I’m not sure why anyone in their right minds thought bitcoin was going to be used by random civilians for their everyday transactions. Customers want the protections that banks and credit cards provide, and vendors don’t want to expose themselves to exchange rate risk when selling goods and services.
Oh, and 4 transactions a second is far too low a limit for any currency.
There is a lot of work done in analyzing holding patterns. Would probably be interesting to see comparison to usage and price of gold as a store of value.
For me, buying and holding seems to be legitimate usage. I guess that would count as "speculating". What else should you do with a store of value that you expect to appreciate in price because it has inflation going to 0?
> What else should you do with a store of value that you expect to appreciate in price because it has inflation going to 0?
Do you expect to increase in price solely because there are a limited amount?
There are many things which have that property, but are not good stores of value. Your ability to sell it later for more money is based on continuing demand. Unless there's some other use case, where is that demand going to come from? Isn't some of the value it is allegedly storing based on future expectations of utility?
This is beating a dead horse and the typical argument, but the same can be said for gold. Its "intrinsic value" in terms of practical application is far lower than the market cost given the plentiful substitutes for high current / low heat transmission applications.
I really do wonder why Bloomberg hates Bitcoing. If you read through a history of their articles, they REALLY hate it.
I haven't mentioned intrinsic value once in my post, I agree it's not especially useful to talk about.
I'm asking why BTC value should keep going up without some sort of demand beyond people buying because they expect it to go up? Or do you think that's enough?
If you can answer that for gold & silver, then there is a point in talking about this. If not, the answer is "It's a secure, easily transferable, deflationary store of value. Examples of it being used - Venezuela. Gold is not an option due to crime. The local currency is not an option due to massive inflation.
I see Venezuela cited a lot as an example of Bitcoin adoption, but all I can find about its use is people mining as a way to arbitrage the subsidized electricity prices they get. Is there any evidence of widespread use of Bitcoin there as opposed to, say, USD?
Obviously "people keep buying it" is enough for the price to go up. People keep buying for the reasons already mentioned. I don't have much else to add to the conversation.
Gold’s special place in the western canon is really just a cultural artifact. Not only are there a variety of metals that could take its place as an investment vehicle (silver, platinum, and rhodium among others), but historically a variety of metals were used for currencies and transactions. Bronze, brass, lead, and salt were all once used as currency, but have long since just become “base” metals.
On the opposite end of the spectrum you’ve got South American cultures that loved Gold for purely decorative purposes, but basically never considered it money. These cultures largely traded using barter or using a specific agricultural product as the unit of account, such as cacao beans.
The Chinese were first to print money and the first to get into difficulties by printing too much. After this silver became the store of value and the currency.
Hence the Opium Wars, the only way for UK/USA to get silver out of the Chinese economy. China had no interest in sub-standard Western goods and only wanted silver in exchange for their fine porcelain, silk and other goodies. Getting the whole nation on drugs and defending that trade with gunboats was a way of getting silver, silver being needed in the West for paying soldiers/mercenaries.
Such proud history we have, enslaving India to get the opium, selling it in China and getting silver back to buy legit goods from China.
Yes, I would, provided there is another asset that I would expect to appreciate against it.
Also there is a difference in short term and long term. In short term one might sell only to buy again after corrections, but this is risky/hard to time.
For the sake of this discussion, let’s just focus on bitcoin as an investment vehicle.
Rarity does not confer value. My toenail clippings are limited in quantity, but valueless. There has to be some sort of underlying demand before rarity gets to play a factor in the pricing equation.
So for bitcoin, what has been the underlying value proposition to justify purchasing? A large part of it was that bitcoin is the future of money, and that once “mass adoption” began, the price would go up.
Of course, bitcoin is a miserable failure of a currency. It doesn’t have properties that most consumers and vendors want. So this leaves us with “bitcoin has no inflation”, which is as I’ve mentioned above, not a good reason for anything to be valuable.
It's distinguishable by being the first and most heavily invested in, as well as having the most infrastructure around it, especially institutional. Keep downvoting literally because you don't like facts.
True, I've been saying the same for a long time. However, forks are extremely susceptible to 50% attacks, the more so the more computing power concentrates on bitcoin. Anyway, the prices of all main cryptocurrencies go up and down together with very similar trends, so I guess the crypto inflation is already factored in the current price.
So bitcoin is more valuable than its hard forks because there’s more hashing power.
Ok, that makes sense. So why is there more hashing power on bitcoin than the hard forks? Oh, because bitcoin is more valuable and so the mining reward is higher once converted to fiat? Well, that seems like a problem.
Real diamonds are indistinguishable from artificial diamonds, but nonetheless the market treats them as a different product, even with the risk that some criminal might try to substitute them. Bitcoin is in a better position, with no risk of accepting a forked coin unless you want to. It might be all human irrationality all the way down, but if so it's the kind of irrationality that's been around forever.
Yes, it is. It is the first, arguably the most decentralized and safe, and absolutely the most valuable (by market cap) and thus most trusted store of value.
I can come up with myriad examples of verifiably limited items that are valueless, I don’t think there’s any point in litigating that issue.
And bitcoin is easy to move internationally, but that’s just begging the question. Why would anyone want to move bitcoin? Presumably because it’s valuable, but now we have a circular dependency; bitcoin is valuable because you can move it internationally, and people want to move it internationally because it’s valuable and can be converted into currencies in which people can actually buy goods and services.
Comparing to gold as a "buy & hold" store of value is only viable as a future possibility. Bitcoin has been too volatile to qualify as a store of value. If that changes, so too might its legitimacy for this use. But for the average investor/institution looking for a non-sovereign store of value, a year of stability isn't going to be sufficient. Maybe 5 years would convince, but then that puts bitcoin's legitimacy as a store of value at least 5 years out, and every time an exchange collapses or fraud or theft is revealed that sends the market into chaos, the clock is reset.
BitCoin was supposed to transform the way people buy things. Instead it's mainly transformed the way people buy BitCoin. That's a legitimate criticism.
If you paid for the cards they inherently have value else they would be free... Despite what many people choose to ignore, bitcoin has value - at the very minimum for illicit transactions online - its just not an as widely accepted value. Whether that acceptance will increase remains to be seen but to write it off as worthless is disingenuous
forget pokemon cards. Magic the Gathering cards are pretty valuable and you can definitely sell them for a bunch of money and buy a car or whatever. Ok, they have a use case because people play the game. But why do they play the game? because they feel like it - there is no "inherent value" to those cards either. Tomorrow, the game goes out of style for whatever reason and the cards are worthless. But today, while people like to play the game, they are valuable. Today, people shop on Amazon. Tomorrow, something changes and they stop shopping on Amazon and Amazon stock falls a lot. There is obviously a difference, but it's not as fundamental as people think.
what's the value of gold? gold has some use case, but its market value far outstrips that use case. The use case of gold is exactly this - that people trade it back and forth in the form of futures, etfs and spot gold.
Can we talk for a minute about that first graph in the article? "Bitcoin Activity By Category" supposedly lists percentages on the Y axis, but they included the percent sign on the label, making the range go from 0% to 1% instead of from 0 to 1 like they intended. Bloomberg should know better!
I'd just like to go on record saying I use it as a payment method for developer services for developers locked out of the western world's banking system.
Of course most of these devs will take any of the top N cryptos.
As a very early bitcoin adopter who made and lost and made and lost a fortune; I can say that bitcoin and crypto is still "ahead of schedule" for realistic-optimistic timelines of adoption.
I still believe cryptocurrency will continue to grow and eventually eat gold; but I am less convinced that it will eat fiat.
The instability and the high fees make it useless for generic payment. The lighting network was supposed to fix latter problem.
As soon as the bitcoin price becomes stable it will be useful. As soon as it is useful it will swiftly rise in value and become unstable again. We have already seen several iterations of this cycle. Who knows when this will end.
Which brings up another important point: Typically, when someone wants someone to adopt their currency, they actively work to ensure that the currency has a stable value.
Think of historical examples of governments buying and selling each others' gold and silver coins; or more recently governments actively buying and selling gold and silver in their currency; or even more recently governments holding reserves of other countries currency.
The historical purpose is to ensure that a currency has a stable value, and is readily available for anyone who wants to use it.
No one does this with Bitcoin. The incentives are to use the currency as a speculative bubble, instead of as a means of commerce.
Drawing an analogy, in order for Bitcoin to work, there would need to be a "Bitcoin authority" that basically holds a huge reserve of Bitcoin or another commodity, and buys and sells to keep the value stable. Bitcoin goes up in value: Sell Bitcoin for some commodity, Bitcoin goes down in value, sell the commodity for Bitcoin.
(Of course, a Bitcoin authority goes against the general anti-government promise of Bitcoin.)
HN is full of bitter commenters who have been predicting the death of cryptocurrency for a decade, and it hasn’t come true. A community that learned of Bitcoin right as it was invented, dismissed it, and missed out on huge fortunes.
Well, some people here thought for themselves and analyzed the technology and ideas on its merits. Just not the people who comment on these posts.
I think Bitcoin pushes a lot of people's buttons because it was so new, exotic and difficult to understand that it really challenged a lot of people who consider themselves smart. I know I didn't "get it" right off the bat but I couldn't shake the feeling that the fact that I didn't understand it was a signal that something special was going on. So I kept pushing forwards. I read the whitepaper and thought, this seems cool but I still don't get it, something must be here. So I read more books (Mastering Bitcoin by O'Reilly is amazing). Finally I got it, understood the potential and realized just how amazing these concepts were. Unfortunately at that point the price had already risen to the point where I couldn't just buy hundreds of these things. I bought a few and now that looks like a freaking amazing investment.
During this story arc, I also witnessed a growing dissent against Bitcoin. A lot of it came from the media and tech adjacent people but not technologists themselves. Initial complaints were more or less ad hominems (money for filthy nerds), as the currency went up in value, the story morphed conveniently to an ecological one as the rebuttal for that requires deeper knowledge of crypto and an acknowledgement of the energy consumption used to secure regular money.
Now you get on HN and it's just hated. Passionate hate. I figure it's a mix of people that could have understood it and didn't until it was too late, people who still don't understand it, and people who don't like it due to the constant barrage of negative media coverage.
Meanwhile Microsoft is building a distributed system on top of Bitcoin to help people get rid of passwords and take ownership of their data and identity.
The protocol is blockchain agnostic, the only requirement is a public blockhain, they're using Bitcoin because it's the most secure one.
They've calculated that when batching transactions they could give an globally verifiable identity to every person on the planet using only a tiny fraction of Bitcoin's 2MB~ every 10 minutes blockspace. The users of the system would have no clue that they're using Bitcoin, they would download an app that just works.
If public Blockchains end up being massively adopted it's going to through Layer 2 protocols like Microsoft DID or the Lightning Network that barely touch the actual blockchain layer because blockchains don't scale.
MS has an Azure service that allows people to spin up private Ethereum blockchains, but they don't have any projects that utilize public Ethereum network.
Even a quick look at CoinMarketCap shows you that there's something a little odd about the current rally.
Look at the volume column and you'll see that Tether has more volume than bitcoin and has had for a little while.
Tether has recently
a) Admitted that they don't have 1:1 backing in USD
b) They use customer funds for investment rather than just storing them and
c) They're currently under investigation by the New York Attorney General.
Against that backdrop they've increased the number of Tethers in circulation by $400 million in the last month...
Now it's possible that they've got a load of companies who really believe in them to the point that they're eager to invest in Tether (even when there are other 1:1 backed stablecoins available)
A different interpretation could be that Tether have worked out they can effectively just print money as much as they want and are using this to buy bitcoins, driving up the price...
>Even a quick look at CoinMarketCap shows you that there's something a little odd about the current rally.
>Look at the volume column
The really odd thing is getting your volume numbers from CoinMarketCap in the first place when according to this well argued deck[0], 95% of those numbers are fake.
What you're looking at there is completely distorted as unregulated exchanges have a huge vested interest in inflating the numbers to dupe projects into paying higher listing fees and since most of the time, the fake volume doesn't track the waning and waxing of the real volume of legitimate exchanges, not only is that fake volume wrong quantitatively but it's also wrong relatively making it worthless and CMC practically worthless by extension though they do claim to be addressing the issue.
It makes the point about relative volume, even if absolute levels are crap :) The volume point was around a stablecoin with issues having a higher relative volume than bitcoin itself.
I find it amusing that media doesn't give a crap about Bitcoin until there's price action. This was the exact same type of article that was dominating headlines back in the 2017 run-up.
Bitcoin has proved remarkably resilient over the last 10 years. It's clear (to me, anyway) that this asset class/set of technologies is here to stay, it's really just a question of what comes of it.
It's actually quite useful to be able to send large quantities of money anywhere in the world without needing a series of intermediaries. For that purpose alone I could see supply limitations leading to increased prices in the long haul. There are also some interesting "layer 2" projects that have been percolating for several years now with a lot of potential to make Bitcoin useful for smaller transactions.
The insane hype of the last cycle understandably turned a lot of people off from crypto, but I think it would be a mistake to ignore the progress that's being made.
>Bitcoin has proved remarkably resilient over the last 10 years.
What does that even mean? Resilient in what way? As this article notes, it hasn't been adopted for use in any meaningful or significant way. It's a speculation vehicle. I guess in the sense that it didn't literally disappear it's resilient, but beyond that the idea from its early days that it would fundamentally change the world and be widely adopted is gone. It's not the glorious dagger that will pierce the heart of the statist beast its libertarian boosters imagined. The governments, banks, and people of the world have mostly shrugged at it. Ironically, some banks and governments even started adopting the technology for their own uses.
It's just a vehicle for speculation and a toy that doesn't seem to have any actually useful applications that couldn't have already been done better.
>I think it would be a mistake to ignore the progress that's being made.
What progress? It made some speculators rich but is otherwise useless.
Resilient as in despite 10 years of continuous doomsday prognostications, Bitcoin continues to be traded and used around the world. And 1 BTC, this thing that didn't exist 10 years ago, is now worth $8,422.40 USD.
As for utility: I've used it to pay contractors in Europe, for example, without having to figure out which money transmittal service is going to rip me off the least. Tons of expats living in North America and Europe use it to send money back to family in their home countries. People use it to hedge against runaway inflation caused by poor monetary policy.
It could all fall apart in a few years, sure, but it's damn interesting. Being cynical just means if you're right you get to gloat about it, but if you're wrong you're missing something that could be really important.
The problem I think a lot of people have with Bitcoin, at least that ends up producing articles like this, is that there's always a tremendous amount of goalpost-shifting in the Bitcoin/adjacent community.
At times it's been talked about as a replacement for cash in the sense of using it for lots of low-value transactions (it won't work), as a value store (it fluctuates a LOT for that), for sending money across borders (absolutely dwarfed by Western Union), for replacing Paypal/Venmo/Google Wallet/any other electronic payment system (absolutely dwarfed any of those), and so on.
It's not dead, of course, but the Bitcoin community has made a LOT of strong claims about widespread public adoption, yet still remains very much in the hands of speculators and hobbyists.
That's what, I think, a lot of the objections come from. Bitcoin's like the Segway in a sense; did it change the world? in some small way, yes. Are we building cities (or large-scale financial infrastructures) around it? Well, show me.
Well, I think nobody knows exactly what it is yet. It's an emerging technology, so even if there's a great deal of utility it's not surprising that predictions will be off the mark/downright wrong, and that opportunities will be missed that eventually seem obvious in retrospect.
And there is no cohesive "community" that's making predictions and measuring against them. It's just people speculating out loud, and then other people writing about the speculation.
It's a bit unusual because it started out as a cool technological curiosity vs. a product with a defined product/market fit. Sort of like desktop computing in the 70s.
> Resilient as in despite 10 years of continuous doomsday prognostications,
> It's an emerging technology,
What are the timelines like here? If 10 years is too short to suss out what BTC is going to be useful for, will another 10 years help? Is this a 100 year long thing then?
It's useful now. It could be more useful in the future, or it could be supplanted by something else. All I'm saying is that big changes don't happen as fast as people expect, and it's hard to determine where they'll go while they're happening. See: the internet, cell phones, desktop computers, space travel, etc.
Internet was expensive when it came out. Remember when it used to be pay by the hour and tied up your landline? I had internet through the University and had to kick people out of my apartment because they would sit at my computer forever.
Everyone I knew in high school wanted a cellphone but couldn't afford it. Same with desktop computers. Same with space travel. Everyone wanted that that stuff but it was expensive.
Bitcoin isn't hard or expensive to get. But still nobody wants it.
Bitcoin trades on open markets. If it was worth nothing and nobody wanted it, it would trade at $0. Instead, 1 Bitcoin is currently trading at $8,400 USD. Tens of billions of dollars are tied up in it, and it's impossible to trivially create new Bitcoin.
So... pretty much exactly the opposite of what you're arguing.
There is a market for speculation, black and grey market finance, and gambling that will always give Bitcoin and other deflationary type cryptocurrencies value. People will "play" in these markets just like they play in casinos. The question is how much value and how realistic current numbers are. I have little doubt that if say 5% of BTC holders tried to cash in the price in USD would crash hard.
Cryptocurrency in a broader sense is an emerging technology and will probably find other areas of utility. I feel like we don't even know what it is yet.
So is everything else. Investors buy company shares to make a profit; they don't buy the shares for any other reason.
In a world where practically every person only cares about capturing value and almost none of them care about creating value, everything is speculation. Everything is just smoke and mirrors.
> It's actually quite useful to be able to send large quantities of money anywhere in the world without needing a series of intermediaries.
The problem is that the vast majority of businesses do not accept Bitcoin and right now Bitcoin is too volatile to store value/buying power. This means that for all practical purposes you need to exchange your local currency for Bitcoin, send it somewhere, then convert it back to fiat currency.
That means you require at least 2 intermediaries. Not to mention I would have a hard time trusting any reasonable amount of money to most Bitcoin exchanges.
What kind of progress has been made in crypto currency adoption?
After 10 years there really is nothing to show for it.
I mined a few coins in 2011 and they were quite useful in the 2013 boom when there were various merchants experimenting with adoption.
Since then the merchant adoption has only gone down.
Bitcoin will continue to have value because of its use in very shady transactions:
* hard drugs
* avoiding capital controls(China, Russia etc)
* extortion, blackmail
* crypto scams
* pure speculative/gambling vehicle
Sadly, there is no cryptocurrency which is useful as a general purpose e-money.
That is: as a buyer you get no protection and pay more as compared to regular credit card. Why in the world would you use it unless you want to use it for something shady?
Now one could argue that capital controls and hard drugs should be legal but that doesn't change the problem that bitcoin and other cryptocurrencies only exist to serve markets that nation states deem illegal.
Compare this to regular gold and cash.
Finally, the big problem is the energy use. If BTC runs to 50k-100k then the energy consumption used for mining will surely surpass that of a medium sized country.
If speculators push the price of BTC to say 500k, then the whole world will stop and half the energy will be used to mine BTC.
How the hell it is resilient? I also have a website that I coded 6 years ago and it still keeps running on a server somewhere for its 50 users. Do you find that "remarkably resilient", too?
I think part of the reason for the dearth of merchant transactions is the lack of a tax safe harbor to treat it like currency, at least for transactions under a certain size. So long as buying a cup of coffee requires one to keep detailed records and report it as a capital gains, it is really not worth the trouble to use Bitcoin as a currency.
I have little doubt BTC price is being manipulated.
Its price was kept very low for the longest time so some very powerful organizations such as Bakkt (backed by the same people behind NYSE) could accumulate most of its market supply. At the moment the price is being artificially pumped up to build momentum until enough people from the public buy into it, then its price will once again start dropping faster than gravity.
You often can attribute the exact reasons why a stock price went up, but for BTC it seems to be a complete mystery black box that even the most well-versed traders couldn't tell you the exact reasons why it went up.
For stock price for example, you just knew in advanced even from last year that Beyond Meat's stock was going to be a hit. "What The Health", an anti meat industry and pro vegans documentary film, was a HUGE success last year and you could see from miles away everything was set up for this trend to become mainstream in 2019 as public sentiments were beginning to swing very positively towards it. For BTC however, everything just seems like a wild guess as no one could pin point exactly what drives its price.
You can't. What is more likely is that central banks that can print infinite amounts of their own money are buying up bitcoin in order to make it useless. Bitcoin is seen as competitor by central banks.
The same happened to gold. As soon as one entity controlled the vast majority of gold the price ceased to be stable. Central banks already essentially destroyed gold as payment method. If central banks only sell 1% of their gold assets they increase the supply on the actual tradeable market so much that the price can be vastly manipulated. It would be smart if they do the same with bitcoin.
Why should all btc holders sell all their holdings, especially if price is steadily rising, since central banks are inflating money supply to buy more?
Because there is an artificial eternal demand for fiat. Fiat is created as debt with interest. This means the total debt can never be payed except with more debt. As soon as the state ceases to use force to collect debt, fiat will be worthless.
If I buy BTC and prices rise enough, I can sell for more than I paid, pay my debt and still keep some. In this scenario the majority of people who did not buy BTC or other less inflationary assets will suffer a lot more than me.
Maxing out credit cards has nothing to do with it. Nobody is forcing you to do that. How much you buy is depending on you, and it should be an amount that you won't need in the coming ??? (4 seems to be a good guess) years.
Exactly! BTC futures or derivatives were precisely the tools that were used. With Bitcoin derivatives, essentially you don't even need to own any Bitcoin at the present to trade since it's a future contract.
BTC price reached its peak at $20,000 on December 17, 2017 which happened to be the exact same date that the CME Group (Chicago Mercantile Exchange) became the first provider of Bitcoin derivatives to the market. Immediately BTC price started dropping down the next day and it went down all the way to $13,000 only within the next five days! Not much needed to be said after that.
Because traditionally short positions carry more risks. You would only keep short positions for a long period of time if you have enormous amount of capital to sustain it. Short selling strategies and derivatives were often utilized to artificially deflate prices and conduct “bear raids” on vulnerable stocks.
Shorting exposes you to effectively infinite upside risk. If you shorted one BTC at $4,000 a few months ago, today you'd have lost almost $5,000. If it goes to $20k again, you could be out $16,000.
It's not like a regular asset, where the most you can lose is what you put in. You could lose literally everything.
In the case of stocks, there is some limit in the sense that there's an underlying asset. There's some dispute as to the real long-term value of a share of Facebook or Netflix or Google, but ultimately there is one: your share entitles you to a piece of the profits of that company. It's still possible to lose a huge amount of money shorting stocks (say, you short a nearly-worthless stock in a drug company whose product is surprisingly approved), but it's very rare.
With bitcoin, there's no underlying value to the asset. That makes it extremely volatile; there's no sound way to guess what it could ultimately be worth. Further, unlike stocks, there's no regulator trying to put a damper on price manipulation. (Basically, every dirty trick that was ever tried in the stock market now has rules against it, but they all get dusted off and tried again.) So shorting BTC puts you at significant risk.
Some people are long on BTC because they think that ultimately there is a real value there, and happens to be higher than the current trading price. Their willingness to do so is what will ultimately determine that long-term price. Shorting it is betting that they're wrong... assuming you have the financial wherewithal to wait for the "long term". Or are willing to assume the risk that you're right in the short term, too.
Just because you can short futures doesn't mean you can effectively short bitcoin. You see this immediately if you look at the forward prices which are vastly different from the actual price.
There is no instrument to borrow and short real Bitcoin.
I'm not sure if I understood you correctly as there are multiple ways one can short Bitcoin at the moment if they wish to. But in the end I think we all need to remember that any theory presented by anyone here would only serve as a hypothesis based on speculation. There's no way to prove it as nobody really knows what's going on except those key individuals involved.
The reason why I think Bitcoin's success (read increasing in wealth infinitely against fiat, albeit slowing down over time) is more probable than its demise is not that it is some kind of replacement religion for me. It is just that I have so far not heard any good arguments why it would not succeed.
Of course opponents might say: why should it succeed if they see no reason for it to succeed.
That position is completely acceptable to me, but the risk of losing out seems too high for me, so I invest a little bit, just to hedge.
And because many people might do that, it could succeed. As long as there are no good arguments against holding a little bit. Which there aren't.
Except maybe the ecological footprint. As soon as someone finds a solution to that without sacrificing the other qualities, a hardfork will surely succeed.
There's no point in a hard fork when you can just start fresh, and mint a new network of cryptocurrency.
Especially due to the fact that the early cryptocoins like Bitcoin, Ethereum, and Monereo each designed their supplies to dump into a plutocratic distribution.
I think there is big value in continuity of store of value. People will be easier to convince if they do not lose stake when forking. One would not be buying BTC if one would fear that it can be replaced easily while destroying one's savings.
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[ 3.2 ms ] story [ 168 ms ] threadOh, and 4 transactions a second is far too low a limit for any currency.
(I've always been in shock at how many people don't realize that it's a poor currency, but a useful experiment overall.)
For me, buying and holding seems to be legitimate usage. I guess that would count as "speculating". What else should you do with a store of value that you expect to appreciate in price because it has inflation going to 0?
Do you expect to increase in price solely because there are a limited amount? There are many things which have that property, but are not good stores of value. Your ability to sell it later for more money is based on continuing demand. Unless there's some other use case, where is that demand going to come from? Isn't some of the value it is allegedly storing based on future expectations of utility?
I really do wonder why Bloomberg hates Bitcoing. If you read through a history of their articles, they REALLY hate it.
I'm asking why BTC value should keep going up without some sort of demand beyond people buying because they expect it to go up? Or do you think that's enough?
You've had an answer for gold and silver and you've just said it's a store of value because it's a store of value. That's circular logic.
On the opposite end of the spectrum you’ve got South American cultures that loved Gold for purely decorative purposes, but basically never considered it money. These cultures largely traded using barter or using a specific agricultural product as the unit of account, such as cacao beans.
Hence the Opium Wars, the only way for UK/USA to get silver out of the Chinese economy. China had no interest in sub-standard Western goods and only wanted silver in exchange for their fine porcelain, silk and other goodies. Getting the whole nation on drugs and defending that trade with gunboats was a way of getting silver, silver being needed in the West for paying soldiers/mercenaries.
Such proud history we have, enslaving India to get the opium, selling it in China and getting silver back to buy legit goods from China.
1 or 21 million does not really make a difference, as long as they are infinitely divisible.
It depends on the price. If the price if above what it's "real" value will be (after factoring in later deflation), then you'd sell it.
Also there is a difference in short term and long term. In short term one might sell only to buy again after corrections, but this is risky/hard to time.
Rarity does not confer value. My toenail clippings are limited in quantity, but valueless. There has to be some sort of underlying demand before rarity gets to play a factor in the pricing equation.
So for bitcoin, what has been the underlying value proposition to justify purchasing? A large part of it was that bitcoin is the future of money, and that once “mass adoption” began, the price would go up.
Of course, bitcoin is a miserable failure of a currency. It doesn’t have properties that most consumers and vendors want. So this leaves us with “bitcoin has no inflation”, which is as I’ve mentioned above, not a good reason for anything to be valuable.
Indistinguishable from other toe-nail clippings, for which supply is not limited. Not easy to transport internationally quickly.
Ok, that makes sense. So why is there more hashing power on bitcoin than the hard forks? Oh, because bitcoin is more valuable and so the mining reward is higher once converted to fiat? Well, that seems like a problem.
And bitcoin is easy to move internationally, but that’s just begging the question. Why would anyone want to move bitcoin? Presumably because it’s valuable, but now we have a circular dependency; bitcoin is valuable because you can move it internationally, and people want to move it internationally because it’s valuable and can be converted into currencies in which people can actually buy goods and services.
You can't buy a car or toilet paper with your precious Pokemon cards.
Of course most of these devs will take any of the top N cryptos.
As a very early bitcoin adopter who made and lost and made and lost a fortune; I can say that bitcoin and crypto is still "ahead of schedule" for realistic-optimistic timelines of adoption.
I still believe cryptocurrency will continue to grow and eventually eat gold; but I am less convinced that it will eat fiat.
As soon as the bitcoin price becomes stable it will be useful. As soon as it is useful it will swiftly rise in value and become unstable again. We have already seen several iterations of this cycle. Who knows when this will end.
Think of historical examples of governments buying and selling each others' gold and silver coins; or more recently governments actively buying and selling gold and silver in their currency; or even more recently governments holding reserves of other countries currency.
The historical purpose is to ensure that a currency has a stable value, and is readily available for anyone who wants to use it.
No one does this with Bitcoin. The incentives are to use the currency as a speculative bubble, instead of as a means of commerce.
Drawing an analogy, in order for Bitcoin to work, there would need to be a "Bitcoin authority" that basically holds a huge reserve of Bitcoin or another commodity, and buys and sells to keep the value stable. Bitcoin goes up in value: Sell Bitcoin for some commodity, Bitcoin goes down in value, sell the commodity for Bitcoin.
(Of course, a Bitcoin authority goes against the general anti-government promise of Bitcoin.)
Well, some people here thought for themselves and analyzed the technology and ideas on its merits. Just not the people who comment on these posts.
During this story arc, I also witnessed a growing dissent against Bitcoin. A lot of it came from the media and tech adjacent people but not technologists themselves. Initial complaints were more or less ad hominems (money for filthy nerds), as the currency went up in value, the story morphed conveniently to an ecological one as the rebuttal for that requires deeper knowledge of crypto and an acknowledgement of the energy consumption used to secure regular money.
Now you get on HN and it's just hated. Passionate hate. I figure it's a mix of people that could have understood it and didn't until it was too late, people who still don't understand it, and people who don't like it due to the constant barrage of negative media coverage.
Meanwhile Microsoft is building a distributed system on top of Bitcoin to help people get rid of passwords and take ownership of their data and identity.
The protocol is blockchain agnostic, the only requirement is a public blockhain, they're using Bitcoin because it's the most secure one.
They've calculated that when batching transactions they could give an globally verifiable identity to every person on the planet using only a tiny fraction of Bitcoin's 2MB~ every 10 minutes blockspace. The users of the system would have no clue that they're using Bitcoin, they would download an app that just works.
If public Blockchains end up being massively adopted it's going to through Layer 2 protocols like Microsoft DID or the Lightning Network that barely touch the actual blockchain layer because blockchains don't scale.
https://techcommunity.microsoft.com/t5/Azure-Active-Director...
MS has an Azure service that allows people to spin up private Ethereum blockchains, but they don't have any projects that utilize public Ethereum network.
So they missed out on a gold rush, so what? Another will appear in due time, be it Beanie Babies, Tamagotchis or Fidget Spinners.
> Well, some people here thought for themselves and analyzed the technology and ideas on its merits.
You are talking about buy low, sell high. The bitcoin boom was in 2017, what changed in the underlying technology?
This rally is designed, as will the next downcycle and the next rally.
Look at the volume column and you'll see that Tether has more volume than bitcoin and has had for a little while.
Tether has recently
a) Admitted that they don't have 1:1 backing in USD
b) They use customer funds for investment rather than just storing them and
c) They're currently under investigation by the New York Attorney General.
Against that backdrop they've increased the number of Tethers in circulation by $400 million in the last month...
Now it's possible that they've got a load of companies who really believe in them to the point that they're eager to invest in Tether (even when there are other 1:1 backed stablecoins available)
A different interpretation could be that Tether have worked out they can effectively just print money as much as they want and are using this to buy bitcoins, driving up the price...
>Look at the volume column
The really odd thing is getting your volume numbers from CoinMarketCap in the first place when according to this well argued deck[0], 95% of those numbers are fake.
What you're looking at there is completely distorted as unregulated exchanges have a huge vested interest in inflating the numbers to dupe projects into paying higher listing fees and since most of the time, the fake volume doesn't track the waning and waxing of the real volume of legitimate exchanges, not only is that fake volume wrong quantitatively but it's also wrong relatively making it worthless and CMC practically worthless by extension though they do claim to be addressing the issue.
[0]https://www.sec.gov/comments/sr-nysearca-2019-01/srnysearca2...
Bitcoin has proved remarkably resilient over the last 10 years. It's clear (to me, anyway) that this asset class/set of technologies is here to stay, it's really just a question of what comes of it.
It's actually quite useful to be able to send large quantities of money anywhere in the world without needing a series of intermediaries. For that purpose alone I could see supply limitations leading to increased prices in the long haul. There are also some interesting "layer 2" projects that have been percolating for several years now with a lot of potential to make Bitcoin useful for smaller transactions.
The insane hype of the last cycle understandably turned a lot of people off from crypto, but I think it would be a mistake to ignore the progress that's being made.
What does that even mean? Resilient in what way? As this article notes, it hasn't been adopted for use in any meaningful or significant way. It's a speculation vehicle. I guess in the sense that it didn't literally disappear it's resilient, but beyond that the idea from its early days that it would fundamentally change the world and be widely adopted is gone. It's not the glorious dagger that will pierce the heart of the statist beast its libertarian boosters imagined. The governments, banks, and people of the world have mostly shrugged at it. Ironically, some banks and governments even started adopting the technology for their own uses.
It's just a vehicle for speculation and a toy that doesn't seem to have any actually useful applications that couldn't have already been done better.
>I think it would be a mistake to ignore the progress that's being made.
What progress? It made some speculators rich but is otherwise useless.
As for utility: I've used it to pay contractors in Europe, for example, without having to figure out which money transmittal service is going to rip me off the least. Tons of expats living in North America and Europe use it to send money back to family in their home countries. People use it to hedge against runaway inflation caused by poor monetary policy.
It could all fall apart in a few years, sure, but it's damn interesting. Being cynical just means if you're right you get to gloat about it, but if you're wrong you're missing something that could be really important.
At times it's been talked about as a replacement for cash in the sense of using it for lots of low-value transactions (it won't work), as a value store (it fluctuates a LOT for that), for sending money across borders (absolutely dwarfed by Western Union), for replacing Paypal/Venmo/Google Wallet/any other electronic payment system (absolutely dwarfed any of those), and so on.
It's not dead, of course, but the Bitcoin community has made a LOT of strong claims about widespread public adoption, yet still remains very much in the hands of speculators and hobbyists.
That's what, I think, a lot of the objections come from. Bitcoin's like the Segway in a sense; did it change the world? in some small way, yes. Are we building cities (or large-scale financial infrastructures) around it? Well, show me.
And there is no cohesive "community" that's making predictions and measuring against them. It's just people speculating out loud, and then other people writing about the speculation.
It's a bit unusual because it started out as a cool technological curiosity vs. a product with a defined product/market fit. Sort of like desktop computing in the 70s.
> It's an emerging technology,
What are the timelines like here? If 10 years is too short to suss out what BTC is going to be useful for, will another 10 years help? Is this a 100 year long thing then?
Everyone I knew in high school wanted a cellphone but couldn't afford it. Same with desktop computers. Same with space travel. Everyone wanted that that stuff but it was expensive.
Bitcoin isn't hard or expensive to get. But still nobody wants it.
So... pretty much exactly the opposite of what you're arguing.
Cryptocurrency in a broader sense is an emerging technology and will probably find other areas of utility. I feel like we don't even know what it is yet.
So is everything else. Investors buy company shares to make a profit; they don't buy the shares for any other reason.
In a world where practically every person only cares about capturing value and almost none of them care about creating value, everything is speculation. Everything is just smoke and mirrors.
The problem is that the vast majority of businesses do not accept Bitcoin and right now Bitcoin is too volatile to store value/buying power. This means that for all practical purposes you need to exchange your local currency for Bitcoin, send it somewhere, then convert it back to fiat currency.
That means you require at least 2 intermediaries. Not to mention I would have a hard time trusting any reasonable amount of money to most Bitcoin exchanges.
https://bitinfocharts.com/comparison/bitcoin-transactions.ht...
After 10 years there really is nothing to show for it.
I mined a few coins in 2011 and they were quite useful in the 2013 boom when there were various merchants experimenting with adoption.
Since then the merchant adoption has only gone down.
Bitcoin will continue to have value because of its use in very shady transactions:
Sadly, there is no cryptocurrency which is useful as a general purpose e-money.That is: as a buyer you get no protection and pay more as compared to regular credit card. Why in the world would you use it unless you want to use it for something shady?
Now one could argue that capital controls and hard drugs should be legal but that doesn't change the problem that bitcoin and other cryptocurrencies only exist to serve markets that nation states deem illegal.
Compare this to regular gold and cash.
Finally, the big problem is the energy use. If BTC runs to 50k-100k then the energy consumption used for mining will surely surpass that of a medium sized country. If speculators push the price of BTC to say 500k, then the whole world will stop and half the energy will be used to mine BTC.
It is ridiculously silly yet dangerous.
Its price was kept very low for the longest time so some very powerful organizations such as Bakkt (backed by the same people behind NYSE) could accumulate most of its market supply. At the moment the price is being artificially pumped up to build momentum until enough people from the public buy into it, then its price will once again start dropping faster than gravity.
You often can attribute the exact reasons why a stock price went up, but for BTC it seems to be a complete mystery black box that even the most well-versed traders couldn't tell you the exact reasons why it went up.
For stock price for example, you just knew in advanced even from last year that Beyond Meat's stock was going to be a hit. "What The Health", an anti meat industry and pro vegans documentary film, was a HUGE success last year and you could see from miles away everything was set up for this trend to become mainstream in 2019 as public sentiments were beginning to swing very positively towards it. For BTC however, everything just seems like a wild guess as no one could pin point exactly what drives its price.
The same happened to gold. As soon as one entity controlled the vast majority of gold the price ceased to be stable. Central banks already essentially destroyed gold as payment method. If central banks only sell 1% of their gold assets they increase the supply on the actual tradeable market so much that the price can be vastly manipulated. It would be smart if they do the same with bitcoin.
Some 'coiners actually believe this. Wow.
Most assessments of Bitcoin's potential impact on the economy come out saying it's negligible.
This is comedy gold.
Comedy bitcoin.
BTC price reached its peak at $20,000 on December 17, 2017 which happened to be the exact same date that the CME Group (Chicago Mercantile Exchange) became the first provider of Bitcoin derivatives to the market. Immediately BTC price started dropping down the next day and it went down all the way to $13,000 only within the next five days! Not much needed to be said after that.
FYI: https://ethereumworldnews.com/report-crypto-platform-bakkt-u...
It's not like a regular asset, where the most you can lose is what you put in. You could lose literally everything.
In the case of stocks, there is some limit in the sense that there's an underlying asset. There's some dispute as to the real long-term value of a share of Facebook or Netflix or Google, but ultimately there is one: your share entitles you to a piece of the profits of that company. It's still possible to lose a huge amount of money shorting stocks (say, you short a nearly-worthless stock in a drug company whose product is surprisingly approved), but it's very rare.
With bitcoin, there's no underlying value to the asset. That makes it extremely volatile; there's no sound way to guess what it could ultimately be worth. Further, unlike stocks, there's no regulator trying to put a damper on price manipulation. (Basically, every dirty trick that was ever tried in the stock market now has rules against it, but they all get dusted off and tried again.) So shorting BTC puts you at significant risk.
Some people are long on BTC because they think that ultimately there is a real value there, and happens to be higher than the current trading price. Their willingness to do so is what will ultimately determine that long-term price. Shorting it is betting that they're wrong... assuming you have the financial wherewithal to wait for the "long term". Or are willing to assume the risk that you're right in the short term, too.
There is no instrument to borrow and short real Bitcoin.
Of course opponents might say: why should it succeed if they see no reason for it to succeed.
That position is completely acceptable to me, but the risk of losing out seems too high for me, so I invest a little bit, just to hedge.
And because many people might do that, it could succeed. As long as there are no good arguments against holding a little bit. Which there aren't.
Except maybe the ecological footprint. As soon as someone finds a solution to that without sacrificing the other qualities, a hardfork will surely succeed.
Especially due to the fact that the early cryptocoins like Bitcoin, Ethereum, and Monereo each designed their supplies to dump into a plutocratic distribution.