What he's saying is that in the next few weeks it's going to drop as low as 8k, it will be as much as 40k by the end of the next year, and within 5 - 10 years it will be the biggest bubble of our lifetimes. It's really not that complicated.
What an awfully disingenuous comment. Just because some random so called "cryptocurrency" may still hold any residual value after this bitcoin pump-and-dump scam blows up it doesn't mean it makes any sense to keep pumping, let alone enter the fraud at this stage.
What is Bitcoin supposed to be worth? The only way to determine true value is to go through these phases of price expansion and contraction until equilibrium is reached.
If you don't want to participate in volatile speculation, that's fine, the average person shouldn't. But there is no other way around it.
What scheme are you talking about? It's an unregulated market, so yes, there are scams and dumps occurring. However BTC has huge volume, so it takes huge volume and risk to manipulate it. Or manipulation from the exchange itself. Those are risks that the informed trader is aware of.
Any and all securities go up and down, whether it is justified or not.
Nearly every cryptocurrency followed Bitcoins scheme, wherein massive quantities of the supply were produced for the first few weeks to a small group of users, so any later users entering these systems must than buy from those horders or spend more and more capital on the increasingly expensive and reducing output of mining.
It's not exactly a ponzi or pyramid scheme, but the manipulative intent is clear so a new term is needed.
> Those coins were also pretty much worthless early on.
...hence the "pump" stage of the pump-and-dump scheme being conducted quite extensively, with all forms of scammers publicizing the immense virtues and magically perpetual low value of bitcoin, hoping that the next batch of fools and idiots open their wallets to finance the value pumping.
> publicizing the immense virtues and magically perpetual low value...
This happens every day in securities. Those "pumpers" are called "analysts". They sometimes work for investment banks and research firms. You can choose to follow their advice or you can bet against it.
Apple shares were $0.50 (unadjusted) in its early history. By your definition, anyone espousing the future of Apple and computers at that point is a pump and dump scammer.
Literally every investment is a "ponzi" or "pyramid" by your definition. If I invest in a company I can get a hell of a lot more shares for cheap now than when they IPO.
This is specific to crypto currency supply production algorithms.
Coin supplies are created by running the software. Bitcoin and many other cryptocoins use a rule that lets the first users take control of the supply very easily by generating the coins for very low CPU/GPU difficulty. After a few weeks, the work required to produce more coins doubles. This just lets a few users control the supply, wait, and attempt to convince new users the coins are rare because the production/mining has become significantly more expensive.
tl;dr: early miners generate most of the coins inexpensively, and try to sell to greater fools because the software stops creating coins as easily as the first few days
Shares are fractional ownership of a company that can grow or shrink. The whole point is that their value corresponds with the total value of the company.
It becomes a ponzi scheme when the only value from early shares comes from investment in later shares. That's what's happening with bitcoin.
Satoshi made a machine that prints money if you do work. He made it so it only required a small amount of work to begin with and as time goes on, someone else with the same machine and the same work gets less. It's made even worse because there were less users battling over the larger easy production near the start, and more and more users fighting over less and less output.
He doesn't care about survival. He's a speculator who wants to pump up the bubble, ride the wave, and cash out billions in a few years. Nothing wrong with that though, as long as he doesn't do anything illegal.
For further comparison, he ran an $8 billion fund that utterly failed to weather the 2008 financial crisis [1]. Prior to the IPO, he and Fortress' management "borrowed money, used $250 million of it to pay themselves a dividend, and used part of the I.P.O. proceeds to pay back the loan."
Old trick among big-money managers ... the other fun piece about giving yourself a questionably-recourse (or questionably-to-ever-actually-be-collected) loan is that it's not taxable until it's forgiven. But it's still plenty spendable before that!
I refuse to believe that he didn't anticipate this given how insanely it was going up lately. I'm surprised he haven't bought back yet and wants it to go lower. It totally could though. Just 2 months ago $10k for Christmas sounded very optimistic.
Bitcoin has no mainstream use right now. It's too expensive to transact in terms of money and time, it's too volatile to be a store of value, it's too technical to be used casually, it's too fragile since it gets hacked every which way, and it's too easily copied to be rare.
To most people there is no difference. The consequence is that Bitcoin seems unsafe because there has been lots of money stolen. It's like the Oracle bug I am tackling today, my customers don't care if it's Oracle's fault, they just know my product doesn't work.
Don't understand why I'm being downvoted. Don't put your coins on an exchange, ever, unless you want to risk them being lost. This is cryptocurrency 101.
I assume he meant people have had their coins stolen, usually from exchanges, really not much different than your bank getting robbed, although in this cause your money is gone and the exchange doesn't cover the theft.
There is no FDIC for Bitcoin exchanges. Also a distressingly large percentage of the exchanges to date have been either fraudulently or incompetently run and lost the user's bitcoibs and/or fiat money.
Nobody would use banks if 4 out of 5 were completely cleaned out by crooks and went out of business.
Numerous cases of backdoored wallets, or poorly implemented weak private keys generated from javascript, or straight up theft from deposits.
While a tiny aspect of dealing with Bitcoin is secure (key pairs) [1], actually using Bitcoin has proven to be a mess for almost the majority of users.
This is not a user friendly experience for most users.
People always forget to include future innovations in their projections. It's as if they don't believe (or know) that software can rapidly improve.
The lightning network looks very promising in its ability to scale and reduce fees. It would make transactions nearly instantaneous, have reasonable fees, and help scale the network.
Everyone thought Netflix was a useless mail-order DVD company until it dominated streaming video.
Everyone thought Amazon would never make a profit until it revealed the profit monster that is AWS.
No one can predict the future, all you can do is take the information you have available today and come to your own conclusion. If you don't understand the implications of cryptocurrency on society and money, then that's your loss. If you think you do understand it and believe otherwise, then go ahead and short everything and go make some profits against it.
If "everyone" though Netflix was "useless", then its win came out of the blue. Meanwhile you're trying to argue that the current hype around Bitcoin is justified because of something that _might_ happen in the future. There were a lot of massively over-hyped Internet companies too. They _could_ have developed technology and a big business. But the opposite happened - they went bankrupt.
I'm sure some very smart people saw a path to internet streaming distribution and negotiation leverage with their content base.
I don't know if the hype/price is justified, I just know cryptocurrencies are going to change the world. It seems to me that something that important is probably worth betting on, and not against.
Being able to exchange btc for other coins makes it like a stock market. BTC is also a commodity. It is also a speculative investment into the lightning network. It is also a hedge against fiat currency.
BTC is many things and it causes confusion amongst people trying to determine where the value comes from. It took me many years to figure this out, unfortunately.
In casual use with your mobile phone, you are shown a QR code, scan it, tap "OK", and it's done. Not that technical. Billions of people with smartphones could handle that perfectly. You're right about transactions being slow and expensive, and that is certainly a much bigger problem. That and the fact that there are still very few places accepting it.
> That and the fact that there are still very few places accepting it.
This is one thing I don’t get. In countries like China and India (to name the two countries I know about) mobile payment apps are ubiquitous. You go in to a shop, scan a QR code, and boom your payment is done. This is what crytocurrencies promised, but instead more closed apps came to fill the market. What happened?
All these apps give the government more control, that is why their use is encouraged.
Bitcoin "as app" (once or if it works) will be more like cash payments, privacy wise. That is were I see the main advantage. I find it spooky what Visa and Mastercard now about all of us... at least about me.
> Bitcoin "as app" (once or if it works) will be more like cash payments, privacy wise.
One massive caveat is that all Bitcoin transactions are public, traceable, and permanently stored in the Bitcoin network. In most ways it's worse than cash, in some ways it's probably even worse than credit cards.
I doubt it's about the government like another poster mentioned. Cash works great to subvert the government and that's exactly what a lot of little shops do. It's probably because as a merchant:
1. You don't want to _ever_ wait 45 minutes for a transaction to potentially be confirmed on the blockchain. Even before the recent craziness and high fees this would sometimes happen.
2. The price fluctuates wildly. Pretty hard to reason properly about whether or not you'll be able to pay your employees this week if your "store of value" could drop 20% or more at a moment's notice.
3. The fees charged by exchanges to convert to fiat are exorbitant. Unless all of your suppliers and handymen take Bitcoin, you will get screwed by this on the regular.
The bulls usually scream "Lightning network, scaling, store of value" or some other nonsense, but the truth is, today Bitcoin is garbage as an actual currency.
They take zero effort to setup, since it just adds to your existing phone bill. Unlike bitcoin, where people need to install apps, navigate subscribing to financial-like systems they don't really understand. The conversion rate will be tiny, and very few people who consider paying with Bitcoin will complete the process and actually be in a position to scan the QR code and hit the button. None of the other crypto currencies are even on the public's radar, and won't be unless Visa or Mastercard join in.
Bitcoin Core betrayed the original vision of Bitcoin and hotwired it into a high-cost settlement system. The average transaction fee in Bitcoin is something like $38, which is more than the average weekly salary in many countries.
I believe that cryptocurrency will eventually attain mass adoption. The timeline has been pushed back a few years though because the main network has failed.
At the current volatility how can businesses be expected to take on the risk of accepting bitcoin? None of their costs would be in bitcoin so they would have to be constantly moving their bitcoin to fiat currency and taking a risk on wild daily swings.
Businesses accepting Bitcoin typically do it via third-party payment processors. The intermediate takes a cut, shields the vendor from the risks, and pays an agreed price in fiat.
The system has been in place for years, and it works reasonably well. More competition would still help. And yes, a better network and better systems to cut out the intermediary would help even more.
The problem with that now, and the reason why Steam stopped accepting Bitcoin, is that the peg expires by the time the transaction comes in, which can take hours.
Do some napkin math, this is impossible. The people who hold bitcoin now probably have a combined net worth of over a trillion dollars. They will pump and dump it forever rather than let it go to zero. It's way too much fun to trade alone.
> bitcoin has no mainstream use right now
Maybe not in india yet. Even there, it's only a matter of time. Someone will introduce gbtc to the NSE and BSE, and watch it get bought widely even in india. There is a reason it sells at a 20% premium in india.
Hedge funds can short too, why the cold feet all of a sudden?
My guess is he's shorting the markets or couldn't raise the capital after all. Or ultimately thought the risk to his reputation if his fund failed was too high.
It's different shorting when you have to put up so much capital to short all at once. To give you an idea, on future exchanges in the United States, you have to put up a 90% maintenance margin, compared to other commodities that allow you to maintain 40%.
Options not being written is another factor.
>Getting cold feet
? I bet it's not easy raising money when the asset you are trading falls 40% in two days.
If he knew it would and cashed in on that capital would come quickly. From the article I see part of it was regulatory burden and propriety of trading his own crypto while maintaining the fund. That makes sense but nothing to do with the current drop, good excuse though.
Yeah, this seems like weird erratic behavior. I mean if you are raising a big fund for bitcoin and you think it's going to drop, that's good for yoi because you can buy it cheaper. And if you are not a bitcoin bull, why raise a fund in the first place? Something is up with this guy
He could be massively shorting it and using negative press to panic retail investors into selling, driving down prices further (and increasing profits on his short).
Not uncommon for public equity hedge funds. Makes sense that someone would do it in the wild west of cryptocurrencies.
IIRC, BTC has gone from ~$3k to it's current levels from the time when he first mentioned starting a hedge to fund to when it was supposed open last week. Typical financial instruments have a hard time keeping up with the current crypto volatility.
Actually not that erratic. he doesn't have enough stake in BTC or ETH to make massive market movements. he's wants to drive the price down to buy more and the only way is through his position of "influence."
BTC will make a massive rebound in 2018. I'm sure a lot of BTC bulls have full knowledge of this possibility and are acquiring as many as possible.
This is typical bullcrap from Wall Street. I think its going down but I also think its going up...if it doesnt drop in 4 months he can claim to be a sage. If it drops he can be a right that way too. What Novo is being indecisive and wishy washy.
I want to know what platform someone like him can use to transact $250MM out of Bitcoin into USD (in his personal trading acount he said, actually $250MM was the profit).
As I understand, its not easy to convert to cash, especially in large volume.
How the fuck is some guy, or anyone for that matter supposed to know where the Bitcoin price is going to go? Yeah it could go to 1,000 or even 100... it could also go to 100,000 by next month. There are so many factors at play it’s extremely difficult to make a prediction with a high degree of confidence. If this guy thinks it’s going to drop to $8000 just because the price fell 20% in one day he must be new to this. There have been many many cases where the price dropped like crazy and then picked back up within no time.
By making the prediction, it can become a self-fulfilling prophecy.
He is probably just trying to make the price drop more so that he can buy even more Bitcoin.
The end of the year is often a time when people get together... Bitcoin is bound to come up in conversations. So I think that there might actually be a big rise in interest after Christmas.
The last few days have been delightful for longer term holders - it’s just been wave after wave of panic selling, with everybody seemingly forgetting that there are futures contracts out there for Jan delivery at $16k+.
I think what we’ve just seen is a bit of a forced sell off, to drive the price down before the next big speculative bubble, which will likely mirror the one after thanksgiving.
"After Christmas" is vague. Its likely people are going to buy a lot right after dec 31 because taxation upcoming this year is about what's owned from before jan 1. The IRS et al is also going to receive some large sums of money over Bitcoins in 2017.
I read what he said as: 'Since btc dropped 20% in a day I might have trouble to find suckers to participate in mu "fund", I need to lay low for a bit till this all "you can loose on bitcoin" blows over.'
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[ 3.6 ms ] story [ 97.4 ms ] threadhttps://www.cnbc.com/video/2017/12/12/the-man-who-called-the...
is really weird. People might disagree with me but I think he comes off as unreliable.
http://www.businessinsider.com/novogratz-bitcoin-could-be-at...
If you don't want to participate in volatile speculation, that's fine, the average person shouldn't. But there is no other way around it.
You're referring to a pump and dump scheme as "phases". You don't set high values by scamming unsuspecting fools.
Any and all securities go up and down, whether it is justified or not.
It's not exactly a ponzi or pyramid scheme, but the manipulative intent is clear so a new term is needed.
It's a Satoshi scheme.
...hence the "pump" stage of the pump-and-dump scheme being conducted quite extensively, with all forms of scammers publicizing the immense virtues and magically perpetual low value of bitcoin, hoping that the next batch of fools and idiots open their wallets to finance the value pumping.
This happens every day in securities. Those "pumpers" are called "analysts". They sometimes work for investment banks and research firms. You can choose to follow their advice or you can bet against it.
Apple shares were $0.50 (unadjusted) in its early history. By your definition, anyone espousing the future of Apple and computers at that point is a pump and dump scammer.
Apple and stocks also generate value, whereas Bitcoin and PoW software burns electricity/value.
This is specific to crypto currency supply production algorithms.
Coin supplies are created by running the software. Bitcoin and many other cryptocoins use a rule that lets the first users take control of the supply very easily by generating the coins for very low CPU/GPU difficulty. After a few weeks, the work required to produce more coins doubles. This just lets a few users control the supply, wait, and attempt to convince new users the coins are rare because the production/mining has become significantly more expensive.
tl;dr: early miners generate most of the coins inexpensively, and try to sell to greater fools because the software stops creating coins as easily as the first few days
It becomes a ponzi scheme when the only value from early shares comes from investment in later shares. That's what's happening with bitcoin.
Satoshi made a machine that prints money if you do work. He made it so it only required a small amount of work to begin with and as time goes on, someone else with the same machine and the same work gets less. It's made even worse because there were less users battling over the larger easy production near the start, and more and more users fighting over less and less output.
tl;dr it's even more malicious than a ponzi
[1] https://www.vanityfair.com/news/2009/04/fortress-group200904...
Who knows, it might still be very optimistic today.
Bitcoin has no mainstream use right now. It's too expensive to transact in terms of money and time, it's too volatile to be a store of value, it's too technical to be used casually, it's too fragile since it gets hacked every which way, and it's too easily copied to be rare.
http://www.cryptsysettlement.com/ [i]
Do you want to clarify this? If you meant what I think you meant, you're incorrect.
Nobody would use banks if 4 out of 5 were completely cleaned out by crooks and went out of business.
While a tiny aspect of dealing with Bitcoin is secure (key pairs) [1], actually using Bitcoin has proven to be a mess for almost the majority of users.
This is not a user friendly experience for most users.
[1] https://lbc.cryptoguru.org/about
and if you think Bitcoin can simply be duplicated through a hard fork, you are even more misinformed than I had imagined.
The lightning network looks very promising in its ability to scale and reduce fees. It would make transactions nearly instantaneous, have reasonable fees, and help scale the network.
No, it would help scale "the lightning network" which would not be the same as "the bitcoin network".
So while it may not be technically true that the main network's capabilities have changed, users should see massive improvements.
And you posted that comment while driving your flying car on your way to alpha centauri, right?
Foolosh cargo cult beliefs such as the ones you've illustrated do not serve as any basis to make investment decisions.
Everyone thought Amazon would never make a profit until it revealed the profit monster that is AWS.
No one can predict the future, all you can do is take the information you have available today and come to your own conclusion. If you don't understand the implications of cryptocurrency on society and money, then that's your loss. If you think you do understand it and believe otherwise, then go ahead and short everything and go make some profits against it.
I don't know if the hype/price is justified, I just know cryptocurrencies are going to change the world. It seems to me that something that important is probably worth betting on, and not against.
I've followed bitcoin from the beginning and personally think the only problem it seems to solve is a way for techies to get rich quick.
There should be a knowledge test to comment in Bitcoin threads on HN.
Crypto is also a stock market 2.0, where bitcoin is an index fund.
BTC is many things and it causes confusion amongst people trying to determine where the value comes from. It took me many years to figure this out, unfortunately.
In casual use with your mobile phone, you are shown a QR code, scan it, tap "OK", and it's done. Not that technical. Billions of people with smartphones could handle that perfectly. You're right about transactions being slow and expensive, and that is certainly a much bigger problem. That and the fact that there are still very few places accepting it.
This is one thing I don’t get. In countries like China and India (to name the two countries I know about) mobile payment apps are ubiquitous. You go in to a shop, scan a QR code, and boom your payment is done. This is what crytocurrencies promised, but instead more closed apps came to fill the market. What happened?
Bitcoin "as app" (once or if it works) will be more like cash payments, privacy wise. That is were I see the main advantage. I find it spooky what Visa and Mastercard now about all of us... at least about me.
One massive caveat is that all Bitcoin transactions are public, traceable, and permanently stored in the Bitcoin network. In most ways it's worse than cash, in some ways it's probably even worse than credit cards.
monereo, zcash, and eventually ethereum
the concept seems to make sense but I'd be curious how to audit such an obfuscated system
1. You don't want to _ever_ wait 45 minutes for a transaction to potentially be confirmed on the blockchain. Even before the recent craziness and high fees this would sometimes happen.
2. The price fluctuates wildly. Pretty hard to reason properly about whether or not you'll be able to pay your employees this week if your "store of value" could drop 20% or more at a moment's notice.
3. The fees charged by exchanges to convert to fiat are exorbitant. Unless all of your suppliers and handymen take Bitcoin, you will get screwed by this on the regular.
The bulls usually scream "Lightning network, scaling, store of value" or some other nonsense, but the truth is, today Bitcoin is garbage as an actual currency.
Bitcoin Core betrayed the original vision of Bitcoin and hotwired it into a high-cost settlement system. The average transaction fee in Bitcoin is something like $38, which is more than the average weekly salary in many countries.
I believe that cryptocurrency will eventually attain mass adoption. The timeline has been pushed back a few years though because the main network has failed.
The system has been in place for years, and it works reasonably well. More competition would still help. And yes, a better network and better systems to cut out the intermediary would help even more.
What do you mean by this?
Proved wrong by 300k transactions per day willing to pay a median fee of $30+.
«too volatile to be a store of value»
Proved wrong on the long term; has shown to be a fantastic store of value over 7 years: http://bitcoin.zorinaq.com/price/
«too technical»
Only gets easier over time.
«too fragile since it gets hacked »
Hardware wallets have pretty much solved hacking (plus can be backed up on paper in case they are lost, etc)
Do some napkin math, this is impossible. The people who hold bitcoin now probably have a combined net worth of over a trillion dollars. They will pump and dump it forever rather than let it go to zero. It's way too much fun to trade alone.
> bitcoin has no mainstream use right now
Maybe not in india yet. Even there, it's only a matter of time. Someone will introduce gbtc to the NSE and BSE, and watch it get bought widely even in india. There is a reason it sells at a 20% premium in india.
I wouldn't be so sure.
> pump and dump it forever
That doesn't work.
My guess is he's shorting the markets or couldn't raise the capital after all. Or ultimately thought the risk to his reputation if his fund failed was too high.
Options not being written is another factor.
>Getting cold feet ? I bet it's not easy raising money when the asset you are trading falls 40% in two days.
Not uncommon for public equity hedge funds. Makes sense that someone would do it in the wild west of cryptocurrencies.
BTC will make a massive rebound in 2018. I'm sure a lot of BTC bulls have full knowledge of this possibility and are acquiring as many as possible.
...
> I'm sure a lot of BTC bulls have full knowledge of this possibility
Which is correct since the value of it is mostly driven by speculation right now. There’s no telling how much it will swing.
As I understand, its not easy to convert to cash, especially in large volume.
* Internet monopoly money
He is probably just trying to make the price drop more so that he can buy even more Bitcoin.
The end of the year is often a time when people get together... Bitcoin is bound to come up in conversations. So I think that there might actually be a big rise in interest after Christmas.
I think what we’ve just seen is a bit of a forced sell off, to drive the price down before the next big speculative bubble, which will likely mirror the one after thanksgiving.
Disclaimer: I don't know any cryptocurrency.