"As a final note: this is not a Bitcoin obituary; Bitcoin will be fine. However, its price may change a bit. "
So he is saying the same thing. Only he thinks there will be single event, I see this as a series of corrections and bitcoin will become more of an asset then a currency.
since there really arent that many fundamentals to bitcoin's value, at least obvious ones to me, i think its mostly a gamble. not that that is bad or good. just that i dont think its worth attributing to much credit or blame to winning and losing parties. ive followed it since it was a dollar in 2011... i still dont know what makes it go up and down except hype, china banning or unbanning it, and exchange thefts. someone got rich off beanie babies, are the people who didn't "too chicken shit" too?
storage of value, information integrity, speed - If you don't see obvious utility with cryptocurrency then you haven't done enough/very little research.
Why would ycombinator backed REQ try to replace Paypal with crypto technology if there wasn't fundamental value in the tech?
YC's whole model is making many investments which are likely to fail, assuming a lucky few will pay for the rest. It only works because they diversify, rather than going all-in on a single one.
the statement why REQ would try this, not ycomb's investment strategy..
They don't just invest in anyone, they do due diligence, why would they conclude this is even a viable risk taking opportunity if it was easy to see there is no utility in the technology?
I keep hearing about how cryptocurrencies are a revolution and the "Greatest Transfer of Wealth in History" and all I have in response is that it appears to be nothing more than yet another transfer of wealth in the wealthy elite's favor. The wealthy get wealthier, while those not wealthy may get a few crumbs to placate them (10x returns on 6 - 8 figures investments + funding to build massive scale ASIC/GPU farms versus 10x returns on 3 - 4 figure investments and no ability to generate meaningful returns via personal mining).
I'd argue you're getting richer, not wealthier. A very key distinction.
I do have money in cryptocurrency, just to be clear. Only because I expect to be able to sell it for a higher value to a greater fool down the line (and have no misconceptions about what it is and the risks involved).
I agree that crypto has tons of obvious fundamentals. In 2017, I would agree that ETH, LTC, XMR, XRP, NEO, POWR etc have utility, but BTC has name recognition.
It's good for moving money out of countries with strict currency controls. There's a ton of conceptual value to a currency that exists beyond the control of any central authority.
i dont dispute there is some utility to the currency. i mean, i guess you could say that governmental instability / dumb monetary policy drives bitcoin's price to some degree?
EDIT: i guess its ambiguous in my parent comment- i mean fundamentals that drive the PRICE of bitcoin. i dont want to hear about its intrinsic value, i know there is some.
Several years ago during the MTGox collapse, /r/bitcoin over on reddit had a suicide hotline pinned to the top as multiple evangelicals had sunken their life savings into BTC. It's going to be a very difficult situation if / when BTC crashes again, and it won't end well for just about anyone.
Given the recent uptick in posts about people investing their life savings into bitcoin and bragging to friends and relatives about their wealth, it seems like the community hasn't learned anything from past turbulent times.
The mainstream audience is trying to get their heads around this new asset class and when reputable and respected members of the financial industry say anything about cryptocurrency, it is likely to get a lot of pageviews.
Literally the same line about tulips has been repeated for the last 4 years. It's probably true, but at this point I'm curious why anyone is interested in yet another article saying exactly the same thing with no new information, content, evidence, anything.
Ironically, the news works in the same way as BTC prices. There doesn't have to be any intrinsic value as long as people are talking about it.
The tulip mania comparison is lazy. It's just a way for pass of FUD as a "scholars approach", when in reality nobody knows if it is a bubble or not since it hasn't yet crashed.
When the price sinks down to <1k/btc and stays there, we can look back and laugh over the tulip mania. Until then its all speculation, on both sides.
> It's just a way for pass of FUD as a "scholars approach", when in reality nobody knows if it is a bubble or not since it hasn't yet crashed.
No horses in the race (except a sense of regret I didn't buy more sooner), but isn't this exactly what the majority opinion is about every contemporaneous bubble? I was a Finance major back before the crash when my professors used to say homes were the only asset that always increased in value.
people are idiots. The tulip bubble (and most every bubble since) have ended in a lot of tears because of leveraged trading. While there is some leveraging going on in the cryptocurrency market today, it's far less than any we've seen of late (and far less than the tulip bubble).
If you don't want to end up crying about bitcoins or crypto you do the following: 1) make a plan that you're happy with. 2) if it fails, oh well 3) consider your assets lost as soon as you put into cryptocurrency.
My thinking is this: bitcoin and other digital currencies are becoming more and more “popular” (literally). More and more “ordinary” people start investing, the barriers of participation are coming down. As long as there is a large enough pool of people willing to join the party, prices will continue to rise. The question is when to pull out. I always get nervous when cab drivers start giving me free stock advice. Hasn’t happened yet with coins. So: way to go!
I've got people on my Facebook feed posting regularly about how we all need to buy BTC now while it is on the rise. They brag about their winnings and encourage others to play too...
Came up at family gathering over Thanksgiving. The masses know about it because of its massive increase in value and are all afraid that they are missing out.
Yeah. It’s a sign that the bubble is going to pop soon. Honestly the stock market is getting to be the same way. People should start moving money into safe investments and be prepared to ride out a storm.
>Honestly the stock market is getting to be the same way. People should start moving money into safe investments and be prepared to ride out a storm.
If you have a way of accurately predicting when that storm will happen and when it will be over, you should look for ways to cash in on that.
Otherwise pulling money out of the stock market because you think there might be a bubble is a terrible idea. People have been warning of a bubble for the last 5+ years--there will definitely be a downturn, but it could be next year it could be 10 years from now.
The average person should adjust their portfolio based on how much time they have to keep investing, not based on reading the market entrails.
Well technically you are speculating by paying for the energy to mine the coins. You could take that money and save it as cash/M1 if you didn't want to speculate.
A major holder of bitcoins tries to pull more than can be converted into a national currency. This basically topples what I equate to a ponzi scheme when people find out that it doesn't convert so easily back and forth at current evaluation, and reduces the value enough that others fearful of loss start to try to convert as well.
I think that this is probably the most likely scenario where people discover that bitcoin, as a currency, is a bad idea: deflationary currencies cannot succeed (the rate of creation goes down while population goes up, so it must be deflationary). Further, it shows that bitcoin as a commodity/investment doesn't work, because to be honest there is nothing backing it up. What recourse do you have when the bitcoins you bought at 10k are now worth 1k? What real gain/loss has occurred that the rest of the GDP need concern itself with?
Philosophically, I believe that bitcoin has presented an interesting technological breakthrough, but the implementation of production is off. I do believe that in the future that we'll see national currencies using blockchain technology.
In the meantime, I'm not going to worry about it, and I'm not getting involved. If some of my friends become wealthy for it, then great for them, but I'm not particularly keen on 'get rich quick' or market timing schemes.
So for me, the most realistic price drop scenario is something that creates a big increase in supply and decrease in demand at the same time. For MtGox you have a crisis that lowers trust in brokers, decreasing demand, and huge hoard of stolen coins going to a criminal that wants to profit, increasing supply. Holders who bought bitcoin for a reason will sell for a reason, and they're heavily incentivized not to do a panic selloff, unless they think bitcoin is dying.
I agree bitcoin is inadequate as a currency. (I think ETH is better as a currency, since it sort of has the "tax base" of executing contracts and enshrining the results on the blockchain.) I view it as a store of value. If your wealth is mostly represented as various numbers in various databases (mine is,) then bitcoin is a robust form of integer storage, or at least vulnerable in ways that are uncorrelated with my other wealth storage providers.
I found very interesting the community discourse change from having a currency to use for sending transactions anywhere and with tiny fees to Bitcoin is a value reserve like Gold. The last assertion existed before but companies like BitPay, Coinbase and others were oriented to the former use case.
If a viable cryptocurrency that doesn’t use massive amounts of energy for its transactions would come along, wouldn’t that pose a huge risk to btc?
At that point, shouldn’t btc just be “outlawed” (to the extent it can be, e.g target exchanges, banning payment in physical stores and similar). It should go the way of incandescent light bulbs.
it doesn't look like it right now, there are dozens of cryptocurrencies with better technology than bitcoin (including proof-of-stake), but lower public awareness and therefore lower market size.
At some point, bitcoin is going to have to be worth more than just n USD... right? Other than buying in and cashing out, what is bitcoin useful for right now? What makes BTC today better than my cash?
I am aware of the potential for cryptocurrency and I am aware of it's increasing value. But if all my money is tomorrow BTC instead of USD, for instance, how will I survive without converting it back into USD every time I needed to use it?
Not trying to be facetious, just curious as to what the bitcoin crowd is using BTC for. If not to pay for goods and services, then isn't it a misnomer at this point to keep calling it a currency?
1) Inherent value is a fiction. There is no such thing as value without intervening human judgement. Besides which by any sane and consistent definition cryptocurrencies have inherent value (decentralized trust mechanism... Not gonna judge whether or not it's worth the current valuations of cryptos... It's just nonzero)
Is there much decentralized trust in bitcoin? If you're using it like money, you still have to trust someone will give you goods and that your wallet software isn't going to steal your information.
We really are living in strange times. I can't tell if it's a brave new world or a hype train headed off a cliff.
Because once the price stops rapidly going up, if there is no other reason to hold on to it, people will sell. If it's no longer working as an investment, and it's only value is as an investment, what other reason would people have to hold it?
Unless you think the value can keep increasing forever. If that's the case, can you name one example of something with no value whatsoever, other than that it's value was known to be increasing over a certain period of time, that continued increasing long term?
A good that has no use to any person other than the hope that another person may buy it from them later for a price higher than what the original person paid for it.
There's pretty much nothing that fits this bill. Can you give an example of such a good? "any" is a pretty strong qualifier. Cryptocurrencies are certainly useful to some people - whether or not it justifies current valuation is subject to debate of course, but you have defined yourself out of a category.
The OP's assertion was that bitcoin must have some use other than as an investment vehicle if it is to survive long term.
You asked the OP "On what principles do you base this assertion?".
If you arguing that bit coin is useful outside its use as an investment vehicle, and must be so to survive long term, you are agreeing with the OP.
If you arguing that bit coin is useful outside its use as an investment vehicle, but it doesn't have to be to survive long term, you need to provide an example of something that is not useful outside it's value as an investment vehicle that has survived long term.
Drugs, ransomware, and maybe web hosting or a remote shell.
>if all my money is tomorrow BTC instead of USD, for instance, how will I survive without converting it back into USD every time I needed to use it?
You won't. Crypto-libertarian dweebs are convinced that someday somebody will accept their Dunning-Krugerrands in exchange for goods and services, but right now the price is so volatile that everyone who owns them won't spend them to pay for milk and bread if it's likely they will be worth twice as much next week as they were this week, and nobody selling real world necessities gives enough of a shit to go out of their way to accept them.
True. There are many more limitations with cash. The most important example might be illegal drug quality. With cash, you can give a friend of a friend some money for drugs. Who the hell knows where they got it from. With crypto, you can buy from an online marketplace complete with thousands of reviews and quite possibly much safer drugs than what you may find in your local community.
1. As a buyer, sending money via Bitcoin means whoever I'm buying goods/services from won't be able to bill me monthly, they won't be able to lose my credit card info, and they can't overcharge me.
2. Also as a buyer, there are also no "restrictions" on who I can send money to, and how much. Nobody can close my account because they don't approve of what I bought,
or can restrict where i'm able to send money to (ignoring custodial wallets, which can do all of those things to some extent).
3. As a "merchant", receiving payment in Bitcoin means that I don't need to worry about "chargebacks", "reversals" or any other way that the money could be taken back after it's been sent.
4. As a developer, Bitcoin is a fantastic way to receive tips and donations. I don't need to maintain an account with some service that might go under or get hacked. I can create an address for donations securely once, and can put it everywhere knowing that it will work indefinitely.
Yeah, I agree that at this point people trying to live on Bitcoin are a little crazy, but if more and more places start accepting it it's a fantastic way to buy and sell things that is a lot more "safe" feeling for all involved.
> 3. As a "merchant", receiving payment in Bitcoin means that I don't need to worry about "chargebacks", "reversals" or any other way that the money could be taken back after it's been sent.
This is why I wouldn't use BTC to buy anything. Banking and consumer protection regulations did not just come out of thin air. They came out pain that occurred at some point. BTC will never replace the bulk of traditional transactions until remediation can happen.
Just because it's in bitcoin doesn't mean that consumer protection doesn't apply. It just means that the process to get your money back isn't "call my bank and tell them to take it back".
The pain that they mostly solve for people (at least from what i've seen) is due to the fact that most payment systems work on a "pull" method. You give your information to the merchant, and the merchant tells your bank to give them $X. With that kind of setup, it's obvious that things like "chargebacks" and friends are absolutely necessary.
But since bitcoin is "push based", the only person that can send money is you. So generally the only time you would need to "charge back" is due to fraud. And escrow services can add that "protection" back into the mix if it's needed or wanted by the people transacting. And the legal system can take care of larger or systematic abusers.
Escrow services can give you the exact same protection you are looking for, but with the difference that it's opt in, and you can freely choose your escrow service independently of where you keep your money.
I'll start by echoing another comment below -- Bitcoin is immune to direct central bank intervention.
> ... what is bitcoin useful for right now? ... all my money is tomorrow BTC ... what the bitcoin crowd _is_ using ...
I would contend that this isn't the right question -- value right now is not based on utility right now; it's based on an estimate of discounted future utility. Unfortunately, that future utility includes a component of "price momentum", which may or may not actually exist, or may just be in part a self-fulfilling limited-timeframe prophecy (or a bubble, as some call it). There's even, in some quarters, worries that onroads to cryptocurrencies may become more difficult in the future as AML laws start to focus on it, so better to have some on hand so that when the "one true cryptocurrency" emerges, you'll be able to get in on it despite your government's reluctance to allow it.
> What makes BTC today better than my cash?
Today, I would say the immunity to politically-directed manipulation of value. As compared to "cash" as in folding paper money that you hold on your person, I would say it gains the advantage of being electronically transferable, and arguably, easier to secure. As compared to "cash" as in money on deposit in a demand deposit account, it offers the liquidity of cash (no bank to tell you "you can't take out that much right now), and immunity from other failures: bank runs do happen (rarely), banks do fail (less rarely), "identities" are stolen (not rarely at all), and accounts are closed because of violations of terms of service or because of suspicious activity (which may just involve transactions over a certain dollar amount). If you're sufficiently paranoid, concerns about a cause you support being labelled as "terrorist" and having money laundering protections slapped on it, or a country that you have relatives in being labelled a "rogue state", or even (true story!) a neighboring country being artificially branded a terrorist state to blackmail them into building a wall.
> isn't it a misnomer at this point to keep calling it a currency?
Maybe. But if it walks like a duck and quacks like a duck... I mean, this ends up just being a semantic game where we're fighting over the definition of the word "currency". If it makes you feel better, call it a crypt o'currency, which is its own thing distinct from currency; it just shares some attributes of currencies.
Stocks have tangible assets that generate earnings to justify their investment. Bitcoin, however, generates no real returns beyond its exploding popularity resulting in a higher price. While that doesn't automatically doom its fate (see: traditional currency pairs), Bitcoin is different in that its only real use so far is as an alternative bank account. It will likely remain this way until people can live their lives on Bitcoin in the way people live their lives on a traditional, centralized currency. Many people who simply use it as a bank account may deposit their money for a long period of time, resulting in a sustainable price; for simplicity's sake, we can give the benefit of the doubt and assume that 100% of those looking for an alternative bank rather than an investment will hold it indefinitely.
The question is: Of those pushing the price from ~$750 to ~$10,000 in one year, after several years of stability in the ~$500 area, how many are looking to hold it as a bank account alternative, and how many are looking at it as an investment to eventually sell for a profit? Given the trajectory, it's hard to believe individuals are adopting it this rapidly for purposes other than investment; it seems like this 'mainstream adoption' is really just primarily mainstream investment. Is it sustainable when the majority of people are just buying in expectation of others buying? With companies like TSLA it can be sustainable, as investors believe that future earnings will justify the valuation. Here, there's nothing but a hope that others will buy because the price keeps going up.
The only way this bubble doesn't pop is if the money being pumped into Bitcoin results in commercial adoption as a viable currency, however that seems unlikely in the meantime.
Counterpoint: it is difficult and expensive to buy or sell gold, and it can't easily be used as a currency (at least not in the modern world). However, it has held its value remarkably well.
You usually pay a 3-5% premium over spot to a reputable coin dealer to buy gold coins, and you are paid spot when you sell them. With Bitcoin, you usually pay 2-4% transaction fees to get your fiat into an exchange, 0.25% fees per trade, and 2-4% transaction fees to get your fiat out of an exchange.
I'm actually a little surprised that local coin shops haven't gotten into the cryptocurrency market.
True, and the illiquidity of gold is part of what makes it a great store of value.
Bitcoin will certainly survive, at least, as a niche alternative for short-term storage (easy transactions) and/or those in physical danger (decentralized and without a physical existence).
Counter counterpoint : When the panic comes and everyone runs for the door, crypto hits a bottleneck of conversion to fiat. Gold is easily exchanged for any kind of goods, service or fiat money (WE BUY GOLD!).
Disclaimer: Most of my cypto money are in bitcoins.
My biggest problem with Bitcoin these days is the developers pushing Bitcoin to become 'store of value'.
Originally Bitcoin became popular because it simply let people transact over the internet quickly with low cost. This was what gave Bitcoin its utility, and thus value.
Now that the Core team has decided that ease-of-use is not important, they are literally trying to hype Bitcoin as something intrinsically worthless except for people's perception of it. Bitcoin is now coasting on its reputation it accumulated in its first 5 years of life. So what makes Bitcoin _not_ a pyramid scheme?
Other cyptocurrencies have their own uses-
Litecoin - Buy stuff over internet cheaply and quickly
Ethereum - ICO and contracts
Ripple/Steem - Pseudo-decentralization allows for huge number of transactions.
Monero/ZCash - Privacy
Gold - People have liked shiny and non-degradable stuff since the stone age
Stocks/Bonds - Dividend/Interests
Tulips bulbs - Grow tulip flowers
Bitcoin in 2017 - ??? Store of value
The first 4 example cryptos actually have real world usage that could potentially justify their prices. What use does Bitcoin have right now? Every transaction costs >$1 and takes hours to process. What could Bitcoin do that other cryptocurrencies couldn't do better?
I think the biggest benefit though, is name recognition. When people think of crypto, they think Bitcoin. That's the biggest issues Litecoin and Ethereum have now.
Exactly, that's why I mentioned that Bitcoin is coasting on its reputation. IMO a technology cannot survive with name recognition alone. Myspace vs Facebook comes to mind. Everyone knew Myspace, but they made no improvement and at the end, Facebook (via superior features) stole its lunch.
I chose this example because both financial markets and Web 2.0 depends on network of scale to be efficient. At the same time, just because most people use your product today, doesn't mean they will remain to do so tomorrow. Constant improvement is the key, and Bitcoin is actually regressing in its utility.
Yeah, most of my crypto is in ETH because I think it has value beyond the hype. BTC has the name recognition and thus has the 'dumb' money buying in like crazy. My thesis though is that long term crypto is useful and will be worth something. How much is hard to quantify right now.
Litecoin is really the future. It is almost the exact same as Bitcoin (different hashing algorithm, more in supply, faster transactions) but the most important thing is it has crystal clear guidance on SegWit/POS/POW and how it is developed. It has probably one of the most influential people in all of crypto behind it (Charlie Lee) AND it is a fair coin, it was not premined. It has actually been used as a "testbed" for some of the SegWit Bitcoin testing if that gives you any indication of its stability.
You're right that Bitcoin is only a store of value (thanks for reminding me of that word, btw!). It could definitely be successful with that purpose, particularly for short-term storage or for those in physical danger.
As a sibling comment mentioned, it could be a gold alternative. Bitcoin is much more volatile, however, and it already has a $160b market cap. The total value of all gold ever mined, from what I've found, is $1190b. Gold has gone up in value while Bitcoin has been rallying, which is a small but nonetheless existent indicator that people are not changing their store of value.
Bitcoin will only be stable when most of those invested in it view it as that store of value, however even then it will be shaky compared to gold. Though it may receive commercial adoption due to its popularity, the slow transactions you mentioned really disable that.
In conclusion: Thanks for the list of cryptocurrencies, as I'll certainly be looking into buying them rather than Bitcoin ;)
>Originally Bitcoin became popular because it simply let people transact over the internet quickly with low cost. This was what gave Bitcoin its utility, and thus value.
It is a severe misunderstanding to think a coins market cap is a reflection of its current utility. "Potential" drives valuations, and bitcoin has the greatest potential to be the currency of the future, despite its limited current utility. The fact that almost every alt-coin has cheaper/faster transactions, and yet are worth tiny fractions compared to bitcoin should clue you in. Bitcoin is still the most valuable because it has by far the most name recognition, and this name recognition will carry it to success down the road when things like the lightnight network are implemented and in widespread use.
You are actually not disagreeing with what I said on most points, where we differ is the conclusion.
First, no where I mentioned current market cap, let alone its link to utility. As an aside, Ethereum and Bitcoin Gold combined mkt cap are slightly half of Bitcoin's, so it's not tiny fractions by any measurement.
As you said, one has to make the distinction between current utility and potential utility. You argued that Bitcoin is valuable because it has the most name recognition, and it has the biggest potential utility via Lightning Network.
I actually typed up more on how Lightning Network in my previous post, but I deleted it because I don't want to stifle the conversation. But hear me out, other crypto currencies have implemented LN and are beginning to use it. Aside from the fact that it would only give BTC 1.7x transaction counts boost, what other features does LN bring to Bitcoin that other currencies can not achieve? Name recognition again.
I haven't even gotten into how long it is taking the Core team to put in a functional LN into Bitcoin. By the time they are done, so would every other cyptocurrencies under the sun.
>First, no where I mentioned current market cap, let alone its link to utility
The only substantive way to read "this was what gave Bitcoin its utility, and thus value" is through its connection to market cap.
>other crypto currencies have implemented LN and are beginning to use it
No one is near having a functional lightning network. Simply enabling segwit isn't enough. Furthermore, it isn't enough to just have the LN, but it needs to be in widespread usage for its full potential to be reached. Say some low usage alt-coin did enable a fully functional lightning network. It wouldn't matter because there are no scaling concerns for that coin to begin with. It would be functionally no different than doing a transaction with the bare network. The LN is a solution to the kinds of scaling problems only bitcoin is currently having (perhaps Ethereum as well).
>Aside from the fact that it would only give BTC 1.7x transaction counts boost
LN enables off-chain transactions and so would scale the effective transaction capacity orders of magnitude.
>The only substantive way to read "this was what gave Bitcoin its utility, and thus value" is through its connection to market cap.
Okay fair enough. What I was going for in using the word "value" was the intrinsic worth of having a free-flowing currency that can be use by anyone.
>other crypto currencies have implemented LN and are beginning to use it
>No one is near having a functional lightning network...it needs to be in widespread usage for its full potential to be reached.
Maybe I am too dumb to understand LN, but what gives BTC an edge over, say Litecoin, if both BTC and Litcoin have LN fully implemented.
>LN enables off-chain transactions and so would scale the effective transaction capacity orders of magnitude.
I never see anyone ever claim LN will allow +10x transactions. Most claims I read are 1.7x-4x . If you have a source on that I'd really appreciate it (I will read it.)
But all these are moot points. While BTC is waiting for LN to be implemented, other solutions (that have their uses) are available today. A bad analogy would be a restaurant owner telling hungry patrons that a new master chef will start next week, and the food will be amazing. Great, but people are hungry now and they will just go to other restaurants (and maybe the other restaurants are almost as good as this one and so the patrons will stop coming to yours.)
By the time LN is done, I hope there's enough left of BTC's reputation.
>Maybe I am too dumb to understand LN, but what gives BTC an edge over, say Litecoin, if both BTC and Litcoin have LN fully implemented.
You have to understand the end goal of the LN. A future with LN is one with off-chain instant transactions with unlimited throughput. This is enabled by a network of LN hubs where each "edge" is a payment channel. Then sending a payment on the LN is a matter of routing your payment through existing hubs. As long as you already have some locked amount on the LN and there is a route between you and your intended destination, the transaction can happen instantly and immutably off chain. Once you close your connection then the transactions are settled on chain. Essentially an unlimited number LN transactions can occur in between an on-chain settlement. But this requires widespread deployment of LN hubs which only happens if there is enough incentive by sellers to join.
If enough of their customers have bitcoin they want to spend, they will join. If some alt-coin has all the tech ready for the LN, but lack the widespread distribution of their tokens to incentivize sellers to join, it won't happen. This is why the idea of bitcoin being a store of value is a necessary step in the mainstreaming of bitcoin for payments: it gives people an incentive to buy and hold it now. A "currency" that only greases the wheels of transactions (i.e. bought for the duration of a tx then immediately sold) is no currency. It has to be worth holding in its own right and "store of value" bitcoin provides that.
>I never see anyone ever claim LN will allow +10x transactions. Most claims I read are 1.7x-4x . If you have a source on that I'd really appreciate it (I will read it.)
I'm guessing what they mean is that Segwit reduces the signature and thus increases the on chain capacity by 1.7x. People say this in an attempt to cloud the issue of Segwit vs bigger blocks. The LN isn't about stuffing more transactions into each block.
>Great, but people are hungry now and they will just go to other restaurants (and maybe the other restaurants are almost as good as this one and so the patrons will stop coming to yours.)
But most people aren't hungry now. For most people, paypal and VISA works just fine. They will only switch when the advantages over these legacy systems are great enough. This only happens with the fully deployed LN. For the small number of people that want anonymous transactions now, or need to circumvent the banking infrastructure now, they will use bitcoin or any number of alt-coins. But the value this service provides as it stands just doesn't warrant multi-billion dollar market caps: there simply isn't enough simultaneous transactions (i.e. instantaneous demand) to drive up the cost of the service.
>I never see anyone ever claim LN will allow +10x transactions. Most claims I read are 1.7x-4x . If you have a source on that I'd really appreciate it (I will read it.)
Botcoin value is dependent on and pumped by exchanges. In case of larger sale run they will cease to payout with cash or other cryptocurrencies because they are out of money to cover most payouts. I think at most 1% is available in US$ cash -- the rest is gone in tax heavens. There is no law control over these entities and their financial fitness.
So as the value is going to collapse and with low value the cost of transactions will explode to an extent that exhanging is going to stale and mining will become worthless.
I agree the block-chain and smart contract technology is interesting, but this pioneer execution is simply a Ponzi scheme. Newcomers are funding payouts and nobody asks where the real cash goes. Scared merchants can pull a "cryptocurrency payment" plug overnight, and there is no goverment to call bailout to save this financial system. This will be epic bail-in.
> Bitcoin is different in that its only real use so far is as an alternative bank account.
Only? Thats not true though.
> With companies like TSLA it can be sustainable, as investors believe that future earnings will justify the valuation.
Why do you keep using stock and equity analogies when talking about a completely different asset class that behaves more like a commodity?
So so strange.
What does a "pop" and "doom" mean to you? Bitcoin has swung 90% downwards multiple times and all tearful holders at any point in history have a profit right now. The people that are using bitcoin for more than an alternative bank account will still have uses for bitcoin.
limited supply cryptographic hashes have utility for a variety of reasons at any price to various market participants, just like oil and gold has utility for a variety of reasons at any price.
but yes I can see why that might be confusing when your only valuation model requires revenues and earnings.
Alright guys, let's plot. How can we crash Bitcoin?
Bitcoin is obviously a bit of a new bird when it comes to what sort of financial instrument it is. To me it seems to be half gold, a hedge against currency and other economic troubles and half ponzi scheme, a lot of the valuation is driven by the belief that there are more people in line behind you than there are in front of you.
So if we take it that there is a bubbley aspect to bitcoin built upon ponzi scheme psychology but also the new aspect which is that many participants are aware it's a ponzi scheme and still believe in it anyway - is there anyway to pop it? It seems all the normal methods of popping a bubble like this have been eliminated by the completely decentralized nature of it. Is it even a bubble anymore if that's true?
The normal way this goes is: Asset X has good fundamental utility/value. Investors see that, and put money in X. X goes up. That's not a bubble.
Other investors see X going up, and put money in X because it's going up. That's the start of a bubble - when people buy, not because they think the fundamentals are good, but because it's going up and they don't want to miss out. So of course X goes up more because of all the new money coming in.
The next stage comes when, because X is reliably going up, people borrow money to put in X. Now X really shoots up, because there's so much money going in. This keeps going while new money keeps coming in, but the investors are more nervous, because it's borrowed money. They're in trouble if they can't pay it back. And the more recently they invested, the more nervous they are, because they've got less room for it to fall before they owe the bank money.
This falls apart in panic selling when the price of X drops. The price drops either when nobody can believe the current price of X any more, or else when banks won't lend any more money for buying X.
So, if my understanding of bubbles is correct, and if Bitcoin is going to be a typical bubble, the relevant question is, how much of the money invested in Bitcoin is borrowed?
>>> Other investors see X going up, and put money in X because it's going up. That's the start of a bubble - when people buy, not because they think the fundamentals are good, but because it's going up and they don't want to miss out. So of course X goes up more because of all the new money coming in.
That isn't just the start of the bubble, that's pretty much the definition - asset trading at the price that exceeds the asset's intrinsic value. If people are buying on speculation and not for it's utility, it's a bubble.
>>> So, if my understanding of bubbles is correct, and if Bitcoin is going to be a typical bubble, the relevant question is, how much of the money invested in Bitcoin is borrowed?
The amount of borrowed money used to purchase Bitcoin is certainly a lot greater than zero, which while not strictly a characteristic of a bubble, probably is a sign of nearing critical levels.
Headlines like these give me confidence that it will keep going. It may crash, however, most people would be caught off-guard...these things aren't telegraphed, plus, what's the motive? To save me money? or to make more money for himself?
What really underlies this issue is whether you think Bitcoin is over or undervalued. Griffin leads off saying this is a bubble understanding that the people at Blomberg already believe this.
Without a real justification for why Griffin values Bitcoin at less than the current market price this article is nothing but fluff.
Of course if it is a bubble, this is a bad thing for those invested in Bitcoin. That is not up for debate. If it does burst, there will be plenty of tears, but the value of the entire Bitcoin ecosystem is still tiny compared to classic commodities like gold or real estate.
I have seen several articles here on HN recently that have seem to all confirm that Bitcoin is a bubble, but I haven't read anything that dives into the real substance behind the claim that Bitcoin is overvalued.
I understand the scaling issues, but I am confident that something like the lightning network can solve those. I don't believe that all transactions can be on-chain as this would make running a full-node and verification of the entire chain very difficult over time.
Well it's obvious Bitcoin is a bubble. It's basically unusable as a currency or payment processor and the only markets that use it are very small. It's not even a good choice for those use cases.
Since I see a lot of people posting that there is no legitimate use case for Bitcoin, let me point out that the global remittance market is over $500 billion per year. Being able to cheaply and easily move money between countries is a huge need, and bitcoin is good at that. This isn't even touching grey-area financial services like evading capital controls, routing around artificially pegged currencies (ie what's happening Argentina), etc. This isn't to say that there isn't a big ugly correction coming, but it's not accurate to say that Bitcoin has no value/purpose.
I used to believe that as well. I have business and family in other countries and the traditional approaches were way too expensive ($50 for a bank wire, $X fee plus horrible exchange rates via Moneygram, etc). I used Bitcoin a few times to move money from my US accounts to my overseas accounts where I could then transfer it in local currency through the local banking systems.
But then it started taking longer and longer for bitcoin transactions to clear. And the price was often moving during this window between when I bought in one currency and I could sell in another currency.
Now I just use TransferWise. Less hassle. Costs are much more reasonable (a few bucks for small amounts) and I don't have to have do multiple transactions to get money from Point A to Point B.
Very interesting, thanks for sharing. I also experienced the long confirmation time issue, but it seems to have settled down after the segwit fork, which allowed more transactions per block.
Bitcoin is going mainstream just now, at $9800/btc it's STILL early stage. At this point it will just continue growing because of finite amount and mainstream adoption.
I wouldn't be surprised to see BTC reach $50,000 by December next year.
Why are bitcoin prices going up? Because there's no reason why they should go down.
People who buy bitcoin are largely trying to buy in "early". This raises the price, which makes other people want to be in "early". This raises the price, etc etc etc.
Bitcoin has legitimate uses, but most people who buy crypto don't plan to use it. They plan to sell it. And they rely on the newcomers to inflate the price. Very much a pyramid type model. I think the most real threat is legislation restricting its handling.
Until then, bitcoin price is not going to stop rising.
sure, sure. i've been hearing it for years, the same bubble talk and questions about it's utility. the same nobodies yelling about tulips and and pyramid schemes. i expect this low effort discourse but it is pathetic to see this unsubstantiated bullshit discussed in any seriousness. unfortunately i expect more stories like his as wall street comes to grips with this technology. i'm sure there will be efforts to undermine and manipulate the market but as long as bitcoin continues to be censorship resistant and decentralized there is not a damn thing anybody can do to stop its spread. every simpleton thinks they have some unique insight on why it will not work while the smart people have been working on improvements to the protocol.
Bitcoin let's you send peer to peer payments online without going through a financial institution; that's what the whitepaper says it was designed to do, and that is what it does. We can all agree on that. I think everyone can also agree that there is some utility in that capability.
The question now becomes, what is the relationship between that utility and the quantity of bitcoin owned? I think the answer is clear: there is none, and based on that, I think it's safe to conclude that this gigantic rally based on a desire to own bitcoin is very likely a bubble.
If I was given 1 satoshi every time I hear some old fart is preaching Bitcoin doomsday I would be a trillionaire. I can summarize it without even reading into
I don't get Bitcoin, why don't they all use banks instead, banks are cool because I use them and I am def cool. Bitcoin is not supported by anything, look at that nice cool bank where we used to fuck whores, USD is backed by all that coolness, Bitcoin is backed only by math and I don't get math.
But tbh fees are now ridiculous, I think Bitcoin will crash soon
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[ 3.1 ms ] story [ 175 ms ] threadThere will definitely be a lot of corrections, but I see stable future for bitcoin as an asset.
How can this possibly scale of the net value of created bitcoins grows at the rate of $10 billion dollars per day?
So he is saying the same thing. Only he thinks there will be single event, I see this as a series of corrections and bitcoin will become more of an asset then a currency.
Difficult to steal or confiscate.
Confidence of transaction completion in a low trust environment.
I'm sure there are more but those are three off the top of my head.
Why would ycombinator backed REQ try to replace Paypal with crypto technology if there wasn't fundamental value in the tech?
They don't just invest in anyone, they do due diligence, why would they conclude this is even a viable risk taking opportunity if it was easy to see there is no utility in the technology?
Business as usual.
I highly suggest you do a little more research. This is a transfer of wealth on scale that I haven't seen in my lifetime.
I'm not a wealthy elite. I'm getting wealthier.
I do have money in cryptocurrency, just to be clear. Only because I expect to be able to sell it for a higher value to a greater fool down the line (and have no misconceptions about what it is and the risks involved).
Edit: changed "has" to "as", as it was a typo.
Ken Griffin "may" find a $10 bill on the street today. He "may" see his stock portfolio flash crash 30% this week.
Why is this even news?
The tulip mania comparison is lazy. It's just a way for pass of FUD as a "scholars approach", when in reality nobody knows if it is a bubble or not since it hasn't yet crashed.
When the price sinks down to <1k/btc and stays there, we can look back and laugh over the tulip mania. Until then its all speculation, on both sides.
No horses in the race (except a sense of regret I didn't buy more sooner), but isn't this exactly what the majority opinion is about every contemporaneous bubble? I was a Finance major back before the crash when my professors used to say homes were the only asset that always increased in value.
If you don't want to end up crying about bitcoins or crypto you do the following: 1) make a plan that you're happy with. 2) if it fails, oh well 3) consider your assets lost as soon as you put into cryptocurrency.
Is it though ....?
https://www.smithsonianmag.com/history/there-never-was-real-...
If you have a way of accurately predicting when that storm will happen and when it will be over, you should look for ways to cash in on that.
Otherwise pulling money out of the stock market because you think there might be a bubble is a terrible idea. People have been warning of a bubble for the last 5+ years--there will definitely be a downturn, but it could be next year it could be 10 years from now.
The average person should adjust their portfolio based on how much time they have to keep investing, not based on reading the market entrails.
Bonus points if one can point to a well researched article on positive catalysts for BTC in 2018.
Only thing is no one knows when and how deep the pullback will be.
It could go up to 12-15k and then drop to 3-5k. Or it could go up to 20k and drop to 1k. No one knows.
Disclaimer: I've only mined and sold my BTC since 2011 no speculation.
- me-too buyers drawn by the huge 2017 increases
- investors that have a mandate to seek out high-risk investments for a certain %age of their portfolio, and are gradually overcoming technical and regulatory barriers ( https://www.bloomberg.com/news/articles/2017-11-16/bitcoin-e... )
For a decrease
- MtGox style failure of a company holding a lot of coins
- crypto-diversification as other projects get stronger
A major holder of bitcoins tries to pull more than can be converted into a national currency. This basically topples what I equate to a ponzi scheme when people find out that it doesn't convert so easily back and forth at current evaluation, and reduces the value enough that others fearful of loss start to try to convert as well.
I think that this is probably the most likely scenario where people discover that bitcoin, as a currency, is a bad idea: deflationary currencies cannot succeed (the rate of creation goes down while population goes up, so it must be deflationary). Further, it shows that bitcoin as a commodity/investment doesn't work, because to be honest there is nothing backing it up. What recourse do you have when the bitcoins you bought at 10k are now worth 1k? What real gain/loss has occurred that the rest of the GDP need concern itself with?
Philosophically, I believe that bitcoin has presented an interesting technological breakthrough, but the implementation of production is off. I do believe that in the future that we'll see national currencies using blockchain technology.
In the meantime, I'm not going to worry about it, and I'm not getting involved. If some of my friends become wealthy for it, then great for them, but I'm not particularly keen on 'get rich quick' or market timing schemes.
I agree bitcoin is inadequate as a currency. (I think ETH is better as a currency, since it sort of has the "tax base" of executing contracts and enshrining the results on the blockchain.) I view it as a store of value. If your wealth is mostly represented as various numbers in various databases (mine is,) then bitcoin is a robust form of integer storage, or at least vulnerable in ways that are uncorrelated with my other wealth storage providers.
I am aware of the potential for cryptocurrency and I am aware of it's increasing value. But if all my money is tomorrow BTC instead of USD, for instance, how will I survive without converting it back into USD every time I needed to use it?
Not trying to be facetious, just curious as to what the bitcoin crowd is using BTC for. If not to pay for goods and services, then isn't it a misnomer at this point to keep calling it a currency?
But it isn’t, and while it does get used to buy things it’s hardly the most common use.
Which is why most critics liken it to investments, and why it’s a problem.
Question: On what principles do you base this assertion?
Then again, maybe that doesn't even matter.
2) We're living in strange times.
We really are living in strange times. I can't tell if it's a brave new world or a hype train headed off a cliff.
https://en.wikipedia.org/wiki/Tulip_mania
Unless you think the value can keep increasing forever. If that's the case, can you name one example of something with no value whatsoever, other than that it's value was known to be increasing over a certain period of time, that continued increasing long term?
The OP's assertion was that bitcoin must have some use other than as an investment vehicle if it is to survive long term.
You asked the OP "On what principles do you base this assertion?".
If you arguing that bit coin is useful outside its use as an investment vehicle, and must be so to survive long term, you are agreeing with the OP.
If you arguing that bit coin is useful outside its use as an investment vehicle, but it doesn't have to be to survive long term, you need to provide an example of something that is not useful outside it's value as an investment vehicle that has survived long term.
Drugs, ransomware, and maybe web hosting or a remote shell.
>if all my money is tomorrow BTC instead of USD, for instance, how will I survive without converting it back into USD every time I needed to use it?
You won't. Crypto-libertarian dweebs are convinced that someday somebody will accept their Dunning-Krugerrands in exchange for goods and services, but right now the price is so volatile that everyone who owns them won't spend them to pay for milk and bread if it's likely they will be worth twice as much next week as they were this week, and nobody selling real world necessities gives enough of a shit to go out of their way to accept them.
Someone already will, most notably for illegal goods and services.
- Transferring "value" to another person without oversight.
That's pretty much it. And the latter wouldn't exist if you couldn't do the former.
1. As a buyer, sending money via Bitcoin means whoever I'm buying goods/services from won't be able to bill me monthly, they won't be able to lose my credit card info, and they can't overcharge me.
2. Also as a buyer, there are also no "restrictions" on who I can send money to, and how much. Nobody can close my account because they don't approve of what I bought, or can restrict where i'm able to send money to (ignoring custodial wallets, which can do all of those things to some extent).
3. As a "merchant", receiving payment in Bitcoin means that I don't need to worry about "chargebacks", "reversals" or any other way that the money could be taken back after it's been sent.
4. As a developer, Bitcoin is a fantastic way to receive tips and donations. I don't need to maintain an account with some service that might go under or get hacked. I can create an address for donations securely once, and can put it everywhere knowing that it will work indefinitely.
Yeah, I agree that at this point people trying to live on Bitcoin are a little crazy, but if more and more places start accepting it it's a fantastic way to buy and sell things that is a lot more "safe" feeling for all involved.
This is why I wouldn't use BTC to buy anything. Banking and consumer protection regulations did not just come out of thin air. They came out pain that occurred at some point. BTC will never replace the bulk of traditional transactions until remediation can happen.
The pain that they mostly solve for people (at least from what i've seen) is due to the fact that most payment systems work on a "pull" method. You give your information to the merchant, and the merchant tells your bank to give them $X. With that kind of setup, it's obvious that things like "chargebacks" and friends are absolutely necessary.
But since bitcoin is "push based", the only person that can send money is you. So generally the only time you would need to "charge back" is due to fraud. And escrow services can add that "protection" back into the mix if it's needed or wanted by the people transacting. And the legal system can take care of larger or systematic abusers.
Escrow services can give you the exact same protection you are looking for, but with the difference that it's opt in, and you can freely choose your escrow service independently of where you keep your money.
> ... what is bitcoin useful for right now? ... all my money is tomorrow BTC ... what the bitcoin crowd _is_ using ...
I would contend that this isn't the right question -- value right now is not based on utility right now; it's based on an estimate of discounted future utility. Unfortunately, that future utility includes a component of "price momentum", which may or may not actually exist, or may just be in part a self-fulfilling limited-timeframe prophecy (or a bubble, as some call it). There's even, in some quarters, worries that onroads to cryptocurrencies may become more difficult in the future as AML laws start to focus on it, so better to have some on hand so that when the "one true cryptocurrency" emerges, you'll be able to get in on it despite your government's reluctance to allow it.
> What makes BTC today better than my cash?
Today, I would say the immunity to politically-directed manipulation of value. As compared to "cash" as in folding paper money that you hold on your person, I would say it gains the advantage of being electronically transferable, and arguably, easier to secure. As compared to "cash" as in money on deposit in a demand deposit account, it offers the liquidity of cash (no bank to tell you "you can't take out that much right now), and immunity from other failures: bank runs do happen (rarely), banks do fail (less rarely), "identities" are stolen (not rarely at all), and accounts are closed because of violations of terms of service or because of suspicious activity (which may just involve transactions over a certain dollar amount). If you're sufficiently paranoid, concerns about a cause you support being labelled as "terrorist" and having money laundering protections slapped on it, or a country that you have relatives in being labelled a "rogue state", or even (true story!) a neighboring country being artificially branded a terrorist state to blackmail them into building a wall.
> isn't it a misnomer at this point to keep calling it a currency?
Maybe. But if it walks like a duck and quacks like a duck... I mean, this ends up just being a semantic game where we're fighting over the definition of the word "currency". If it makes you feel better, call it a crypt o'currency, which is its own thing distinct from currency; it just shares some attributes of currencies.
Stocks have tangible assets that generate earnings to justify their investment. Bitcoin, however, generates no real returns beyond its exploding popularity resulting in a higher price. While that doesn't automatically doom its fate (see: traditional currency pairs), Bitcoin is different in that its only real use so far is as an alternative bank account. It will likely remain this way until people can live their lives on Bitcoin in the way people live their lives on a traditional, centralized currency. Many people who simply use it as a bank account may deposit their money for a long period of time, resulting in a sustainable price; for simplicity's sake, we can give the benefit of the doubt and assume that 100% of those looking for an alternative bank rather than an investment will hold it indefinitely.
The question is: Of those pushing the price from ~$750 to ~$10,000 in one year, after several years of stability in the ~$500 area, how many are looking to hold it as a bank account alternative, and how many are looking at it as an investment to eventually sell for a profit? Given the trajectory, it's hard to believe individuals are adopting it this rapidly for purposes other than investment; it seems like this 'mainstream adoption' is really just primarily mainstream investment. Is it sustainable when the majority of people are just buying in expectation of others buying? With companies like TSLA it can be sustainable, as investors believe that future earnings will justify the valuation. Here, there's nothing but a hope that others will buy because the price keeps going up.
The only way this bubble doesn't pop is if the money being pumped into Bitcoin results in commercial adoption as a viable currency, however that seems unlikely in the meantime.
I'm actually a little surprised that local coin shops haven't gotten into the cryptocurrency market.
Bitcoin will certainly survive, at least, as a niche alternative for short-term storage (easy transactions) and/or those in physical danger (decentralized and without a physical existence).
My biggest problem with Bitcoin these days is the developers pushing Bitcoin to become 'store of value'.
Originally Bitcoin became popular because it simply let people transact over the internet quickly with low cost. This was what gave Bitcoin its utility, and thus value.
Now that the Core team has decided that ease-of-use is not important, they are literally trying to hype Bitcoin as something intrinsically worthless except for people's perception of it. Bitcoin is now coasting on its reputation it accumulated in its first 5 years of life. So what makes Bitcoin _not_ a pyramid scheme?
Other cyptocurrencies have their own uses-
Litecoin - Buy stuff over internet cheaply and quickly
Ethereum - ICO and contracts
Ripple/Steem - Pseudo-decentralization allows for huge number of transactions.
Monero/ZCash - Privacy
Gold - People have liked shiny and non-degradable stuff since the stone age
Stocks/Bonds - Dividend/Interests
Tulips bulbs - Grow tulip flowers
Bitcoin in 2017 - ??? Store of value
The first 4 example cryptos actually have real world usage that could potentially justify their prices. What use does Bitcoin have right now? Every transaction costs >$1 and takes hours to process. What could Bitcoin do that other cryptocurrencies couldn't do better?
I chose this example because both financial markets and Web 2.0 depends on network of scale to be efficient. At the same time, just because most people use your product today, doesn't mean they will remain to do so tomorrow. Constant improvement is the key, and Bitcoin is actually regressing in its utility.
Bitcoin has the brand position in peoples heads. For most, cryptocurrency and Bitcoin are the same thing. You "google" it, you don't "search the web".
As a sibling comment mentioned, it could be a gold alternative. Bitcoin is much more volatile, however, and it already has a $160b market cap. The total value of all gold ever mined, from what I've found, is $1190b. Gold has gone up in value while Bitcoin has been rallying, which is a small but nonetheless existent indicator that people are not changing their store of value.
Bitcoin will only be stable when most of those invested in it view it as that store of value, however even then it will be shaky compared to gold. Though it may receive commercial adoption due to its popularity, the slow transactions you mentioned really disable that.
In conclusion: Thanks for the list of cryptocurrencies, as I'll certainly be looking into buying them rather than Bitcoin ;)
It is a severe misunderstanding to think a coins market cap is a reflection of its current utility. "Potential" drives valuations, and bitcoin has the greatest potential to be the currency of the future, despite its limited current utility. The fact that almost every alt-coin has cheaper/faster transactions, and yet are worth tiny fractions compared to bitcoin should clue you in. Bitcoin is still the most valuable because it has by far the most name recognition, and this name recognition will carry it to success down the road when things like the lightnight network are implemented and in widespread use.
First, no where I mentioned current market cap, let alone its link to utility. As an aside, Ethereum and Bitcoin Gold combined mkt cap are slightly half of Bitcoin's, so it's not tiny fractions by any measurement.
As you said, one has to make the distinction between current utility and potential utility. You argued that Bitcoin is valuable because it has the most name recognition, and it has the biggest potential utility via Lightning Network.
I actually typed up more on how Lightning Network in my previous post, but I deleted it because I don't want to stifle the conversation. But hear me out, other crypto currencies have implemented LN and are beginning to use it. Aside from the fact that it would only give BTC 1.7x transaction counts boost, what other features does LN bring to Bitcoin that other currencies can not achieve? Name recognition again.
I haven't even gotten into how long it is taking the Core team to put in a functional LN into Bitcoin. By the time they are done, so would every other cyptocurrencies under the sun.
The only substantive way to read "this was what gave Bitcoin its utility, and thus value" is through its connection to market cap.
>other crypto currencies have implemented LN and are beginning to use it
No one is near having a functional lightning network. Simply enabling segwit isn't enough. Furthermore, it isn't enough to just have the LN, but it needs to be in widespread usage for its full potential to be reached. Say some low usage alt-coin did enable a fully functional lightning network. It wouldn't matter because there are no scaling concerns for that coin to begin with. It would be functionally no different than doing a transaction with the bare network. The LN is a solution to the kinds of scaling problems only bitcoin is currently having (perhaps Ethereum as well).
>Aside from the fact that it would only give BTC 1.7x transaction counts boost
LN enables off-chain transactions and so would scale the effective transaction capacity orders of magnitude.
Okay fair enough. What I was going for in using the word "value" was the intrinsic worth of having a free-flowing currency that can be use by anyone.
>other crypto currencies have implemented LN and are beginning to use it
>No one is near having a functional lightning network...it needs to be in widespread usage for its full potential to be reached.
Maybe I am too dumb to understand LN, but what gives BTC an edge over, say Litecoin, if both BTC and Litcoin have LN fully implemented.
>LN enables off-chain transactions and so would scale the effective transaction capacity orders of magnitude.
I never see anyone ever claim LN will allow +10x transactions. Most claims I read are 1.7x-4x . If you have a source on that I'd really appreciate it (I will read it.)
But all these are moot points. While BTC is waiting for LN to be implemented, other solutions (that have their uses) are available today. A bad analogy would be a restaurant owner telling hungry patrons that a new master chef will start next week, and the food will be amazing. Great, but people are hungry now and they will just go to other restaurants (and maybe the other restaurants are almost as good as this one and so the patrons will stop coming to yours.)
By the time LN is done, I hope there's enough left of BTC's reputation.
You have to understand the end goal of the LN. A future with LN is one with off-chain instant transactions with unlimited throughput. This is enabled by a network of LN hubs where each "edge" is a payment channel. Then sending a payment on the LN is a matter of routing your payment through existing hubs. As long as you already have some locked amount on the LN and there is a route between you and your intended destination, the transaction can happen instantly and immutably off chain. Once you close your connection then the transactions are settled on chain. Essentially an unlimited number LN transactions can occur in between an on-chain settlement. But this requires widespread deployment of LN hubs which only happens if there is enough incentive by sellers to join.
If enough of their customers have bitcoin they want to spend, they will join. If some alt-coin has all the tech ready for the LN, but lack the widespread distribution of their tokens to incentivize sellers to join, it won't happen. This is why the idea of bitcoin being a store of value is a necessary step in the mainstreaming of bitcoin for payments: it gives people an incentive to buy and hold it now. A "currency" that only greases the wheels of transactions (i.e. bought for the duration of a tx then immediately sold) is no currency. It has to be worth holding in its own right and "store of value" bitcoin provides that.
>I never see anyone ever claim LN will allow +10x transactions. Most claims I read are 1.7x-4x . If you have a source on that I'd really appreciate it (I will read it.)
I'm guessing what they mean is that Segwit reduces the signature and thus increases the on chain capacity by 1.7x. People say this in an attempt to cloud the issue of Segwit vs bigger blocks. The LN isn't about stuffing more transactions into each block.
>Great, but people are hungry now and they will just go to other restaurants (and maybe the other restaurants are almost as good as this one and so the patrons will stop coming to yours.)
But most people aren't hungry now. For most people, paypal and VISA works just fine. They will only switch when the advantages over these legacy systems are great enough. This only happens with the fully deployed LN. For the small number of people that want anonymous transactions now, or need to circumvent the banking infrastructure now, they will use bitcoin or any number of alt-coins. But the value this service provides as it stands just doesn't warrant multi-billion dollar market caps: there simply isn't enough simultaneous transactions (i.e. instantaneous demand) to drive up the cost of the service.
>I never see anyone ever claim LN will allow +10x transactions. Most claims I read are 1.7x-4x . If you have a source on that I'd really appreciate it (I will read it.)
I don't have any good authoritative sources on hand, but a recent comment I saw on reddit really drives home the value of the LN (warning, its a bit ranty): https://www.reddit.com/r/btc/comments/7fde71/im_switching_to...
Only? Thats not true though.
> With companies like TSLA it can be sustainable, as investors believe that future earnings will justify the valuation.
Why do you keep using stock and equity analogies when talking about a completely different asset class that behaves more like a commodity?
So so strange.
What does a "pop" and "doom" mean to you? Bitcoin has swung 90% downwards multiple times and all tearful holders at any point in history have a profit right now. The people that are using bitcoin for more than an alternative bank account will still have uses for bitcoin.
limited supply cryptographic hashes have utility for a variety of reasons at any price to various market participants, just like oil and gold has utility for a variety of reasons at any price.
but yes I can see why that might be confusing when your only valuation model requires revenues and earnings.
Bitcoin is obviously a bit of a new bird when it comes to what sort of financial instrument it is. To me it seems to be half gold, a hedge against currency and other economic troubles and half ponzi scheme, a lot of the valuation is driven by the belief that there are more people in line behind you than there are in front of you.
So if we take it that there is a bubbley aspect to bitcoin built upon ponzi scheme psychology but also the new aspect which is that many participants are aware it's a ponzi scheme and still believe in it anyway - is there anyway to pop it? It seems all the normal methods of popping a bubble like this have been eliminated by the completely decentralized nature of it. Is it even a bubble anymore if that's true?
Other investors see X going up, and put money in X because it's going up. That's the start of a bubble - when people buy, not because they think the fundamentals are good, but because it's going up and they don't want to miss out. So of course X goes up more because of all the new money coming in.
The next stage comes when, because X is reliably going up, people borrow money to put in X. Now X really shoots up, because there's so much money going in. This keeps going while new money keeps coming in, but the investors are more nervous, because it's borrowed money. They're in trouble if they can't pay it back. And the more recently they invested, the more nervous they are, because they've got less room for it to fall before they owe the bank money.
This falls apart in panic selling when the price of X drops. The price drops either when nobody can believe the current price of X any more, or else when banks won't lend any more money for buying X.
So, if my understanding of bubbles is correct, and if Bitcoin is going to be a typical bubble, the relevant question is, how much of the money invested in Bitcoin is borrowed?
That isn't just the start of the bubble, that's pretty much the definition - asset trading at the price that exceeds the asset's intrinsic value. If people are buying on speculation and not for it's utility, it's a bubble.
>>> So, if my understanding of bubbles is correct, and if Bitcoin is going to be a typical bubble, the relevant question is, how much of the money invested in Bitcoin is borrowed?
The amount of borrowed money used to purchase Bitcoin is certainly a lot greater than zero, which while not strictly a characteristic of a bubble, probably is a sign of nearing critical levels.
Without a real justification for why Griffin values Bitcoin at less than the current market price this article is nothing but fluff.
Of course if it is a bubble, this is a bad thing for those invested in Bitcoin. That is not up for debate. If it does burst, there will be plenty of tears, but the value of the entire Bitcoin ecosystem is still tiny compared to classic commodities like gold or real estate.
I have seen several articles here on HN recently that have seem to all confirm that Bitcoin is a bubble, but I haven't read anything that dives into the real substance behind the claim that Bitcoin is overvalued.
I understand the scaling issues, but I am confident that something like the lightning network can solve those. I don't believe that all transactions can be on-chain as this would make running a full-node and verification of the entire chain very difficult over time.
How do they get Bitcoin to begin with?
Is value moving out of Argentina in a way that has little to do with Bitcoin?
But then it started taking longer and longer for bitcoin transactions to clear. And the price was often moving during this window between when I bought in one currency and I could sell in another currency.
Now I just use TransferWise. Less hassle. Costs are much more reasonable (a few bucks for small amounts) and I don't have to have do multiple transactions to get money from Point A to Point B.
I wouldn't be surprised to see BTC reach $50,000 by December next year.
People who buy bitcoin are largely trying to buy in "early". This raises the price, which makes other people want to be in "early". This raises the price, etc etc etc.
Bitcoin has legitimate uses, but most people who buy crypto don't plan to use it. They plan to sell it. And they rely on the newcomers to inflate the price. Very much a pyramid type model. I think the most real threat is legislation restricting its handling.
Until then, bitcoin price is not going to stop rising.
The question now becomes, what is the relationship between that utility and the quantity of bitcoin owned? I think the answer is clear: there is none, and based on that, I think it's safe to conclude that this gigantic rally based on a desire to own bitcoin is very likely a bubble.
I don't get Bitcoin, why don't they all use banks instead, banks are cool because I use them and I am def cool. Bitcoin is not supported by anything, look at that nice cool bank where we used to fuck whores, USD is backed by all that coolness, Bitcoin is backed only by math and I don't get math.
But tbh fees are now ridiculous, I think Bitcoin will crash soon