As someone who owns and believes in cryptocurrency, I'm actually glad this happened. I was getting sick of all the get rich quick people who've been driving the price lately, even for the coins that shouldn't be pumping.
It was almost as if the entire cryptocurrency space had turned into a huge unregulated casino.
I was at a couple of Bitcoin meetups recently and was surprised to find that most attendees were proudly saying that it doesn't matter if they understand how the technology works. It's one thing to not understand what you're gambling with, it's a whole another matter if everyone is actually proud about their very ignorance and even thinks of their ignorance (yet I'm still making money!) as being clever.
Unlike what some people pointed out in this thread, the price going down is not from people who got rich quick and sold. It's a panic sell.
That's what happens when you gamble with something you don't understand.
> It was almost as if the entire cryptocurrency space had turned into a huge unregulated casino.
[/thread]. That's really what it is, but instead of casino, call it a stock market. With that one there's a lot of regulation in place - including new European legislation, MiFID II (http://europa.eu/rapid/press-release_MEMO-14-305_en.htm), which in part is aimed at protecting clueless investors from themselves.
The crypto market doesn't have this, so a lot of people jump on this, consider themselves subject matter experts after a few days or weeks of reading up on stuff and following relevant subreddits, and getting swept up in the hypes (even if they don't think they are. I don't think I am. wait.)
It's the same with stock market trading, you don't need to understand how the company you're investing in works, the only thing that really matters is how much other people are interested in the company (or crypto).
The value of cryptocurrencies is not based on technology or how it works, it's based on supply and demand, which in turn is driven by trust and hype. Not unlike the stock market in a less regulated age.
I agree that currently it's purely based on speculative supply and demand. But I disagree that's what cryptocurrency is.
Bitcoin became popular because people actually used it to buy and sell stuff in the early days. And its main value was that it could provide very low transaction fee. Nowadays that's become impossible because the BTC transaction fee has risen to a ridiculous state.
For something to function as currency it needs fungibility. That used to exist in BTC but it's gone now. They're trying to come up with a solution with lightning network, sidechains, etc. But in the meantime all the vendors who used to take payments in Bitcoin have all pulled off because of the transaction fee. And we see all the other cryptocurrencies have risen up because BTC couldn't provide the value it used to provide. To be honest it's been pathetic watching the "civil war" between Bitcoin people because they've been deluded enough to believe they've already won that they were doing petty in-fighting over ego. This crash should be a wakeup call for those complacent devs to realize there's still long way to go.
So you're right that currently BTC deserves to drop all the way down, because it doesn't deserve to be a currency. Which is why I'm glad this happened. Because I was getting sick of all those people who've been parroting the "Bitcoin is fine as just a store of value" narrative. It's not, and this crash is the proof. All those people who thought they were "storing value" when there was no fungibility deserve to learn it the hard way.
Bitcoin seems pretty fungible in that it's a "commodity whose individual units are essentially interchangeable." But I agree the transaction costs are too high if that's what you mean.
Haha sorry i was too emotional that I made a weird mistake. I meant liquidity. I'm working on a project to improve Bitcoin fungibility so that's all I've been thinking about lately, I guess it just leaked out while I was posting the comment.
The answer is pick another coin to replace btc... It'll always be flawed. 1st gen stuff usually dies eventually.
Ardor I think is going to replace a lot of the current coins out there... it solves a lot of the technical issues, has child chains a much faster and more secure network, etc...
Stocks are inherently a positive some game. Crypto is by definition a negative sum game where every $ taken out needs to be matched by a dollar put in and beyond that people need to pay for mining.
Crypto is only negative sum if you assume the coins have no value. Which is debatable. If all coins went to zero at the end of the game sure it would be negative sum but that seems unlikely.
Negative sum means all players on average are worse off.
Think of it as a poker game where each player hands 10$ to the dealer to sit at the table. Now, if the players are exchanging chips individual players may end up ahead, but on average at the end of the night everyone is down 10$.
Transaction fees are very much playing a deal to sit at the table. Miners do spend money to get tokens, but nobody in the game receives that money it's just gone and miners need someone else's money to get paid.
Re: MiFID II - having just completed a project for MiFIR financial transaction reporting, let's just say it remains to be seen whether it can help "protecting clueless investors from themselves" as you say, especially when London, by far the largest financial market in EU, isn't going to implement it.
Just FYI and very anecdotal, I know a guy who was confronted in the parking lot after a bitcoin meetup by 2 guys demanding that he send some coins to their wallet. Be careful at those meetups.
Good for him, your friend has every right to protect his life and property. We could rely on police, but all the police can be guaranteed to protect is his body after they show up 5 minutes too late.
Luckily for them it didn't have to go that far, but he did pull it and they immediately took off. He then got in his car and called the police to report what happened.
His life doesn't have to be in danger to pull a gun!
1. He just has to justify that he had a reasonable fear for it.
2. Anyway he was protecting his property
In fact, he did a very honest thing: he brandished his gun. Which means he showed the would be criminals that he was packing.
Steps to shoot a would be assailant legally:
1. Show that you're packing
2. if the would be assailant doesn't leave, aim
3. if the would be assailant doesn't leave, shoot.
Its a very fast, but choreographed dance. The point of it being that you don't just get to shoot anyone right away, you have to give them a chance to bugger off. Which they did.
EDIT: I've never owned a gun and don't really want to own one (shooting is a lot of fun, but I don't want to be a gun owner). I might buy a .22 rifle (hardly relevant for this story)
There seems to be missing something in your story to show danger.
They just asked for his cash, nothing show any sign in danger in that. Would you pull out a gun because someone asked you for food too?
Was there a threat? Which kind of threat? Did it look like these guys had the means to carry that threat and did it look like they actually were going to carry that threat?
I wouldn't kill a guy in hope to get a few thousand dollars. There are cars that are worth much more than I could steal and risk much less than a homicide sentence (which I guess is pretty high in Arizona).
I don't believe his life was in danger, but I'm also not living in a country where people think their life is constantly in danger and they have to carry gun for their safety. That mentality is dangerous in itself and may justify itself sadly. Having a gun in any interaction escalate way too quickly any risk.
> They just asked for his cash, nothing show any sign in danger in that.
Yeah, that's all they said. I'm sure there was no threat in their words or mannerisms at all. Certainly, if the victim had merely given these gentlemen a firm "no," they would have just shrugged their shoulders and walked away.
Two guys demanding money from you doesn't sound like a dangerous situation to you? You're nuts. Even if his life wasn't in danger he was gonna get roughed up, and that's worth pulling your weapon for.
Demanded cash. Only an asshole would pull a gun on some homeless man who asks if he has any spare change.
It changes if they come up and demand money.
Losing a couple thousand bucks would suck, and if that was guaranteed to be the end of it then I'd rather that be the end of it. The problem is you are dealing with people who are already willing to commit robbery, there is any number of ways that situation could get violent. Once it does then who knows what happens.
In most states in the US you are definitely allowed to defend yourself and your property by brandishing and using a gun. "life, liberty, and property" -Locke
It may be an unpopular statement, but I believe that even enthusiasts and long-time supporters such as yourself know just about as much regarding the actual value of bitcoin as people who are caught up in the hype.
Note the parent is talking about technology, not value. As far as actual value is concerned, your statement is fair enough since we all know the same amount: fuck all.
I am still trying to find fundamental cryptocurrency developments in 2017.
2011 were the first steps in BTC usability.
2013 was the rise of alt-coins and also BTC became actually usable(mostly due to Bitpay and Gyft)
2017 it seems all speculation.
So let's take top (by market value on 12/22/2017) crypto-currencies:
1. Bitcoin - first mover, slow, expensive to use pivoted to store of value
2. Ethereum - smart contracts enabling ICO craze despite horrible contract programming language
3. Bitcoin Cash - moving to replace BTC in usability(Bitpay), but large single entity(Bitmain) influence
4. Ripple - building backbone for financial institutions, but otherwise just speculation
5. Litecoin - my 2nd love after BTC has not really advanced since 2013 and lead dev just sold all -> just speculation still
6. Cardano - smart, open, unusable -> just speculation
7. IOTA - IoT currency, premined, again why does this need high value?
8. Dash - at least has some merchant acceptance, but still pitiful
9. NEM - buzzwords but again unusable -> just speculation
10. Bitcoin Gold - BTC fork with ASIC resistance -> just speculation
11. Monero - black market usability rising
12. EOS - impressive buzzwords, unclear on why tokens should have high value
13. Stellar - a few name drops but unclear on usability
14. NEO - what a name pivot, otherwise just a vision and speculation
15. QTUM - smart apps, plus a few DAPPS, any good?
16. Ethereum Classic - the one that honors badly written smart contracts
Out of these, BTC and Ethereum seem likely to stay at some value despite their flaws just because of their originality.
Out of rest, Dash, Monero and Bitcoin Cash seem like potentially useful for the general public.
The rest, what use are they for the general public?
Even if we assume all are honest and produce something useful for many of these tokens it is unclear why should general public care about buying tokens.
For example why should Ripple be valued by public and speculated upon when it is only its backbone that is to be used by bigbanks?
Disclaimer: despite mining some since 2011 I am really sceptical about most crypto currencies.
TLDR; besides white papers what actually became usable in 2017?
I wonder if crypto currency will survive, or if we end up with Blockchain being a useful technology and smart contracts having niche applications and still worth a lot.
Ripple - no documented consensus mechanism. Banks aren't using XRP to settle.
Stellar - a better rewrite of Ripple targeting smaller Money Transmission companies.
Unfortunately the high price and get-rich-quick stories associated with Cryptocurrencies in general will overshadow and hinder meaningful technological progress.
The best thing that could happen for any meaningful development would be a crash down to 2016 levels and a stagnation period. Let the hype fade away and get back to making something useful, instead of trying to pump and dump.
Depends on how you define "this" but bitcoin seems to have similar drops every few months. This time on Dec 22 it just dropped to where it was on Dec 6th and seems to have recovered a little.
>As someone who owns and believes in cryptocurrency, I'm actually glad this happened. I was getting sick of all the get rich quick people who've been driving the price lately, even for the coins that shouldn't be pumping.
you say this as if it won't happen again and again. 95%+ of crypto ownership is pure speculation. There are coins in the top 15 that don't even have existing networks yet.
One problem with cyrptocurancy is its decentralized model and instability; that is why institutions are more interested in Ripple and similar solutions.
I do mobile software consulting. To give you an idea of the level of crypto currency mania: Every single one of my clients in San Francisco have some kind of slack or group chat devoted to crypto trading.
I was waiting at the front desk of a client who has a floor in a fancy building downtown. Whilst waiting I overheard the end of a conversation between the door guy talking to the maintanence man: “I put in a bunch of money like you said and it went up!”. The door guy was gesturing at his phone and I vaguely saw a blue and white interface that looked like coinbase. I’m 95% sure this conversation was about bitcoin or etherium. This occurred about two weeks ago.
It really made me think of that old story about the shoe shine boy talking stocks promoting a guy to exit the stock market prior to the 1929 crash:
The key moment of bubble insanity for me was overheating the security screeners at Heathrow talking about how they just signed up for “this new app called CoinBase” which was going to make them all rich.
Compared to a lot of other coins, DOGE has been around for a long time and basically counts as an established, respectable institution. It had a very active community, it sponsored a racecar. And unlike most coins, it has a very concise and transparent value proposition of why it's different than the million other coins on the market. That value proposition being "lol memes," which... isn't a scam, at least.
That may be the case for most. In this case, it could be argued it does. If one address the parent is being classist (subjective), this comment does well to highlight it.
Its not a commodity it's a currency. Why does it need to be "rare"? The US dollar is also not backed by anything "rare" and hasn't been since Nixon abandoned the gold standard in 1973.
>"didn't have any government backing or big institutional backing in case the price dropped from 19,000 to 11,000"
You realize this is the exact reason it was created right? That's the whole point. It's not coincidence that bitcoin was released on the heels of the 2008 financial crisis.
The dollar is essentially backed by oil and the fact that it's needed to trade with the largest economy in the world, not to mention the country with the largest military.
Sure those things help give value to the dollar by increasing its demand. Whether of not this constitutes "backing" depends on the definition of backing. There is no underlying asset that directly backs the dollar, which is the whole point of fiat currencies.
The fundamental source of demand is the requirement that US Taxes must be paid in dollars. The utility of using dollars to trade with the US economy is simply a consequence of this fact.
If such a loose definition of "backing" is going to be used, then one could also say that bitcoin is "essentially backed" by its utility as a medium of exchange. That utility is a consequence of:
(1) the infaliabilty of its public ledger (which means it is especially useful where trust is low and where trust is needed).
(2) The ease of making a transaction.*
*Aside: since the bitcoin transaction volume currently exceeds the limits it was specifically designed to handle, that means that transactions currently either cost a lot of money or take a long time to be confirmed. But those are issues that could be resolved either with lightning network (or other off-chain solutions), side-chains, forks (soft and hard), or even by a whole new variation of the blockchain concept. Although bitcoin transactions admittedly currently aren't cheap or fast doesn't mean blockchain necessarily will always be like that.
You must pay US taxes in USD which collectively must equal a large percentage of the US economy. So, the USD is backed up by everything made in the US.
The downside is the US government's outlay is larger than it's income, but in practice that's less important than you might think.
The thing about dollars is that I can pay my taxes with them.
Let's say I think dollars are worthless, and my whole community works off something with real value, like shiny rocks. I'll still have to pay the IRS next April. They may take shiny rocks, but instead I could trade just one or two rocks for a big pile of worthless dollars and get Uncle Sam of my back for next to nothing. Unfortunately for me, every other shiny rock user in town is going to have the same idea, so they'll bid up the price of dollars until trading rocks for dollars doesn't feel any better than just paying my taxes in rocks directly.
The only faith that "full faith and credit" requires is faith that I'll have to keep paying taxes.
Taxes are why I think a piece of paper with a bad portrait of George Washington has some intrinsic value to me, whether or not there's a secondary market for them. It's why I think the purchasing power of that piece of paper is anchored to a real phenomenon in the real world, and why I don't expect that purchasing power to move around much.
Think of it like this. If the dollar lost 20% of it's purchasing power overnight, I would be pretty damn sure something important has happened in American governance. Bitcoin just moved 20% because...?
I'm missing how your link supports your claim. The linked article says nothing about the financial crisis and discusses petrodollar behavior in recent years. Much of the reduction in export of petrodollars to asset markets is blamed on sanctions on Russia.
I’m not sure Bitcoin knows if it’s a currency or a commodity yet. Seems to be in flux depending which interest group is currently commanding the headlines.
I don't see how this is justifiable at this point. With rampant speculation, $30+ transaction fees, the slow nature of the network, devs who keep putting off dealing with the slow nature, forking, etc...
If a US company is paid in euros or gold it still needs to pay taxes in dollars. Further, property taxes for example are independent of your income stream. As owning land creates a liability, but land in no way creates money from thin air.
People do transactions in USD specifically because they need to pay taxes in USD not the other way around. Thus, these transactions are simply a multiplayer on top of the Tax demand.
>"If a US company is paid in euros or gold it still needs to pay taxes in dollars"
And similarly if a European company is paid in dollars they still need to pay taxes in Euros. Why is this relevant?
>"As owning land creates a liability, but land in no way creates money from thin air."
Owning land creates money out of thin air by appreciating in value. People have gotten fantastically wealthy by doing nothing except letting time pass.
>"People do transactions in USD specifically because they need to pay taxes in USD not the other way around."
This is not unique to the US. Where else can you pay local taxes in a foreign currency?
Sure, and Euros are also backed by the EU economy. The point is 'national' currency's are actually backed up by enforced demand unlike say Ethereum.
People talk about hyper inflation as if it can actually happen without the backing government printing money. The reality is taxes limit inflation as long as the currency is not printed endlessly and the government does not over spend you can't sustain hyperinflation.
>"Sure, and Euros are also backed by the EU economy. The point is 'national' currency's are actually backed up by enforced demand unlike say Ethereum"
I agree with this but that's also the main differentiator is that the "legal tender" of a country backed up by enforced demand while Bitcoin and backed up purely by supply and demand. I think I misunderstood your point with regards to the tax examples.
However I don't agree that inflation can not be controlled exclusively through taxes. That is but one component the much bigger lever being the monetary policy of the central bank.
I am more talking about the long term. Total value of all currency is going to be +/- some % * k of GDP so over say 100 years you get minimal average inflation or deflation and the average keeps dropping as you increase to say 200 years etc.
But, even if it's value is stable in the long term that's arguably less important than month to month and year to year stability because you need to make loan payments today or buy food today etc.
when you talk to a bitcoin enthusiast, at first it was 'well it's a currency'. then after seeing the transaction fee and time, it was 'well it's a store of value'. then after seeing the 80% price drop, it was 'well it's rare'. then after seeing hundreds of cryptocurrencies on coinbase it was '......?'
It sounds like you are talking to different people, who all think different things...
I personally see cryptocurrencies as a decentralized way to transact money. Yes, bitcoin is failing in this area currently, and while they have plans on how to fix it, they are not going to get here soon enough to keep this valuation up in my mind. If you ask a friend of mine, he will tell you that he has always thought of cryptocurrencies as a way of storing value, since the inability to do chargebacks means he doesn't want to use it as his daily currency ever.
Both of us can be right, because it's an opinion.
And there hasn't been an 80% price drop at this time, and coinbase doesn't have "hundreds of cryptocurrencies", they have 4 (3 up until a day or 2 ago).
>"Yes, bitcoin is failing in this area currently, and while they have plans on how to fix it, they are not going to get here soon enough to keep this valuation up in my mind."
Can you elaborate on this? What exactly is the plan?
This right there is exactly why long term it's doomed and cannot be a reliable store of value. You don't see banks and random geeks inventing new precious metals out of thin air. So you have gold, silver, platinum and palladium and that's about it as far as store of values are concerned.
I mean, I suppose anyone can create a currency out of thin air. In fact, I'd wager there's hundreds of currencies, as nearly every sovereign state has one. It's not meant to be a store of value, which is why this bubble will burst, but that doesn't mean it's doomed. It has the characteristics of a currency: 1. scarce. 2. useful.
But not 3. fast and easy to transfer ownership of or 4. stable in value over time. Plenty of things (houses, human toes, pre-release copies of films, etc.) Are both scarce and useful without also being good candidates for a medium of exchange.
Fair enough, but Bitcoin certainly can be either of those things, even if it's not right now. History shows us any currency can have those problems. Inflation can become so high that as a medium of exchange it's pointless. It can become so unstable in value that people use something else.
Bitcoin is no panacea, but the "fake money" argument seems misplaced to me. It's current failings are not failings of crypto-currency in general.
Paying for a $5 cup of coffee with a debt card takes about 10 seconds and invites about $0.10 in transaction fees. Paying in physical currency is even faster and costs approximately $0.
I've heard plenty of ideas to make the Bitcoin network a little cheaper or a little faster. Occasionally both! I've yet to hear a good theory for how the Bitcoin network can ever get both 500x cheaper and 500x faster.
Same is true about Facebook. Someone could clone the features and create facebook2.com, and everyone would flock to it. That's why Facebook stock is a Ponzi scheme. Anyone who thinks Facebook has a value above $0 is insane.
Look, i'm not convinced that bitcoin is worth the price it's at right even right now either, but that's just not true.
The network effect is extremely strong in the cryptocurrency space. Everything in the cryptocurrency space supports bitcoin, and fractions of everything support anything else. Payment processors, exchanges, hardware wallets, software wallets, secure storage and backup systems, etc... All of it is focused on bitcoin first, and adds others later (if ever).
If you want to buy or sell bitcoin, you've got tons of repudible options, you want to buy or sell monero? You've got 1/3 of the options, and most of them are small and shady or don't deal with fiat currencies in any way.
If that's not a network effect, I don't know what is.
One could argue the exact opposite - that all the infrastructure around Bitcoin makes it an inferior store of value. For example, the fact that Litecoin does not (yet) have ETFs and other financial vehicles that can be used to manipulate its price without actually dealing with "physical" Litecoins, makes it a more stable store of value.
It took a while for 28.8K modems to catch up with bandwidth needs, and that's part of the reason people thought the internet sucked and was a joke compared to all its promises. I think even today people snort about pets.com as the poster child of the dot-com boom. Then their Amazon Pantry order arrives, which they consume without irony.
Maybe. Or the modem is part of Bitcoin's infrastructure that needs to be replaced. Bitcoin's architecture is reasonably modular, so that is a possible outcome.
I can't read tea leaves better than anyone else, but I do agree with Hal Finney's Bitcoin-or-bust observation. If another cryptocurrency besides Bitcoin takes hold, it's likely that all cryptocurrencies will fail. This is because the scarcity argument proves false -- yes, any individual currency is perfectly scarce, but technological improvements in newer currencies will effectively inflate the entire ecosystem and devalue existing currencies.
That's the weak version of the prediction. The stronger version is that those already in the ecosystem (and thus who have an interest in preserving existing wealth) will see the weak version of the prediction, conclude it's undesirable, and try to prevent it from coming true. Thus they will integrate technological improvements into Bitcoin rather than supporting a separate chain.
The question is whether there is enough momentum already behind Bitcoin to support the strong version of the Finney theory. I think there is; Bitcoin supporters will eventually address its technological weaknesses, and future improvements in cryptocurrency will be implemented in terms of Bitcoin rather than by forking the ecosystem.
You might disagree, and maybe you're right. Maybe Bitcoin is just the modem. Maybe it's the internet. I'm betting it's the internet.
You could say that about any company that doesn't have crucial IP. It doesn't seem like you understand the value of a brand.
>Someone could clone the features and create facebook2.com, and everyone would flock to it.
This is flat out false. if it was actually that easy don't you think we would have seen it happen already? There are numerous social media platforms that have tried to dethrone Facebook and none of them have succeeded.
in addition, Facebook practically prints money through advertising, which very clearly has value (multiple billions of dollars a year).
I don't really use Facebook anymore and I don't work there but to think it's value is $0 is insane. I'm not sure how you can conflate a multi-billion dollar company with proven profit streams and the current hype in the current crypto market
Perhaps you would have benefited from an explicit /s in this conversation. We're in agreement. I was taking OP's point and extending it to demonstrate its weakness.
A little. It is somewhat like Bitcoin Cash, which I'll admit surprised me by not dying immediately. The way I reconciled it with my view of the world is that it's a different feature set (larger ledger pages) that was too hard to integrate with the main product (Bitcoin), so they did a market test with a different brand and found out it resonated with some people. ("they" is an odd term to use because it was actually two viciously opposed groups, but the same kind of infighting happens in corporations as well, and people on the outside think corporations are all singular hive minds, so oh well).
I continue to view Bitcoin Cash as a prototype for different features that validates the need for Bitcoin to address that market segment, either by fixing the block size problem outright, or by the lightning network. I don't see a world where both BTC and BCH coexist long-term.
I can't explain why Instagram coexists with Facebook. It does feel like one is a superset of the other. Maybe Instagram's simplicity and ease of use is simply inconsistent with Facebook's engulfing experience, and they truly are two distinct features of a larger whole. If that's the case, then I'm looking at BTC/BCH the wrong way, and they're also part of a larger whole, and both will survive. So my original facetious point that Facebook is cloneable (which of course it isn't, because its value is in network effects, not its source code) would actually be somewhat true, except that it's different products serving the same overall network, just overlapping but distinct parts of it.
I doubt it's that easy to gain consensus on that. Half a decade of billion-dollar incentives have already provided a real-life experiment in which this issue didn't come up, although it may in the future.
The reasons are that bitcoin's value is derived from its scarcity and decentralised properties. If you completely break that philosophy, it's sorta-kinda just a digital ledger controlled by a small group of powerful companies like any other system you could think of.
So you'd momentarily print money that'd soon lose much of its value. And you'd be doing it on specialised mining equipment which are purpose-built by all the big mining companies, that can just has a single algorithm that bitcoin uses (and is useless for mining many other coins), which then also all lose their value.
Again, it could happen, but the incentive structure certainly isn't designed for this to occur naturally. Even a small printing of money would be immediately noticed.
Rather, the rarity to me stems from the fact that indeed, anyone can run a blockchain. It's just software on 1 or more computers. I can run 100 blockchain clones on my computer with trillions of tokens. And bitcoin tokens themselves can be split to ridiculous numbers, as you can send 0.000001 bitcoin. That fraction of a bitocin is a token that can carry information and put it on the blockchain, and you can agree that this information represents any asset. As such, there's no scarcity of databases (blockchains) or tokens (bitcoin fractions), and thereby it isn't 'rare'. Of course, most blockchains have no security strength because there's not enough value to incentivise a large group of independent miners like with bitcoin. But the idea that you can clone/improve bitcoin, run your own and create a healthy market is reality, and it means that ultimately there's no real rarity for bitcoin usecases that couldn't happen on another chain that's supported by users.
You know what? That's a good point, and a problem with the Bitcoin end game. As Bitcoin mining gets harder and more of the value ends up entirely in the already-mined BTC, those with all this mining infrastructure are going to realize they can maximize this otherwise-stranded-asset by monopolizing mining power and developing a consensus to allow them to continue printing money.
"But transaction fees!"
Okay, but if transaction fees go way up, that will encourage people to move away from BTC anyway or find some other way to reduce their exposure to transaction fees.
Once mining draws to a close, miners will consolidate. Just like in every other industry after a bust.
Cryptocurrencies are still, of course, very interesting and powerful.
My expectation is we'll end up with "to avoid a hard cliff between a network reliant on mining and one reliant on transaction fees (and the inevitable instability of the transition), and to ensure a robust mining ecosystem, we're going to extend mining, at a reduced rate, for just a few more months..."
And there's an apparent benefit for end-users, too - if you want Bitcoin to be a practical payments mechanism (as opposed to store of value), transaction fees have to be kept comparable to credit cards. But the electricity used by the network still has to be paid for. What could be more tempting than magicing a few more bitcoin out of thin air to pay the miners?
The algorithm is just a convention. The algorithm can be easily forked or modified by law / regulation / consensus among a few key market participants (mostly large miners).
Also Bitcoin is just one blockchain. Even with the same algorithm I can create an infinity of other bitcoin blockchains. Why would one have more value than the others? It's like if you generated an RSA key and then said, this RSA key is special, it has lots of value, you can't replicate it because you don't have the private key. No one else can recreate this key, it is enforced by cryptography. Well yes. But it's just a key. I can create a million others with an average laptop.
And I could make thousands of kinds of physical coins next month, it doesn't mean physical money is worth less...
I feel like I'm crazy here, how is the ability to make a new "thing" make something else less valuable? A toyota isn't worth less because I can make a new car company next week, Facebook isn't worth less because I could make a clone of it tomorrow, A company stock shouldn't be consitered "worthless" just because I can create a new company tomorrow...
What am I missing? Why would the ability to make something new affect the rarity of an unrelated "thing"? Why isn't the value determined by what that "thing" does, how it does it, the number of people that believe in it's ability to do the thing it says it will do, and more? Why do you think it matters that someone can create a new currency?
There are two kinds of rarity. There is rarity of the thing itself and rarity of things like the thing. Consider an extremely rare thing used for some industrial application. It is very expensive because there is little supply. But if there is another thing that functions just as well then the price of the first thing drops, even though the supply of that thing is fixed.
The only differences between bitcoin and bitcoin2 after a fork are the miners. If the number of miners is sufficiently large to be confident in transactions, original bitcoins and bitcoin2s are just as good at being used for whatever. This is even worse if bitcoin2 has some new desirable properties that bitcoin does not have.
I agree to some point. You can't forget the network effect, which in many cases is the most important factor (it's easy to make a clone of twitter, but good luck getting everyone to switch). Because Bitcoin is basically just a way to ensure that a group of people are doing math with a given set of rules, if you get a copy with slightly different rules, you need that group to agree to them to give it value. It doesn't really have many analogies in the physical world that I can think of, the closest is actual physical currencies.
Just because I can make a "Flollar" doesn't mean that it's going to take a bite out of USD. I have nothing to backup my flollar, no users, no army, nothing. It's the same way with cryptocurrencies. Just because you can fork bitcoin doesn't mean you'll take a chunk of it's value. You still need to provide all of the other things that make bitcoin valuable that's not in the codebase (decentralization, userbase, vendors/exchanges, software that works with it, time with real usage to show that it's secure (or at least that your changes are secure), and just trust that it will stand the test of time). And even if you do that, bitcoin can and will evolve over time. If you start to eat bitcoin's lunch, there is no reason why they can't just fold your changes into bitcoin proper. If it's in everyone's best interest to have the feature, then consensus will be easy to achieve and the network can be upgraded. In a way, it's similar to forks of an open source project. In the vast majority of cases, a fork of a codebase doesn't reduce the number of users of a project. In some cases it does, but it normally doesn't happen overnight, and takes years and years to have people transition over (take openoffice vs libreoffice for example).
All that being said, I do think that bitcoin is in a bad place right now, and they are dangerously close to allowing another currency to jump up as the main contender, but I don't believe that any of the top 10 or so have actually solved the scaling problem that bitcoin currently has without getting rid of the biggest benefits of a cryptocurrency.
> And I could make thousands of kinds of physical coins next month
No, you couldn't, not without literally tons of raw material, heavy machinery and infrastructure to mint the coins, laborers to run the operation, time to process the raw materials, and a practical mechanism to circulate the coins. These are serious barriers to the creation of physical money, unlike cryptocurrency which can be instantly and effortlessly minted in unlimited quantities by a single individual and easily distributed over the internet. There is no comparison.
> A toyota isn't worth less because I can make a new car company next week
This analogy makes no sense. A Toyota is valuable because it has an inherent utility in its ability to provide its owner with an effective method of transportation, crypo-tokens (as opposed to the network itself) have no inherent utility because they are not actually a thing and do not exist independently of the ledger that qualifies their distribution. Certainly, if any single individual could generate an unlimited supply of "effective transportation" instantly at near zero cost, the value of toyota's would very quickly decline.
> Facebook isn't worth less because I could make a clone of it tomorrow
First of all, no you couldn't. You could create a much crappier version of Facebook with an unmaintainable code-base that doesn't scale and supports a minuscule fraction of Facebook's feature set, and even that would cost you time, money, and effort. Even if you could just git clone Facebook's code, you still wouldn't be able to get it running and keep it running without a team of senior dev, ops, and network engineers, plus an annual server bill in the hundreds of thousands at the absolute minimum.
> A company stock shouldn't be consitered "worthless" just because I can create a new company tomorrow...
The point is that you can't just "create a new company" tomorrow that is in any way comparable to a successful business, otherwise everyone would do it... not to say that some don't try, but the ash heap of history is littered with the remains of companies that thought they could replicate a successful company's business model only to find out that its actually not that simple.
>The point is that you can't just "create a new company" tomorrow that is in any way comparable to a successful business
That's my point exactly! Just because you can replicate the "class" of thing, doesn't mean you can replicate the thing...
Just like how a company stock isn't just a piece of paper that anyone can photocopy, a cryptocurrency isn't just the code that runs it. It's the users, the track record of security, the amount of vendors and exchanges that use it, the amount of centralization/decentralization to it's development team, the amount and maturity of implementations of the software, and any number of other intangible things.
Simply making a new cryptocurrency is exactly the same as making a new company, or a new facebook, or a new toyota, or a new anything. It doesn't make you a direct competitor any more than my "klathmonbook.com" is a direct competitor to facebook just because I replicated some (or even all) of the functionality.
>the ash heap of history is littered with the remains of companies that thought they could replicate a successful company's business model only to find out that its actually not that simple.
So is the pile of scamcoins and poorly thought out implementations that have already collapsed within months of their creation. Give the space some more time, and I bet you'll see a lot more of them fail, because just like how creating a company isn't just clicking a button, creating a successful cryptocurrency isn't a simple thing either. But I still don't think that it means that all cryptocurrencies are worthless because anyone can enter the space.
> Simply making a new cryptocurrency is exactly the same as making a new company, or a new facebook, or a new toyota, or a new anything.
No, it isn't at all similar, because business are specialized entities with specific properties that cannot be easily replicated, unlike a crypto-token ledger which can be instantly and effortlessly replicated with identical qualities and capabilities at near zero cost.
> So is the pile of scamcoins and poorly thought out implementations that have already collapsed within months of their creation
The critical distinction that you're not seeing is the fact that it costs nothing to create a scamcoin unlike a business which can cost the creator everything if it fails. You're also ignoring the fact that a business has to effectively serve the market for it to even be comparable to a competitor, you can't just incorporate a business, buy a bunch of ads and start pulling in money, you need to actually do something that generates wealth, unlike crypto-token ledgers which require nothing except for people to run the code.
Why do you think it "costs nothing" to create a successful crypto-token?
I can create a business with a hundred dollars and a trip to the local government building, but that doesn't mean i'll be successful, or that i'm a competitor to facebook. Just like how anyone can fork a cryptocurrency, that doesn't make them successful or a competitor to bitcoin.
And I disagree about how creating a business can cost the creator everything, isn't limiting liability one of the biggest reasons to start a company? So that you don't lose everything if it doesn't work.
But I think you need to really look at what it takes to build a cryptocurrency, let alone a successful one. You seem to be ignoring my point that a currency isn't just the code, but the network, the users, the trust, the amount of hardware and software written for it, the number of implementations, the amount of acceptance at vendors, the number of reputable exchanges, and the amount of decentralization. Replicating all of that isn't going to be any easier than getting everyone to switch from facebook to "klathmonbook" would be.
The fact that there are hundreds of cryptocurrencies created all the damn time that aren't overtaking bitcoin proves my point. If you replace the word "business" with "cryptocurrency" in your last paragraph, it still holds true. A good cryptocurrency needs to provide a benefit, and in bitcoin's case (at least to me) that benefit is decentralization, "push based" payments, the ability to be your own bank, a network of users and vendors that trust and use it, and not needing to trust anyone to transact with them using it.
> Why do you think it "costs nothing" to create a successful crypto-token?
Because "success" for a crypto-token requires near zero effort from the entity deploying the ledger, all that is necessary is to rebrand forked code and pump enough hype into it so that people start buying it. The billion dollar ICO phenomenon is a concrete example of exactly what I'm referring to and that's just one blockchain with a second layer of abstraction on top. If Donald Trump forked litecoin tomorrow and told all his followers to buy the best cryptocurrency ever and that bitcoin was a fake-news token supported by the Obamas, Trump-Coin would be within the top 5 crypto-tokens literally over night.
> I can create a business with a hundred dollars and a trip to the local government building
And if Trump went on TV and pumped that business every day for a year, it would be a certain failure because a "business" is not a clerical detail that you can effortlessly replicate by filing paperwork with the government, it's an organization that embodies the implementation of a concrete business process, it requires that the business owner actually do something.
> the network, the users, the trust, the amount of hardware and software written for it, the number of implementations, the amount of acceptance at vendors, the number of reputable exchanges, and the amount of decentralization
Right... but there is nothing marrying any of that to any specific implementation of a compatible blockchain, this was particularly apparent with the BTC vs BCH fork where companies didn't even know whether or not they should recognize the new ledger that was instantly created out of thin air... but ultimately they decided they would recognize it and suddenly there is "double" the total amount of bitcoin that existed previously. These kind of things can't happen with a business because you can't instantly fork a functioning business with 5 minutes and a PR.
You need to do some more research, because the way you describe things is not how they really are.
The success of a crypto requires much more than just forking and publishing, it's not just hype based except for the scams and fly-by-night operations.
And there aren't "double" the Bitcoin any more than a photocopy of dollar bill doubles the amount of money in circulation.
There is a new cryptocurrency called Bitcoin Cash, but that is not the same as Bitcoin. Just because they have similar names doesn't make then the same, just because they come from the same codebase doesn't make them the same.
Unless you also think that creating a successful browser is just hitting fork and publish, or creating a successful operating system is just hitting fork and publish, or creating a new Facebook is just copying the functionality.
If it's really that easy, then please take over Bitcoin yourself, as there are literally hundreds of billions of dollars to be made here, surely if it's that easy you can handle it?
There's essentially nothing driving the price increase in 2017. Payment processing, remittance, asset-backing, digital identities, micropayments, bitcoin ATMs, VC-backed bitcoin startups, none of these things took off at all in 2017, in fact if anything the exciting years regarding these usecases/infrastructure ventures were 2013-2015.
I bet if you ask 100 people why they bought and if they use bitcoin for anything in particular, 99 will say no. That's why none of this is a real surprise.
On the other hand, apart from appreciation of gold as jewellery (partially because it's expensive) and some industrial use (fraction of the gold industry), in large part gold too exhibits price growth sustained by nothing but a simple cultural notion that it's scarce and valuable. Countries, banks, pension funds etc aren't putting hundreds of billions of dollars worth into stacks of gold bars locked in vaults because of their industrial or jewellery usage, after all. Bitcoin, as little the growth of real-life usecases has been in 2017, may have established itself as an alternative store of value. I don't agree with that myself (just as like I think it's utterly useless to invest in gold as a store of value), but who cares about me.
So it remains to be seen what'll happen the next ten years, maybe it'll still remain as a store of value. I'm no longer buying though. The 'using bitcoin' vs 'bitcoin as store of value' became completely lopsided in favour of the latter, which was the point I cashed out.
Serious question: what value would gold have in a post-apocalyptic world? If I'm selling something, why should I take gold in exchange for it, instead of something useful, like ammunition or food or water?
If I were convinced the apocalypse were going to happen in the next couple years, I would start storing up ramen noodles, Hersheys chocolate bars, and M&Ms. Cheap to purchase, easy to store, and likely to have astronomic value post-apocalypse.
That would be rational. I am assuming that even in a post-apocalyptic scenario, people will not be rational. I imagine people being willing to pay an awful lot for the experience of tasting M&Ms again and for a few brief moments being able to pretend that everything is just like it used to be.
Though now that you point it out, maybe I would rather buy rice and beans so that I could be more useful to people, rather than just maximizing profit. Or better yet, stock up on both kinds of goods.
Ironically, the postapocalyptic world will probably still use US dollars. And when it turns out that not enough physical dollars survived the apocalypse, dollars will be the way credit is accounted, with whatever dollars remain being used to periodically reconcile accounts.
> Serious question: what value would gold have in a post-apocalyptic world? If I'm selling something, why should I take gold in exchange for it, instead of something useful, like ammunition or food or water?
What if the people who want your goat don't have what you want to immediately consume but you know for sure Bob down the street (who doesn't particularly like goats) will trade ammo for gold?
All the alternatives are perishable. Food and Water last a few days before going bad, making them unusable for trading caravans or well-off settlements (those you will likely buy from).
Ammunition is better, but for something that can be stored indefinitely without great care, it's hard to beat gold.
Not if you take the time to prepare them. Grains will last basically until pests eat them, and water will last forever if you keep it in a sealed container and sanitize it first. Hell, even meat can keep for years if you salt it enough.
I think the most important part of what he's claiming (after removing all the noise) is Bitfinex (largest exchange) keeps producing USDT(supposedly USD backed cryptotoken), which currently is at around 1B$, and there is no bank that's behind this sort of money.
Dude can't even get his dates correct across a few paragraphs for the "EXTERNAL USD AUDIT" (one of either 02/01/2018 or 6th February 2018) and we are expected to believe them to be credible?
There was a halving of miners subsidy in 2016, that is what drives the price. For some reason the effect is delayed, but it was delayed during previous halving too.
Downvote me all you want, but HN really needs to cure this bitcoin-jealousy. Yes, people who invested early became millionares and billionares with a single mouse click. I know it feels unfair when you spend countless hours creating and innovating and not being rewarded. But some of you here needs to stop hating and being bitter. I have been watching HN and bitcoin related threads for months now. Same pattern.
I think there are three elements contributing to the negativity:
(1) People may get hurt. I was in an Uber two weeks ago where my driver talked about taking out a second line on his home to buy Bitcoin. By today's mark, he's lost money. That people who clearly have no idea what they're doing are being preyed on is disturbing to many, myself included.
(2) ICOs are a cesspool of frauds. They allow promoters to make money without putting anything up. That's different from early Bitcoin adopters, who actually put time or money or computing power at risk.
(3) Bitcoin is an article of faith. Discussions around its value often devolve into "does god exist" arguments.
You are missing the reason the fees are high: it's because Bitcoins it the most widely used cryptocurrency today. Scaling something like Bcash, which doesn't have that many transactions - is easy. The fees can be low because nobody wants to use it. Because there is no real demand for those transcations, and so the price can be low. For a crypto like Bitcoin, which does have high demand for transactions, some of the fees have to be high right now. (Does not mean they will be high in the future.)
Are there scalability problems? Yes they are, it's very evident in the transaction fees.
But are technical solutions being developed to mitigate this? Yes they are - that's the real work that actually goes on in the background, by the people who actually work, instead of spending their time on internet posting about the price. It's not an easy task, but it is being done.
When people bring up the transaction fees, sometimes it sounds like they think that real Bitcoin developer's don't know that this is a problem. They do, and they work on it! It's just that regular person doesn't want to hear developers, he wants to hear someone that tells them they can make 3x their money over a weekend.
Increasing the blocksize will never realistically bring a Bitcoin-like network to the truly global scale of say Visa or MasterCard. Many people think that other technical solutions are needed, and that only they can work. These people are broadcasting their choice through the markets and the price of each coin.
Bcash has increased the blocksize (and forked), which is a perfectly valid solution for such a task, in terms of how a cryptocurrency should be governed: no wars, no lawsuits, if some users don't think a certain decision is valid, they are free to fork off their own chain. No one stopped them, no one tried to shut them down.
But the market will ultimately show what is a good solution and what is a bad solution.
And you can already see what the market decided in terms of the decision of increasing the block size - by comparing Bitcoin market cap to Bcash market cap.
I wanted to make a small Bcoin transaction a couple weeks ago to test a wallet and the fee was over $20. That doesn't seem like a good fee compared to Visa. Is this something that could be fixed now with a block size increase?
It's not about being bitter IMO. Sure, some people are mad they missed the boat, but I don't think that is the general consensus (at least here on HN).
There's no valuable discussion to be had anymore regarding BTC because every discussion turns into price point speculation, FUD, or "I told you so" remarks.
Bring some real discussion and critical thought the table, and not just repost the same WSJ articles that sensationalize the tiniest price movements.
> There's no valuable discussion to be had anymore regarding BTC because every discussion turns into price point speculation
There are tangential discussions around market structure, regulations (their existence, interpretation and necessity) and other matters I've found genuinely interesting.
Bitcoin appears to have attempted a clean reboot of modern finance. It's interesting seeing where common solutions are found. It's fascinating considering where divergent conclusions could be reached, and whether that could help us in the mainline economy.
Price discussions are inane for this asset, but it doesn't mean that's the only thing we can talk about.
Let me clarify - I agree with you. Price discussion shouldn't be the only discussion, but the media frenzy and run away increase in value makes it the main topic of focus.
The things that you mentioned are what I am most interested around Bitcoin, and what should be talked about - but that is only happening in very small amounts and (in my experience) by people who don't have any horses in the race.
As a side note - I would add that Bitcoin in theory attempted to reboot modern finance. The idea, passion, maybe even necessity is there - but I don't think the tech is there yet. Clearly people are more interested in generating value based on our current monetary system vs. pushing for widespread Bitcoin adoption.
I think thI discussion should no longer be about bitcoin but about blockchains and how they are going to make the current financial system obsolete. Take for example EOS and Cardano, the two are 3ed generation blockchains that will enable all sorts of uses for crypto coins. Yes the median is fixated on Bitcoin, and I say let them be. People are overlooking what will be the most impactful technology of our lifetime and that is a damn shame. But hey, what do I care; I'm one of those greedy bastards scooping up virtual land I'm decentraland, investing in amazing projects that will eliminate billions of waste in financial and healthcare world and will connect the other 4 billion people currently not participating in the virtual economy.
I've always thought of HN as the place where you can reliably get a contrarian opinion. See for instance that research some time ago showing the top-voted comment of most submissions on HN being a refutation of the thing that was submitted.
Cryptocurrencies have been rising in value at an astronomical pace the last few months, and Bitcoin may currently be the biggest asset bubble in human history [1]. It would seem it is only quite logical that the general HN comment would be quite skeptical at the very least.
There's an other group who is very good at refuting everything: conspirationists. I love how HN comments often provide more insight into subjects that the article they are discussing, but this is no excuse for the blatant discarding of any new idea it often demonstrates. I've been around for a while, and quite frankly, I more and more skip top comments to find really interesting content.
Note that I reply here on the general HN sentiment, not regarding cryptocurrencies specifically. Although I would say that on the topic at hand : beware making general judgments based on one bad day.
I don't think a lot of what I'm hearing was bitterness. Instead, there was a (seemingly correct) assumption that Bitcoin was undergoing a massive bubble at the moment. There was a lot of signs similar to other bubbles, such as the late 1990s dot com bubble and the mid 2000s real estate bubble.
There's no problem with putting a little into Bitcoin or other cryptocurrencies, but at the moment, it is a very speculative investment. If you diversify, and don't do something silly like massively borrow, then that's fine. In fact, this sort of investor probably doesn't care too much that Bitcoin crashed in value. It may go up by silly amounts, or it may go down by silly amounts. That's life with any speculative investment. I personally can't see Bitcoin justifying its valuation unless it fixes its transaction issues, but there is plenty of room for disagreement there.
Now, the fact that a fair bit of current marketing / promotions of crypto has the whiff of pyramid schemes and other dodgy "make money fast" type things is of concern to me. Mainly because these sorts of things usually never end well. I think it would be very foolish to put a significant percentage of your assets into crypto right now, and it would be extremely dicey to invest in crypto on the margin. In fact, it would probably be better if one was seriously interested in crypto to wait until a major crash clears these sort of "you're gonna get rich instantly with CRYPTO!" players out of the market.
Who is buying coin? Like if you seriously found 3 BTC you had on an old hard drive from years ago, remembered that password, who would pay you the $30k? You'd have to try different exchanges, try small amounts first, pay the insane transaction fees and wait for confirmation. Anyone who truly had a huge stash of like 400k USD in BTC would need to grab a lawyer, an escrow company and enter into a pretty strict legal contract with a coin exchange to guarantee that money.
Are there really large amounts being traded? I guess you could just look at the block chain ledger and see. But I'm just wondering how much of this is due to people cashing in/out vs market manipulation.
Your numbers are off by more than a factor of 1,000. As of a couple days ago, you could liquidate $30M (not $30K) on GDAX with a market sell order (which would be the worst possible way to sell) for more than 95% of last-quoted price.
An over the counter(OTC) trade with a firm that specialises in high worth trades. They quote you a mid market price and they fill your whole amount at the same price.
You grossly misjudge the size of the crytomarket in general, and Bitcoin market specifically. The size has been much larger than you seem to think, not only during this craze, but it has been growing steady for years.
Yes, there are people that will pay you 30K$ (which is nothing) in a microsecond on any of the major exchanges.
To liquidate 400k in BTC is a no-brainer. Just take the major exchanges with SEPA and go. If you have worries then just test the liq process with smaller amounts.
What we're seeing right now is a shakeout of all those unsophisticated individuals who have been purchasing crytocurrencies in growing numbers, mostly without understanding them, and in many cases with borrowed money and even by taking out home mortgages.[a] Those unsophisticated buyers are the ones who pushed the price of Bitcoin from ~$1000 at the beginning of the year to $18000+ a couple of weeks ago.[b] Now they're surely wondering what the heck is happening to them.
The question is: who is buying? Remember, for every sale there is a purchase on the other side of the transaction. Trading volumes have grown from around US $2B/day at the beginning of the year to $20B/day right now, excluding Futures volume, which means that there are people or firms buying $20B/day of Bitcoin in the face of a substantial price decline.[c] Who are these buyers?
Sounds like gatekeeping. This isn't uncommon, I've done a fair amount of day trading and I've invested in many companies that I know nothing about aside from the numbers look good. They have healthy financials or it's a pharma company about to get a patent (protip: I know nothing about how they make it or any of the chemistry). That's how people are approaching this and it's/was growing. Now, I would say this is similar to betting on a penny stock that could basically go bankrupt the next day. I've received those letters, fun stuff but it's a gamble. Don't treat it as a 401k or a saving account, it's not. It's speculative 100%.
> American dollars have value because the US Government taxes things, like land, and if you do not pay those taxes they will send you mean letters (trust me) before resorting to other means (trust Al Capone). You pay these taxes in US dollars. You just having dollars does not make them valuable. And dollars are not valuable because they are backed by gold or silver or sea shells. What makes dollars valuable is that the government wants them back.
Ways to destroy the US dollar value: Destroy the US tax collecting power, or have the US ask for taxes in a different currency. If the US started collecting taxes in Euros, the value of the US dollar would disappear instantly.
The US is a strong entity and has no incentive to ruin the value of the dollar. It will not start collecting taxes in Euros. Or Bitcoin. Why would it give all that power away? More likely is that Bitcoin gets made illegal or very difficult to use. At the end of the day, if you have US-protected assets, you will have to pay US dollars to the US gov and this will continue to give USD value.
Bitcoin has no such strong-entity backing, so it has no fundamental value. Bitcoin people are obsessed with the idea that mere possession is important. It's not. Ask people with loads of marks or Zimbabwe dollars.
Bitcoins' value is the inherent mathematical properties that makes it hard to forge. things that are hard to forge can be used as tokens for other, easier to forge (but valuable) objects.
hard to forge tokens can be used to denote things that are otherwise used to denote (such as ownership, and chain of custody).
being electronic, this makes Bitcoin quite useful.
Things you can walk to a shop to and buy things with.
Things employers will pay you for.
Things that are backed by a government and guaranteed by a national bank.
Things that are protected by laws and monitored to prevent large value shifts.
Things that can be transferred in many transactions (like, more than four per second)
Things that don't need the energy production / consumption of a small country just to function.
Cryptocurrencies can have all that, but they need to have a high transaction volume (tens of thousands / second), regulation, protected / monitored exchange value, etc. Which defeats the original purpose of an "open source", unregulated currency.
The cowry was used as an international currency for thousands of years and wasn't backed by any government. All it was was seashells that were a limited supply resource. In major usage, it was used all the way from Africa to Hawaii. I think most people look at currencies with an incredibly narrow view of history.
^ Worth noting, that this is relatively modern history. It's usage stopped as a currency in the mid 20th century. At the beginning of the 20th century, some african countries still accepted it as taxes
> Things that are backed by a government and guaranteed by a national bank. Things that are protected by laws and monitored to prevent large value shifts.
I'm no crypto-anarchist, but plenty of currencies do not meet this definition, and have failed as a result. Indeed, it's a time honored method of spurring growth to simply create money, and it's a time tested cause of instability. Certainly a well managed central bank is an asset, but it's hardly a reliable method of keeping currencies useful. There are plenty of reasons to be concerned with bitcoin's deflationary nature, but arguing that it's not as inflationary as government backed currencies is an argument that can damage both side of this debate.
Currencies don't need fundamental value they only need to remain stable something which bitcoin utterly fails at.
You cannot invest into a currency. If bitcoin rises by 30% is there a corresponding increase in fundamental value real value? No. It's a zero sum game. If somebody wins that also means someone else loses. It's pure speculation yet people treat it like a get rich quick scheme and think bitcoin cannot ever fall in price.
On the other hand you can invest into a stock. A stock will increase in price by 30% because the company has made 30% more profit or owns 30% more assets. Everyone who holds stock wins.
Government backed currencies have value based on the network of people that use them. Theoretically, if Bitcoin was ever a currency, it could have the same fundamental value once millions of people used it for every transaction in their lives.
Why can't it be both? If you educate yourself about how cryptocurrencies work, you will see there is a lot of fundamental value. There is also obviously a bubble on top of it.
But it's not like those aircraft carriers are going to show up if someone doesn't take your dollar. State backed currencies (backed by state backed armies) have failed plenty of times. History is dotted with governments who suffered by poorly managing their currencies, no matter what their military power.
Like all dollars, yen, pounds, euros, silver, metal and gold?
None of these things, paper or earth metals, really have any intrinsic value. You can't eat gold. You can't put euros in your car. I guess you can burn money to keep warm, which is what happened to German Marks once people lost confidence in their currency prior to WW2.
The value of money is based off belief systems. When a very large scale economic or state collapse happens, the most important thing to have are a community of people around you who believe in each other.
> When a very large scale economic or state collapse happens, the most important thing to have are a community of people around you who believe in each other.
But isn't that one of the hopes of cryptocurrency -- that it can survive a state collapse, because the relatively normal currency manipulation leading up to said collapse would be less (or not at all) viable? I feel like that was the spirit of OP's tongue in cheek remark and it's going over everyone's heads.
Also (this is pedantic) but many metals _do_ have intrinsic value (ex copper wiring or gold plated connections). It's slightly meaningful because (among other things, like its relative scarcity) has helped those metals be used as relatively stable currency in the past.
> But isn't that one of the hopes of cryptocurrency -- that it can survive a state collapse, because the relatively normal currency manipulation leading up to said collapse would be less (or not at all) viable?
I've always wondered about this argument. It seems to me that a state collapse would be accompanied by the collapse of things that make bitcoin possible: electrical grid, Internet, mobile networks, and so on.
That's definitely a good point and I think it would probably apply in some cases. From my standpoint I"m most interested in the leadup to a collapse where governments start manipulating currency to greater degrees, destabilizing the countries economy (to the eventual point of temporary collapse) further than it otherwise would. I'm not sufficiently well read on the subject to argue deeply about it, just always seemed like if cryptocurrencies were viable they could perhaps alleviate or improve those situations. Maybe modern Venezuela is a good example. I'm not well read enough on either topic to take a strong stance but if it holds water, it's always seemed like a very promising thing for humanity.
I remember when many alt coins collapsed in 2013/2014 one problem was that with miners dropping off, difficulty stayed. Many coins with longer difficulty adjustments couldn't get back to reasonable confirmation times.
So let's say BTC difficulty drops 10x (China cracks downs on farms or simply miners moving to a different more profitable coin, who knows)
Currently this would be ruinous, as difficulty adjustments are every 2 weeks, so that would be 140 days until things get back to normal.
Also, why does our currency need intrinsic value? It represents a debt owed and can be exchanged for things with intrinsic value. The reason dollars, yen, pounds, euros, silver, metal and gold have value is both a social and a legal contract. Cryptocurrencies may have some social contracts that give them value but they lack the legal contract. That's why I think they are doomed unless they open themselves to regulation.
You can use gold (and other rare minerals) in electronics and such though, which creates a demand, and a demand = value.
The demand for USD is cyclic in nature (IANAEconomist, I just made that term up), in that, I need money to buy food, my employer needs me to make them stuff, my employer's customers need my employer's product for their processes, etc.
Yes, but the dollar also has a very long history of being extremely stable. Said another way, the dollar has never had a 30% shock in a year (BTC did today...)
The dollar certainly has had 30% "shocks" in a year compared to gold, which is the usual standard. Most famously, obviously, 1971, but there have been more normal years with such changes as well.
You could also say that the US dollar is really backed by the US economy. Well, the US economy is S&P500 + a few percentage points. Well that has dropped, and gained more than 30% in a year as well (depending on the foreign currency you use to measure this, or if you're talking in gold price, we've seen 60% drops happen. Of course the S&P 500 is worth more than all the gold in the world, so ... this is a bit of an artificial thing to do. Truth is that if someone started buying the S&P 500 using large quantities of Gold, that wouldn't work, so perhaps that is actually right).
Shocks is between quotes because they weren't really shocks. Everybody in finance was perfectly aware of the "real" price for the US dollar, in 1971, but political hubris and re-election factors did not allow the government and congress to admit to this, until every other avenue was exhausted, including lying, cheating (not charging the same price to everybody despite their own laws demanding they do so), fraud, and so on.
Or to put it another way, one might even make the comment that the dollar lost such amounts against gold for the worst possible reason : a refusal by the US government to settle debt for the agreed price (specifically, as has come out, the refusal of the US government and the congress to honor the agreed-upon exchange rate the French government demanded they pay). Surprisingly when I tell my bank that my loan is now only against half my house, such flexibility is not extended to me, and congress in fact has laws preventing this ... weird, since they clearly see it perfectly moral & valid to do this themselves, and even to do it to pay off (their favored) banks.
30% changes in the value of the dollar have happened before, and in all likelihood, will happen again. Granted, it's been a while.
The only thing you cannot do with bitcoin is pay taxes directly. You can do that indirectly by trading your bitcoin for USD. There are a lot of different goods you can buy with bitcoin, some of which you cannot buy any other way (many are illegal but that is a different matter). Bitcoin is traded for other currency all the time.
I tend to believe those who say bitcoin will not last are right, but right not it is a currency. Not the most useful one, but there are countries with a real currency that is not very useful.
That's like saying I can pay my taxes in barrels of oil, I just have to sell them first so that I can pay in my government's currency.
Like, what accountant would be capable of planning finances for a business where every single liability is denominated in a super-volatile asset? The whole thing is nuts.
People rarely do this. However a lot of accountants do this.
Nearly all large and even mid sized companies have customers who use a different currency and have to deal with it. Big companies hedge foreign currency risks. It is common for the press release for a companie's earning to say "we made $x per share driven in part by foreign currency values and ..." Which is to say when looking at a press release they believe their investors (perhaps a legal requirement?) will want to know that a significant factor wasn't sales but just currency trade.
Now bitcoin is super-volatile. That isn't relevant to a general discussion, but it is a major factor when discussing bitcoin in specifics. There are other foreign currencies that have similar considerations at times though, it isn't unique to bitcoin.
Euhm, almost every single country on the planet ? (granted, one or two exceptions)
Even the value of the dollar is significantly in the social contract with Saudi Arabia (not sure if "social" is the right word, but it's definitely not legal, as both sides are sovereign and thus free to change any law or contract between them)
Seems to work well, for the most part. Granted, on occasion disasters happen.
"This page (https://www.coinbase.com/dashboard) is currently offline. However, because the site uses Cloudflare's Always Online™ technology you can continue to surf a snapshot of the site."
If only the coins were the only things that continued to crash in this saga.
I find the cynics much less tolerable than the crypto-evangelists. HN is a haven for them: bitter, jealous people who never miss an opportunity to trash crypto when it's up or mock it when it's down.
This likely isn't the end of Bitcoin just as its numerous other 30%+ corrections didn't stop its rise. Whatever happens, I'll be proud to have participated in such an important new technology while avoiding the leagues of cold and timid souls who jeered from the sidelines.
I guess, but unless you bought in past few weeks, you’re still way up. This is more likely a huge payday for those who held long and liquidated at year end.
Yes, I assume the price drop is due to people selling off their positions, which is also known as “cashing out”. The “smart money” moves in at the bottom of the sell off, if you’re bullish on BTC.
Hindsight will tell how much cynicism was warranted, but given the historic exponential volatility anybody who invested and liquidated at opportune moments were probably just lucky.
Nothing wrong with taking risk, but dont pretend you're not gambling.
Considering that almost the entire time since the inception of BTC has been a “good time to buy”, and considering the price today is still twice or more what it was in September, I don’t really follow your logic. I don’t own any BTC, for the record.
Funny thing is not many that bought for 15k will sell below that, so price will drop (as did few times before, when bitcoin experienced rapid appreciation) but it won't drop to the before-bubble price but slightly higher.
It will either very gradually climb from there or stay steady for 3 years or so and then experience next crazy ride up.
Then most of the guys who bought for 15k will sell.
The point is, people buy bitcoin with money they don't need anyways so they can go long and most of them will because bitcoin apparently can't die no matter how many bubble popping it experiences.
I think this might explain short term behavior but not the long term one. The same argument applies to beanie babies and other speculative bubbles that eventualy did crash.
Funny how any pro-bitcoin comment immediately attracts downvotes. I'm considering posting opposite of what I think about bitcoin to get those sweet, sweet upvotes. :-)
Meta: but this is probably one of the rules I've broken most frequently.
Most times not because I was downvoted (and then only to ask for an explanation IIRC) but because it seems like people are misunderstanding or IMO abusing the downvote feature.
I've been avoiding buying for this very reason. I know bitcoin well enough to know it's going to crash, it's always going to crash, so never touch it on an upswing.
Buying it now is fairly reasonable. Though, I wouldn't be surprised to see it crash yet again, even harder, but it felt like buying on that upswing to 20k was suicide.
I'd wait few months. If it is actually crashing not just backing up before next silly raise then you'd be better off waiting till it settles after the crash. It usually takes few months or a year.
If you don't want to gamble, bitcoin is rather long term investment.
I opened a bank account for BitCoin and put less then $100 into for investment. No way would I ever connect my real bank account to any crypto currency wallet.
Anyway I invested the $100 and I am down, but whatever it's like going to the casino and gambling/losing it all.
Technically true, no matter what you invest in and for how long, but I suspect casinos would be less thrilling places and caused less addictive costly behaviors if you had to wait for the outcome of your gamble few years.
To be fair, it probably will be pumped to $50k some time in the future (before crashing again). It's what Bitcoin does. After ten years, it's all it does.
In 2011 (or something, I'm going by memory) it rose to $30 before crashing back to about $5. In 2013 (still the days when all people had to do was spam a few forums) it reached $10, $100, $200 before stagnating until MtGox and Willybot pumped it up to $1k.
ISTR some people back then were predicting $10k BTC by the end of the next year (end of 2014). Instead it was about $500 or something, and BTC didn't reach $1k again for about three years (the start of this year or end of last year).
I think this latest pump brought in a lot of Regular Joe speculators. Not sure if that can be repeated again, but I guess all those Regular Joes now have Coinbase accounts, so maybe.
Looks like people have already started buying the dip.
I've found the recent discussions around BTC and cryptocoins on this forum incredibly illuminating, from both the bulls and the bears.
I'm beginning to think perhaps there's no point in discussing the fundamental financial flaws of cryptos, or their lack of inherent value. I'm beginning to think their main utility in is meeting a human need that's existed since antiquity - the need to gamble.
As long as a solvent exchange remains, and another ready to come along when it fails, there will always be large numbers of folks entering the casino.
Perhaps the only thing that can stop it now is strict government regulation.
Most people here seem to be completely oblivious to the movement behind Bitcoin and what it means for the world as the antiquated financial systems are replaced with people in control of their own money. The fact that everyone is so fixated on price shows the lack of imagination and forward thinking about what is coming. You call it gambling, we call it being ahead of the curve when the rest of the world only wakes up. I've come to believe the HN crowd for the most part cannot comprehend what is about to happen to our financial, political and technological world. Entire industries are being revamped while the hackerpeneur is blinded by Bitcoin fog. You are correct, there is no point in telling a banker he is about to be unemployed.
It's a fairly standard order book view, with a nice log of trades on the right hand side. For most real exchanges (eg ones trading shares or commodities), this view would be impossible without some kind of downsampling as there would be too many trades/sec to display in real time. Your monitor probably isn't fast enough, let alone your browser rendering stack.
Oh the log is cool but I was more specifically referring to the order book with the spread, and the "green on the left, red on the right" view in the middle that shows the market.
I would like to see such a view for regular stock markets but I don't know where to go. The stock exchange interface of my bank, for example, is far from showing such a nice thing, only a bare order book with only a few lines.
It's sometimes called "level 2", stock markets do charge fees for access to the feeds - at least the LSE did when I worked on a site that showed the information :)
It's got order books and charts for quite a few coins and exchanges, which makes it easier to see if there's a market-wide trend or just one coin/exchange fluctuating.
I'll bite, because I could use more insight. As far as I can tell, he references daily bars—to see the effect that you referenced, I had to reduce the bars to ~ 3 - 15 minutes.
Otherwise, the pattern looks quite the opposite to me. Am I missing something? If not, could something like that somewhat reasonably be applied to trading at that time scale? Seems like a good way to never get any sleep!
I just tend to recognize the patterns in any timeframe. They're everywhere. If I were a day trader, that was a trade I would have taken, but I don't have the patience to sit and stare at the screen like that all day.
I'm reviewing the whole thread and impression is that there is not too many daily stock traders on here, like myself.
First thing when something like this happens you look at volume. Volume. Volume. Volume! Clearly its not here! It is not even half of that from the rally up 10 days ago (looking at ETH now). After such rally this tells you 2 things: 1) not enough people believed in ETH at $800 so they didnt line up from 500-800 with "buy", 2) since volume is medicore, this is not a panic selloff, but rather regular selloff that didnt capture enough support on its way down BECAUSE of #1.
In my PERSONAL opinion this is great opportunity to catch some ETH cheap. But how cheap at this point doesn't matter because all crypto has like what 60% volatility. This situation tells me ETH was immature to remain at $800 (long term, short term who knows that would be like looking into crystal ball but we been there before with bitcoin touching $1k and crushing badly before it was 15x that) but looking at last 30 years of trading, that doesn't mean you will buy it for $10 anytime soon.
As always don't make any decision based on my personal opinion as this is not professional financial advice.
EDIT: one more thing about #1. Since it was 150% in few days rally, I don't consider lack of strong buy between 500-800 as a sign ETH should be much cheaper. Its just that the whole rally up did not mature enough thru the time. I mean normal stock doesnt go up 150% in few days so different rules apply here :)
Yes, illegal activities, you're right. But betting on something as famous and easily accessible keeping evading law for a long time is a risky bet.
As for "Evading currency control" it doesn't mean anything for individual, i'm sorry (unless you're an autonomous region trying to get rid of central bank policy, but i don't think any has adopted bitcoin yet)
It's risky and I wouldn't recommend betting on it, but file sharing and drugs haven't gone away, despite the government fighting them for many years. The exact mechanism for trading bits over the Internet that other people don't want you to has evolved since the days of Napster, but music and video for free over the Internet are more accessible than ever. The other example is the War on Drugs, and we're right in the middle of an opiate epidemic, so you tell me how well that's going.
Bitcoin is backed - by the opposite of the government - the DEA keeps cannabis, cocaine, and heroin illegal, which means that Bitcoin is actually useful for moving money around for drug dealers and terrorists; anyone who can't use the mainstream banking system due to prohibition by the US government. (North Korea is another example of who's not allowed to bank.)
However, this does not let us calculate how much a Bitcoin should be worth, it only allows us to say that there is actually a use for Bitcoin, and it's not purely speculation.
I feel like this may have been the last upswing this big. A lot of regular folks are going to get burned, and they're not going to forget. The societal consensus 6 months from now will be that Bitcoin Was A Scam, and that'll depress speculative potential.
Which is a good thing, insofar as Bitcoin may actually have a future as a currency. But a bad thing for HODLers.
a similar but much more pronounced thing happened in 2013 when MtGox was hacked and the Bitcoin price crashed. people will rush back in to try and make a quick buck
What you're really asking is "does anyone think that $19k for Bitcoin is undervalued?" And there are certainly people who think that.
So what is the fair value of Bitcoin? Well, it's a new economic idea [1], so there's not a lot of prior art to gauge here. There's no P/E ratio, no rent/price ratios, nothing of that sort to give you at least a baseline feel for "does this seem frothy?"
Indeed, its value is ultimately based on projection: whatever you think Bitcoin could do, what values it might have, that's the valuation you're going to give to it. And people have given really daft ideas of its value: I've seen someone seriously argue that Bitcoin is useful for people who lack phones or internet. Other people argue that $19k is cheap, if Bitcoin somehow replaced all fiat currency. So there's no shortage of people willing to bid prices higher, and that's not counting speculators hoping to make money on a "free" get-rich-quick scheme.
[1] I say this as someone skeptical of high valuations of Bitcoin. Just because something is new and transformative doesn't mean it's valuable--just ask CDOs.
A lot of people? People continued to buy all the way up to 19.5. The thing about Bitcoin is, almost everyone expected a drop, no one knew when or how high it would go before it dropped... or how far it will drop.
Everyone also expected it to drop at 5k, 10, 15k and it just didn't happen to a large extent. I stupidly bought in at 10k and got lucky to make some money but others stupidly bought in at 20k.
The only thing definitive about Bitcoin is that it will go up..and down. Claiming to know how high, how fast, or how low is BS.
One of the infuriating things about Bitcoin is that there's no reason 19K couldn't be the new normal. You don't have to trade in whole Bitcoins, so high prices just mean people trade in smaller fractions and low prices just mean people trade in higher numbers, unlike a stock where you might want to do a split to make it easier for people to invest.
Wrong. Bitcoin has a lot of fundamental value - value in scarcity, future price projection and potential to become better via cheap and fast transactions. Those who claim Bitcoin costs a lot to move clearly hasnt used a segwit address. Once segwit is adopted across the board mempool will clear.
In fact, Bitcoin has so much value that 5 years from now 19k will look like bargain of the century. People just can't seem to see the true potential of Bitcoin and ultimately blockchains.
USD aren't valuable because they have a fundamental value, either. Personally, I think the "you have to pay taxes in USD" argument is stupid; it doesn't factor into my daily thinking and I doubt it does to many other people's.
They're valuable because literally everyone I interact with treats them as if they were valuable. If that changed, I'm sure USD would quickly become worthless.
You can say there's no difference between USD and BTC, but there's some difference between "a million people think they have value" and "three billion people think they have value".
I wanted to short bitcoin, I predicted a price correction of -50% after the CBOE and CME futures came online, and well, here we are. Unfortunately I can't post 200% margin even on a 20k contract :(
edit: The futures markets may not have even been the catalyst for this drop, more likely it's this: "The market has also been artificially pumped up by Bitfinex and their money printing machine Tether."
I've been looking into it after hearing a few thoughts this morning. I think its even more likely that:
The timing of increased volumes and the beginning of bulk selloffs times pretty closely with the announcement of a large hack in South Korea — and exchange called Youbit. They've completely shut down. South Korea is a huge market.
> The South Korean National Intelligence service believes that North Korean hackers were behind that attack, as well as a separate hacking of South Korea’s largest exchange, Bithumb, back in February. The Korean Internet and Security Agency is currently investigating Youbit’s most recent attack.
Is there really much there is to expect though? Bitcoin's value has no real basis one way or another, since all the purported practical uses have fizzled out once the network became incapable of actual commerce due to various factors like transaction fees, price instability, processing delays, etc.
So I guess by now, Bitcoin crashing by 50% is as surprising or unsurprising as Bitcoin growing by 50% instead. So I'm not sure if you could really expect the crash, since that expectation requires understanding the unknown speculation mechanism that currently drives it. Though in the future some analysis in hindsight might tell us how to explain what market psychology is currently influencing the price.
Yes. https://news.ycombinator.com/item?id=15984381 (This commenter at least hedges at the end, but this kind of reasoning could be found all over the relevant sub-reddits and other corners of the internet this week. Every bubble has a "this time it's different" motivated-reasoning thing...)
Edit: Here's another from the same thread, with a motivated response to "sell when the shoe shine boy gives stock tips" on why "this time that's different" https://news.ycombinator.com/item?id=15983811
I used to ask others in last few months, at what point would you be comfortable buying?
Is it 20K, 15K, 10K, 5K, 1K, 500$, 100$, or 50$? or less?
See, the story changes, what was nice months ago now is an extremely high risk.
Myself, I probably woudln't buy unless it's under 100$. Even that is questionable. Reason being, blockchain is a pipedream and BTC is a dinosaur within that dream. What future BTC has but speculation?
Out of curiosity, why is blockchain a pipe dream? Am I missing something?
My answer to your question is: I'd buy at any of those prices. Just never on an upswing. This is because I believe in the technology, but the very nature of it means it's volatile - so buying on an upswing is just going to hurt you. There's always the risk of not knowing where the upswing is, ie this downswing might not be the real downswing - but nevertheless I believe my point stands.
Note though that I don't view these coins as value holders. I'm not a fan of the idea, so far at least, I vastly prefer transaction coins and coins that are a means to a feature, like storage coins. BTC is not that interesting to me, despite it's popularity, because just being a store of value isn't a big enough selling point to me.
Note that I'm not saying a store of value and/or BTC isn't inherently valuable, I just dislike a store of value because anything can be a store of value. So if the public decided tomorrow to use another store of value, BTC would be worthless. Unlike a coin that actually does something, like Filecoin, where the value in the coin will be derived from the usefulness of the coin. It seems less arbitrary, to me at least.
This. Who cares if it's $100, $10000 or $0.10? What matters is the price it will have, and yes, that is all just speculation, unless you have a crystal ball that actually works.
What is great/weird/... (select according to your opinion) is that the gains were huge in the last year.
There are better things to spend on if you can only afford $50. For example, food and clothes. Buying Bitcoin is no better than buying a scratchoff lottery ticket until the price stabilizes. At least the ticket pays for part of someone's college education.
I think sub $5k is a reasonable reentry though I still expect it to go down from there.
My theory is this:
I think the last time bitcoin had reasonable organic growth was when it was around $300-500 post Gox.
The reward halved so you’d naturally expect the price to increase from there, so let’s say $800-$1200 is reasonable to be generous.
Now you’ve got a bunch more infrastructure around it and more awareness, so double it or triple it from there— so $1500-$6000 or so seems like a plausible range. I suspect the price in the near future is going to be on the low end of that and stay there for a while.
People keep thinking it’s going to revolutionize entire industries when really it’s a highly limited and inefficient database technology that no one who isn’t trying to make a buck would suggest using for data storage unless you have the very particular constraints of something like bitcoin.
There’s lots of mature, versatile database options out there: Postgres, SQLite, BerkeleyDB, and countless other NoSQL and CQRS solutions. Blockchain does one thing well, its immutability and intractability are not well suited to many applications.
It's like "machine learning" and every other buzzword. People expect "machine learning" to just solve all the problems in every industry. It's great tech but it has limited use cases.
You are comparing apples to... potatoes? The whole point of blockchain is that it is immutable and intractable. It doesn't try to be a DB, except maybe in some abstract sense. Whether it will revolutionaze industries or not remains to be seen, but dismissing blockchain as an inefficient DB is simply misguided.
While cryptocurrencies price is clearly decoupled from any real work value. However, I'm really can't imagine what a realistic endgame will look like. Even if the bubble pops completely and Bitcoin goes to below $100, I am somewhat certain that the game will restart. There are enough believers to keep this going as a Ponzi scheme machine till the technology has matured enough and it's actually useful. If not that I expect it to longer around as some shady, mostly illegal gambling thing.
I blame Bitcoin Cash. But to put things in perspective, the crash wiped out like three weeks of gains. So this is just a counter part to the Bitcoin going through the roof article.
BCH is the catalyst but not the direct cause. It's commonly agreed that BTC price was a bubble. Bubbles need an event to pop them. Coinbase opening support for BCH was that event.
Not saying I agree or disagree, but what's the relationship here between Bitcoin Cash (Bitcoin Crash?) and the drop across the board?
If capital is moving into other currencies, it must be a small percentage of the capital, since the others aren't exactly rallying either. Capital's running for the hills.
Just sheer speculation. I was kind of assuming that when Bitcoin Cash hit Coinbase, everyone was looking at it as free money and looking to sell. Because everyone wanted to sell, coinbase didn't open it up, people were getting frusterated watching the price come down and unable to sell. So they started selling other stuff. Again total speculation. I've joined the tin hat club.
This is why you buy over time, and not in one go (dollar cost averaging). Your gains are lower than if you coincidentally managed to buy at the bottom, but you won't be affected nearly as hard as if you put all your money in at the top.
Does this suggest that people are dumping to fiat, rather than other coins? There was speculation that the reason Ripple shot up recently was because people were buying it with Bitcoin, however virtually everything is down at the moment.
"price" doesn't really describe this concept well. It's more like .. trying to judge the value of your laptop, by looking at what identical models have sold for on ebay.
This is where the "supply vs demand" adage comes in. If there's 1000 copies of your laptop on ebay, and one person trying to buy one, then its a buyer's marker - the cheapest auction sells, and the market value of your laptop just fell.
But if there's thousands of people trying to buy one or two copies of your laptop, then its a seller's market - the highest bidders get their laptops, and the market value of your laptop rises.
So (ignoring deprecation/inflation) your laptop didn't actually change. Its intrinsic value, if any, didn't change. But the market's position towards your laptop did, and how much you believe it'd fetch at auction right now, did.
If the last traded price was 20k, then that's the price. If you have some btc and are looking to sell really quickly before it goes down, and I make a buy offer for 19k that you accept, then the last traded price is now 19k, and that's the new price. Nothing voodoo really, just a bunch of people making buy/sell decisions based on how they think the value will move.
You can see the ones happening on GDAX on their main page, https://www.gdax.com/trade/BTC-USD
If it seems ridiculous to look at this single exchange's order book and extrapolate a whole market from that, yes, it is.
The past few instances this has happened tended to follow some big news stories, like China banning ICO's or SK banning cryptocurrency exchanges, or the (falsified rumour) news Vitalik Buterin had died, some inflammatory SEC actions, etc.
People panic sold on a lot of that news. As good news came in, like the reversal of those decisions the price recovered.
This time it's bizarre to see, especially after the Goldman Sachs announcement yesterday. There hasn't really been much other news the past few days. Considering everything is down in almost equal proportions, it certainly looks like something else is at play. Panic selling piled on top of ___?
So the weird moving green and orange bars in the middle of the screen are the order book. Green is the 'buy' side of the book and orange is 'sell.' Buy and sell orders get matched, the sale goes through and both the buy and sell order disappear from the order book. If there's more demand to buy then the green bar starts eating into the orange section and pushes the price up. Vice versa in a crash, and it works the same way for stocks.
And you can see that the orange and green sections are cumulative. So if the price right now is $12000 I can scroll over $12,250 and it'll say something like 280 BTC, that number is how many bitcoins I have to buy to eat the order book up to $12,250 (which makes that the new price).
Bob has $995 and places an order to buy 1 BTC at $995
Alice could wait around for someone to make a better offer, or maybe she needs $ for christmas presents NOW and lets it go for $995, at which point the price becomes $995
The listed price is the valuation at which the last transaction occured.
Market manipulation. The prices are really set by the coin exchanges; what they are willing to take/pay. They're all really competing with each other on the best prices for BTC. All of this becomes a feedback loop.
A lot of people I talked to really believed prices were being driven by some kind of market manipulation. Either within the coin exchanges or people who were finding a way to manipulate things on the blockchain.
There was this post not too long ago about how someone might be stealing coins using well known keys:
I believe that if you truly understood how exchanges work, you wouldn't hold this belief. I guess I should elaborate. You may know some of this but you likely don't know all of it.
There are two types of orders: LIMIT and MARKET. Limit orders get added to a list. There is a list of standing BUY orders and a list of standing SELL orders. They are standing/LIMIT because no one has taken them up on their offer. For example, I can enter a limit order now: "I offer to buy BTC for $500."
You can only enter a LIMIT SELL order at 1 penny above the highest BUY offer or higher. Conversely, you can only enter a LIMIT BUY order at 1 penny below the lowest SELL offer or lower. This is because when you TAKE an order that already exists on the book (the lists), you execute a MARKET order, not a LIMIT order.
Executing a MARKET order means that you "eat up" the book/list until you have reached your order size. So if I place a market order to buy 3 BTC I will progressively buy BTC at higher and higher rates from the standing limit sell offers until my order is fully filled.
That is how an order book/market actually works. Now enter your claim:"Market manipulation. The prices are really set by the coin exchanges"
What exactly would this entail?
I guess you suppose that Coinbase simply increases the price of Bitcoin on their website, and pockets the difference between what people pay and what they acquire them for. Clever!
But wait a minute, in order to increase the price, they have to eat all of the orders between the starting price and the finish price. Otherwise people would notice that the price moved over their order without filling it, which should never happen, and which would thus prove fraud, which would probably completely destroy the company.
So Coinbase, knowing this, decides to eat up all of the orders from the original price (let's say $15,000) to the new price they want BTC to cost: $20,000.
In order to do this, Coinbase has to OVERPAY for every single coin they buy on the way up. There is a fair market price, which is what you can expect to get when selling a coin, and you would have to agree to pay above this price for every single coin in order to manipulate the market. As a result, your attempt to manipulate the market would almost certainly lose you a massive amount of money. The order book has a lot of orders in it. This appears to me to be one of the stupidest things anyone could ever try to do. It would move the market, but it's not clear that there's any reason to believe that it would be anything but massively unprofitable.
Imagine walking into a gold market and offering to buy all the gold that's for sale at higher than the current fair price. Wow, what a clever strategy! Surely you'll make a killing!
Whether it makes sense to you or not market price manipulation absolutely does work as shown by hundreds of lawsuits filed by SEC every year.
>The order book has a lot of orders in it. This appears to me to be one of the stupidest things anyone could ever try to do. It would move the market, but it's not clear that there's any reason to believe that it would be anything but massively unprofitable.
Given enough cash/coins you can easily manipulate order book (see "wash sales"). Even easier if you are running an unregulated exchange, duh!
The goal of bidding price up is to attract buyers and establish an upward trend, which later you can sell into at a higher price. Works even better when it causes a "short squeeze".
Works in other direction too, obviously. All this is rather pretty basic and also highly illegal in _regulated_ markets.
You're missing the fact that an exchange can execute trades where they're both the buyer and the seller, and so they don't end up spending anything overall. Illegal on actual stock markets, but very easy to do in the murky regulatory environment that exists around cryptocurrencies.
If you looked at all of this objectively it was clear it was coming. What is alarming we have not seen yet is one of the larger exchanges shady behavior become exposed (hello Bitfinex). I still think this is coming and will likely make the fall even worse (oops we're out of money!). In the past sharp BTC movements have been triggered by external events.
“Hey, our currency dipped 20% today. And swings any number of percent each way daily. You know, like Zimbabwean dollars and the like. Don’t worry, it’s value will only increase in 2018”
People are delusional (except those who scam people out of their money)
I think the bubble is starting to burst. When just adding something related to crypto currencies in your company name can result in a 500% stock increase https://www.marketwatch.com/story/long-island-iced-teas-stoc... you there is a bubble. That like adding dot com in the dot com bubble or a tech sounding name in the early 80’s.
Cboe & CME must have some extensive performance clauses with exchanges used for futures pricing. A few weeks ago, selloffs like this would result in exchanges closing.
I never invested in Bitcoins. I've been asked by many people the past few weeks whether or not they should invest - truthfully, I told people not to and wait to the current "wave" of popularity was over.
I genuinely don't know that much about speculation in currency, but is this "burst bubble" really it this time? Is this supposed to be the actual end of actual value for Bitcoins now?
Bitcoin has "died" hundreds of times. Here's an article discussing its doom when it dropped 50% (down to $108) back in 2013: http://nymag.com/daily/intelligencer/2013/06/bitcoin-sees-th... It has been the same technology since 2009, regardless of the market around it. I think that there is real value in that technology. The world is trying to measure this value, and having an awkward time of it. Let's check back in 10 years. :)
This time I think we’re done for the year. Unlike in July, this time if you look on Reddit there is very little appetite in ‘buying the dip’. People are fed up after the Coinbase shenanigans and are wary about Tether, IOTA, etc.
When you cannot really have a way to value something, I don’t think the world has seen a class of “investment vehicle” like this since the subprime packages that were being sold
Many people are writing this, but... if you had money to buy this dip, why didn't you buy at the exact same price two weeks ago? It wasn't exactly "long" awaited.
If you believe in it and are long. Yes, buy (be greedy) when others are fearful. If you're trying to time the market for short term gains, I'd skip it. You're just going to get skinned by the big players doing the manipulation unless you're lucky.
I think big manipulations were already happening. That's why we saw the price driving up.
With a currency so based around absolute mathematical constants, with just a little coin and testing, it'd be a really easy system to manipulate as well.
PS: why is this getting downvoted? Is the bitcoin mania so high now even in HN that people care more about short term financial gains than the environment?
It was almost as if the entire cryptocurrency space had turned into a huge unregulated casino.
I was at a couple of Bitcoin meetups recently and was surprised to find that most attendees were proudly saying that it doesn't matter if they understand how the technology works. It's one thing to not understand what you're gambling with, it's a whole another matter if everyone is actually proud about their very ignorance and even thinks of their ignorance (yet I'm still making money!) as being clever.
Unlike what some people pointed out in this thread, the price going down is not from people who got rich quick and sold. It's a panic sell.
That's what happens when you gamble with something you don't understand.