It's kinda cool to be living in a tulip era like this. I wish there was some way I could make a long term bet against the the price of bitcoin, say it's price 10 years from now.
Of course, this is impossible. If there is anything we have learned, and I can demonstrate that I predicted 5 years ago, it's that the definition of bitcoin is infinitely divisible. I could claim a bitcoin fork in 2027 is the true bitcoin, and price it at $1M a coin.
I've been into Bitcoin since 2011, and it's interesting that people are still making tulip comparisons 6 years later. Tulip mania itself only lasted about 9 months. I wonder how long Bitcoin will have to hold out before the tulip argument could no longer be made.
I was skeptical of Bitcoin for a long time, but the other day I was on a (legal) website and they had it listed as a payment method, right next to Visa. Seeing it there really showed me how far it's come.
It's not that hard to add to a real website, but what percentage of transactions are conducted in it?
I mean if some big retailer like Amazon or BestBuy or Walmart to accept it, but only 0.02% of their daily transactions involved bitcoin would that be a success? It's a lot of money in absolute numbers, but it's minuscule as a percentage.
If it were 5% that would certainly be something to look at.
DNM is something I had to look up. I don't have to explain why going to the store and being able to purchase something with Bitcoin is not the same as buying drugs on the black market.
To what extent do you think the value of bitcoin is driven by its use as a black market exchange / laundering tool?
I suspect virtually all of it. People dismiss this viewpoint because they attribute it to Silk Road type activities, which can't explain the scale, but what I'm talking about is millionaires and billionaires funneling wealth out of China etc.
One thing that's certain is that bitcoin isn't really a currency. When you pay with bitcoin, the value is tied to and converted to USD, and the price paid is tied to USD. Bitcoin isn't the currency in those transactions, USD is. Bitcoin is more like a decentralized anonymous Western Union than it is a currency.
I also don't understand what proponents think the endgame is for bitcoin as an investment-grade asset. Everyone who buys some just becomes the world's first trillionaires, and we become a 2-tiered society of people who bought bitcoin and people who didn't?
Bitcoin might have some serious world-changing implications, but I seriously doubt it being an investable asset is one of them.
> I wonder how long Bitcoin will have to hold out before the tulip argument could no longer be made.
Until the end of the infrastructure phase at least. A lot of folks are going to get hauled off the prison, which will create new opportunities to challenge the dominant existing players. At this point the value being ascribed to the different blockchain assets is pretty arbitrary.
For all you know in 10 years it could be worth $50000. For me it’s simply a hedge against real currency the same way gold would be. How many people hold gold for the same reason?
Indeed it looks like a bubble, but at this point I've seen it happen so many times and not actually been a bubble. Every time is settles down to a point significantly higher than it started. At this point I've accepted these are all price corrections that over compensate and then drop back down to it's true value. Maybe this time it's truly a bubble this time, but I tend to think just repeating history.
I'm kind of glad I didn't buy a lot of btc earlier - I would be a lot more stressed out about the right time to sell. Then I'd sell at just the wrong time and beat myself up for it. Then I'd probably get audited...
Seems to be really effective at separating people from their money (though not all of them, when the music stops someone will be left without a chair).
Bitcoin does seem to be the best payment technology for online illegal transactions. Albeit, one could argue those shouldn't be 'real' in the first place.
No, it’s a store of value like a rolex or a pot of gold. Except much more fungible. And it increases in value relatively every time new “real” money is created. I don’t agree that it’s just for illegal transactions.
It's not just for illegal activity, it just seems like that's a huge percentage of its current use. Not unlike Tor, sadly.
It may be more fungible at the moment, but is it anywhere near as safe? Gold goes up and down but nowhere near to the degree we've seen with bitcoin. Add a minimum it's useful in manufacturing so even if the price crash there would still be people to buy it. Rolexes are useful, they have an intrinsic value/use. Bitcoin is only valuable as a medium of exchange.
Bitcoin could effectively disappear. I'm not saying it looks likely at the moment but even if your holdings are very large all it takes is the market to decide to stop accepting/exchanging it.
I think that's FAR more likely than gold or Rolexes.
Does the FUD you just wrote invalidate the utility I suggested? If, maybe, someday etc. Bitcoin could be worthless. This is very true but money, of any kind, is only worth what people believe it’s worth.
And in case you didn’t know, cash is also used for illegal activity...
I'm trying to suggest that it isn't a proven store of value. Just because something has value today doesn't mean it will tomorrow. Gold has centuries of history behind it, Rolex has maybe 100 years. Cash is thousands of years old.
Bitcoin has had a high value for a couple of years. I'm not trying to suggest it's Beanie Babies or Pokémon cards. Obviously those were never useful as real currency and bitcoin can buy things today. But I don't think it's fair to compare it to gold or cash.
And you're right, cash is used for illegal activity. But a HUGE chunk of it's use is for normal legal activity.
There's no real way to know, but I'd be very interested to find out what percentage of bitcoin use is for legal activity. It's a very popular on the dark web because it's so much harder to trace than the normal credit card. They are legal stores on the "normal" internet that take it, but do they process a lot of transactions compared to the illegal stuff?
Calling something FUD usually means that you think someone is mounting some sort of propaganda campaign against someone/something.
That's not me, but the literal meaning fits. I'm afraid people will convert money they can't afford to lose into bitcoin even though we don't know how stable it is long term. I'm uncertain that it can continue to be used as transaction volumes increase. I doubt it's as impenetrable as people think because the US government (among others) is capable of throwing a LOT of computer power at getting enough hashing to manipulate the block chain.
According to a report by J.P. Morgan Chase, just 0.0002% of Overstock’s revenue last year were conducted in Bitcoin. Overstock announced BTC support 3 years ago, in 2014.
The global remittance market transferred more than half a trillion dollars last year, typically at exorbitant, near monopolistic rents.[0]
How big of an industry are electronic payments? Anyone have a guess? I couldn't even find a number I was confident was a reasonable approximation. Unfathomably large.
A unit of exchange as volatile as BTC is not an obvious ideal in the US. But what about in Venezuela, compared to local currency? What's the value of an asset that holds or appreciates, or even bounces around wildly in value in comparison to a currency with triple digit inflation? If all it does is put a stop to the grossest malfeasance by the dozen worst central banks in the world, how would we calculate that as a value?
It's reasonable to believe that BTC isn't the ideal solution for any of these, but with the established markets, even if it is destined to just take over a minority 1% of those sectors, then it's currently far undervalued. If it has a shot at preventing governments from causing mass starvation by printing money and passing it to cronies,[1] then it's a net win for humanity.
What will stop bitcoin's price from going up? I just keep thinking that other than new laws or something getting hacked there is no reason for the price to not just keep creeping up.
This kind of thinking is what leads to tulip bubbles. BTC has real value, but either BTC is the one asset in history which has no ceiling, or it will reach it eventually. The question is, when?
Bitcoin's main product is trust, so if trust in the system decreases, the price will drop. If someone demonstrated a security flaw and began to exploit it, that would likely do it.
It can't go up forever because the knowledge of that trend would make more and more people invest in them.
At some point this would cause people to build stashes of tokens instead of investing in real businesses with real production capacity.
When this trend would become widespread enough, it would eventually cause global production capacity to drop. That's right, when enough people do it, token hoarding displaces investment in businesses and factories and lowers global production capacity. This means token hoarding causes a future drop in things available to buy with these very tokens.
Eventually there will be people who want to buy real things with their stock of tokens. The tokens will be chasing fewer goods which would mean prices for stuff would rise (tokens would lose value). This could happen suddenly when people with large stockpiles of tokens notice that value is dropping and that there are tons of other tokens waiting on the sideline ready to make it drop even further.
Hoarders might rush to get rid of their stockpile all at the same time before they're worthless which would cause their fall to worthlessness. This drop would bring the tokens closer to their natural intrinsic value of zero. The cycle can then start again, such is aggregate economics.
The 1920s and 1930s suffered from this type of production drop but with gold tied currencies instead of cryptocoins. It happened to a lesser extent in 2007 when western world central banks failed to keep inflation rates high enough.
It's important for the world's sake to not let deflationary currencies become too popular.
When savings or financial promises are insufficiently tied to future production or to accumulation of real goods, there will be disappointment when many people try to exchange them for real stuff. That is true for crypto currencies as well as government currencies (that is why the system is designed to make banks invest people's money in real businesses and minimize the proportion of money that is stockpiled idly).
It's true that crypto currencies are currently not widely held enough to significantly affect the aggregate economy but speculation already keeps them volatile and the knowledge that as they get more popular, there will be more macroeconomic pressures towards volatility keeps the speculation wild and cryptocoins unstable.
Currencies that are not designed to lose value over time can not be stable. Intrinsically worthless tokens engineered to have better than market risk adjusted, liquidity adjusted, real returns compared to real productive investment will always fluctuate increasingly wildly as they get more popular.
This is the soundest commentary I have encountered regarding the Bitcoin phenomenon since 2008. Sure, a lot of people will denounce Bitcoin, even central bankers will assign doom to it, but never assert why. Is your background in economics? What literature or resource do you recommend I read to understand more of what you understand? May I contact you?
My background is not in economics but the financial crisis of 2008 and its aftermath kept me interested on the subject long enough to develop a general understanding of macro.
A while back, I wanted to do as a side project, a game with a realistic macro economy but I got stuck at the learning phase and never got around to do the game (the rabbit hole went deeper than I had imagined). While I was researching, I put some of my musings about what I was learning in a few posts here: http://bessiambre.tumblr.com/ then later kind of summarized the views that I had formed in the following medium post: https://medium.com/@b.essiambre/the-world-deserves-a-pay-rai...
I'm sure my conclusions are simplistic and over-general compared to those of real economists.
My email is b.essiambre@gmail.com. Don't hesitate to write if you have questions.
I got one better... I traded 30 bitcoins for Diablo 3 gold when Diablo 3 launched, 1m gold was about $5 and bitcoins were about $7. Was just after linode wallets got hacked.
I threw away hundreds of Bitcoin on formatting a drive many years ago. never thought they would be worth more than a few cents. I revisited in 2014 and have been accumulating ever since.
People have been saying since it was valued at $1 that it was overvalued, or nobody should pay $1 for a virtual coin. Same people are still arguing the same thing 5 years later...
Each bitcoin can be divided into 100 million atomic units called "satoshis". 1 BTC is just a particular denomination, in the same way that $20 and $100 bills are denominations in use for USD.
1 BTC is a historically common denomination that will likely receive less usage if the price continues to rise.
I find the idea of crypto currency, especially bitcoin, very interesting. I just have a very hard time seeing how it's actually useful. It can't handle very many transactions per minute. And the thing that supposed to make it so great is that no one controls it. But if bitcoin becomes really important then people will want to control a lot of the mining power. Pretty soon you end up with a group of miners (or even a single miner) having enough power to influence things leaving you pretty close to someone being in charge of the thing.
It's such a fascinating idea. But in less there was someway to limit mining so people couldn't throw additional power at it I'm not sure it's useful.
As an example, you could use a block chain to enforce a ledger between a couple of different companies but you'd have to have some sort of contract it said everyone was only allowed to use one of device X for mining. That way everyone would be equal and you could easily check it because the blocks should be minded roughly evenly.
But when miners can buy additional mining capacity, and they get rewarded for doing that with more money, how does this not end up with a winner takes all situation?
why is it useful? you can store and instantly send any arbitrary amount of money anywhere on the planet and it is the hardest (impossible?) for a government to steal it from you
I can send money around the world with it. You can too.
Will it hold up when 10 million people want to do that per day? 100 million? Half 1 billion? I know it can work at niche scales (relative to total global financial transactions) but can it actually be scaled up to be a real player?
Even if the block size was massively larger, say 100 MB, would enough transactions be able to be broadcasted around fast enough to be able to be collected in giant blocks to keep up with demand?
As to hardest/impossible for a government to steal from you: this is the mining pool problem. What if China decided to do something about all of the mining pools they have in their country and try and manipulate bitcoin? What if in addition to the pools that they could get/force to cooperate they added a bunch more miners with government computers?
What if the US government just decided to throw computer power at trying to make the dominant hashrate mining pool?
I'm guessing there are number of governments in the world it would be capable of doing that TODAY. They could certainly do it if they cooperated. Even if they can't take over they could throw enough uncertainty into the process to cause the price to crash.
If they all competed against each other we could end up in a situation where even know if theoretically no one controls bit coin realistically it's controlled by a bunch of giant governments and no one else is capable of competing. Oops, that sort of like the current banking system.
Like I said it's a fascinating idea, but I don't think it works at planet scale or if people can independently buy additional hashing capacity. It seems like it would have to have some sort of agreement to limit everyone to be roughly equal for it to work out almost anywhere.
I'd love to see history prove me wrong. I don't remember seening a solution to the problems that worry me yet. If they exist I'm not smart enough to think of them.
I think it can. People hate on the lightning network proposal, but I've read it and it seems like there's no reason it wouldn't work. BTC would then be used as a finalizing ledger, not for day to day transactions.
You're sending integers. To do anything useful you'd need to convert those integers to actual fiat money, and to do that you either go through a government-licensed conversion channel such as an exchange, or a third party willing to assume the conversion risk that usually comes wih high fees or highly unfavorable exchange rate.
It shows up as unconfirmed usually in a few seconds, meaning it's in the mempool and ready to be added to the blockchain. If you trust the sender it's enough... but on average you are right that it's about 10 minutes to get the transaction included in the block. With Ethereum they are mining blocks about every 10 or 20 seconds.
I have many times. Bank transfers can take hours or days but BTC shows up instantly and is proven permanently immutable after a few blocks (20-40 minutes)
It's actually less useful. You already have banks doing the exact same thing for free, while insuring your money, you don't get hit 3% for transferring it into the bank, and there's interest accrued, not wildly shifting value where you might lose half in a few hours.
> You already have banks doing the exact same thing for free, while insuring your money, you don't get hit 3% for transferring it into the bank, and there's interest accrued
So much wrong with this statement.
First, not many banks in the U.S. do "the exact same thing for free", actually almost none do. Most ACH transfers take 1-5 days, instead of ~10 minutes with Bitcoin or ~15 seconds with Ethereum. Yes, I know about Zelle, but not all banks support that, and clearXchange isn't always same day, even.
Second, some services like Coinbase[1] insure your holdings, even while in crypto.
Third, almost all services that use ACH, like GDAX (Coinbase), Gemini, etc. don't do a 3% transfer fee through ACH, it's actually free. But it's next business day, like most ACH, where as crypto would've been an hour at most.
Lastly, some countries, like oh I don't know, Japan[2], have negative interest rates, so your money shrinks by the day instead of growing.
Is 10-minute ACH a kind of problem a lot of people face?
Seems like instant liquidity confirmation has been solved with credit cards or Paypal for trivial amounts (third party willing to act as an intermediary) or wire transfers for larger amounts (banks engaging their backchannel comfirmation protocols for a measly $25 fee).
There are also debit card payments, admittedly not as widespread, but impressively fast when used through Square Cash or Facebook Messenger.
None of the existing solutions are perfect, but all seem to be "good enough".
There's no need for anyone to switch at this point. Also, an ACH from Coinbase is 4-5 days not 1 day. Japan is an edge case with a very small population. They have -0.1 interest rate. That is nothing compared to what you might lose based on the wild fluctuations Bitcoin incurs.
Funny part is, you're still wrong. There is a need obviously, as people are switching.
If I deposit to GDAX, sell to USD, and withdraw to my bank it will be there in 1 business day. It's been that way for years, for almost everyone I know. ACH pulls take longer, sure, but what I said is correct.
Also, multiple countries implemented negative interest rates[1]. Japan isn't an anomaly.
What you might lose from BTC fluctuation, you may also gain, as seen by the 400% YTD growth, this year alone[2].
You really should do more research and actually understand the topic instead of dismissing it because it doesn't fit your world-view.
How many money transfers do Visa or Amex handle per day? The Federal Reserve? What about Western Union?
Is bitcoin capable of doing 50% of that? 10%? 1%?
I know people have just decided to expand the block size but what's a realistic limit on how many transactions can be done per hour? Is that enough for real widespread use?
I can certainly see uses but I worry that he can never get big enough to truly matter. Or if it does that a government or large private entity could easily try to take it over through force of computing power.
The reason it's gone up so much recently is that they just scaled it to handle more transactions. As other pointed out you can send an arbitrary amount whether it's 40 cents or 40 million dollars and it transfers quickly.
There's no holidays for the blockchain like banks have so you can send 24 hours a day, every day.
Would it be correct to say that there is a threshold where the value of a bitcoin makes it reasonable for retailers/small business/etc to invest in using them as an actual currency at the register? If that's the case, then it would make good business sense for someone nefarious to pump up the price as much as possible to reach that threshold, wait for the use to become common, then cash out. Effectively manipulating the market into something it didn't need in the first place.
I don’t see why this would be the case. The utility in currency is not value, but stability; there’s little incentive to use Bitcoin if the value is not stable.
Also in how liquid it is. If a very large retailer decided to do this with the block chain be able to keep up? I know the block size was recently raised but would it be enough?
Certainly not retailers in the context of a currency!
Things that rapidly appreciate in value also carry the risk of rapidly depreciating in value. That’s fine as an investment vehicle, but a much less attractive prospect in a currency.
Businesses wanting to use it probably care more about stability than anything. If there was a limited supply and it wasn't easily divisible then I'd agree with you.
Volatility is the important measure here more than price. If a merchant cannot have certainty that the USD value of their hot bitcoin won't fall between the time they accept it and the time they convert it, they'll be loath to make that any substantial portion of revenues.
It's almost the reverse... high BTC/USD ratios mean high real transaction fees and long confirmations, even for small purchases. The fork made it better, but I don't think this is a solved problem for BTC.
Litecoin evangelists will point out that the usability of litecoin is currently far and away better. Part of that is certainly attributable to design, but part of it is attributable to LTC/USD being a better ratio than BTC/USD, meaning a 0.001 tx fee is a few pennies in one and a few dollars in the other.
The popularity of a coin increases adoption (and so network effects), but increases hurdles to usability at the same time, it's a really fascinating game theory situation...
We might end up with a suite of coins that users bounce between, or maybe some clever altcoin designer will find a clever fix for some of these issues. Not sure.
The different hashing algorithms have different power requirements.
Scrypt (LTC) and KECCAK-256 (ETH) are less power intensive than SHA-256 (BTC). Those are just proof-of-work.
Proof-of-stake or proof-of-importance would have barely any power footprint, but there are still debates about whether they could replace PoW and offer similar security guarantees.
Proof of steak is basically the kind of system I was thinking of. Proof of work seems like a very good solution as long as people are relatively equal, but you could use proof of steak to ensure that.
Of course that means that you need some way to set up the initial steaks and decide who gets them. And that means it isn't as democratic like bitcoin is, which I know is a big plus for many people.
Alternative crypto currency network designs try to reduce the energy cost of PoW though delegation to a limited set of masternodes, or via "Proof of Stake" which so far has required a pre-existing supply of coins to exist (and one should ask who mints the supply...?)
That seems more like the kind of system I was thinking of, but you're right the initial set up and dolling out of the supply brings you back to the kind of problems bitcoin was trying to avoid.
- Premine Part I: Anyone can buy ETH in exchange for BTC for the next 42 days
- Premine Part II: On top of Premine Part I, +10% of the total ETH allocated during Premine Part I will be distributed to "early contributors"
- Premine Part III: On top of Premine Part I and Premine Part II, +10% of the total ETH allocated during Premine Part I will be distributed to the Ethereum Foundation
- The supply of ETH is uncapped and inflationary at a rate of +25% per year
- The premine is being conducted by "EthSuisse", a Swiss entity which will be prompty dissolved after the premining period ends. The Ethereum team makes no guarantee that development of Ethereum will continue after the dissolution of "EthSuisse"
- Regardless of how many BTCs are raised during the premine period, ~4000 BTC is explicitly reserved to pay for "Expenses incurred prior to and related to Genesis Sale". Translation: they are pocketing the first 4000-5000 BTC
> The Ethereum Platform is being developed primarily by a volunteer contributor team - many of whom will be receiving gifts of ETH in acknowledgement of their dedication - and will continue to be developed on a volunteer basis by some developers as well as under a more formalized contracting or employment relationship for other developers. The group of developers and other personnel that is now, or will be, employed by, or contracted with, Ethereum Switzerland GmbH ("EthSuisse") is termed the "Ethereum Team." EthSuisse will be liquidated shortly after creation of genesis block, and EthSuisse anticipates (but does not guarantee) that after it is dissolved the Ethereum Platform will continue to be developed by persons and entities who support Ethereum, including both volunteers and developers who are paid by nonprofit entities interested in supporting the Ethereum Platform.
I see so many people dissing the technology and rehashing old arguments.
You shouldn't consider Bitcoin as a currency but as a better form of Gold. Like gold it has a limited amount available: ~180k tons of gold and eventually 21 million bitcoins. Like gold it is a good store of value (especially as more people are dropping their gold to purchase BTC). Unlike Gold you can send it to someone else online and that means it can also be used like a currency (even thought it is not its strength).
In a true, real post apocalyptic world, you can't eat gold, you can't have sex with it, it will not cure your sickness nor will it feed your vices; therefore, it has little to no value.
Once a semblance of civilization establishes again? Then yes, it's likely. During times of true hardship where the general population is at risk of dying of starvation, disease or being murdered by a once upstanding citizen, and there's no way to readily exchange that gold for needed supplies? No. You would consider yourself lucky to be able to exchange a bar of solid gold for a few cans of food.
Or similarly, an informal debt economy. If I give Bob a pair of boots, he'll be more obliged to give me one of his pigs when I tell him how nice and fat they look a month later. Informal debt economies really only work within tribal communities where social pressure has more leverage, but it does solve the double coincidence of wants problem.
The graph in the article (1), showing a much steeper slope than other bubbles is fascinating for a couple of reasons:
1) The total SCALE of the bubble is much much smaller than say the tech bubble - the 280 stocks representative of the tech bubble fell almost $1.7 TRILLION in 52 weeks (2) vs the total crypto market cap @ the moment of ~180 billion.
2) The total scale of the Crypto bubble has MORE potential than stocks - why? The opportunity for casual global participation and almost complete lack of regulation / sophistication.
If the single use case for Crypto is nothing more than the world's greatest tulip mania / pyramid scheme it has the potential to be a multi trillion dollar asset class / wealth transfer.
Bitcoin has indeed appreciated more than any other investment in human history. In 7.5 years it went from $0.003 to $4900: a growth 1,600,000×. Imagine investing ten bucks and a few years later it is worth $16 million!
For comparison: the founders seed round of Uber grew their investment 65,000×, tulip prices increased by at most 5,000× during tulip mania, some "best performing stocks" over the last century are reported as growing 1,000×.
It's contemplating these returns and seeing the price still going up that leads people to continue jumping in to buy at any price level. Is there an upper limit to this?
About 1000x value from now. That's when all fiat currencies hyperinflate. It's scary to think that it's not that far away, about 10-20 years from now if the crypto adoption trend continues.
According to some reports, the entirety of the world's current wealth is measured to be north of $240 trillion dollars. [1]
There will only be 21 million bitcoins ever.
Let's say we were to measure all of our wealth in bitcoins, and let's say we already have all the bitcoins ever to exist available now. Then each bitcoin could be the equivalent of what $11,428,571.43 is to us today.
When more people are trying to buy bitcoins rather than sell there's no real limit. I could offer $1 of a millionth of a coin and lo the price would be $1m if that's what buyers hold out for. However when more people are selling than buying, which will happen from time to time then the price they fetch will be limited by the amount of money out there. If 1m bitcoin go on the market at $1 each it's not so hard to find people with $1m to buy. If 1m go on the market at $10k each that means you need buyers with $10bn knocking around which would be harder.
I'm curious what the naming conventions are going to be to transact bitcoin on a regular (offline) basis.
Are you going to say 1/10 bitcoin or will that have a name?
One thing I haven't seen anyone talk about is the language to make bitcoin more accessible.
No other currency (that I know of) has 1 unit as the MAX unit to transact (at such a high value) with no smaller denominations.
If Bitcoin really DOES end up at 100k/coin - and you want to buy something that's $10, are you really going to say .0001 bitcoin? There has to be a cleaner way. Even that, you could easily screw up decimal spots very easily.
It could go up to $6,000, $50,000, or even $1M. It's not localized like tulips, and it's connected to the internet, so the universe of people available to fuel the speculation is enormous. That the Chinese are highly speculative is what's mainly driving the current price.
It has no intrinsic value. It's like gold in that it's not a productive asset. It doesn't yield anything like stocks or bonds. The only thing a bitcoin holder can hope for is that someone will buy their coins in the future at a higher price.
The interesting part is watching human nature unfold. People who hold bitcoin mistakenly believing they're investors because the price action is reinforcing that belief. They're 100% speculators by definition. It's OK to speculate. It's neither illegal or immoral, but you should know when you're speculating and when you're investing.
You can't make this stuff up. Look at the people coming out of the woodwork: The Winklevoss Twins, Dan Bilzerian, professional wrestlers, and such. All the community leaders are either fighting with each other or in jail.
This. Gold has value like Nike has value. It's a brand. Like the word 'Mom', it's about the strength of the wirings in people's heads. If Bitcoin was around for 1000 years, with less than 1% fluctuations, and accepted everywhere, who wouldn't "believe" in it? So the question is how far down that path are we? Will there be volatility early on? Did the guy that founded the first bank ever get robbed?
the china essentialist argument was debunked once CN regulators forced CN exchanges to institute a know-your-customer policy. Result, the bots they used to fluff their order books had to go. You can see this difference from that day onward very clearly in exchange trade volume comparison:
https://data.bitcoinity.org/markets/volume/2y?c=e&t=b
actaul trade from china is similar or smaller to that in the EU at the moment
They're not trading. They're holding and creating the price support. The only people who are trading right now are John Q. Public and a few whales who manipulate the market with shill bids.
It's almost crazy how gambling and stock bubbles are nearly unheard of in Europe or America, precisely because of how seldom those peoples speculate.
To think, if it wasn't for Jinan province's tulip mania, we'd barely understand the phenomenon of speculative bubbles. Or maybe it was Dandong, I forget.
Yikes, turns out humor didn't really disarm the situation. On the contrary, if you're resorting to sockpuppet downvoting then we've hit pure freakout mode.
So... let's take a breath.
We all have assumptions about the world, there's nothing wrong with that. Sometimes they're right and sometimes we're wrong.
What we want to do, is (1) recognize that blanket statements about an entire ethnic group can sometimes strike others as offensive or just comically antiquated, and therefore, (2) sanity check these generalizations against actual data.
I mean, it's one thing to offend a bunch of people if you're right, right? Maybe that's worth it... occasionally. But why waste the energy if you're going to be wrong? Or even just unsure?
Ok, I'm sure you're bursting with anecdotes already to defend the claim. I'll spare you some effort and try a few.
Like... the Chinese stock market is crazy! Well, yes, but actually a pretty normal level of crazy for a developing economy with some corruption and off-book efforts determining winners and losers.
Or... Macau is a huge gambling city! Sure, but lots of places have had a huge gambling hub before. They're often a symptom of other factors. A maturing hospitality sector... or restrictions on certain types of income. They make a great way to launder illegal money or support subtle capital flight.
Ok, what if we could look at gambling by country more broadly then, not focused on hubs but entire nations?
Well, gambling revenues track with GDP really well, countries with the most money are the ones that gamble the most. The US is way on top of the list. Go figure. Ok, so let's control for GDP...
If you run that check on the dozen or so countries big enough to matter, you'll find Italy and Australia topping the list with twice the proportionate losses as China. China muddles around the middle, squarely between the UK and the US, not much beyond France or Japan. It's perfectly boring.
Beyond this, levels of regulation seem to have a strong influence, so we'd want to control for the weird mixed status of Macau vs. the mainland (which has legal lotteries but not slots).
It's a project that could be done, possibly useful, but the data already screams other factors that matter more. Patterns aren't determined by culture so much as they're determined by all these simple exogenous factors that obviously require a control, like how much money is in people's pockets, how much access they have to games.
And speaking of controls... we're being generous here by not even controlling for population, which would tank China's rating.
There's a reason gambling isn't strongly tied to a certain nationality, why several regions have been gambling hubs over the ages. There's a similar reason speculative bubbles happen in markets around the world, not just in China.
Speculative affinity isn't a cultural characteristic, to the extent it's even measurable at all.
Ok, we can save time at this point. I'm pretty sure you still disagree.
If it makes you feel better, downvote this one too, they're just fake internet points.
But if you make sweeping generalizations disparaging an entire race based on archaic stereotypes, you should expect some pushback from time to time. It shouldn't strike you as a sudden unexpected shock to occasionally get called out on that sort of thing. Frankly I don't think it's a hill worth fighting and dying on, but everyone has to pick their own redlines I suppose.
> if you're resorting to sockpuppet downvoting then we've hit pure freakout mode.
@brownbat, I can't downvote you since you're replying to my comment. I would guess the downvotes are because your original comments are snarky and lack an argument germane to the OP.
I don't have raw data and am basing my conclusions on the stock market you mention, that luck is a big component of chinese culture, and that the Chinese operate the largest bitcoin mining pools. My comments weren't meant to offend. I'm not implying there's anything wrong with speculators (so long as they don't call themselves investors).
It's funny how thick HNers are about Bitcoin. I believe it's evidence of the sort of passive conservatism of the tech community. Bitcoin is some utopian shit, the decentralized technology dream that has a ton of traction, yet many of you just can't seem to get behind it. Is it because YC is an ultra capitalistic investment fund and Bitcoin is just too anarchist for its fanboys?
For all the people out there saying, "I cant find a use case", my question to you is, have you ever used it?!
If you have, did you notice that there wasn't a middleman taking a cut when you sent the money? I mean, do you have any fucking idea how much money businesses pay to the credit card companies?
heh, anarchist? In the course of perhaps 2 or 3 years Bitcoin has turned more anarchists I know into greedy capitalists than anything else over my entire lifetime.
HN is certainly "on board" as ycombinator and affiliates invests in various blockchain retailed companies
I've used it and noticed how miners will only include your transaction in a reasonable length of time if you pay a fee, and even that is artificially low due to the subsidy.
the first time you ever pay anyone for anything the probability that this person can determine your entire net worth is much much higher than if you were to use any other means of value exchange (Cash, credit, check, etc).
The best case scenario for Bitcoin is reaching a consistent price for the rest of its lifetime. That scenario means there's no reason to "invest" in it because ideally it would never change in value.
Only people trying to cash out need people buying in. If you were really invested in the long term you'd rather people not buy in so you can buy more at a lower price.
Bitcoin also has fees. The only reason the fees are lower than credit cards are because people in China can afford to burn electricity at a loss just to turn their Chinese money into anything else.
You still have to pay taxes on the capital gains. And you can't pay taxes in Bitcoin.
The best case scenario for bitcoin is it becoming the de facto monetary standard, meaning there would be no reason to buy or cash out, as everything would be priced in bitcoin.
> as it is inherently flawed: price fluctuate too much, and favor early owner of it.
These aren't flaws, welcome to economics, man. Once bitcoin gains enough things will be priced in BTC, so fluctuation won't be an issue.
Deflationary economics benefit the savers, while inflationary economics benefit the spenders. Just because bitcoin's economic model isn't something you're used to or like doesn't mean it is 'inherently flawed'.
It is flawed because the pool of currency is limited. What happen when our economy grows fast, but then there's not enough BTC to support it? Price will decrease and benefit the savers, sure. But then many people will prefer to save instead of spending, which will not fuel the economy
The reason to want people to buy in is to grow the space and incentivise vendors to build sophisticated services for it. Like with self-driving cars, a large herd benefits all members.
The tone of this comment is harsh and inflammatory. But I agree with the sentiment.
The tech is genuinely interesting and certainly doesn't lack hype. That is usually a formula for positive comments on Hacker News. So I'm genuinely curious why so many users here are against Bitcoin.
Is it because they didn't buy in early and want to justify missing the boat? Does it make people feel their own startup is somehow less relevant? Does it threaten the traditional VC funding model?
I don't like it because it's bad for the environment.
Eventually someone like Vanguard will come along and offer a blockchain with real value behind it. After this, all the hype around bitcoin will just look embarrassing in the aftermath.
The SEC was useful when information was hard to come by, but now it's just standing in the way of progress.
> Is it because they didn't buy in early and want to justify missing the boat?
Not one bit. It's because people are losing their heads over it, it's got classic bubble written all over it, and you've got people who've made money and think they're all the wiser for it.
They arrogantly carry a sentiment that detractors are just jealous. Human nature to do that--I get it.
There's a saying I heard, something like "Sure, you made a lot of money buying the stocks of tobacco companies. So what? You're still an asshole."
In my mind, buying Bitcoin is like shorting the US financial system with the idea that it sucks and should to hell anyway. But, our system with all it's flaws works pretty damn well. It shouldn't be taken for granted and bet against.
I just don't see what benefits Bitcoin gives to me over a regular bank.
First of all because it is decentralised, it is much less scalable than the current system, so I don't think it is going to be able to replace regular banking anytime soon (although I don't know a tonne about the scalability issues).
Also I like to have a centralised system, because if my bitcoin gets stolen/I screw up and lose it, it is gone forever. If my money gets stolen somehow, I call up the bank and they reverse the charges. Having a central authority is also pretty nice because they also give me lots of other benefits like credit card rewards, making it really easy to move my money around into different savings accounts or investments, etc. And regular currencies are also backed by the government, so are incredibly stable, unlike Bitcoin which changes values very quickly.
Bitcoin is also deflationary, which is a bad trait for a currency to have, as it discourages investment, and encourages people to hoard money instead of spending it.
I'm sure there are use cases for Bitcoin, but I don't think it is "some utopian shit", since the current system works super well for most people.
I'm very much agree to this, especially the deflationary part. Current Bitcoin pricing seems to favor the early `investors`, and fluctuate too much. That is not acceptable for use as money, which must store a stable value for a long time...
US Dollar lost 95% of it's purchasing power over the last century, so much for "must store a stable value for a long time".
The wealth distribution of dollar is based on how many more people your grandfather killed than my grandfather. I don't have any problem with currency where initial distribution rewards people who took investment risks because they saw potential in innovative new technology.
And volatility - volatility in bitcoin is actually smaller every year, and this trend will continue. And btw volatility is natural and healthy. It's when something is not moving that you should be worried.
It's because I can't use it to do business with anyone in my market, I can't buy anything I want with it, it's volatile, and it's an absurd waste of energy.
Enjoy the run, but sell at the right times because ultimately it will end in some form of tragedy.
Only if the US lost its Political Power. Currently the USD still holds its value because OPEC standardize on using it for the Oil Currency (Petrodollar), and early aggressive lending to the third world country with USD.
When electric cars become mainstream, I expect there will be a turmoil in the USD
> did you notice that there wasn't a middleman taking a cut when you sent the money? I mean, do you have any fucking idea how much money businesses pay to the credit card companies
"High fees make it impractical to use bitcoin as a day-to-day currency. Paying a $5 fee to send $10,000 bitcoin isn’t a big deal, but it’s hard to justify buying a cup of coffee with bitcoin if the transaction costs more than the coffee."
Realistically, though, from the consumer standpoint Bitcoin is an electronic payments network analogous to credit cards that
1) Takes longer time to confirm (great news when you're standing in a checkout line).
2) Does not have a third party to resolve conflicts and disputes between the consumer and unscrupulous merchant or a straight out scammer.
3) Does not have a rollback mechanism in case of an unauthorized or fraudulent transaction.
4) Does not offer consumer-side rewards - cashback, airline miles, points - for usage.
> "High fees make it impractical to use bitcoin as a day-to-day currency. Paying a $5 fee to send $10,000 bitcoin isn’t a big deal, but it’s hard to justify buying a cup of coffee with bitcoin if the transaction costs more than the coffee."
The real story is ETH. It's appreciating at a faster pace over the last two months than BTC has.
There's a lot of reasons why prices move. There's obviously speculation. But there's also utility. And the way ETH is designed is far more useful to me than BTC.
My prediction is that both currencies will reach 10k USD in the next few years. But ETH will get there faster
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[ 3.3 ms ] story [ 187 ms ] threadOf course, this is impossible. If there is anything we have learned, and I can demonstrate that I predicted 5 years ago, it's that the definition of bitcoin is infinitely divisible. I could claim a bitcoin fork in 2027 is the true bitcoin, and price it at $1M a coin.
I mean if some big retailer like Amazon or BestBuy or Walmart to accept it, but only 0.02% of their daily transactions involved bitcoin would that be a success? It's a lot of money in absolute numbers, but it's minuscule as a percentage.
If it were 5% that would certainly be something to look at.
I suspect virtually all of it. People dismiss this viewpoint because they attribute it to Silk Road type activities, which can't explain the scale, but what I'm talking about is millionaires and billionaires funneling wealth out of China etc.
One thing that's certain is that bitcoin isn't really a currency. When you pay with bitcoin, the value is tied to and converted to USD, and the price paid is tied to USD. Bitcoin isn't the currency in those transactions, USD is. Bitcoin is more like a decentralized anonymous Western Union than it is a currency.
I also don't understand what proponents think the endgame is for bitcoin as an investment-grade asset. Everyone who buys some just becomes the world's first trillionaires, and we become a 2-tiered society of people who bought bitcoin and people who didn't?
Bitcoin might have some serious world-changing implications, but I seriously doubt it being an investable asset is one of them.
Until the end of the infrastructure phase at least. A lot of folks are going to get hauled off the prison, which will create new opportunities to challenge the dominant existing players. At this point the value being ascribed to the different blockchain assets is pretty arbitrary.
But to your other questions, check out: http://longbets.org/
https://i.imgur.com/tIyvGFs.png
It may be more fungible at the moment, but is it anywhere near as safe? Gold goes up and down but nowhere near to the degree we've seen with bitcoin. Add a minimum it's useful in manufacturing so even if the price crash there would still be people to buy it. Rolexes are useful, they have an intrinsic value/use. Bitcoin is only valuable as a medium of exchange.
Bitcoin could effectively disappear. I'm not saying it looks likely at the moment but even if your holdings are very large all it takes is the market to decide to stop accepting/exchanging it.
I think that's FAR more likely than gold or Rolexes.
And in case you didn’t know, cash is also used for illegal activity...
Bitcoin has had a high value for a couple of years. I'm not trying to suggest it's Beanie Babies or Pokémon cards. Obviously those were never useful as real currency and bitcoin can buy things today. But I don't think it's fair to compare it to gold or cash.
And you're right, cash is used for illegal activity. But a HUGE chunk of it's use is for normal legal activity.
There's no real way to know, but I'd be very interested to find out what percentage of bitcoin use is for legal activity. It's a very popular on the dark web because it's so much harder to trace than the normal credit card. They are legal stores on the "normal" internet that take it, but do they process a lot of transactions compared to the illegal stuff?
Calling something FUD usually means that you think someone is mounting some sort of propaganda campaign against someone/something.
That's not me, but the literal meaning fits. I'm afraid people will convert money they can't afford to lose into bitcoin even though we don't know how stable it is long term. I'm uncertain that it can continue to be used as transaction volumes increase. I doubt it's as impenetrable as people think because the US government (among others) is capable of throwing a LOT of computer power at getting enough hashing to manipulate the block chain.
Source: http://www.businessinsider.com/merchants-arent-accepting-bit...
How big of an industry are electronic payments? Anyone have a guess? I couldn't even find a number I was confident was a reasonable approximation. Unfathomably large.
A unit of exchange as volatile as BTC is not an obvious ideal in the US. But what about in Venezuela, compared to local currency? What's the value of an asset that holds or appreciates, or even bounces around wildly in value in comparison to a currency with triple digit inflation? If all it does is put a stop to the grossest malfeasance by the dozen worst central banks in the world, how would we calculate that as a value?
It's reasonable to believe that BTC isn't the ideal solution for any of these, but with the established markets, even if it is destined to just take over a minority 1% of those sectors, then it's currently far undervalued. If it has a shot at preventing governments from causing mass starvation by printing money and passing it to cronies,[1] then it's a net win for humanity.
[0] https://www.theguardian.com/global-development/2014/aug/18/g...
[1] https://www.youtube.com/watch?v=S1gUR8wM5vA
At some point this would cause people to build stashes of tokens instead of investing in real businesses with real production capacity.
When this trend would become widespread enough, it would eventually cause global production capacity to drop. That's right, when enough people do it, token hoarding displaces investment in businesses and factories and lowers global production capacity. This means token hoarding causes a future drop in things available to buy with these very tokens.
Eventually there will be people who want to buy real things with their stock of tokens. The tokens will be chasing fewer goods which would mean prices for stuff would rise (tokens would lose value). This could happen suddenly when people with large stockpiles of tokens notice that value is dropping and that there are tons of other tokens waiting on the sideline ready to make it drop even further.
Hoarders might rush to get rid of their stockpile all at the same time before they're worthless which would cause their fall to worthlessness. This drop would bring the tokens closer to their natural intrinsic value of zero. The cycle can then start again, such is aggregate economics.
The 1920s and 1930s suffered from this type of production drop but with gold tied currencies instead of cryptocoins. It happened to a lesser extent in 2007 when western world central banks failed to keep inflation rates high enough.
It's important for the world's sake to not let deflationary currencies become too popular. When savings or financial promises are insufficiently tied to future production or to accumulation of real goods, there will be disappointment when many people try to exchange them for real stuff. That is true for crypto currencies as well as government currencies (that is why the system is designed to make banks invest people's money in real businesses and minimize the proportion of money that is stockpiled idly).
It's true that crypto currencies are currently not widely held enough to significantly affect the aggregate economy but speculation already keeps them volatile and the knowledge that as they get more popular, there will be more macroeconomic pressures towards volatility keeps the speculation wild and cryptocoins unstable.
Currencies that are not designed to lose value over time can not be stable. Intrinsically worthless tokens engineered to have better than market risk adjusted, liquidity adjusted, real returns compared to real productive investment will always fluctuate increasingly wildly as they get more popular.
I would say the economists who most shape my views would be Nick Rowe ( http://worthwhile.typepad.com/worthwhile_canadian_initi/nick... ), David Beckworth ( http://macromarketmusings.blogspot.ca/ ) and sometimes the more controversial but always entertaining Scott Sumner ( http://www.themoneyillusion.com/ ) .
A while back, I wanted to do as a side project, a game with a realistic macro economy but I got stuck at the learning phase and never got around to do the game (the rabbit hole went deeper than I had imagined). While I was researching, I put some of my musings about what I was learning in a few posts here: http://bessiambre.tumblr.com/ then later kind of summarized the views that I had formed in the following medium post: https://medium.com/@b.essiambre/the-world-deserves-a-pay-rai...
I'm sure my conclusions are simplistic and over-general compared to those of real economists.
My email is b.essiambre@gmail.com. Don't hesitate to write if you have questions.
I'll let you do the over/under on that one.
1 BTC is a historically common denomination that will likely receive less usage if the price continues to rise.
I find the idea of crypto currency, especially bitcoin, very interesting. I just have a very hard time seeing how it's actually useful. It can't handle very many transactions per minute. And the thing that supposed to make it so great is that no one controls it. But if bitcoin becomes really important then people will want to control a lot of the mining power. Pretty soon you end up with a group of miners (or even a single miner) having enough power to influence things leaving you pretty close to someone being in charge of the thing.
It's such a fascinating idea. But in less there was someway to limit mining so people couldn't throw additional power at it I'm not sure it's useful.
As an example, you could use a block chain to enforce a ledger between a couple of different companies but you'd have to have some sort of contract it said everyone was only allowed to use one of device X for mining. That way everyone would be equal and you could easily check it because the blocks should be minded roughly evenly.
But when miners can buy additional mining capacity, and they get rewarded for doing that with more money, how does this not end up with a winner takes all situation?
Will it hold up when 10 million people want to do that per day? 100 million? Half 1 billion? I know it can work at niche scales (relative to total global financial transactions) but can it actually be scaled up to be a real player?
Even if the block size was massively larger, say 100 MB, would enough transactions be able to be broadcasted around fast enough to be able to be collected in giant blocks to keep up with demand?
As to hardest/impossible for a government to steal from you: this is the mining pool problem. What if China decided to do something about all of the mining pools they have in their country and try and manipulate bitcoin? What if in addition to the pools that they could get/force to cooperate they added a bunch more miners with government computers?
What if the US government just decided to throw computer power at trying to make the dominant hashrate mining pool?
I'm guessing there are number of governments in the world it would be capable of doing that TODAY. They could certainly do it if they cooperated. Even if they can't take over they could throw enough uncertainty into the process to cause the price to crash.
If they all competed against each other we could end up in a situation where even know if theoretically no one controls bit coin realistically it's controlled by a bunch of giant governments and no one else is capable of competing. Oops, that sort of like the current banking system.
Like I said it's a fascinating idea, but I don't think it works at planet scale or if people can independently buy additional hashing capacity. It seems like it would have to have some sort of agreement to limit everyone to be roughly equal for it to work out almost anywhere.
I'd love to see history prove me wrong. I don't remember seening a solution to the problems that worry me yet. If they exist I'm not smart enough to think of them.
We'll see what happens.
This makes me think you haven't ever transferred bitcoins.
Why is it so hard to see?
Whenever you send money somewhere electronically, a middleman takes a cut. With Bitcoin there is no middleman.
It's that easy.
So much wrong with this statement.
First, not many banks in the U.S. do "the exact same thing for free", actually almost none do. Most ACH transfers take 1-5 days, instead of ~10 minutes with Bitcoin or ~15 seconds with Ethereum. Yes, I know about Zelle, but not all banks support that, and clearXchange isn't always same day, even.
Second, some services like Coinbase[1] insure your holdings, even while in crypto.
Third, almost all services that use ACH, like GDAX (Coinbase), Gemini, etc. don't do a 3% transfer fee through ACH, it's actually free. But it's next business day, like most ACH, where as crypto would've been an hour at most.
Lastly, some countries, like oh I don't know, Japan[2], have negative interest rates, so your money shrinks by the day instead of growing.
[1]:https://support.coinbase.com/customer/portal/articles/166237...
[2]:https://www.nytimes.com/2016/09/21/business/international/ja...
Seems like instant liquidity confirmation has been solved with credit cards or Paypal for trivial amounts (third party willing to act as an intermediary) or wire transfers for larger amounts (banks engaging their backchannel comfirmation protocols for a measly $25 fee).
There are also debit card payments, admittedly not as widespread, but impressively fast when used through Square Cash or Facebook Messenger.
None of the existing solutions are perfect, but all seem to be "good enough".
If I deposit to GDAX, sell to USD, and withdraw to my bank it will be there in 1 business day. It's been that way for years, for almost everyone I know. ACH pulls take longer, sure, but what I said is correct.
Also, multiple countries implemented negative interest rates[1]. Japan isn't an anomaly.
What you might lose from BTC fluctuation, you may also gain, as seen by the 400% YTD growth, this year alone[2].
You really should do more research and actually understand the topic instead of dismissing it because it doesn't fit your world-view.
[1]: https://en.wikipedia.org/wiki/List_of_countries_by_central_b...
[2]: https://www.cryptocoinsnews.com/bitcoin-price-nears-5000-ytd...
Is bitcoin capable of doing 50% of that? 10%? 1%?
I know people have just decided to expand the block size but what's a realistic limit on how many transactions can be done per hour? Is that enough for real widespread use?
I can certainly see uses but I worry that he can never get big enough to truly matter. Or if it does that a government or large private entity could easily try to take it over through force of computing power.
There's no holidays for the blockchain like banks have so you can send 24 hours a day, every day.
Things that rapidly appreciate in value also carry the risk of rapidly depreciating in value. That’s fine as an investment vehicle, but a much less attractive prospect in a currency.
Litecoin evangelists will point out that the usability of litecoin is currently far and away better. Part of that is certainly attributable to design, but part of it is attributable to LTC/USD being a better ratio than BTC/USD, meaning a 0.001 tx fee is a few pennies in one and a few dollars in the other.
The popularity of a coin increases adoption (and so network effects), but increases hurdles to usability at the same time, it's a really fascinating game theory situation...
We might end up with a suite of coins that users bounce between, or maybe some clever altcoin designer will find a clever fix for some of these issues. Not sure.
Scrypt (LTC) and KECCAK-256 (ETH) are less power intensive than SHA-256 (BTC). Those are just proof-of-work.
Proof-of-stake or proof-of-importance would have barely any power footprint, but there are still debates about whether they could replace PoW and offer similar security guarantees.
Of course that means that you need some way to set up the initial steaks and decide who gets them. And that means it isn't as democratic like bitcoin is, which I know is a big plus for many people.
(Sorry, couldn't help it.)
https://mycrypto.guide/
- Investment Prospectus: https://www.ethereum.org/pdfs/TermsAndConditionsOfTheEthereu...
- Premine Part I: Anyone can buy ETH in exchange for BTC for the next 42 days
- Premine Part II: On top of Premine Part I, +10% of the total ETH allocated during Premine Part I will be distributed to "early contributors"
- Premine Part III: On top of Premine Part I and Premine Part II, +10% of the total ETH allocated during Premine Part I will be distributed to the Ethereum Foundation
- The supply of ETH is uncapped and inflationary at a rate of +25% per year
- The premine is being conducted by "EthSuisse", a Swiss entity which will be prompty dissolved after the premining period ends. The Ethereum team makes no guarantee that development of Ethereum will continue after the dissolution of "EthSuisse"
- Regardless of how many BTCs are raised during the premine period, ~4000 BTC is explicitly reserved to pay for "Expenses incurred prior to and related to Genesis Sale". Translation: they are pocketing the first 4000-5000 BTC
> The Ethereum Platform is being developed primarily by a volunteer contributor team - many of whom will be receiving gifts of ETH in acknowledgement of their dedication - and will continue to be developed on a volunteer basis by some developers as well as under a more formalized contracting or employment relationship for other developers. The group of developers and other personnel that is now, or will be, employed by, or contracted with, Ethereum Switzerland GmbH ("EthSuisse") is termed the "Ethereum Team." EthSuisse will be liquidated shortly after creation of genesis block, and EthSuisse anticipates (but does not guarantee) that after it is dissolved the Ethereum Platform will continue to be developed by persons and entities who support Ethereum, including both volunteers and developers who are paid by nonprofit entities interested in supporting the Ethereum Platform.
via Cyther606 ( https://news.ycombinator.com/item?id=8072947 )
You shouldn't consider Bitcoin as a currency but as a better form of Gold. Like gold it has a limited amount available: ~180k tons of gold and eventually 21 million bitcoins. Like gold it is a good store of value (especially as more people are dropping their gold to purchase BTC). Unlike Gold you can send it to someone else online and that means it can also be used like a currency (even thought it is not its strength).
Product 1 has use A (in this case Apocalypse Insurance), and product 2 doesn't because its meant for another scenario.
1) The total SCALE of the bubble is much much smaller than say the tech bubble - the 280 stocks representative of the tech bubble fell almost $1.7 TRILLION in 52 weeks (2) vs the total crypto market cap @ the moment of ~180 billion.
2) The total scale of the Crypto bubble has MORE potential than stocks - why? The opportunity for casual global participation and almost complete lack of regulation / sophistication.
If the single use case for Crypto is nothing more than the world's greatest tulip mania / pyramid scheme it has the potential to be a multi trillion dollar asset class / wealth transfer.
(1) https://pbs.twimg.com/media/DIaa9KcVoAAcs3m.jpg:large
(2) http://cnnfn.cnn.com/2000/11/09/technology/overview/
For comparison: the founders seed round of Uber grew their investment 65,000×, tulip prices increased by at most 5,000× during tulip mania, some "best performing stocks" over the last century are reported as growing 1,000×.
There will only be 21 million bitcoins ever.
Let's say we were to measure all of our wealth in bitcoins, and let's say we already have all the bitcoins ever to exist available now. Then each bitcoin could be the equivalent of what $11,428,571.43 is to us today.
[1] https://publications.credit-suisse.com/tasks/render/file/?fi...
Are you going to say 1/10 bitcoin or will that have a name?
One thing I haven't seen anyone talk about is the language to make bitcoin more accessible.
No other currency (that I know of) has 1 unit as the MAX unit to transact (at such a high value) with no smaller denominations.
If Bitcoin really DOES end up at 100k/coin - and you want to buy something that's $10, are you really going to say .0001 bitcoin? There has to be a cleaner way. Even that, you could easily screw up decimal spots very easily.
Maybe I'm just not used to it yet - maybe they're just use the first part? "san", "deca", "mil"
It could go up to $6,000, $50,000, or even $1M. It's not localized like tulips, and it's connected to the internet, so the universe of people available to fuel the speculation is enormous. That the Chinese are highly speculative is what's mainly driving the current price.
It has no intrinsic value. It's like gold in that it's not a productive asset. It doesn't yield anything like stocks or bonds. The only thing a bitcoin holder can hope for is that someone will buy their coins in the future at a higher price.
The interesting part is watching human nature unfold. People who hold bitcoin mistakenly believing they're investors because the price action is reinforcing that belief. They're 100% speculators by definition. It's OK to speculate. It's neither illegal or immoral, but you should know when you're speculating and when you're investing.
You can't make this stuff up. Look at the people coming out of the woodwork: The Winklevoss Twins, Dan Bilzerian, professional wrestlers, and such. All the community leaders are either fighting with each other or in jail.
Yup, just like every other currency ever to exist.
actaul trade from china is similar or smaller to that in the EU at the moment
It's almost crazy how gambling and stock bubbles are nearly unheard of in Europe or America, precisely because of how seldom those peoples speculate.
To think, if it wasn't for Jinan province's tulip mania, we'd barely understand the phenomenon of speculative bubbles. Or maybe it was Dandong, I forget.
Since there are only 1.4 Billion Chinese, these sort of sweeping generalizations are perfectly reasonable.
So... let's take a breath.
We all have assumptions about the world, there's nothing wrong with that. Sometimes they're right and sometimes we're wrong.
What we want to do, is (1) recognize that blanket statements about an entire ethnic group can sometimes strike others as offensive or just comically antiquated, and therefore, (2) sanity check these generalizations against actual data.
I mean, it's one thing to offend a bunch of people if you're right, right? Maybe that's worth it... occasionally. But why waste the energy if you're going to be wrong? Or even just unsure?
Ok, I'm sure you're bursting with anecdotes already to defend the claim. I'll spare you some effort and try a few.
Like... the Chinese stock market is crazy! Well, yes, but actually a pretty normal level of crazy for a developing economy with some corruption and off-book efforts determining winners and losers.
Or... Macau is a huge gambling city! Sure, but lots of places have had a huge gambling hub before. They're often a symptom of other factors. A maturing hospitality sector... or restrictions on certain types of income. They make a great way to launder illegal money or support subtle capital flight.
Ok, what if we could look at gambling by country more broadly then, not focused on hubs but entire nations?
Well, gambling revenues track with GDP really well, countries with the most money are the ones that gamble the most. The US is way on top of the list. Go figure. Ok, so let's control for GDP...
If you run that check on the dozen or so countries big enough to matter, you'll find Italy and Australia topping the list with twice the proportionate losses as China. China muddles around the middle, squarely between the UK and the US, not much beyond France or Japan. It's perfectly boring.
Beyond this, levels of regulation seem to have a strong influence, so we'd want to control for the weird mixed status of Macau vs. the mainland (which has legal lotteries but not slots).
It's a project that could be done, possibly useful, but the data already screams other factors that matter more. Patterns aren't determined by culture so much as they're determined by all these simple exogenous factors that obviously require a control, like how much money is in people's pockets, how much access they have to games.
And speaking of controls... we're being generous here by not even controlling for population, which would tank China's rating.
There's a reason gambling isn't strongly tied to a certain nationality, why several regions have been gambling hubs over the ages. There's a similar reason speculative bubbles happen in markets around the world, not just in China.
Speculative affinity isn't a cultural characteristic, to the extent it's even measurable at all.
Ok, we can save time at this point. I'm pretty sure you still disagree.
If it makes you feel better, downvote this one too, they're just fake internet points.
But if you make sweeping generalizations disparaging an entire race based on archaic stereotypes, you should expect some pushback from time to time. It shouldn't strike you as a sudden unexpected shock to occasionally get called out on that sort of thing. Frankly I don't think it's a hill worth fighting and dying on, but everyone has to pick their own redlines I suppose.
Good luck with your Internetting.
@brownbat, I can't downvote you since you're replying to my comment. I would guess the downvotes are because your original comments are snarky and lack an argument germane to the OP.
I don't have raw data and am basing my conclusions on the stock market you mention, that luck is a big component of chinese culture, and that the Chinese operate the largest bitcoin mining pools. My comments weren't meant to offend. I'm not implying there's anything wrong with speculators (so long as they don't call themselves investors).
For all the people out there saying, "I cant find a use case", my question to you is, have you ever used it?!
If you have, did you notice that there wasn't a middleman taking a cut when you sent the money? I mean, do you have any fucking idea how much money businesses pay to the credit card companies?
Get on board guys.
HN is certainly "on board" as ycombinator and affiliates invests in various blockchain retailed companies
Only people trying to cash out need people buying in. If you were really invested in the long term you'd rather people not buy in so you can buy more at a lower price.
Bitcoin also has fees. The only reason the fees are lower than credit cards are because people in China can afford to burn electricity at a loss just to turn their Chinese money into anything else.
You still have to pay taxes on the capital gains. And you can't pay taxes in Bitcoin.
The best case scenario for bitcoin is it becoming the de facto monetary standard, meaning there would be no reason to buy or cash out, as everything would be priced in bitcoin.
Bitcoin will never replace current fiat money as it is inherently flawed: price fluctuate too much, and favor early owner of it.
These aren't flaws, welcome to economics, man. Once bitcoin gains enough things will be priced in BTC, so fluctuation won't be an issue.
Deflationary economics benefit the savers, while inflationary economics benefit the spenders. Just because bitcoin's economic model isn't something you're used to or like doesn't mean it is 'inherently flawed'.
So you mean, like, people will not waste nature's resources for things they don't really need? Oh, what a tragedy!
The tech is genuinely interesting and certainly doesn't lack hype. That is usually a formula for positive comments on Hacker News. So I'm genuinely curious why so many users here are against Bitcoin.
Is it because they didn't buy in early and want to justify missing the boat? Does it make people feel their own startup is somehow less relevant? Does it threaten the traditional VC funding model?
Eventually someone like Vanguard will come along and offer a blockchain with real value behind it. After this, all the hype around bitcoin will just look embarrassing in the aftermath.
The SEC was useful when information was hard to come by, but now it's just standing in the way of progress.
Not one bit. It's because people are losing their heads over it, it's got classic bubble written all over it, and you've got people who've made money and think they're all the wiser for it.
They arrogantly carry a sentiment that detractors are just jealous. Human nature to do that--I get it.
There's a saying I heard, something like "Sure, you made a lot of money buying the stocks of tobacco companies. So what? You're still an asshole."
In my mind, buying Bitcoin is like shorting the US financial system with the idea that it sucks and should to hell anyway. But, our system with all it's flaws works pretty damn well. It shouldn't be taken for granted and bet against.
First of all because it is decentralised, it is much less scalable than the current system, so I don't think it is going to be able to replace regular banking anytime soon (although I don't know a tonne about the scalability issues).
Also I like to have a centralised system, because if my bitcoin gets stolen/I screw up and lose it, it is gone forever. If my money gets stolen somehow, I call up the bank and they reverse the charges. Having a central authority is also pretty nice because they also give me lots of other benefits like credit card rewards, making it really easy to move my money around into different savings accounts or investments, etc. And regular currencies are also backed by the government, so are incredibly stable, unlike Bitcoin which changes values very quickly.
Bitcoin is also deflationary, which is a bad trait for a currency to have, as it discourages investment, and encourages people to hoard money instead of spending it.
I'm sure there are use cases for Bitcoin, but I don't think it is "some utopian shit", since the current system works super well for most people.
The wealth distribution of dollar is based on how many more people your grandfather killed than my grandfather. I don't have any problem with currency where initial distribution rewards people who took investment risks because they saw potential in innovative new technology.
And volatility - volatility in bitcoin is actually smaller every year, and this trend will continue. And btw volatility is natural and healthy. It's when something is not moving that you should be worried.
Enjoy the run, but sell at the right times because ultimately it will end in some form of tragedy.
When electric cars become mainstream, I expect there will be a turmoil in the USD
This guy noticed https://www.wsj.com/articles/why-you-wont-be-buying-a-coffee...
"High fees make it impractical to use bitcoin as a day-to-day currency. Paying a $5 fee to send $10,000 bitcoin isn’t a big deal, but it’s hard to justify buying a cup of coffee with bitcoin if the transaction costs more than the coffee."
Realistically, though, from the consumer standpoint Bitcoin is an electronic payments network analogous to credit cards that
1) Takes longer time to confirm (great news when you're standing in a checkout line).
2) Does not have a third party to resolve conflicts and disputes between the consumer and unscrupulous merchant or a straight out scammer.
3) Does not have a rollback mechanism in case of an unauthorized or fraudulent transaction.
4) Does not offer consumer-side rewards - cashback, airline miles, points - for usage.
Where do I sign up?
That's what the new Lighting network is for ( https://lightning.network/ )
Not an issue for me I'm afraid (UK).
If their "market caps" aren't decimated then I will be a true believer.
I say this as someone who has owns some of a few different ones.
There's a lot of reasons why prices move. There's obviously speculation. But there's also utility. And the way ETH is designed is far more useful to me than BTC.
My prediction is that both currencies will reach 10k USD in the next few years. But ETH will get there faster