I'm already seeing non-technical friends (who are not exactly rich either) on FB posting all sorts of mental gymnastics about this. People are going to get hurt.
Stuff like HODL? To the moon? Stupid memes about the strong don't sell? Reality is most of these speculators haven't got a clue as to the utility (or lack of) of the coins they "hold" in the exchanges, the butthurt is well deserved.
At $15k-$20k I was seeing crypto lay persons on Facebook cheering themselves on about how easy it was to make money with Bitcoin. Tons of classic mania warning signs were pervasive.
Extreme mania usually gives way to extreme pessimism. Emotion takes it too far both directions (assuming there is at least some underlying value). So the question: how low can that aspect of human nature take Bitcoin to the downside?
The average non-technical person doesn't understand bitcoin. I mean they don't understand exactly what problems it solves and how. More importantly most people don't understand it's limitations. This makes it hard to determine what the market value of a bitcoin should be.
My social media feeds were filled with amateur Bitcoin speculators and even hucksters trying to sell crypto based investment strategies. That told me everything I needed to know about the Bitcoin bubble.
the thing is, tether/finex was instrumental in keeping up the hype during the great rise where every news outlet reported it. It was also what kept bitcoin from falling too fast after reaching top. Now as its been subpoenaed, things are looking grim. But I do think it wont fall paste 3000$
I say this unironically: this is good for Bitcoin. In my opinion, the best time for Bitcoin was when it was sitting at around ~$1000, where fees were low, transaction times were low and acceptance was high.
Bitcoin was a great currency for online transactions back then. Once prices skyrocketed as they did, it lost the ability to function as "Internet money" because it was simply too expensive to use. Fees are high, transactions take hours, and a lot of the companies that famously accepted Bitcoin (Microsoft, Valve) no longer accept it. As someone who regularly made purchases with Bitcoin before the ridiculous growth, I'm hopeful for a return to those times.
If you want a more nuanced look at bitcoin fees, take a look at the mempool [0]. That way you can see for yourself fees that will probably clear in 1 block, 1 day, etc.
Forgive my ignorance but that makes no sense to me. Things were good when they were good. But Bitcoin has proven to be incredibly unstable. I want my currency to be consistent. My understanding is that currencies like the USD have a central authority that pulls levers and knobs in attempt to make its value consistent across time. What mechanics exist within Bitcoin to do this?
Bitcoin isn't really attempting to fulfill the currency use-case anymore. It's pretty much sticking with digital gold. Likewise with Ethereum, the currency is primarily used to run the protocol. Low price volatility is not a pressing design goal for either system.
>> Bitcoin isn't really attempting to fulfill the currency use-case anymore
... because it failed miserably at it, due to technical limitations.
Now we hear a story about "digital gold", but you know what that story really is? It's just the people who bought Bitcoin on its historical maximum (near 20k USD) refusing to admit their loss and hoping for a miracle.
They weren't technical limitations. It failed due to problems with its community. They deliberately drove it off a cliff-edge and claimed the new broken Bitcoin was better than the old working Bitcoin.
I thought that those insane transaction fees and processing times were due to technical decision to use too small block size, and to hashing algorithm used. But I'm no expert on technical side of Blockchain so I might be wrong about that.
Yes, I think most early Bitcoin supporters would agree that things were much better when transaction fees were low and confirmation times were fast. Bitcoin is worthless if the underlying utility is broken.
It's unfortunate that the community wasn't organized enough to come a consensus on "scaling" ...
It was only a few months ago that it appeared as though the possibilities were endless. We had excellent "long-term" solutions in development (Segwit and Lightning) AND a good "short-term" fix ready to go (Blocksize increase).
As an early adopter I feel betrayed, that we were forced to choose a side, that politics trumped usability. It's toxic. Self-limiting, and difficult to "buy" into at this point.
> It's unfortunate that the community wasn't organized enough to come a consensus on "scaling" ...
I thought the principle appeal of bitcoin was its decentralized nature. Why do you want to forge a consensus and remove the best feature bitcoin can claim?
> ...that politics trumped usability
You mean, bitcoin operates in The Real World (tm) operated by humans?
The block increase was looked down upon by many, probably the more technical minded, because we were taught that simple constants in equations (block size of 1,2,8...) are not as important as the exponents. However, a 2MB increase on something that was probably arbitrarily 1MB seemed like a fine middle ground until Lightning Network. Then again, hard forks are no fun.
ETH is also dropping pretty sharply today, -30% over 24h, at $800 now.
Question for those who know: what is the current break even price for ETH miners using GPUs? At what point does one take that GTX 1070 rig and either sell the parts or move to another currency, given the current mining difficulty?
1) Largest mining operations are mining multiple currencies
2) The initial "whales" of ethereum were BTC early adopters diversifying holdings
In general it seems the price of BTC is almost always a proxy for the rest of crypto, most likely because any crypto portfolio has a significant amount of BTC in it.
The tech is interesting and the ideals of a currency not aligned with a government or big bank are nice but cryptocurrencies have no real value.
Essentially, they are a verifiable ledger of anonymous people exchanging bytes. They may have paid for those bytes with a real currency, much like someone paid for tulips some time ago, or they may have won them for verifying something on the ledger.
Some people in the tulip craze actually had tulips though, right? If a cryptocurrency falls to $0 USD exchange then all that is left is a digital ledger.
"At the peak of tulip mania, in February 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsworker" [1]
I wonder if time of year plays into the psychology of this.
That's sort of my point. If Bitcoin and gold lose all financial value, at least with gold you have a heavy rock and to most humans, visually appealing. You can do something with that - build a house with enough of it, make jewelry out of it, forge weapons (would they be any good?)
You can't do anything with Bitcoin if is exchanging at $0 USD.
Gold has a myriad of uses outside of it being a heavy rock. If it's price were to drop substantially it's use in industry would increase substantially and we know what happens to price when demand increases.
I don’t think industry is the floor you think it is. They’ll happily pay as little as they can for it.
I think the more honest measure is simply how many people have faith in it. Bitcoin and gold may be logically equivalent for this function, but a lot more people have a lot more faith in gold.
> The tech is interesting and the ideals of a currency not aligned with a government or big bank are nice but cryptocurrencies have no real value.
If the network participants obtain an utility there is value. One example that I commented several times here in HN: I live in Buenos Aires, Argentina, and when foreign customers paid us via a wire transfer the inefficient big banks (that exist almost everywhere) calculate an exchange rate that is not very fair. Doing the same transfer by Bitcoin and converting it (100% legally) to our local currency gives us a better rate which means more profits for our company. Other examples exist but at the core what is happening is that there are financial innovations that the regulatory framework is killing and can be leveraged with these technologies. Sure, there are a lot of scammers right there but this is another topic.
To prevent scammers from scamming and imbibe confidence about a currency (or any store of value) in the general populations, you need regulations, security practices and insurance. All those cost money and transaction fees is one source to pay that cost.
The central dilemma is how far the regulations go to prevent innovation. Just look at the accredited investor thing in US, it is unbelievable while you can go to Las Vegas and lose everything.
The enormous value that the technology provides is anonymous, distributed consensus. It enables digital asset ownership. It enables self-organising permissionless networks. It enables humans to organise and transact without any central authority for the first time. That's the real value.
Ouch. This wasn't unexpected, but as much as I'd like to revel in schadenfreude here, I can't do it in good conscience because this is going to hurt a lot of good people who were naive and got caught up in the hype.
I remember seeing the news circulating in the Canadian media about the couple of spent their life savings on Bitcoin mining ASICs [1]. Even though they'd should've been way more cautious, I don't enjoy seeing people potentially get wiped out.
"I'm not planning on taking money out on a daily basis to live off of — I have a job for that," Ingram said. "This is for the long term. It's basically taking all of my savings so far and putting it towards it. It is a little risky, but I'm young."
Sounds like he knows what he is doing, so I am confident he will be fine.
They approached it with more caution than many people did.
But they're almost 40. They aren't so young that losing their life savings will have no impact.
I don't write any of this to criticize them. And I realize they could still see a positive ROI on the money they've spent. For me, their story sort of humanizes the whole thing. It's easy to look at this as just a bunch of abstract people losing money.
We'll see how it all works out. Between the time I wrote my first post and the time I'm writing this one, the price of Bitcoin has jumped from 7600 to 8300. Too volatile for me, but I'm sure someone, somewhere is having fun.
Makes me think of this Dutch family that was in the news back in October:
"Didi Taihuttu, his wife, three kids and their cat bet all they have on bitcoin. The Dutch family of five is in the process of selling pretty much everything they own — from their 2,500-square-foot house, to their shoes – and trading it in for the popular cryptocurrency. They have moved to a campsite in the Netherlands, where they're waiting for bitcoin to really take off."
What's interesting to me about this dip/pop is that the money isn't rushing into Tether (USDT). Normally in a dip people sell for USDT, which drives up the price of USDT over $1.
But right now Tether is at $0.97. It seems that the money is flowing back into fiat (as there's no other obvious place for it to be going).
Perhaps people have finally figured out what a scam Tether is.
I hope so. The sooner the general narrative shifts from “USDT is a valuable hedge in a down market” to “USDT’s structure doesn’t make a lot of sense, and it’s risky to use” the better.
If it’s going to implode, I’d prefer it happened now, rather than to have the crypto asset markets reach a point of consolidation and rebound, only to be clobbered again when USDT issues inevitably arise.
Previous drops of Bitcoin price were pretty random. Current drop is fueled by events such as governments passing, or at least considering, regulations that would make Bitcoin illegal. That's why this time it won't be so easy to bounce back.
Neither lucky nor smart. When the technology came out, I put the work in, studied it, realised the potential and invested what I could afford to lose in it.
Calling us lucky is very condescending, but I really don't mind it with my current bank account balance. Cheerio
A lot of technologies have potential but die out from a whole bunch of executional problems, you were lucky that Bitcoin didn't, just like any investor in high-risk investments is. There are no fundamentals to analyse Bitcoin and there were even less back in the beginning, you made a bet and got lucky, that's about it.
I'm glad your bank account balance is healthy but again, you just made a bet, don't try to sell like there was a proper analysis that was in any way close to a scientific method to go through.
Cheers, enjoy your money, I don't care about how much you have, don't be smug about it.
Best time is when real asset value is higher than market valuation (cheap) - like when people rush to sell houses at any price to get out of loan spiral.
1) Positive sum: facilitate buying goods and services
2) Zero sum: move money from later to earlier adopters
3) Negative sum: warm up the planet
Right now (3) is destroying much more value than (1) is creating. Moreover, all trends show that (1) is falling and (3) is rising. So it would be better for mankind if Bitcoin didn't exist. Regulation is probably the best way to achieve that.
There are a lot of pre-mined coins such as Ripple (XRP) and some are going to move to PoS (Proof of Stake) model instead of PoW (Proof of work, basically mining). Ethereum being one.
There are also plenty of PoS coins out there, although not yet commonly used, but people are aware of the problem and working to fix it.
CryptoCurrency reporting is dire. Take the quotes from the research analyst in this report:
"Bitcoin is in trouble" - with who exactly? Miners? gfx card manufacturers? People forgetting their wallet passwords? Speculators panic selling?
"Price action suggests that bears are clearly in control, with further losses on the cards" - Price action? You mean the numbers on the chart have gone down so maybe they'll go down some more? Who are the bears? Why can't you point to transactions on chain?
"jitters over regulation" - what jitters? wtf is a jitter? Who is jittering? Who are the investors not investing any more?
Welcome to the world of public financial analysis. No one wants to publish real research because they can sell it or use it instead, so almost by definition, any analysis found on the internet or given to journalists is useless fluff.
Somewhat coincidental that the price start dropping dramatically just as Bitfinex starts getting heavily scrutinised (and maybe stops propping up the price).
The hype, the bubble, the pop to me all look like it did back in 2013-2014. That took a full year to eventually bottom out. Obviously there is way more money in the markets now and things have matured somewhat, but it's not unreasonable to assume it will take a while for the dust to settle on this one.
If we go with the thesis that crypto is here to stay and that two or three of these coins will be here in five years, which coins would you put money in with today's price drop?
It's going up/down because financial institutions are cashing their earnings using contracts. I thought it's obvious they want to destabilize cryptocurrency as it's threat to their business model and it's same threat to the capitalistic culture nowadays. When they fail or get bored they might force IMF to ban cryptocurrency exchange for national currency. As always banks would suck your money :)
This is a great learning experience for my 11 yo son.
He wanted me to buy him bitcoins because it was cool. Initially he wanted to put all his savings, I talked him into just a bit. He invested 13 €. He got the double.
He wanted to invest all his savings again. I talked him into just a bit. He invested 30€,got 50€.
He threw in 80€ (of a total of 137€ of savings) when the rate was 12k.He now lost almost half by, and learned a lot. About being careful, what a rate is, how money works (at his level).
Now I hope that it will be 12k again so that he gets the money back :)
But not something like 100k because I did not actually buy the bitcoins but merely acted as the bank...
99 comments
[ 1.4 ms ] story [ 45.1 ms ] threadhttps://www.youtube.com/watch?v=DgRLlqEvOT8&feature=youtu.be (someone posted this on reddit which captures the scene pretty well)
Extreme mania usually gives way to extreme pessimism. Emotion takes it too far both directions (assuming there is at least some underlying value). So the question: how low can that aspect of human nature take Bitcoin to the downside?
My social media feeds were filled with amateur Bitcoin speculators and even hucksters trying to sell crypto based investment strategies. That told me everything I needed to know about the Bitcoin bubble.
Bitcoin was a great currency for online transactions back then. Once prices skyrocketed as they did, it lost the ability to function as "Internet money" because it was simply too expensive to use. Fees are high, transactions take hours, and a lot of the companies that famously accepted Bitcoin (Microsoft, Valve) no longer accept it. As someone who regularly made purchases with Bitcoin before the ridiculous growth, I'm hopeful for a return to those times.
See https://bitcoinfees.earn.com for what it looks like now
Unfortunately lots of wallets/presets are still recommending the higher fees from when traffic was higher.
[0] dedi.jochen-hoenicke.de/queue
For a token that does have the levers and knobs, check out the Dai whitepaper: https://makerdao.com/whitepaper/DaiDec17WP.pdf
I attempt to use Bitcoin as a currency, but that doesn't mean you have to.
... because it failed miserably at it, due to technical limitations.
Now we hear a story about "digital gold", but you know what that story really is? It's just the people who bought Bitcoin on its historical maximum (near 20k USD) refusing to admit their loss and hoping for a miracle.
It's unfortunate that the community wasn't organized enough to come a consensus on "scaling" ...
It was only a few months ago that it appeared as though the possibilities were endless. We had excellent "long-term" solutions in development (Segwit and Lightning) AND a good "short-term" fix ready to go (Blocksize increase).
As an early adopter I feel betrayed, that we were forced to choose a side, that politics trumped usability. It's toxic. Self-limiting, and difficult to "buy" into at this point.
I thought the principle appeal of bitcoin was its decentralized nature. Why do you want to forge a consensus and remove the best feature bitcoin can claim?
> ...that politics trumped usability
You mean, bitcoin operates in The Real World (tm) operated by humans?
Question for those who know: what is the current break even price for ETH miners using GPUs? At what point does one take that GTX 1070 rig and either sell the parts or move to another currency, given the current mining difficulty?
1) Largest mining operations are mining multiple currencies
2) The initial "whales" of ethereum were BTC early adopters diversifying holdings
In general it seems the price of BTC is almost always a proxy for the rest of crypto, most likely because any crypto portfolio has a significant amount of BTC in it.
Essentially, they are a verifiable ledger of anonymous people exchanging bytes. They may have paid for those bytes with a real currency, much like someone paid for tulips some time ago, or they may have won them for verifying something on the ledger.
Some people in the tulip craze actually had tulips though, right? If a cryptocurrency falls to $0 USD exchange then all that is left is a digital ledger.
"At the peak of tulip mania, in February 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsworker" [1]
I wonder if time of year plays into the psychology of this.
[1] https://en.wikipedia.org/wiki/Tulip_mania
If it's interesting, and the ideals are nice, how does it have no value?
If gold loses its value, then it's just a heavy rock. They both take time, money, and resources to mine but neither of them have any intrinsic value.
But as far as recent technology goes, Bitcoin's been around for a while. It's older then the iPad.
You can't do anything with Bitcoin if is exchanging at $0 USD.
Ethereum is a better example, but on the flip-side so is steel.
I think the more honest measure is simply how many people have faith in it. Bitcoin and gold may be logically equivalent for this function, but a lot more people have a lot more faith in gold.
If the network participants obtain an utility there is value. One example that I commented several times here in HN: I live in Buenos Aires, Argentina, and when foreign customers paid us via a wire transfer the inefficient big banks (that exist almost everywhere) calculate an exchange rate that is not very fair. Doing the same transfer by Bitcoin and converting it (100% legally) to our local currency gives us a better rate which means more profits for our company. Other examples exist but at the core what is happening is that there are financial innovations that the regulatory framework is killing and can be leveraged with these technologies. Sure, there are a lot of scammers right there but this is another topic.
Didn't that already happen before we even had central authorities?
I remember seeing the news circulating in the Canadian media about the couple of spent their life savings on Bitcoin mining ASICs [1]. Even though they'd should've been way more cautious, I don't enjoy seeing people potentially get wiped out.
[1] http://www.cbc.ca/news/business/bitcoin-mine-canada-1.443614...
"I'm not planning on taking money out on a daily basis to live off of — I have a job for that," Ingram said. "This is for the long term. It's basically taking all of my savings so far and putting it towards it. It is a little risky, but I'm young."
Sounds like he knows what he is doing, so I am confident he will be fine.
But they're almost 40. They aren't so young that losing their life savings will have no impact.
I don't write any of this to criticize them. And I realize they could still see a positive ROI on the money they've spent. For me, their story sort of humanizes the whole thing. It's easy to look at this as just a bunch of abstract people losing money.
We'll see how it all works out. Between the time I wrote my first post and the time I'm writing this one, the price of Bitcoin has jumped from 7600 to 8300. Too volatile for me, but I'm sure someone, somewhere is having fun.
"Didi Taihuttu, his wife, three kids and their cat bet all they have on bitcoin. The Dutch family of five is in the process of selling pretty much everything they own — from their 2,500-square-foot house, to their shoes – and trading it in for the popular cryptocurrency. They have moved to a campsite in the Netherlands, where they're waiting for bitcoin to really take off."
https://www.cnbc.com/2017/10/17/this-family-bet-it-all-on-bi...
But right now Tether is at $0.97. It seems that the money is flowing back into fiat (as there's no other obvious place for it to be going).
Perhaps people have finally figured out what a scam Tether is.
If it’s going to implode, I’d prefer it happened now, rather than to have the crypto asset markets reach a point of consolidation and rebound, only to be clobbered again when USDT issues inevitably arise.
Still, I agree with the essence of your post.
Calling us lucky is very condescending, but I really don't mind it with my current bank account balance. Cheerio
I'm glad your bank account balance is healthy but again, you just made a bet, don't try to sell like there was a proper analysis that was in any way close to a scientific method to go through.
Cheers, enjoy your money, I don't care about how much you have, don't be smug about it.
Now, what is the real value of BTC?
1) Positive sum: facilitate buying goods and services
2) Zero sum: move money from later to earlier adopters
3) Negative sum: warm up the planet
Right now (3) is destroying much more value than (1) is creating. Moreover, all trends show that (1) is falling and (3) is rising. So it would be better for mankind if Bitcoin didn't exist. Regulation is probably the best way to achieve that.
There are also plenty of PoS coins out there, although not yet commonly used, but people are aware of the problem and working to fix it.
"Bitcoin is in trouble" - with who exactly? Miners? gfx card manufacturers? People forgetting their wallet passwords? Speculators panic selling?
"Price action suggests that bears are clearly in control, with further losses on the cards" - Price action? You mean the numbers on the chart have gone down so maybe they'll go down some more? Who are the bears? Why can't you point to transactions on chain?
"jitters over regulation" - what jitters? wtf is a jitter? Who is jittering? Who are the investors not investing any more?
It's all fluff!
Somewhat coincidental that the price start dropping dramatically just as Bitfinex starts getting heavily scrutinised (and maybe stops propping up the price).
Also why do you believe in XLM and XRB? Just curious. They do have a very low price per coin so perhaps they'd appreciate?
He wanted me to buy him bitcoins because it was cool. Initially he wanted to put all his savings, I talked him into just a bit. He invested 13 €. He got the double.
He wanted to invest all his savings again. I talked him into just a bit. He invested 30€,got 50€.
He threw in 80€ (of a total of 137€ of savings) when the rate was 12k.He now lost almost half by, and learned a lot. About being careful, what a rate is, how money works (at his level).
Now I hope that it will be 12k again so that he gets the money back :)
But not something like 100k because I did not actually buy the bitcoins but merely acted as the bank...