrong place.

Re:Bitcoin are not tulips

[Wintermute__]

All of that completely misses the point of the argument comparing the Bitcoin bubble to the tulip craze.
It is precisely not about the nature of the commodity being traded. It could be fidget spinners, beanie babies, futures contracts in mortage-backed securities, it doesn't matter.
What does matter is lots of ordinary investors with no understanding of what they are investing in believing that because others find this commodity desirable, it must be valuable and the price will continue to rise - and importantly, that they will be able to extract that value before the price crashes leaving them "holding the bag" of something now worth much less than they've invested in it.

Re:Bitcoin are not tulips

[Rei]

Tulips are not durable, not scarce, not programmable, not fungible, not verifiable, not divisible, and hard to transfer. But tell me more about your analogy...

The tulip market was by design an annual market, with traders fighting over the rarest cultivars on a seasonal cycle.

Rare tulips were indeed scarce. Each year, new cultivars of tulips were developed and only available in small numbers, while the demand for the rarest tulips was huge. The rarest types of tulip were rare because of a virus (tulip breaking virus) that was only transferred from an infected plant to its buds; since only a few buds formed per year, only a few new tulips of that variety could be formed per year. This guaranteed an enforced scarcity.

Tulips of the same cultivar were fungible, for whatever that's worth.

Tulips were verifiable in that they were purchased in formalized markets, even futures markets, with enforceable contracts (although short selling was made illegal).

I'm not sure what the point of tulips being divisible is. Neither are yen, but people seem to have no problem using them.

Most importantly, tulips were actually in demand in and of themselves . There was a lull in the Thirty Years War, and tulips were a highly in demand luxury item at wealthy estates. What's the value of bitcoin in and of itself? What's that? An alternative payment system to credit cards? Yeah, how is that going for you? Backwards, is how - the few places that had previously started experimenting with accepting bitcoin as payment are one by one backing out of it. Even if you ignore the volatility, the overhead in bitcoin transaction processing makes it stupid as an alternative. And it always runs the risk of governments cracking down on it due to the one thing that people actually value bitcoin for in and of itself: illegal purchases and money laundering. Don't think governments can crack down on it in a way that utterly crashes its value? Yeah, good luck with that notion.

Bitcoin is currently in the "greater fool" investment mode. We know how these things end.

Re:Bitcoin are not tulips

[JohnFen]

Ummm... so what? How does any of that speak to whether or not the tulip analogy is apt?

Re:Bitcoin are not tulips

[Killall -9 Bash]

Maybe YOU cant....

Re:Bitcoin are not tulips

[Mr307]

This to infinity.

According to this 1 source more than 4000 cryptocurrencies already.
https://cryptocoincharts.info/...

There is no actual scarcity, or any restrictions on scarcity at all. Its pure unregulated speculation with no foundation, maybe its just gambling, or some combination of an mlm/ponzi/pyramid scam with the net effect of a bubble.

People who have bought in already have a vested interest in keeping the fever pitch high. Maybe Slashdot editors need to disclose if they have any coins and are using us to keep the story going.

Re:Bitcoin are not tulips

[bozzy]

Tulips are indeed divisible by the offsets that larger bulbs can produce, giving genetically identical flowers. This played a part in speculation and pricing.

From this page:

And heavier bulbs tended to have more offsets or bulblets formed at the base of the mother bulb, which were separated and sold individually. A tulip bulb may produce two or three offsets a year and then only for several years before it becomes too enervated to reproduce. Propagating from these offsets, which can take from one to three years to become flowering bulbs themselves, necessarily limited the number of bulbs on the market. But, unlike seeds, it was the only way to ensure that the tulips would be genetically identical. A bulb with offsets obviously had greater value but it could not be sold too soon. To do so would limit the ability of the grower to produce any more of that variety and only make it available to others—which is why prized bulbs always were in short supply and commanded such high prices. Because a bulb planted in September likely would weigh substantially more when lifted the following June, it encouraged speculation. Even if the price per aes did not change, the value of the bulb could multiply three to five times during those nine months, simply because of its increased weight. Contracting to pay a specified price at lifting, buyers speculated that the bulbs would have greater value in the future than the promissory note, which could be sold to a new buyer in hope of realizing a profit. No longer the province of liefhebbers, bulbs were purchased by the weaver, brewer, or baker. For a modest investment, often paid for in kind (when there was not the cash), these poorer craftsmen and artisans speculated in the common varieties that were the stock of mass trade. Such speculation was risky, of course. Having put everything down on deposit, if the price of tulip bulbs were to drop before lifting, there would not be the means to pay the remaining balance. Nevertheless, novices continued to enter the market and speculation increased, until in December 1636 and January 1637 it reached its height.

Re:Bitcoin are not tulips

[Mr307]

Nonsense, it isn't anything. Just happens to be 'first' maybe not even the first, just the first to accidentally be recognized as a good vehicle to make a scam from.

Other than its current 'popularity' what differentiates it from any other of the same ilk?

Nothing is the correct and only answer, its been forked and copied and soon to be extended and forked and copied some more.

Bitcoin will implode, the only question is how many people get hurt by their poor and or uninformed decisions.

Re:Bitcoin are not tulips

[Gussington]

From Twitter:

Tulips are not durable, not scarce, not programmable, not fungible, not verifiable, not divisible, and hard to transfer. But tell me more about your analogy...

Tulips is another way of saying I'm too dumb to understand technology, and I feel bad because I'm missing out on the next big thing. Just let them go...

Re:Bitcoin are not tulips

[Gussington]

All of that completely misses the point of the argument comparing the Bitcoin bubble to the tulip craze.

I wonder how many people who throw the work tulip around actually have any idea what it is about? Because just by reading the Wikipedia page makes it clear that most people never got past the headline.

Re:Does it even matter?

[arth1]

It is infinitely divisible, but each blockchain transaction can be expensive, especially if you want to see it posted anytime in the next few days. Things like the Lightning Network are trying to help with that... but stuff like that is still alpha quality.

And to the point, the more people use bitcoin for actual purchases, fragmenting it more and more while adding to the chains, the longer the transactions are going to take. Large scale speculation where people primarily sit on the bitcoins and don't make a large amount of purchases is what keeps it from collapsing completely.

If panic breaks out, the system will likely collapse to the point that even if you find buyers, they can't buy, because the transaction time is so long that the value changes significantly during transaction, if the transaction can be completed at all.

Don't walk under any skyscrapers or sail below bridges until this is resolved, one way or another.

Re:Does it even matter?

[jellomizer]

However if you were the guy who bought a Pizza for 20 bitcoins a decade ago, I expect you are kicking yourself.

As I have stated over and over... BitCoin prices are rising too fast for anyone to intelligently trade them for a goods and services. It isn't a case like other commodes like Gold, if you traded something for a goods and service then the price went up 5% over a year, you would be kicking yourself so hard, sure the value of your purchase + inflation is less then what selling gold would had been, but only by a small amount, and the value of such purchase may be worth it. However if after a year it goes up 1000% you better have bought something meaningful to you.

Let's get real, golds value is scarcity

[SuperKendall]

The real uses gold has (for example, conductivity or ornamentation) pale in comparison to the value that gold holds in relation to other currencies.

The vast majority of value people place on gold is the same reason bitcoin is valuable - scarcity.

All of the digital aspects of bitcoin just enable you to give someone a piece of bitcoin the same way someone could give you a piece of eight, and to ensure scarcity is real. Otherwise the value proposition is remarkably similar.

Re:Let's get real, golds value is scarcity

[Anonymous Coward]

Gold value is a delicate balance between scarcity (supply side) and demand side: unique chemical properties (e.x. resistance to tarnish), actual commercial uses (e.x. electronics), aesthetic uses (e.x. jewelry), and investment/store of value uses. The balancing act is such that if gold value were to drop drastically the uses that DON'T rely on scarcity will pick up. If gold were 100x less valuable then it would be used far more often in commercial applications, jewelry, etc. and thus its value would NOT free fall to anywhere near zero. If gold value dropped significantly, mining of gold would immediately stop but uses would actually pick up. This implied protection of anything near a total loss is valuable. The opposite effect would occur in a bitcoin crash: the value of the practical use (currency) diminishes rapidly during a price crash since volatility is bad for a currency. So rather than a counter acting force like in gold, you have a compounding force. Ironically, its this same compounding force that is driving UP the price, for now.

Bitcoin represents a situation where, for example, you $1,000,000 bitcoin investment can drop to $0 and you can't turn to a jeweler or electronics manufacturer and sell them your bitcoin because it has no intrinsic properties at all. While impossible to quantify the minimum price of gold, that fact that there is some intrinsic backstop helps support the higher value. Its hard to underestimate this floor value provided by gold because psychology studies have found that most people have a loss aversion. Gold helps alleviate this and bitcoin does nothing to alleviate this.

Re:Let's get real, golds value is scarcity

[religionofpeas]

If gold were 100x less valuable then it would be used far more often in commercial applications

Most commercial applications only require a tiny bit of gold. It's got a few nice properties, but it's also soft and heavy. Applying a thin gold plating to a lighter and stronger base metal is often preferred.

Re:Let's get real, golds value is scarcity

[brantondaveperson]

... same reason bitcoin is valuable - scarcity.

As has been mentioned elsewhere, but bears repeating, bitcoin is not scarce. It is possible to create a practically infinite variety of crytocurrencies, even without changing the protocol significantly. Bitcoin can be, and has already been, "forked". This notion doesn't exist with any other commodity, gold is gold and will always be gold. You can't just go out and create a completely new type of gold, with its own self-contained scarcity. If you could, I'd wager that gold would not be used as a store of value in the way in which it currently is.

Re:Does it even matter?

[jellomizer]

You can buy a pack of gum... However after a year it would be the cost of a nice lunch. After an other year a fancy dinner, Then a oversea trip. The growth rate it too fast be buy stuff with it.

Re:Paywalled free market

[Bing Tsher E]

Chaos. Don't be giving Bakunin a bad name.

Of course it is

[Anonymous Coward]

But remember the famous saying "the market can remain irrational longer than you can remain solvent."
Someday, bitcoin will crash. But if it could reach $18,000, it could reach $180,000 or $1,800,000 before it does.

It's not backed by anything !!!!

[kfh227]

It's not a fiat currency. It's a matter of when it pops, not if.

It is not backed by gold. It is not backed by the faith of a government (The US dollar is backed by the faith in the US government). This thing is backed by nothing. We don't even know who created it.

It's going to tank and in splendid fashion. Just wait for the panic selling to start at some point.

Re:It's not backed by anything !!!!

[Stan92057]

At this point your either a crook or a complete idiot to even mine"do math calculations" at this point. The cost to get 1 cost more then its claimed value so we have been told.

Re:It's not backed by anything !!!!

[Orgasmatron]

The US dollar is backed by the faith in the US government

This sentence has zero information content without proper definitions for the following terms:

"backed"
"faith"
"US government"

While you are working on that, please consider that once upon a time, the US dollar was "backed", in gold, by the "US government", and despite our "faith" that our notes could be redeemed for money (gold) at any time, that faith (and backing) was broken nearly 50 years ago.

Re:It's not backed by anything !!!!

[brantondaveperson]

This is true. The difference is that even after the US dollar crashes, it's still not worth nothing. The US still exists. When bitcoin goes pop, it will be worth nothing, because it cannot be exchanged at all without an immensely expensive and complex worldwide network of computers.

Re:It's not backed by anything !!!!

[david_thornley]

I'm young enough to have seen some silver certificates in my youth, along side the much more common federal reserve notes. The silver certificates spent exactly like federal reserve notes, and the money was just as useful with different printing on it.

If you want precious metals, there's plenty of dealers around, so you can still convert US dollars into silver and gold. It's just not automatically done by the government any more.

Do you mean a method of transmitting dollars?

[raymorris]

You can't possibly mean "medium of exchange" in the normal sense of that term, can you? This is what "medium of exchange" normally means:

Someone wants a car and has firewood.
With BARTER they'd have to find someone willing to trade a car for firewood. That would suck.
Instead they look at Craigslist and find the kind of car they want sells for $8,000
They make arrangements to sell $8,000 worth of firewood.
After the people come pick up the firewood and payments clear, they contact Craigslist sellers and buy a car for $8,000.
The dollars are a medium of exchange because the person selling the car isn't the person receiving the firewood Dollars, as a medium of exchange, allow value delivered to one person (firewood buyers) to later be valued the same by another person (the car seller).

Here's how the exchange would "work" with Bitcoins instead of dollars:

Someone wants a car and has firewood.
They look at Craigslist and find the kind of car they want sells for 2 BTC.
Actually 1.8BTC now.
No, wait, 2.2 BTC.
They make arrangements to sell 2.2BTC worth of firewood.
After the people pick up the firewood and the payments clear, they contact Craigslist sellers, who now want 3BTC for a car.

It doesn't allow the value of firewood to later be used to buy a car, because there's no telling how much 2BTC might be worth two or three days from now.

What kinda works as this:
Now selling this car for $8,000. Accepting payment by cash, certified check, Bitcoin, Visa, or MasterCard. Bitcoin can be used as a method of payment, a way of transmitting dollars from place to place, just like a check or a Visa card. The difference is. Visa transaction is confirmed in about 800 milliseconds, a Bitcoin transaction takes a day or so.

Re:Do you mean a method of transmitting dollars?

[PCM2]

Someone wants a car and has firewood.
They look at Craigslist and find the kind of car they want sells for 2 BTC.
Actually 1.8BTC now.
No, wait, 2.2 BTC.
They make arrangements to sell 2.2BTC worth of firewood.
After the people pick up the firewood and the payments clear, they contact Craigslist sellers, who now want 3BTC for a car.

Isn't what's happening the opposite, though? As the value of 1 BTC goes up, the sticker price of the car goes down.

Re:Does it even matter?

[religionofpeas]

If panic breaks out, the system will likely collapse to the point that even if you find buyers, they can't buy,

Most of the trade is done on exchanges, not on the blockchain. They just update their internal database when someone is doing a trade, just a bank does when you transfer money. You only need the blockchain if you want to move your coins to the exchange to sell. The buyer just needs to transfer fiat money, so there's plenty of liquidity on the buyer's side.

Re:Does it even matter?

[religionofpeas]

the guy who bought a Pizza for 20 bitcoins a decade ago

It was 10000 bitcoins.

But he got 2 pizzas.

The case that Bitcoin is a bubble is simple

[bjdevil66]

Corollary: When everyone - usually including your neighbor or friend down the street, or your grandma - is trying to buy in and ride the wave, but they can't really explain how commodity X works or will make money, it's over. It's time to get out. You've missed the wave as an investor, and you're going to get burned joining too late.

Bonus: If the "everyone" people wanting to buy commodity X can't even really explain how or why it will make money, it's going to get REALLY ugly.

The following fit the pattern:

Microsoft and other internet/tech stocks (2000)
Housing (2007)
Gold (2012)

Bitcoin (2017) will likely be the next big entry to the list.

Re:The case that Bitcoin is a bubble is simple

[Orgasmatron]

We are so far away from the shoeshine boy stage that it isn't even funny. Also, bitcoin is an odd blend of tech-adoption, which follows an S-curve, and an investment, which does not. (Note that I don't consider bitcoin to be an investment and don't encourage it, I'm discussing a conceptual model used by "the masses" here.)

Usage of bitcoin for commerce is growing by leaps and bounds, still very early in the S-curve. In other words, more people are buying bitcoin to use as money than ever before. I don't know how to disentangle those purchases from the speculative purchases, and neither does anyone else.

For that reason, and a few others, bitcoin is unusually resistant to our ordinary methods of price discovery. My guess is that the price today (literally right now) is high compared to what it will be in a few weeks or months or whenever the short term trend reverses, but the price this year is still low compared to what it will be in a few years when the long term trends swamps the recent short term movements.

(Please don't mortgage your house or gamble with money you can't afford to lose with a smile.)

Re:The case that Bitcoin is a bubble is simple

[bjdevil66]

I don't mean this as any kind of attack on this poster, but there are just too many red flags here. I mean, replace "Bitcoin" with whatever you want below (tulips, gold, whatever).

* _______ is "growing by leaps and bounds."
* It's "still very early". (buy in now - you're not too late)
* "more people are using ______ than ever before". (Bitcoin? Not in my neck of the woods yet. Nobody I know would even know what it is, let alone how to use it anywhere the average suburbanite would go.)
* "I don't know how to disentangle.... and neither does anyone else." (That sounds a lot like someone trying to describe the derivatives market in 2006 before the housing crash.)
* _______ is "unusually resistant to our ordinary methods of price discovery." (Just about every bubble ever is that way. "This time it's different, however.")
* The market for ______ may be a little frothy, but "the price this year is still low compared to what it will be in a few years when the long term trends swamps the recent short term movements." (Sounds like a quote from anyone trying to sell you house back in 2006.)

The last sentence is the best thought in the entire post. Yes, it is absolutely gambling. It's the 21st century version of Latchcomb.

And remember that you could be the shoeshine boy and not even realize it.

Re:The case that Bitcoin is a bubble is simple

[Gussington]

The following fit the pattern:

Microsoft and other internet/tech stocks (2000)

Apple 2007.. oh wait...

Housing (2007)

Housing any other year from 1980 to 2017.. oh wait...

Gold (2012)

Gold any other year other than 2011-2012..oh wait...

Bitcoin (2017) will likely be the next big entry to the list.

What list, a list of things you clearly don't understand very well?

Re:The case that Bitcoin is a bubble is simple

[inking]

This is a bit of a non sequitur. Bitcoin is in the process of adoption and what you are saying that there will be a major correction at the end of that process. That is like saying that water is wet. Of course that will happen; the question is if you can make money on it before it happens. If you compare the market capital of Bitcoin with something like gold it is still puny, so it really isn’t as if we ran out of capital to speculate on it. At the current rate of growth, you can very quickly double your investment at which point you can cash out your original position in fiat and, regardless of what happens, leaving you with only opportunity cost to bear on the remaining half.

You should not treat it like any another high-risk position. Put somewhere between 1/10 and 1/20 of your net value into it and call it a day. Even if you lose everything, you will recover it in a year of average equity growth. Conversely, if you manage to cash out, you will probably cash out quite nicely.

Re:The case that Bitcoin is a bubble is simple

[TeknoHog]

Prominent Finnish Bitcoin entrepreneurs have indeed compared the current situation to the Dotcom bubble of 2000. There was a lot of fluff, but a lot of solid tech too -- you're using a lot of Internet products/services as we speak.

The bigger lie is that all cryptocurrencies equal

[SuperKendall]

The idea that bitcoin is scarce is the biggest lie there is. Every other item you list is something that all cryptocurrencies share.

Yes that is true, but just like plutonium also being rare does not diminish the value of gold, other cryptocurrencies being scarce does not diminish the value of bitcoin... bitcoin being scarce is just a necessary condition enabling a whole infrastructure that supports people using Bitcoin. It's not the entire REASON for value, it's what enables value to be held.

How many other cryptocurrencies have an approved futures market for example...

It says a lot to me, that if I want to invest in any other cryptocurrency I generally have to buy them with bitcoin. :-)

The history of currency

[captaindomon]

The funny thing with BitCoin is that you have technology specialists mostly talking about it, instead of economists or historians. Some history is helpful: https://www.youtube.com/watch?...

Re:The history of currency

[Gussington]

The funny thing with BitCoin is that you have technology specialists mostly talking about it, instead of economists or historians.

Because economists and historians aren't useful for much.
I'm not sure where you get your info, but the finance and banking industries they're all over this like a rash. Some major banks have already rolled out blockchain trials, and many others have already kicked off development projects. This is the next big thing in FinTech.

Re:Here's another case that it's in a bubble

[bobbied]

Buy a time share instead... At least you will have a pace to take that yearly vacation when it's all over but the crying..

Re:Cycle

[hackertourist]

The third will be people moaning about losing their BTC wallets.

#nomorebitcoinstories

bitcoin failed. what is next?

[kiviQr]

We need a currency that can be used to buy goods, that is traceable, safe, global, and stable. Last couple months proved that Bitcoin failed miserably here. What are our options? Go back to gold? Bitgold anyone?

Re:bitcoin failed. what is next?

[OrangeTide]

VISA, MasterCard, and AMEX. They should work out an uninsured transaction system where they charge some ultra low fee (5c? 1c?) for transactions below a certain amount ($50? $10?). Central authority that most people agree to trust and is motivated by profit to keep things running. Traceable and global.

I feel that BTC and others are perhaps a solution in search of a problem. But I also admit that banks and credit card companies have not been quick to adapt to the nature of a global commercial Internet.

Re:bitcoin failed. what is next?

[Gussington]

VISA, MasterCard, and AMEX. They should work out an uninsured transaction system where they charge some ultra low fee (5c? 1c?) for transactions below a certain amount ($50? $10?). Central authority that most people agree to trust and is motivated by profit to keep things running. Traceable and global.

What you just described is blockchain, ie what Bitcoin is built on. Except instead of central control to only the establishment it's distributed to anyone who wants to participate, so it's fairer to everyone involved.

I feel that BTC and others are perhaps a solution in search of a problem

You form all of your opinions based on feelings?
The problem is centralised currency and the issues of trust and control and distribution. The current model relies on govts and banks to play mummy and daddy and history has shown that they shouldn't be trusted (Great Depression, GFC etc).
Blockchain decentralises the system, ie it removes all the problems associated with centralised control (ie corruption and manipulation). Mathematically it's as reliable and as robust as transactions can get, therefore it will likely takeover as the default method or storing and transferring value. Just like how the Internet replaced faxes.
Some banks already use blockchain for interbank transactions, so it's already a solution, and it's only going to gain more traction over time.

Re:bitcoin failed. what is next?

[OrangeTide]

What you just described is blockchain, ie what Bitcoin is built on. Except instead of central control to only the establishment it's distributed to anyone who wants to participate, so it's fairer to everyone involved.

It most certainly is not what I described. My key point is old fashion transnational banking, through a central trusted authority.

You form all of your opinions based on feelings?

That's precisely what opinions are, that's why the words can be interchangeable in English rhetoric.

The problem is centralised currency and the issues of trust and control and distribution.

Some may view this as a flaw. Others view it as an asset. Most people mainly care if they can use their account to purchase goods and services without exorbitant fees, to that end there are many possible solutions. I propose one that does not involve revolution.

Re:bitcoin failed. what is next?

[Gussington]

My key point is old fashion transnational banking, through a central trusted authority.

Right gotcha. You want old fashioned ways of doing things, like Kings and Queens, and the Post Office. Good luck selling that dream in a technology forum...

Just like real gold then

[Eunuchswear]

Who'da thunk it -- fake gold has the same problem that make it a bad basis for a currency that real gold has.

It might be a bubble. It might not be.

[grnbrg]

If Bitcoin manages to be successful and achieve widespread adoption, it will necessarily need to increase in value, due to it's scarcity.

What we are seeing could be a bubble, but it could also be due to adoption. Volitility was very low for 2015 and 2016, and with the exception of a few short dips, has been fairly consistently up in 2017.

If Bitcoin is successful, it will eventually find an equilibrium, and plateau, much like gold has.

Re:Does it even matter?

[JohnFen]

"Bitcoin has established itself as a viable medium of exchange."

It has? That's news to me.

To me, it's far too unstable to be a viable medium of exchange. Its value in fiat currency is far from immaterial as long as we live in a system where you have to convert it to and from fiat currency to make it more than marginally useful.

It has only one use that I can see: "speculative investing" a/k/a gambling.

Re:It might be a bubble. It might not be.

[Baron_Yam]

>If Bitcoin manages to be successful and achieve widespread adoption, it will necessarily need to increase in value, due to it's scarcity.

But here's the funny thing nobody seems to notice - Bitcoin is just a ledger, nothing about it really cares what 'a bitcoin' is. You divide by ten and move on. There's no real scarcity so long as you can move the decimal place.

Re:Different View

[JohnFen]

Maybe instead of talking about how much a "single" bitcoin is fluctuating, we should be talking about how much the smallest transferable unit is fluctuating. Or maybe how much $1 USD is worth in bitcoin.

The reports I see do exactly this. Not always in the headlines, but in the stories they talk about the percentage change in value. That percentage is the same whether you're talking about 1,000 bitcoins, 1 bitcoin, or $1 worth of bitcoin.

Tulip bulbs not truly scarce

[SuperKendall]

I'm not sure what the point of tulips being divisible is.

Because when something grows to some very large amount of value, if it's not divisible it essentially locks out the possibility of trade to all but a handful of people.

As the price of Bitcoin grows it does not matter because anyone can still use .001 bitcoin for a transaction. If you have a 15k tulip bulb the ability to extract value from it is far more limited and thus the market or users will shrink.

Rare tulips were indeed scarce.

Not really though since once you have a bulb, you can divide it to create more. If you have one bitcoin you cannot create another. "scarce" is not all about absolute quantity, it is about the inability to duplicate as well.

What's the value of bitcoin in and of itself?

The fact that it is not a currency tied to any one country has huge value, and tangentially you could argue there is vanity value in being part of the blockchain.

An alternative payment system to credit cards? Yeah, how is that going for you?

In the long term, extremely well. You ask like Steam being out is a deal-breaker. But anyone can see long term the trend is growth in acceptance.

And it always runs the risk of governments cracking down on it

Please tell Venezuelans how "real" currencies have no risk at all from government action. The fact is that Bitcoin is far more removed from such concerns because a government may be able to crack down on exchanges but cannot actually do anything about Bitcoin itself, and governments in other countries generally will not. The U.S. in particular will prop up Bitcoin forever because all they really care about is visibility into transactions.

According you China dropping out of support for Bitcoin should have crushed Bitcoin use. Yet obviously it did not. Can you explain why?

Bitcoin is currently in the "greater fool" investment mode.

Yes it is, but an even GREATER fool is one that believe any currency is not at even greater risk. All investment is risk. I agree that Bitcoin is risky compared to something like stocks (well depending on the company of course), but I'd say it's not all that much riskier than leaving your money as cash in any particular currency. I agree you shouldn't put any money into Bitcoin you are not prepared to lose but it's not like that same kind of risk is not all over the place, and Bitcoin seems less risky than some other things.

Re:Tulip bulbs not truly scarce

[Rei]

Because when something grows to some very large amount of value, if it's not divisible it essentially locks out the possibility of trade to all but a handful of people.

And there were both higher and lower value tulips.

Not really though since once you have a bulb, you can divide it to create more

1. Tulips are not freaking potatoes. You can't just cut a bulb into pieces and have each bulb grow a new tulip.

2. It was an *annual, seasonal market*. Most people were buying tulips to sell *that year* to consumers. With some of the rarer varieties, particularly those with viral traits that could only be reproduced by the slow process of budding, a purchase may instead be to breed it to eventually bring it to a wider market. However, for the most part, tulips were purchased with the intent of sales.

The fact that it is not a currency tied to any one country has huge value

This in and of itself is fundamentally wrong. Being tied to a country means it has the backing of how much that country is trusted. Having no country and no assets backing it means it has no backing at all.

You ask like Steam being out is a deal-breaker. But anyone can see long term the trend is growth in acceptance.

Yeah, only Steam. And Dell, of course, And Newegg Canada. Oh, and Baidu. And... you know, just go down the list of early announcers of companies that let you pay with bitcoin; you'll find that a large chunk of them don't let you pay with it anymore.

And it always runs the risk of governments cracking down on it

Please tell Venezuelans how "real" currencies have no risk at all from government action.

Yeah, nice try. Your response has no bearing whatsoever to the issue raised, and even if it did, Venezuela didn't "crack down" on its currency, they just made bad financial decisions, causing currency holders to lose faith in the country's backing of its own currency (see the previous comment about backing of currencies).

The fact is that Bitcoin is far more removed from such concerns because a government may be able to crack down on exchanges but cannot actually do anything about Bitcoin itself

Yeah, totally! I mean, all governments could do is make it illegal to own, close all public exchanges, make it radioactive to any investors and investment firms who want to remain in compliance with the law (the vast majority of all capital), prevent businesses from accepting it, and so on. But apart from that, sure, it's got a solid future ahead of it for buying weed and laundering money.

The U.S. in particular will prop up Bitcoin forever because all they really care about is visibility into transactions.

Right. The US is totally indifferent to illegal purchases, secret financial transactions, money laundering, etc, etc. Also don't care a whit that by crashing Bitcoin they could crash North Korea's savings.

So long as the level of problems stays small enough, I expect no action. But whenever it does? Bitcoin, in its current form, dies, and goes back to being fancy digital drug money.

According you China dropping out of support for Bitcoin should have crushed Bitcoin use. Yet obviously it did not. Can you explain why?

It did crash. This was later more than compensated for by growth in the US and EU based on Greater Fool investment.

Now where exactly do you think is would compensate for the loss of the US and EU?

Yes it is, but an even GREATER fool is one that believe any currency is not at even greater risk

Yes, totally. Because when I use a Euro one day, it's worth half as much o

Re:Tulip bulbs not truly scarce

[spitzak]

if it's not divisible it essentially locks out the possibility of trade to all but a handful of people. As the price of Bitcoin grows it does not matter because anyone can still use .001 bitcoin for a transaction. If you have a 15k tulip bulb the ability to extract value from it is far more limited and thus the market or users will shrink.

Rare tulips were indeed scarce.

Not really though since once you have a bulb, you can divide it to create more.

Brilliant how you managed to contradict yourself in two sentences! So tulips are not the same because they can't be divided, and they are not scarce because they can be divided. Got it.

Re:Tulip bulbs not truly scarce

[LynnwoodRooster]

1. Tulips are not freaking potatoes. You can't just cut a bulb into pieces and have each bulb grow a new tulip.

Correct. They self-divide for you. Meaning whilst the GP wasn't 100% correct, he was functionally spot-on.

Re:Tulip bulbs not truly scarce

[Rei]

Yes - you get a couple buds (new small bulbs that branch off the original) per tulip per year (as I repeatedly wrote). It was a biologically-enforced rarity for traits that spread only through buds.

Currency

[reanjr]

I think the entire sentiment of "it's rising, so no one will spend" is overblown. I spend BTC most when it's rising towards what I expect to be a peak or crash. It's a cheap and easy way to take a bit of profit without bothering to move BTC onto an exchange. When it's stable, I'm more likely hodling for the future or completely divested.

People don't understand money

[Orgasmatron]

Money is an umbrella term for things that have certain properties. An instance of money generally meets all or most of the desired properties. Other than that, the only sensible definition that I've ever seen is the circular definition that money is what people use as money. What gets used as money can be predicted, somewhat, by understanding the desirable properties.

Bitcoin is an electronic system that attempts to implement as many of the properties of the abstract platonic concept of money as it practically can. I've seen it argued, and I mostly agree, that it does a better job of implementing the desired properties than anything else. It isn't perfect here and it isn't perfect there, but in totality and weighted by our current needs it is better than any of the alternatives, including gold, USD, etc.

Is the exchange rate in a bubble right now? Maybe, or "probably". Is it a tulip-bubble that will pop and then disappear forever? Almost certainly not, at least not if you consider cryptocurrencies in general - the chances of bitcoin specifically disappearing in the future is much better than the chances of bitcoin-the-idea disappearing.

Re:People don't understand money

[lokedhs]

I think a better way to think about it is that the available money in a system represents (or should represent) the total amount of value that exists in a given system. The "value" can be somewhat difficult to define, since it includes everything that humans would consider "valuable". Of course, this can change such as when aluminium went from being more valuable than gold to being a disposable commodity. It also includes intangibles such as the consulting services I'm doing for a local business.

In other words, the total amount of a currency is the market cap for the country or region where that currency is used.

The problem with bitcoin's fixed amount of coins is that the total share of the economy represented by one coin is fixed at one 21-millionth. Simple maths tells us that if this ratio is fixed, then the value of a single coin needs to follow the total value of the system. This means that an economy based on bitcoin will be in a state of perpetual deflation as long as the economy grows.

Thinking about what a society looks like if you have constant deflation is left as an exercise to the reader.

Re:People don't understand money

[david_thornley]

One of the abstract platonic ideals is ease of transaction. If we're in the same place, I can just hand you a couple of twenties and we've had a $40 transaction within seconds at no cost, with no interference from other transactions. If you wanted to send me a couple hundred, and knew my email address, you could send it via Paypal. It's slower and has a small transaction fee, or bank transfer if you had my banking info, much faster and probably also with a fee.

Apparently, with Bitcoin, there are considerable delays in registering a transaction and a considerable cost per transaction. That makes it unsuited to be a currency. The idea behind Bitcoin means that Bitcoin can't possibly be transacted efficiently.

The volatility is another big problem, but that's not inherent to Bitcoin.

Don't know much do you

[SuperKendall]

And there were both higher and lower value tulips.

Are you being purposefully obtuse? A) The lower value tulips were not scarce in any sense, and B) it's not like you can magically turn a very expensive bulb into a cheaper one, you have to find someone willing to trade. I can take a bitcoin and instantly use .001 of it if I like.

Tulips are not freaking potatoes. You can't just cut a bulb into pieces and have each bulb grow a new tulip... It was an *annual, seasonal market*.

Tulips will replicate over time if given enough food. So again, any tulip can be replicated.

What you are saying here is vastly worse for any inkling you could compare tulips to BitCoin, because bitcoins do not degrade on their own, they may be lost but are not in any way seasonal. It literally madness for you to bring up the seasonality of tulips and continue to claim they have anything to offer us when understanding the Bitcoin market. The only use they have is for ignorant people to make incredibly misleading comparisons that make zero sense if you understand either Bitcoin or tulips.

I gave up reading your post after that bit on nonsense, I'll let you have the last word as you are taking on the tone of some kind of religious fanatic here, and you already posted a stronger counter-argument to using tulips as an example that I did...

Bubbles all the way down (up?)

[OrangeTide]

Dividend paying blue chip stock can be a good choice for those who are into playing the IPO lottery. Cryptocurrency is just more of this short term, big payoff sort of thinking that leads us into these bubbles. And low-information investors are the key to making a bubble work, there are some people who profit very greatly in during these bubbles and a lot of people who lose a little bit of money playing at investment. Bubbles will keep happening because the losses for the millions of small investors aren't so large that they learn their lesson, and the gains are too big for the strategic people keep at the scam.

Gold is not so bad because it doesn't go to 0. But if for people who sink their retirement into gold only to have it worth half as much by the time they need it have hurt themselves. And more importantly, they could have doubled their money [over decades] by investing more wisely. Shares on the other hand, I've ridden them to the bottom. Once they are off the list they are a real pain to sell.

Real estate is not too bad either, as demand generally goes up and supply is generally fixed. Or in some regions may even shrink as land grants and eminent domain take land off the market permanently. You can still lose a lot of money if you buy some property only to have it surveyed as flood zone a decade later.

No, it really is

[SuperKendall]

As has been mentioned elsewhere

By other people who do not not understand what the term "scarce" actually means...

bitcoin is not scarce. It is possible to create a practically infinite variety of crytocurrencies

Only ONE of which is bitcoin, why is that hard to grasp? Apparently it is very hard to grasp the concept that no matter how many cryptocurrencies you create only one of them is Bitcoin, which is the gold standard (ha!) if you will of cryptocurrencies.

Bitcoin can be, and has already been, "forked"

And you are just as forked if you use a derivative, which is not technically the same at the BitCoin people actually use.

This notion doesn't exist with any other commodity, gold is gold

So you've never ever seen something colored gold that was not actually made of gold? HMM.....

You can't just go out and create a completely new type of gold

BAM. I'll leave it there with all that egg dripping off you, at least you'll have something to eat it with.

Re:No, it really is

[brantondaveperson]

which is the gold standard (ha!) if you will of cryptocurrencies.

Why's that? Is it because you say so, or because bitcoin was there first, or for some other reason? Is there anything that prevents another taking its place?

Also, I'm not too bad at distinguishing gold-colored plastic, from actual gold. And given some weighing scales, I suspect I'd also be able to determine any gold-colored objects from actual gold too.

No telling

[raymorris]

If Bitcoin went up over the last few hours, the sticker price would need to go down. If BTC went down, the price would need to go up. So no way to know what the price should be a few hours from now. Hence it's a really bad medium of exchange.

If you ignore the wild fluctuations and pretend BTC only goes up, prices would go down every day - prices will always be lower tomorrow. Therefore you should always wait until tomorrow to buy something with BTC. Spending it is always foolish, if you pretend it will only go up, at a significant rate.

:D

[cloud.pt]

After a re-read of my own comment, I have much more cringeworthy typos and incoherences than the uncany use of "crypto" for these digital currencies (which some even state aren't that much crypto to begin with). But my opinion is solid.

Re:Does it even matter?

[fisted]

It is infinitely divisible

Wrong.

but each blockchain transaction can be expensive, especially if you want to see it posted anytime in the next few days.

Slightly less wrong, but still wrong. Last time I made a BTC transaction, I set the transaction fee to zero. It took a few hours but eventually the miners picked it up.

Re:This is bad

[brantondaveperson]

I'm pretty sure that in a thousand years

If we still use money in the way that it's used today in a thousand year's time, I'll be totally astonished. I mean, I'll have been dead for a millennia, but I'll be one very astonished dead person.

As human beings we don't understand the function of money very well, and we keep inventing more and complex ways to move it around, and its derivatives. If we ever realise that money is a signal, not an object - that its fluctuations are not indicative of wealth in any meaningful sense - we might have a chance of hitting that next millennia.

Greater fool theory

[NewYork]

Greater fool theory: The price of an object is determined not by its intrinsic value, but rather by irrational beliefs and expectations of market participants
https://en.wikipedia.org/wiki/...

Petrocurrency

[NewYork]

https://en.wikipedia.org/wiki/...
https://en.wikipedia.org/wiki/...