In theory that’s true if you’re holding long term instruments with reasonably stable value and growth (which is not guaranteed for crypto currencies) and happen to have the liquid cash to buy. But in practice it’s often not true, as most investors who try to “time the market” end up underperforming the actual instruments they trade in.
It’s really not true if you have any leverage at all, where a crash might increase your margin requirements or wipe you out entirely.
Exactly. Just because people are paying 50k a piece doesn’t mean people won’t suddenly wake up and realize that bitcoin is actually inferior to most of the other cryptocurrencies in terms of utility
Bitcoin is powered by a shared belief in its value. While it has been powered by scams as well, couch couch Tether, tt seems to be getting more adherents to believing that it is intrinsically valuable. The fact that it tends to go up so quickly also yields to FOMO.
Because Bitcoin is just shared belief, it is hard to dispel that belief via real-world events such as earnings releases and other things that affect more grounded investments.
Bitcoin is more of a movement and it is somewhat revolutionary in that it aims to replace our existing monetary system of central banks and interest rates, etc.
I think the main threats to Bitcoin could be governmental if it continues to grow. If it starts to be a reserve currency competitor to USD which could affect treasury sales, I could see it being banned by the US government and others... but I am not smart enough to work out all that would play out if Bitcoin became that important.
I wonder if Bitcoin will ever be forced to bend towards an inflationary monetary policy controlled by government like entities? It is code and code and always be changed. If it is so successful it becomes necessary to co-opt it into the existing system.... weird stuff.
It has a social network effect of people who agree that it's the store of value for the future. Your paper dollar bill has very little intrinsic value. It's just a shared acceptance.
I fail to see the distinction between “shared acceptance” and “social network effect of people who agree”. Each has value because people agree it does.
Dollars have some amount of intrinsic value: they are the only currency accepted by the US government to pay any taxes due to them. Also, by force of law, anyone living in the US must accept dollars as a way to settle a debt that is due to them, which also gives them some intrinsic value.
So I own some crypto too, but the dollar has a much larger social network effect of people who agree it's the store of value for the future, no? So does the Euro. It's a bit weird that you would claim that bitcoin's intrinsic value is that it's a store of value, but then deny the same reality for other traditional currencies.
I don't think that's true at all. Inflation of fiat is widely accepted as people know more gets printed all the time. You know your dollar will be worth less next year due to inflation. This is why people invest in interest baring accounts and stocks. Dollars by themselves lose money over time.
And yet more people use dollars, and have bank accounts with dollars or their home country's currency.
Bitcoin's block reward can be changed as well, it's not some immutable law of the blockchain. I'm not claiming that it will change, but I also see the potential for there to be a change there to incentivize mining once the block rewards are minuscule and miners are dependent on transaction fees for profitability.
> And yet more people use dollars, and have bank accounts with dollars or their home country's currency.
Those people are losing money due to inflation. This is well known and an issue with people keeping cash in "mattresses".
> Bitcoin's block reward can be changed as well, it's not some immutable law of the blockchain. I'm not claiming that it will change, but I also see the potential for there to be a change there to incentivize mining once the block rewards are minuscule and miners are dependent on transaction fees for profitability.
This is called a hard fork, and has been done more or less unsuccessfully multiple times now.
And yet people still own dollars. I own various investments, and also dollars.
I'm aware of what a hard fork is, I'm also aware of what a 51% attack is. The risk of that down the road could be a fair amount of incentive for folks (and the network effect) to get on board. I'm not saying something will happen there. You do need to maintain clarity to understand the reality of what's possible though. It's also possible that bitcoin's first mover advantage is overcome at some point.
As I said, I own some cryptocurrency too. It's important to see through the mania that is the current market.
You (and I) own dollars but the government can always print more. It's like owning shares in a company that has the habit of regularly issuing more shares, diluting you. We know the denominator on BTC (21,000,000) the denominator on USD is unknown and always increasing.
The fixed, deflationary nature of Bitcoin isn't the only financial instrument we need, but it is desperately needed in its own right.
Paper money is legitimized by the government requiring you to pay it in that denomination. This then gets further legitimized via bonds, bank lending, etc.
Competing tenders in most countries are outlawed. It is an enforced shared belief.
Uh, my paper dollar is backed by the might of the US government and the US economy. It's a lot more than just "shared acceptance". Countries couldn't just switch off the US dollar reserve currency for international trade without massive economic repercussions, which is why no country or set of countries has developed a viable alternative to the dollar for a global reserve currency. It's not like China/Russia wouldn't like to, they have no choice.
The EU came the closest, but no one outside of Europe has wanted Euros since the Greek economic crisis. Hell a large chunk of internal European trade is still done in dollars on the back-end.
On the stick side, under Obama the US stepped up the various mechanisms such that we can cut off trade denominated in dollars on a whim to anyone we want, that's part of how sanctions work. If we (the US) decides we don't want a country to be able to trade internationally, we just cut them off from converting into dollars at the exchanges. There are no economically viable ways around this at present. Just ask Iran.
Bitcoin however, will collapse the moment enough of the crowd loses the faith. It'll go on for a while because it's the new hotness, and some people will get lucky and rich, but at the end of the day it's an ultimately worthless commodity (unless you're trying to avoid government regulation over financial transfers) that exists as long as world governments allow it to exist.
Sure, if theoretically some critical mass of the population all collectively decided Bitcoin was the future it would be, but right now we can't get a critical mass of US citizens to wear masks during a pandemic that's killed hundreds of thousands. So I wouldn't hold out too much hope for pan-Bitcoinism.
Your whole comment is basically an ad for Bitcoin. USD is valuable because we have an imperialistic global army that will kill you or starve you off if you don't use it? Seems like something we desperately need an alternative to.
USD is the dirtiest fiat there is because it's backed by blood at a global scale.
All fiat currency is backed by blood and violence at some scale, it's meted out by court systems, police and military forces. The US happens to be the sole global superpower so the scale is larger for us, but we're actually a very well behaved superpower by historical standards. The "Imperialistic Global Army" has allowed countries who could never have traded globally due to lack of resources to industrialize. The US Navy keeps the trade lanes open for everyone, or at least it did. Whether that will be a thing going forward is an open question now that the Cold War mentality is fading and our troop deployments at historical lows. We might be going back to a truly imperialistic attitude of protecting US and allied trade lanes and letting everyone else build their own Navies if they want to protect their shipping (many countries couldn't do this even if they wanted). But Bitcoin wouldn't be a solution to that either.
As for moral purity, it's no secret that a significant (albeit unknowable) portion of Bitcoin's current value comes from illegal transactions concerning everything from human trafficking to drug sales to organized crime rackets. The ability to obfuscate financial transactions is part of its intrinsic value, so anyone with an interest in doing so will be attracted to it. Plus if Bitcoin were to somehow grow large enough to even consider replacing the dollar, all the blood behind the dollar would simply shift to Bitcoin in some (albeit likely different) manner. Someone has to enforce monetary policy and financial laws, a chaotic, decentralized enforcement would arguably be even worse than centralized fiat enforcement.
There's no way forward financially without some blood on your hands at some stage. So for my money I'm going to build my financial house on solid ground. I'm all for making the system more just and less bloody, but IMO Bitcoin isn't it. In the meantime we've all got to play the hand we're dealt, the only other option is to be a martyr, and while they might get some occasional press and lip service, martyrs typically don't accomplish much.
Right, but to my knowledge target2 doesn't preclude the use of other exchanges. It wouldn't be illegal for say, Spain to convert to dollars and then back to Euros when selling to France. I'm having a hard time finding the statistics I read a few years back, and maybe things have changed or I was misinformed, but I remember reading while most internal EU trade is settled in Euros a significant amount was still settled in dollars for a variety of reasons (legacy systems and such).
That's not just shared acceptance because even if the mighty USD should crumble and fall, a US citizen will still be able to pay the taxman with a dollar bill which is in itself of great value.
Bitcoin is a group of technologies, the one that creates Bitcoin's "value" is a digital implementation of scarcity. Usually digital things are easy to copy infinitely, so Bitcoin's implementation of scarcity is one of its core innovations. Scarce things inherently have value in society, beyond the material themselves, because we primarily make transactions (trade) using scarce things. In other words, scarce things are useful simply by being scarce. So if you take there's value in something being purely digital, and decentralized, then Bitcoin has value through its implementation of scarcity.
It would likely cause a short term shock, especially if people were forced to sell quickly. Essentially a lot of shorter term traders would quickly exit the market.
Though in the longer run, assuming the network stays up (I see no reason why not), I also think it would strengthen the case and we'd see prices continue to climb.
I would suggest gaining additional technical familiarity about block chains if you genuinely believe they are equivalent to centralized relational databases. That's just flat-out incorrect and untrue.
i bought bitcoin and understood block chains in 2013. just because someone disagrees with you doesn’t mean they are
dumb. and maybe sometimes you’re the one that doesn’t know what you’re talking about
You seem to be lacking an understanding of the most basic principles of bitcoin, ie permissionless decentralization backed by proof of work which would not function with existing SQL databases.
What if the central database gets hacked? What if someone does a double-spend? What if the person in charge of the central database decides to redistribute everyone's money or decides to revalue it? What if a transaction fails or someone makes a mistake? How do we know we can trust the owner of said database? What if the central database gets wiped or corrupted?
These are some of the problems with centralization that decentralization solves. The original Satoshi white paper calls out many of these use cases. Part of the reason bitcoin is exploding in value again is because the US government is inflating everyone's money.
This is before even getting into applications of smart contracts...
Congratulations on your successful investment (that's not something I would recommend publicizing though)...
Your misunderstanding of bitcoin seems to boil down to your lack of understanding of what "decentralized trust" is and why it's useful. Maybe start there, but you probably won't because you sound extremely angry.
It at least is tied to a physical thing. There are then limits to how high gold can go in price as higher prices means more will come to the market to sell it because the higher prices are not viewed as sustainable.
Whereas with bitcoin, it is fairly unmoored from physical constraints.
There is no natural price for bitcoin.
It could go up forever or drop to nothing and both are acceptable valuations that would be hard to question -- because it is merely shared belief.
The only plus I can see is a stronger belief that you can't synthesise gold. Synthesising Bitcoin would take an enormous amount of coordinated computing power, but it is technically possible. Other than that I don't see why it matters that gold is a physical thing.
See my peer comment. You can "synthesize" gold pretty easily. I agree most people don't consider this when buying gold though. So "stronger belief" is still accurate. Unfortunately unscrupulous people make fortunes off of that strong belief.
People should know more about the paper gold market. Most importantly how much gold people think they have stored safely in vaults, but is essentially just an IOU that could never be paid if everyone withdrew at the same time. Pretty scary/exciting stuff. I couldn't even begin to describe all the dimensions to this and still learning myself. But long story short, consider the possibility that the price of gold isn't anywhere near tied to a physical thing. :)
There's only one gold... of the cryptocurrencies Bitcoin has become the store of value, by consensus, but that consensus is far more easily popped than the consensus of Gold's worth
The problem with belief is that the Bitcoin price only raises when you find new people who believe in it to put more money into it.
As soon as the BTC market reaches maximum penetration and no new buyers can be found, Bitcoin becomes price stable. And once price stability is reached, because the price isn't appreciating anymore, people will want to start spending their earnings. And as BTC in particular isn't actually that good as a currency, people need to turn their BTC into fiat in order to realise their value and spend them.
And then suddenly... there aren't any buyers and it crashes.
Inflation is only relevant from the time you receive cash to the time you invest it in productive (or in the case of Bitcoin, totally unproductive) investments.
In fact, inflation is the only reason people put money into Bitcoin lol. If there wasn't any inflation, nobody would buy Bitcoin. Really makes you think.
The stock market continues to go up even though its adoption is already widespread. The reason is that governments continue to print USD, and other currencies, which they get invested, re-loaded out, etc. I expect that this can continue in Bitcoin as well for quite some time if there continues to be a shared belief in its intrinsic value.
A shared belief in intrinsic value? What's the calculation then that results in the current bitcoin price without referring to it's existing or historical price?
The stock market goes up because you are looking at a market index of the biggest companies, which are growing bigger as markets concentrate. The difference is if you have a share for a year, it earns you a return separate to what happens to the price of the stock (i.e. a dividend), and this is the intrinsic value (i.e. you can do a fundamental analysis of the stock to reach a price). If you hold onto a Bitcoin for a year it might be worth more, but only because the market is pricing it differently, not because of any fundamentals. This is why it does not have intrinsic value.
This doesn't sound right to me. It seems like your analysis assumes that BTC has already become a store of value, and people are putting excess income into it, like gold. In that future, why wouldn't there be buyers? There aren't new people earning money and investing excess income?
People need to turn gold into fiat in order to spend it. Those are people with excess wealth and not enough income. There will always be people on the other side, excess income but low wealth.
More specifically, I'm assuming that they are a speculative instrument where people are expecting positive growth (i.e. that bitcoins become more valuable over time).
The supply of new people earning money who will want to invest income into Bitcoin has to be finite. Growth can't continue forever because you always need to find someone new who is willing to pay more than you did for a bitcoin/satoshi to keep the price growing, and there isn't an infinite supply of people with an infinite supply of money.
> As soon as the BTC market reaches maximum penetration and no new buyers can be found, Bitcoin becomes price stable.
Bitcoin is negative sum because the miners constantly have to sell Bitcoins for real currency to pay their electric bills. The equilibrium point is when the new money entering the system is equal to the cash value of block rewards. The higher the price, the more new money has to come in to keep it stable.
Currently, Tesla's $1.5B investment is about 4-5 weeks of electric bills (lmao).
The point at which there are no new buyers is actually a negative slope point.
Bitcoin isn’t likely to be banned. Might as well ban World of Warcraft gold while you’re at it.
Clearly it has value as a speculative vehicle and as a systemic risk hedge (like Gold). Whether it can become a true currency is still debatable. Its infrastructure feels more like selling stock or bonds today.
It is not a currency. It is an asset like gold for sure. I think because it is deflationary in nature, it will stay an asset. Currencies need inflation to encourage spending.
The USD also had some difficult beginnings, and through luck and force of will has been established as the de-facto world currency. Saying that no-one will ever challenge the king is foolish, short-sighted, and naive.
"Bitcoin is powered by a shared belief in its value."
The nuance in this is that its value also includes a financial incentive - the MLM structure inherent to Bitcoin, and that is truly what aligns everyone in Bitcoin - it's not for whatever other positives may exist as the primary glue, arguably 99%+ is the financial gain and potential that is the glue.
But yes, pro-Bitcoiners have been good at refining their narrative, the propaganda, conveniently ignoring the MLM structure whenever writing prose of how amazing Bitcoin is - while avoiding answering questions related to its pitfalls like with Bitcoin how do you implement policy and mechanisms like the Magnisky Act to block money of known bad actors as an economic punishment and attempt to sway their bad actions - before needing to perhaps (hopefully not) escalate actions into the physical, destruction-violence mechanism?
> I wonder if Bitcoin will ever be forced to bend towards an inflationary monetary policy controlled by government like entities? It is code and code and always be changed. If it is so successful it becomes necessary to co-opt it into the existing system.... weird stuff.
You can change the code, but it's up to the miners to actually run that code. Not saying it's impossible, but that's a big ask for a controversial change like that. Maybe someday if the mining is even more centralized than it currently is.
I’m far more selfish, I would just like to hear amateur investors stop talking about it. I’d really like for people to stop suggesting a database (blockchain) will fix any problem, even when problems are explicitly not database issues. I think we’re well past either of those things being possibilities though.
cryptocurrency proponents often discuss how manipulated and encumbered with politics normal fiat currencies are, but they don't seem to mind the obvious nation-state-level manipulation of BTC's price shrug
If Silicon Valley was filmed today, their disrupt parody would include “we’re making a world a better place by using blockchain for database”, instead of Paxos (https://youtu.be/B8C5sjjhsso)
Silk road days are gone. Ulbrich got disproportionately punished + convicted on very very dubious hired gun charges. Since then a similar approach was applied on almost every darknet marketplace around, resulting in that these days with BTC at ATH the darknet marketplaces are at an all-time crisis (even though legacy media is still pushing the "criminal's money" narrative :/). Not to mention that all the major mining pools have voluntarily chosen to collaborate with governments on censoring the blockchain, etc.
Let's hope it is just a side-step given that BTC with censorship/regulation is just a breaking of a glass-wall away from perfectly free monetary unit.
P.S. If you are looking to get no-KYC truly anonymous BTC you'd better live in a top-10 city (e.g. Prague), because in a top-100 city (e.g. Sofia) it is not quite straight-forward and takes tons of waiting/selecting.
> Ulbrich got [...] convicted on very very dubious hired gun charges.
No, he didn't. He got convicted of money laundering, conspiracy to commit computer hacking, and conspiracy to traffic narcotics. Evidence related to the alleged murder for hire scheme was presented at trial and was weighed in the sentencing phase in terms of what sentence he got within the range authorized for the crimes he was convicted of, but he was not tried, convicted, or sentenced for “hired gun charges”.
Ulbrich was never convicted of a violent crime. (Though plenty of evidence did show he tried to commit murder-for-hire.) He was convicted of money laundering, conspiracy to commit computer hacking, and conspiracy to traffic narcotics.[1] For this he was sentenced to two life sentences plus 40 years.
> Not to mention that all the major mining pools have voluntarily chosen to collaborate with governments on censoring the blockchain, etc.
BTW Juraj is a great source on anything crypto-related. And from what I now there has been no resistance from the pools so far (at least the EU/US-based ones, though in China it is probably even more difficult.)
That post explains how it might be possible for someone with 10% of mining power (and 100% of legal power) to block certain transactions. Nowhere in that post does it claim that such an attack has succeeded or that mining pools are collaborating with governments.
It is not an attack since by current market conditions there wouldn't be the need for an attack. The owners of the mining pools are not stupid and BTC is not an anonymous (and FREEEEEE whatever this means) currency these days. I hope we can agree on at least this fact.
BTW Juraj is a great source on anything crypto-related. And from what I now there has been no resistance from the pools so far (at least the EU/US-based ones, though in Chine it is probably even more difficult.)
This seems to nicely lay out how the censorship may happen and be implemented. But it only briefly touches on one small example of censorship currently taking place. Is there anything else to support this portion of your previous post?
> Not to mention that all the major mining pools have voluntarily chosen to collaborate with governments on censoring the blockchain, etc.
Maybe when someone invents a “free” consensus scheme that actually competes with PoW’s security properties. There are plenty of reasons to suspect this isn’t possible.
If proof of work is necessary, how much work does proof of work need to do fundamentally? Is there any reason a cryptocurrency can’t be made that uses very little energy?
The structure of your comment suggests you don't grasp the fundamental point of proof-of-work, which is precisely to prove that a certain amount of (physical) resources were expended.
> Is there any reason a cryptocurrency can’t be made that uses very little energy?
As far as proof-of-work is concerned, if you don't use enough energy, you are vulnerable to 51% attacks.
As far as other schemes (e.g. proof-of-stake) are concerned - none of them have the same desirable security properties as PoW.
Given that the current world exchange currency requires 43 aircraft carriers and 6,185 nuclear warheads (+ all the support they need, thousands of very worhtwhile human lives a year, etc), any electricity consumption seems a small problem. Not to mention that the oil-to-electricity transition would require ridiculous investments anyway.
> US would never switch to BTC as legal tender because they can't control the supply of BTC
Most evidence shows the U.S. no longer benefits from the dollar as a global reserve currency. And lots of governments have currency boards or currencies they don’t control.
1. The currency board countries are very small players, mostly beaten to blue and also not all currency boards are tied to USD.
2. The bulk (I guess 90%+) of global lending is still in USD - a currency which the Fed can debase at will - as has been happening since 2008 and happened at a grande scale in 2020.
This brings only frustration and bitterness - the last two things you want in international relations, especially in the post-nuclear age soft-power days.
It is not a hypothesis and it is not about the US. It is a fact that the current global currency is USD and it is enforced thanks to the role of the global policeman and unquestionable military might. However over the (many) years it has caused growing problems both inside and outside the US.
P.S. I think that the US was playing this role very well over the past 76 years and am perfectly happy with 90% of what has been done.
Maybe we can focus on crypto that requires democratically elected consensus - save regulatory capture - which would then allow us to focus on crypto that doesn't unnecessarily transfer wealth from later adopters weighted toward earlier adopters.
Yea it's called every western government which is already a democracy. USD is the democratic coin. Bitcoin isn't democracy. It's the opposite. Absolute property rights removed from the state
It's primary purpose is a store of value that can't be manipulated by the government. It's succeeding wildly at this.
There's a lot of extreme Bitcoin hate on this site, but BTC is helping a ton of people right now, as evidenced by the rapidly increasing demand and money flowing into Bitcoin investment.
There really is no alternative for where to park your money in 2021 unless you want to buy real-estate or stocks both of which come with their own massive set of problems.
The trend has very consistently been for BTC to increase in value (helped by USD decreasing in value). There are only "wide" price swings at very high resolution.
It was never meant to be a value store. First sentence of the whitepaper: "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution".
> BTC is helping a ton of people right now, as evidenced by the rapidly increasing demand and money flowing into Bitcoin investment.
Not making a judgement either way on BTC's success but what you've highlighted there isn't evidence. An artificially inflated market based on speculation would show the exact same signs.
I don't think this is the case, it feels more like people here are no longer as easily charmed by the whole buzzword catalogue surrounding bitcoin.
This switch from everyone starting a new cryptocurrency and "X, but on blockchain" dominating the discourse towards a more critical view probably just feels more extreme than it really is.
Bitcoin is an awful currency for illegal transactions. A permanent public ledger waiting for eventual de-anonymization sounds like a prosecutors dream.
I never understood why people described Bitcoin as an anonymous currency, it really isn’t. Arguably physical currency is much, much more anonymous than Bitcoin.
A valid point and definitely something people should be aware of. It's disingenuous to call Bitcoin anonymous.
On the other hand, "anonymous" is to some degree like computer "security". Secure against what threat? Anonymous to who?
Paper money is certainly traceable to some degree. Plus it almost requires you to meet in person, where the other person in the transaction can see your physical appearance (or your proxy/accomplice's).
Both mediums of exchange have similar risk profiles, but they are a little bit different. Not sure that I'd argue one is better than the other, generally. Depends on the use case.
It's anonymous in the sense that I an use a craigslist-laptop bought with cash at coffeeshop wifi -- paying for that coffee in cash too -- and not have it traced back to me, John Doe.
Plus there isn't any way to order 500 hits of acid from 3 timezones away in-person without a lot of issues. Lotta ID checks at the airport, and lots of cameras on highways.
If something goes weird with the darknet shipment I walk, feign ignorance, burn the laptop. If I'm carrying drugs on a plane and get busted then it's on me, no question.
But yeah, if you didn't pull good OpSec in 2014 it's possible the feds might link it to you in 2023, or whenever they get around to it.
I think the comparison is a little unfair, as it's comparing two fundamentally different technologies - and crypto is in it's infancy. I'd be interested to learn about speculation driven volatility in currencies of the past (perhaps when the fed was first established, or with currencies of ancient civilizations), but I also think cryptocurrency is the first of its kind in many ways.
@dang, you should think about adding a disclaimer to every crypto-related submission, just regex the title with the typical key words to catch them, with something like:
Be aware that crypto-related submissions like this one might be intended to trigger or influence a wanted market behavior by OP.
A little superfluous. Couldn't we just assume that any blog post about any topic "might be intended to trigger or influence a wanted market behavior"? A news article critical of Amazon warehouse management could also be seen the exact same way.
That's absolutely true and every post can have a hidden agenda. However and in particular in this field hidden agendas are more common or let's call it pump and dump schemes. Cause and effect are so much closer together than in other fields, e.g. when I post how great Ruby is I cannot expect that the next day 10K new devs learn again Ruby haha and even if, I won't make any money over night. Maybe my Ruby course business (just an example, I don't have one haha) would get few more subscriptions but yeah.
Right but I do think the principle is the same. We're commenting on an asset. If the market moves due to that conversation then so be it. The GameStop fiasco proves that it's really not hard to manipulate public trading as one might initially think.
Also @dang, should require every user to add a tag/label that will show us if they are a Bitcoin speculator/owner, and would be great if then upvotes/downvotes had a stat that was viewable to see what % of upvotes/downvotes posts or comments have are by those who are financially incentivized for Bitcoin to succeed.
Edit to add: what are the odds this comment would be downvoted in a Bitcoin thread? Would be great to see the bias of upvote/downvoters and commenters in Bitcoin threads, then can have 2 thread columns: top comments for those who own Bitcoin, and top comments for those who don't own Bitcoin; obviously it'd an honour system and could be gamed.
That's a bad faith exaggeration argument you just made: we don't need to know everything someone has financial interest in, just if it's related to the topic. It's why VCs, for example, if writing a blog post about a company - they will write a disclaimer that they own shares in the company. We have laws to require people to disclose if something is sponsorship as well - because it changes the value of what's being said.
> we don't need to know everything someone has financial interest in
You wouldn't. You would just know that OP owns GOOG if the article is about GOOG. Only HN/the brokerage would have their entire portfolio.
> It's why VCs, for example, if writing a blog post about a company - they will write a disclaimer that they own shares in the company
As far as I can tell this isn't a legal requirement - shareholders have no obligation to disclose their position, even major stakeholders don't have to do so every time they post about the company - it's mainly to protect the writer's reputation and because they really don't want to mislead the reader. The point is that HN shouldn't be the one keeping the comments and submissions free of articles posted "for the intent of manipulating the market" regardless if we're talking about crypto securities or public securities.
"As far as I can tell this isn't a legal requirement - shareholders have no obligation to disclose their position, ..."
Very much seems like this should be remedied, it's part of integrity for people to know if you have a financial motivation behind what you say - at least if you want a society that has integrity and not as easily open to manipulation; it's ultimately why advertising is bad, the people didn't deserve to get the attention they've getting - and why in part Tesla has done so well - they created a good enough product to get word of mouth and receive the attention they deserve (for the good and bad) to receive.
Which that logic gets cancelled out because you could claim the person without bias, "skin in the game" - is who should actually be listened to more. Those cancelling each other out then just leaves the financial incentive that the person who owns Bitcoin has.
A blog by a guy going by Trolly, that can't even properly set up HTTPS, and admits he makes things up in the headerline means absolutely nothing. Tether has been involved in shady dealings for a long time. Last bull run people like this guy were claiming it was all going to blow up and tether was worthless etc etc etc. That never happened. This hysteria is very common for nocoiners, why are they so worried about my worthless bitcorns?
What’s interesting is that the fact that this story is gaining traction might make it a self-fulfilling prophecy. That’s the danger and stress of pure-momentum trading, which crypto basically is. It’s full on gambling. I tapped out early 2018 because the gains were not worth the interminable regrets of missing out, the constant worry that some country on the other side of the world would move the market as I slept, the increasing influence of troll/alt-right culture in the community, the insane hyperfocus that coding technical indicators on TradingView would cause, etc.
Anyone who is fresh on the scene or still hodling, god bless you, you have stronger hands than I.
Don't know if anyone else made this mistake but: author is not saying bitcoin will 50/50 collapse tonight just some night this year.
> So the next time someone tries to explain to you that “Bitcoin is a store of value”, when the chances of it getting utterly destroyed overnight before the year is over are around 50/50, try not to shoot coffee through your nose laughing.
EDIT: Not saying I agree with the prediction, it's just a far more timid prediction than I initially thought.
We're living in an era when it is easy to create new "currencies". Bitcoin is only the first, as some others have already been developed. The "value" of such currencies is a social construct. So, the price of BC will continue to grow as long as people have expectation that it will be valuable in the future.
The only problem I see in "investing" in BC is the counterpart risk, i.e., I don't trust any of the companies that do trading in BC. I think this problem is currently bigger than the "currency" itself.
Strange, I don't. I remember HN as a page where many blog posts had a chance, independent of the pseudonymity and ridiculousness of their author's username.
Independent and pseudonym is OK and encouraged, but ridicoulus / no responsibility for trying to be correct is very different from the cool/fun/hacker culture that is looking for the truth.
I am personally long on Bitcoin. Such a crash is just a buying opportunity. I don’t even consider any part of speculating Bitcoin value on a time horizon less than 10 years.
The entire financial system is built on fraud. Corporations are crypto are the prime beneficiaries. For Bitcoin to collapse, all of society would have to collapse.
A lot of comments here attacking this guy's name or things totally tangential to the meat of the post: simply plugging in some numbers into a financial formula to estimate the market's implied probability of these BTC exchanges going bust.
A lot of people here probably have BTC in their own wallets so don't care but the current btc exchanges (binance/coinbase etc) collapsing like mt. gox did would not be good for BTC in the short run at the very least.
I have been watching some BTC related companies recently and one caught my attention - Canaan. A few days ago they announced purchase orders of 100,000 mining machines for 2021. Supposedly many were pre-paid.
Also of note was their claim that in late 2020 they shifted their client base from individual miners to mostly publicly traded companies.
I am not sure what to make of it. Maybe HN can chip in?
225 comments
[ 2.8 ms ] story [ 247 ms ] threadIt’s really not true if you have any leverage at all, where a crash might increase your margin requirements or wipe you out entirely.
archive version though it seems slow https://archive.vn/UvZTZ
Because Bitcoin is just shared belief, it is hard to dispel that belief via real-world events such as earnings releases and other things that affect more grounded investments.
Bitcoin is more of a movement and it is somewhat revolutionary in that it aims to replace our existing monetary system of central banks and interest rates, etc.
I think the main threats to Bitcoin could be governmental if it continues to grow. If it starts to be a reserve currency competitor to USD which could affect treasury sales, I could see it being banned by the US government and others... but I am not smart enough to work out all that would play out if Bitcoin became that important.
I wonder if Bitcoin will ever be forced to bend towards an inflationary monetary policy controlled by government like entities? It is code and code and always be changed. If it is so successful it becomes necessary to co-opt it into the existing system.... weird stuff.
How? As an intrinsically valuable means of speculation because sound investment opportunities are absent?
Bitcoin's block reward can be changed as well, it's not some immutable law of the blockchain. I'm not claiming that it will change, but I also see the potential for there to be a change there to incentivize mining once the block rewards are minuscule and miners are dependent on transaction fees for profitability.
Those people are losing money due to inflation. This is well known and an issue with people keeping cash in "mattresses".
> Bitcoin's block reward can be changed as well, it's not some immutable law of the blockchain. I'm not claiming that it will change, but I also see the potential for there to be a change there to incentivize mining once the block rewards are minuscule and miners are dependent on transaction fees for profitability.
This is called a hard fork, and has been done more or less unsuccessfully multiple times now.
I'm aware of what a hard fork is, I'm also aware of what a 51% attack is. The risk of that down the road could be a fair amount of incentive for folks (and the network effect) to get on board. I'm not saying something will happen there. You do need to maintain clarity to understand the reality of what's possible though. It's also possible that bitcoin's first mover advantage is overcome at some point.
As I said, I own some cryptocurrency too. It's important to see through the mania that is the current market.
The fixed, deflationary nature of Bitcoin isn't the only financial instrument we need, but it is desperately needed in its own right.
Competing tenders in most countries are outlawed. It is an enforced shared belief.
The EU came the closest, but no one outside of Europe has wanted Euros since the Greek economic crisis. Hell a large chunk of internal European trade is still done in dollars on the back-end.
On the stick side, under Obama the US stepped up the various mechanisms such that we can cut off trade denominated in dollars on a whim to anyone we want, that's part of how sanctions work. If we (the US) decides we don't want a country to be able to trade internationally, we just cut them off from converting into dollars at the exchanges. There are no economically viable ways around this at present. Just ask Iran.
Bitcoin however, will collapse the moment enough of the crowd loses the faith. It'll go on for a while because it's the new hotness, and some people will get lucky and rich, but at the end of the day it's an ultimately worthless commodity (unless you're trying to avoid government regulation over financial transfers) that exists as long as world governments allow it to exist.
Sure, if theoretically some critical mass of the population all collectively decided Bitcoin was the future it would be, but right now we can't get a critical mass of US citizens to wear masks during a pandemic that's killed hundreds of thousands. So I wouldn't hold out too much hope for pan-Bitcoinism.
USD is the dirtiest fiat there is because it's backed by blood at a global scale.
As for moral purity, it's no secret that a significant (albeit unknowable) portion of Bitcoin's current value comes from illegal transactions concerning everything from human trafficking to drug sales to organized crime rackets. The ability to obfuscate financial transactions is part of its intrinsic value, so anyone with an interest in doing so will be attracted to it. Plus if Bitcoin were to somehow grow large enough to even consider replacing the dollar, all the blood behind the dollar would simply shift to Bitcoin in some (albeit likely different) manner. Someone has to enforce monetary policy and financial laws, a chaotic, decentralized enforcement would arguably be even worse than centralized fiat enforcement.
There's no way forward financially without some blood on your hands at some stage. So for my money I'm going to build my financial house on solid ground. I'm all for making the system more just and less bloody, but IMO Bitcoin isn't it. In the meantime we've all got to play the hand we're dealt, the only other option is to be a martyr, and while they might get some occasional press and lip service, martyrs typically don't accomplish much.
No. Internal trade is balanced with target2.
That's not just shared acceptance because even if the mighty USD should crumble and fall, a US citizen will still be able to pay the taxman with a dollar bill which is in itself of great value.
It's difficult to imagine this causing the price to go any direction other than up.
To what do you refer here?
Though in the longer run, assuming the network stays up (I see no reason why not), I also think it would strengthen the case and we'd see prices continue to climb.
the only thing novel is that its decentralized and inefficient but the average user really doesnt care about that.
These are some of the problems with centralization that decentralization solves. The original Satoshi white paper calls out many of these use cases. Part of the reason bitcoin is exploding in value again is because the US government is inflating everyone's money.
This is before even getting into applications of smart contracts...
Congratulations on your successful investment (that's not something I would recommend publicizing though)...
Whereas with bitcoin, it is fairly unmoored from physical constraints.
There is no natural price for bitcoin.
It could go up forever or drop to nothing and both are acceptable valuations that would be hard to question -- because it is merely shared belief.
People should know more about the paper gold market. Most importantly how much gold people think they have stored safely in vaults, but is essentially just an IOU that could never be paid if everyone withdrew at the same time. Pretty scary/exciting stuff. I couldn't even begin to describe all the dimensions to this and still learning myself. But long story short, consider the possibility that the price of gold isn't anywhere near tied to a physical thing. :)
All money, currency and assets are based on faith on the continuing demand for that thing. All the other properties are incidental.
As soon as the BTC market reaches maximum penetration and no new buyers can be found, Bitcoin becomes price stable. And once price stability is reached, because the price isn't appreciating anymore, people will want to start spending their earnings. And as BTC in particular isn't actually that good as a currency, people need to turn their BTC into fiat in order to realise their value and spend them.
And then suddenly... there aren't any buyers and it crashes.
In fact, inflation is the only reason people put money into Bitcoin lol. If there wasn't any inflation, nobody would buy Bitcoin. Really makes you think.
The stock market goes up because you are looking at a market index of the biggest companies, which are growing bigger as markets concentrate. The difference is if you have a share for a year, it earns you a return separate to what happens to the price of the stock (i.e. a dividend), and this is the intrinsic value (i.e. you can do a fundamental analysis of the stock to reach a price). If you hold onto a Bitcoin for a year it might be worth more, but only because the market is pricing it differently, not because of any fundamentals. This is why it does not have intrinsic value.
People need to turn gold into fiat in order to spend it. Those are people with excess wealth and not enough income. There will always be people on the other side, excess income but low wealth.
The supply of new people earning money who will want to invest income into Bitcoin has to be finite. Growth can't continue forever because you always need to find someone new who is willing to pay more than you did for a bitcoin/satoshi to keep the price growing, and there isn't an infinite supply of people with an infinite supply of money.
Bitcoin is negative sum because the miners constantly have to sell Bitcoins for real currency to pay their electric bills. The equilibrium point is when the new money entering the system is equal to the cash value of block rewards. The higher the price, the more new money has to come in to keep it stable.
Currently, Tesla's $1.5B investment is about 4-5 weeks of electric bills (lmao).
The point at which there are no new buyers is actually a negative slope point.
Clearly it has value as a speculative vehicle and as a systemic risk hedge (like Gold). Whether it can become a true currency is still debatable. Its infrastructure feels more like selling stock or bonds today.
So is US dollar.
Bitcoin is not even not in the same league - it’s playing different sport.
The nuance in this is that its value also includes a financial incentive - the MLM structure inherent to Bitcoin, and that is truly what aligns everyone in Bitcoin - it's not for whatever other positives may exist as the primary glue, arguably 99%+ is the financial gain and potential that is the glue.
But yes, pro-Bitcoiners have been good at refining their narrative, the propaganda, conveniently ignoring the MLM structure whenever writing prose of how amazing Bitcoin is - while avoiding answering questions related to its pitfalls like with Bitcoin how do you implement policy and mechanisms like the Magnisky Act to block money of known bad actors as an economic punishment and attempt to sway their bad actions - before needing to perhaps (hopefully not) escalate actions into the physical, destruction-violence mechanism?
You can change the code, but it's up to the miners to actually run that code. Not saying it's impossible, but that's a big ask for a controversial change like that. Maybe someday if the mining is even more centralized than it currently is.
I'm developing a blockchain to block these people using sustainable AI. Want to get in on the initial coin offering?
Let's hope it is just a side-step given that BTC with censorship/regulation is just a breaking of a glass-wall away from perfectly free monetary unit.
P.S. If you are looking to get no-KYC truly anonymous BTC you'd better live in a top-10 city (e.g. Prague), because in a top-100 city (e.g. Sofia) it is not quite straight-forward and takes tons of waiting/selecting.
No, he didn't. He got convicted of money laundering, conspiracy to commit computer hacking, and conspiracy to traffic narcotics. Evidence related to the alleged murder for hire scheme was presented at trial and was weighed in the sentencing phase in terms of what sentence he got within the range authorized for the crimes he was convicted of, but he was not tried, convicted, or sentenced for “hired gun charges”.
> Not to mention that all the major mining pools have voluntarily chosen to collaborate with governments on censoring the blockchain, etc.
What do you mean by this?
1. https://en.wikipedia.org/wiki/Ross_Ulbricht#Trial
BTW Juraj is a great source on anything crypto-related. And from what I now there has been no resistance from the pools so far (at least the EU/US-based ones, though in China it is probably even more difficult.)
BTW Juraj is a great source on anything crypto-related. And from what I now there has been no resistance from the pools so far (at least the EU/US-based ones, though in Chine it is probably even more difficult.)
> Not to mention that all the major mining pools have voluntarily chosen to collaborate with governments on censoring the blockchain, etc.
> Is there any reason a cryptocurrency can’t be made that uses very little energy?
As far as proof-of-work is concerned, if you don't use enough energy, you are vulnerable to 51% attacks.
As far as other schemes (e.g. proof-of-stake) are concerned - none of them have the same desirable security properties as PoW.
BTC is "clean" money in that it doesn't have the blood of millions and an imperialistic army powering it.
The energy usage by BTC is a drop in the bucket compared to the ecological damage wreaked by the US military.
Most evidence shows the U.S. no longer benefits from the dollar as a global reserve currency. And lots of governments have currency boards or currencies they don’t control.
1. The currency board countries are very small players, mostly beaten to blue and also not all currency boards are tied to USD.
2. The bulk (I guess 90%+) of global lending is still in USD - a currency which the Fed can debase at will - as has been happening since 2008 and happened at a grande scale in 2020.
This brings only frustration and bitterness - the last two things you want in international relations, especially in the post-nuclear age soft-power days.
P.S. I think that the US was playing this role very well over the past 76 years and am perfectly happy with 90% of what has been done.
There's a lot of extreme Bitcoin hate on this site, but BTC is helping a ton of people right now, as evidenced by the rapidly increasing demand and money flowing into Bitcoin investment.
There really is no alternative for where to park your money in 2021 unless you want to buy real-estate or stocks both of which come with their own massive set of problems.
Not making a judgement either way on BTC's success but what you've highlighted there isn't evidence. An artificially inflated market based on speculation would show the exact same signs.
I don't think this is the case, it feels more like people here are no longer as easily charmed by the whole buzzword catalogue surrounding bitcoin. This switch from everyone starting a new cryptocurrency and "X, but on blockchain" dominating the discourse towards a more critical view probably just feels more extreme than it really is.
I never understood why people described Bitcoin as an anonymous currency, it really isn’t. Arguably physical currency is much, much more anonymous than Bitcoin.
On the other hand, "anonymous" is to some degree like computer "security". Secure against what threat? Anonymous to who?
Paper money is certainly traceable to some degree. Plus it almost requires you to meet in person, where the other person in the transaction can see your physical appearance (or your proxy/accomplice's).
Both mediums of exchange have similar risk profiles, but they are a little bit different. Not sure that I'd argue one is better than the other, generally. Depends on the use case.
Plus there isn't any way to order 500 hits of acid from 3 timezones away in-person without a lot of issues. Lotta ID checks at the airport, and lots of cameras on highways.
If something goes weird with the darknet shipment I walk, feign ignorance, burn the laptop. If I'm carrying drugs on a plane and get busted then it's on me, no question.
But yeah, if you didn't pull good OpSec in 2014 it's possible the feds might link it to you in 2023, or whenever they get around to it.
Monero solves this problem currently.
Note: (current value at USD 49K time of post)
Be aware that crypto-related submissions like this one might be intended to trigger or influence a wanted market behavior by OP.
Edit to add: what are the odds this comment would be downvoted in a Bitcoin thread? Would be great to see the bias of upvote/downvoters and commenters in Bitcoin threads, then can have 2 thread columns: top comments for those who own Bitcoin, and top comments for those who don't own Bitcoin; obviously it'd an honour system and could be gamed.
You wouldn't. You would just know that OP owns GOOG if the article is about GOOG. Only HN/the brokerage would have their entire portfolio.
> It's why VCs, for example, if writing a blog post about a company - they will write a disclaimer that they own shares in the company
As far as I can tell this isn't a legal requirement - shareholders have no obligation to disclose their position, even major stakeholders don't have to do so every time they post about the company - it's mainly to protect the writer's reputation and because they really don't want to mislead the reader. The point is that HN shouldn't be the one keeping the comments and submissions free of articles posted "for the intent of manipulating the market" regardless if we're talking about crypto securities or public securities.
Very much seems like this should be remedied, it's part of integrity for people to know if you have a financial motivation behind what you say - at least if you want a society that has integrity and not as easily open to manipulation; it's ultimately why advertising is bad, the people didn't deserve to get the attention they've getting - and why in part Tesla has done so well - they created a good enough product to get word of mouth and receive the attention they deserve (for the good and bad) to receive.
Can we reasonably infer that you have a financial stake in Bitcoin?
Anyone who is fresh on the scene or still hodling, god bless you, you have stronger hands than I.
> So the next time someone tries to explain to you that “Bitcoin is a store of value”, when the chances of it getting utterly destroyed overnight before the year is over are around 50/50, try not to shoot coffee through your nose laughing.
EDIT: Not saying I agree with the prediction, it's just a far more timid prediction than I initially thought.
Now, will he?
>"In our case [...] R ≈ 50% based on what happened after MtGox collapsed."
He is counting on another MtGox. Black swan events are not certain, by definition.
The only problem I see in "investing" in BC is the counterpart risk, i.e., I don't trust any of the companies that do trading in BC. I think this problem is currently bigger than the "currency" itself.
The main driver of BTC is belief and hype, as more people believe in BTC there’s more hype and increase in demand and price.
Username checks out.
A lot of people here probably have BTC in their own wallets so don't care but the current btc exchanges (binance/coinbase etc) collapsing like mt. gox did would not be good for BTC in the short run at the very least.
Also of note was their claim that in late 2020 they shifted their client base from individual miners to mostly publicly traded companies.
I am not sure what to make of it. Maybe HN can chip in?
https://cointelegraph.com/news/btc-miners-pocket-4m-in-60-mi...