Crypto-currencies have lost 30% of their value in the last 3 weeks | Hacker News Reader

Crypto-currencies have lost 30% of their value in the last 3 weeks

coinmarketcap.com

93 pointsjatsign101 comments

Gold, which is possibly the oldest store of value used by civilization, is just as volatile.

The inflation-adjusted price per Troy ounce of gold went from a high of around $2400 in the the late 1400's, to a low of $200 in 1919; then, it rose in fits and starts until it peaked at nearly $1600 in 1980; it then declined, again in fits and starts, until it bottomed just below $400 in 2002; then it rose to nearly $2000 in 2012; and since then, has dropped to just over $1200, today's price:

   1490   1919   1980   2002   2012   2017
  -----  -----  -----  -----  -----  -----
  $2400   $200  $1600   $400  $2000  $1200

The price of gold is unstable over shorter time frames too. For example, since the start of last year, the price has oscillated between just over $1000 and nearly $1400 per Troy ounce.

This kind of volatility seems normal for assets used as a store of value.

Sources:

[1] http://www.zerohedge.com/news/charting-price-gold-all-way-ba...

[2] https://en.wikipedia.org/wiki/Gold_as_an_investment#/media/F...

[3] http://www.kitco.com/charts/historicalgold.html

Except that during crisis Gold is guarantee to fall back at worst to it's "practical" value as a metal being used for jewelry. Even tulips bulbs have a practical value as every gardener could tell you.

However the practical value of a crypto currency is zero. And no technical small talk was able to contest this truth so far.

EDIT: Downvote what you can't contest, how mature!

* I can buy a new Dell laptop with Bitcoin (https://blog.dell.com/en-us/we-re-now-accepting-bitcoin-on-d...).

* For that laptop I can buy Windows with Bitcoin (https://support.microsoft.com/en-us/help/13942/microsoft-acc...).

* I can book my holiday with Bitcoin (https://www.cheapair.com/help/payment-and-billing/what-is-bi...).

* I can donate to Wikimedia with Bitcoin (https://wikimediafoundation.org/wiki/Ways_to_Give#bitcoin).

Can't really do any of those things with tulips or gold. This is just a small set of places where I can do purchases with Bitcoin.

As for currency, sure a tulip has practical value. But does a $100 bill? You can roll it for a cigarette or it can give you 5 seconds of warmth if you burn it. But that's about it. The reason you have all your savings in $ or € or something else, is because we all as a society say "this piece of paper (worth less than a cent in materials) is worth $5, and this one $50, and this slightly bigger one is $100". Same with crypto-currencies.

You're agreeing with him.

Gold and tulips are commodity currencies, they have value outside of their uses as a currency.

The dollar and bitcoin are not commodity currencies, i.e., they have no value or use outside of their use as currencies.

Whether bitcoin can be called a 'fiat' currency is debatable because it's not a currency "by fiat", though "fiat" currency has come to mean a non-commodity currency.

I see now that I misunderstood his point.

Buying something with something else is not a "practical use". Practical use means that you can actually build or make something of value with the product in question.

The prices for all of these things are almost certainly based on the conversion rate between Bitcoin and the US dollar (or other major currencies). If Bitcoin massively deflates you may be able to still do those things, but it will cost many more Bitcoin: that's the whole point of this discussion.

Yes, a $100 has no practical value either. But it's the official tender of the US government, which means that the US government does all of its spending in US dollars. Contracts, paying its employees, etc. The US government (federal, state, and local) spends a significant chunk of US GDP, i.e. a significant chunk of the world's largest economy.

A country's currency is understood to be tied to that country's economy and monetary policy. As the economy is larger and the policy decisions are protected from craziness by checks and balance, currencies tend to be volatile only to a certain point in practice.

This is even more true when you live in said country: if you live in the US, even if the US dollar is inflating considerably as measured against foreign currencies, the inflation of the dollar on the local economy is generally less. US annual consumer price index inflation has only cracked 10% for the year a handful of times in the last century.

I see your point, and I see I misunderstood the OP's point too. Thanks!

You are required to pay taxes in your state's currency. You can't really buy much with Bitcoin when it tanks, because all of those stores are just using the current exchange rate with state currency.

Gold has industrial usage as well - electronics, computers, even in space tech Gold it's used for it's unique properties.

I don't get why crypto keeps being compared to a metal.

Even fiat currency has intrinsic value. The Zimbabwe bills that were inflated to hell and beyond, then replaced, which aren't even legal tender any more, still have value as collectible notes. You see them on eBay all the time for a buck or two.

Nobody will pay anything for your Bitcoin wallet if Bitcoin fundamentally fails, just as nobody will pay for your World of Warcraft gold when the pull the plug on the last WoW server a decade or two from now. It's just a bunch of useless numbers.

If you're "investing" in crypto, that is speculating, then fine. If you're thinking it's a safe and secure way to store money you're mistaken.

> I don't get why crypto keeps being compared to a metal.

Because Bitcoin was literally created to imitate gold, with the idea being to propagate crank goldbug conspiracy theory economics.

This is why the price is so volatile - as an imitation of the gold standard, bitcoin wants to be money but actually works like a commodity, with booms, busts and bubbles.

https://davidgerard.co.uk/blockchain/the-conspiracist-gold-b...

I understand it - even the term "gold rush" could be applied here, where people the get the fever and sometimes do irrational stuff to try to strike the good ol'gold nugget.

You can learn a lot from the psychology and sociology side of the Gold Rush event, and surely you can compare it to the crypto event (after all, that's what history is for).

But like you've said, Bitcoin was created to imitate gold... still it's not gold.

Unless said crises is global and the internet is dead world wide you would always be able to sell your cryptocurrency to someone in a stable economic market somewhere in the world. When the local fiat currency inflates to worthlessness cryptocurrencies shine.

I don't say cryptocurrency can't be a thing. If widely supported it can succeed as any other fiat currency.

It's just that I think it's nonsensical to apply analogy between gold/bitcoin because of the lack of practical value of BTC.

For instance if the Russian ruble lost 30% of it's value during late Cold War. Would you argue that it's like gold and that we should'nt worry? Well actually some people thought that way... and got burned.

Again I'm not comparing, I'am precisely stating that we should not compare crypto currency to previous markets. We should embrace the fact that we are totally in an unknown territory.

> We should embrace the fact that we are totally in an unknown territory.

Well, not really.

One, we aren't - hugely volatile charts like this are usual in commodities, which cryptos are constructed so as to imitate.

But two, when people start saying phrases like "a whole new form of money" or "the old rules don’t apply any more", people get gullible and the ethically-challenged get creative. And a whole pile of old cons come back into the world.

The best book ever written on Bitcoin is still Memoirs of Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay, and that was written in 1841. Chapter 1 on tulip mania and chapter 2 on the South Sea bubble will seem eerily familiar.

http://www.gutenberg.org/ebooks/24518

> you would always be able to sell your cryptocurrency to someone in a stable economic market somewhere in the world

That's a pretty bold assertion without any evidence or real theoretical justification.

"Unless said crises is global and the internet is dead world wide you would always be able to sell your cryptocurrency to someone in a stable economic market somewhere in the world." Its not true.

Dogecoin is an example.

I have Dogecoin! It's actually worth a few hundred USD at current prices!

I mined some for shits and giggles years ago.

you are right only silver and gold are money.

it should not be Bitcoin vs Gold, the real question is Bitcoin vs USD

Dinosaur, meet meteor.

Wait, what? BTC's dollar volatility is a lot higher than gold's, though there have been short intervals where it's slightly lower.

There's even a site for tracking it; can't link the specific graph, but you can go here and just turn on 30-day BTC/USD and 30-day gold/USD for the past year.

https://www.buybitcoinworldwide.com/volatility-index/

Volatility over 1 month is vastly more harmful than volatility over a decade. To the point where they are not meaningfully comparable.

Further, showing that the actual price is between 200-2500 over 500 years is awesome demonstration of Gold's stability. If I buy 20 million in gold I might not make money over the next 50 years, but I will still be 'wealthy'. Cryptocurrency's have a nasty habit of simply disappearing much like individual stocks they could be around in 50 years and might be worth significantly more, but that does not mean they are worth storing in a giant vault.

you know what is an even better store of value? Just buying across the S&P 500. Treasury bonds also work.

I can understand going for Gold or BTC if you do not have reliable access to US financial markets, but if you do have this, there's no reasonable financial argument for using BTC as your store of value.

If the dollar falls apart, you won't be able to use BTC.

There is no "better" or "worse". The S&P500 is less volatile than Bitcoin, the flip side of that is that historically Bitcoin has appreciated relative to the S&P 500.

Bitcoins are far more practical than an S&P500 ETF. For instance, I can carry bitcoins across a border, whereas if you want to move shares across a border it will involve a lot of paperwork -- if you are a US citizen it may be impossible due to FATCA.

> Bitcoins are far more practical than an S&P500 ETF. For instance, I can carry bitcoins across a border, whereas if you want to move shares across a border it will involve a lot of paperwork -- if you are a US citizen it may be impossible due to FATCA.

You seem to be comparing like what is physically possible with one with what is legally allowed with another; it's physically possible, and you'll probably usually get away with it, to carry stock certificates across most borders. Conversely, I haven't seen ant set of customs allowances which permit travellers to legally carry bitcoins across the border (and those rules tend to be “everything not specifically permitted is prohibited”.)

An element of volatility is time, so Crypto is not reallt comparable to Gold..

Volatility isn't particularly an issue with the store of value function of money; it is a problem for the medium of exchange, and, even moreso, unit of account functions. Those latter two functions are what distinguishes money/currency from any other durable asset.

Hopefully everyone looses confidence in mining and I can start buying cheap used GPUs.

Is it a good idea to buy GPU from mining farm? Surely it was overclocked and in bad thermal condition, so it could barely survive. I think, electronic circuits degrade in those circumstances, so this GPU won't last long.

Mining is about flop/$, rather than flop/s, so overclocking is actually rare. The best mining GPUs are the ones that are most efficient, not most powerful; overclocking usually trades efficiency for power.

Not true in the current environment. Right now pretty much everything is profit, so more hashrate means more profit, even if your electricity costs are higher.

Once AMD and Nvidia print enough cards to match demand though that'll change again.

I have mined, and know people who mine, and so while it might sound counter intuitive, have never heard of a card going bust.

The only card I did hear of was a gamer who didn't mine, and as other comment mentioned, it was RMA'd.

I ran a R9 380 at 80 degress for months >_< sold it but it still worked a treat.

Most GPU manufacturers allow RMAs to carry between card holders. If you own the card you can RMA it. Out of 1/10th the cost of the GPU, some paper work, and some time waiting for a package in the mail, you get a brand-new-old GPU!

I'd love to upgrade from my GTX 750 ti (that I picked up for 60$ and an order of Chicken Tenders & French Fries) to something more high-performance.

Also, if you're not doing a 100% duty cycle, and replace the thermal compound on the card, even a well used card will last a few more years. If you can pick up the cards as sub-$70 it's still worth it.

gpu mining becoming not profitable will not only flood the market with cheaper used gpus but also reduce the excessive demand for new gpus, both will lower prices.

It's not profitable to mine Bitcoin, but we have about 1000 others, and some of them to mine right now is very profitable.

how does that have anything to do with my comment?

a lot of ETH miners underclock and undervolt the cards.

I think he might be talking about for non crypto-currency usage. Like, I dunno, graphics.

Buying a GPU second-hand in the next year is a terrible idea.

"no no this totally wasn't used for mining swer on me mum" <-- was mined to hell and back.

If you want to sell me a card used in mining for pennies on the dollar I'll take it. My email email is in my description.

RX 480/580 and GTX 1060/1070/1080 are all welcome as long as they start, are recognized by the computer, and haven't been overclocked.

*Loses

Where do you find them - eBay?

If you live near a place with cheap housing, less then $0.10/kWh, and within a 1hr drive to a microcenter you can...

     1. Talk to the microsoft returns people and say "If you see anyone dropping off a bunch of graphics cards give them my number"
     2. Check E-waste places
     3. Check ebay
     4. Check Craigslist

"looses"

Enough.

Why am i not surprised? Nearly all or maybe all ICOs since May have been a deliberate scam. That is beyond the word 'bubble'. That is just it - collective scam. Crowdsourced Bernie Madoff.

Exactly. People pay real money and get nothing in exchange.

Plus, its amazing how people don't get how the system works.

The vast majority of people don't understand how our existing financial systems work either.

I'd be genuinely interested to find out what you feel is real about the money compared to the nothing you got in exchange?

Also how does the system work from your point of view?

The thing that's real about real money is that you can use it to pay your taxes. You may talk about how you could, in principle, barter goods and services and account for everything in terms of chickens, but the IRS doesn't accept chickens.

Because you don't need to, to get some return.

This seems overstated. Civic seems interesting. EOS seems interesting. They are both longshots, but are they longer shots than your typical startup?

Have you read the EOS terms and conditions?

> The EOS Tokens do not have any rights, uses, purpose, attributes, functionalities or features, express or implied, including, without limitation, any uses, purpose, attributes, functionalities or features on the EOS Platform.

The legal EOS Token Purchase Agreement is a frankly amazing document. I'd link it but they've taken it down and put the URL in robots.txt. US citizens or residents are not to buy the tokens (though EOS assures us they totally don’t constitute a security – hear that, SEC?); the tokens are defined as not being useful in any manner whatsoever; forty-eight hours after the end of the distribution period, the tokens will no longer be transferable; the buyer promises not to purchase them for speculation or investment. If there’s any legal problems caused by you buying these officially worthless things, you agree to indemnify EOS.

People are still lining up to buy them. This says more about crypto fans than it does about the value of EOS.

Of course, all the action is in China. (People in the anglosphere tend to forget that almost all the action in cryptos is in China, and Western usage is basically a sideshow to that.) Here's a writeup of how the EOS offering actually works:

https://www.reddit.com/r/CryptoCurrency/comments/6ma3a4/the_...

EOS has nothing to show. Pretty much sure it is a scam. Do you imagine a regular startup getting THAT much funding so quickly, for nothing to show? Not even if Elon Musk was the founder.

For now it's just a rather small correction, keeping in mind how much they had gone up in the last 60 months.

On the other hand, the uncertainty with Bitcoin's Segwit activation, possible chain split etc won't help in the next few weeks including August. It could make the bubble pop... or not.

What's weird is that coins that have already adopted SegWit, like Litecoin, seem to suffer even more than BTC during the dips (even if LTC was the best alt during the one since yesterday).

Yeah, the theory that people would be moving money into LTC when the BTC potential split approaches doesn't seem to be holding, at least not yet.

For now, the main theory, that all altcoins, including LTC, take their value from BTC, and react based on BTC's movements, seems to remain true. When people lose trust in Bitcoin, they lose even more trust in other cryptocurrencies, in aggregate.

yes actually it's like playing with leverage, I notice that every 2% move from BTC can results in 10% or more movements in all other coins

I can see that almost 50% of blocks are generated with SegWit support. In a few weeks it'll be more than 50%, unless trend drastically changes. Does it mean, that SegWit won and Bitcoin is safe?

SegWit needs 95% to be activated, it's not even close.

uasf.co will try to force SegWit activation. And we'll see what'll happen, and will there be economic majority or not to force SegWit activation, and how many blocks [and transactions] will end up orphaned.

30% is not a small correction. Per definition, anything that is down more than 20% is in a bear market.

Maybe in normal markets. In the cracked out world of cryptocurrency it's just another day of trading.

Over a two-month period, usually. If the price shoots up from here (and that would be pretty normal for btc, etc), then it was just a correction. It could also drop another 50% from here. cryptocurrency markets are nuts.

Yes, they're nuts. And that's so because they're so small, relative to fiat markets. So it doesn't take much to push relatively large amounts into them, or drive them out.

But whatever. I just use Bitcoin because I can easily make it as anonymous as I like. Price spikes are sweet when they happen, and crashes can be an inconvenience. But that's just what's so.

Ethereum traded around $380 three weeks ago and is now hovering around $200, which is quite a loss in value.

Ethereum makes up 44% of the total market cap of altcoins, but does anyone know what percentage of the remaining altcoins are just ERC20 tokens ? My gut tells me those ERC20 tokens are vulnerable to ETH price declines since miners get paid in ETH. A token may lose value, for example, as transaction times start increasing especially during a sell-off. When trading volume goes up but network capacity goes down that can cause even more panic selling.

Note, ETH mining is done with GPUs so it is really easy to just mine another currency. Mining CAP is about 7X more profitable than mining ETH at the moment [1].

[1] Coinwarz.com

There's not a huge difference, practically, between 17 seconds and 13 second block times.

Interesting to see the paradigm of "bitcoin is doing well, everything else must be less useful" is making a comeback? I the reason progressively larger corrections have been happening is due to more people who know nothing about crypto entering the space, therefore introducing more volatility and reflexive baseless reasoning.

If you question this, join one of the "crpyto currency" groups on FaceBook and read through a majority of the posts... I've come across people who've taken out loans to purchase crypto and people who installed wallets locally and wondered why the crypto they bought on CoinBase didn't magically appear. The most disconcerting posts are those who constantly ask "why did the price go up or down" or blindly post their chart predictions as to why the currency will keep going up in value.

The fear emotion is really something else.

People fear they are missing out on something - a quick scheme to make money...

Looks like it's Ethereum and Ripple which are falling, no? Bitcoin is pretty stable, Litecoin has been climbing, didn't check the others.

Bitcoin is down over 20% from its high a month ago. Not exactly steady, but weathering a bit better.

When ETH and XRP drop by 20% in 1 day, 1 month duration seems mild.

Does this include all of the altcoins built on top of ethereum? For example, BAT adds another $90million of value that isn't represented strictly by looking at the ethereum market cap[0].

[0] https://coinmarketcap.com/assets/basic-attention-token/

I'm not familiar with what "built on top of" means in this case, as it pertains to overall cryptocurrency value. Is it additional, actual coin with tradable value? Is it a derivative? Can someone describe in comparison to traditional means what this is?

Ethereum is a blockchain technology where every block contains a list of Ethereum Virtual Machine (EVM) instructions. The EVM is a Turing-complete virtual machine that allows arbitrary programs to be built upon it, making it much more powerful than Bitcoin, which (although it has a limited scripting language) is really just for transferring value.

Every program in the EVM is called a "contract" but in reality it's a program. One of the fundamental contracts built atop Ethereum are additional coins, traditionally sold in an ICO. Most coins follow a protocol called ERC20 that allows them to be easily exchanged with any other ERC20 coin and Ether itself. In liquid markets, like for the Basic Attention Token (BAT), one can sell off a lot of BAT for Ether without tanking the market too much.

Any speculations on why this is happening, and whether/how much they will grow in the near future ?

1st of aug there is a fork (maybe) which makes people very nervous. Most people I know sold off because of that (and not understanding what stuff means as in ; all crypto is the same and this sounds dangerous!). And correction which was needed anyway. I'll be buying.

Other metrics indicate could be just that it's holiday season. In the northern hemispheres, people are outdoors & enjoying the summer.

This coincides with the sudden drop in Google searches for bitcoin and others, also I've noticed the number of users online on poloniex has dropped significantly. This seasonal pattern was first observed with bitcoin, check this out: https://medium.com/@octskyward/bitcoin-s-seasonal-affective-...

Also, other negative news: 1. Alphabay, the largest darknet market went offline, not sure if that is significant. 2. Bitnumb, largest(?) crypto exchange in South Korea got hacked, also not sure how much impact this had, but usually an exchange hack has a short term effect on prices and there has been a lot of recent activity in SK.

Other reason may be that boom and bust cycles are a natural occurrence of crypto markets. They were getting white-hot for the last few months and finally need some time to cool. So move along, nothing to see.. The cycle continues. The next boom might be bigger than anything we've seen before :-)

There's a good explanation here : https://bitcoinmagazine.com/articles/bitcoin-beginners-guide...

Exactly. Most the crypto guys I know are now 50%+ in fiat due to the Aug 1st. Bitcoin fiasco. I basically won't refresh my portfolio until mid-August.

Funny people don't want to question the reason on a bull run but requires a reason on a bear run. $3000 was way off chart in the first place, a little correction is normal.

the usual hype cycle - https://trends.google.co.uk/trends/explore?q=ethereum,bitcoi...

In 2014 it was a year and half before bitcoin started growing again.

"Market cap" is a vacuous and bogus number.

Cryptocurrency advocates and lazy journalists like to talk about it, but it's not actually useful - it’s not money that was put into the crypto, it’s not a realisable value like a company market cap, it doesn’t affect prices. It’s just an easily-calculated number that sounds good in a headline. It literally doesn't indicate anything.

Trading is so thin in any crypto, even Bitcoin, that you could never realise a fraction of the number in any way.

If you want to compare interest and activity in crypto assets, you need to compare trading volumes, if you can find good numbers for those.

What the drop indicates is that prices in all cryptos track each other, as is usual.

It looks like if you stack them it would be largely flat; just movement from btc --> ripple, eth?

The third plot? It adds up to 100% by definition. ;)

it's dollar market cap, so no it doesn't.

Percentage of market cap, so yes it does.

Is there blood in the streets already?

What I don't get is why alts are losing value against BTC. Like, if you look at this chart it shows that Bitcoin is gaining market share and alts are losing it:

https://coinmarketcap.com/charts/#dominance-percentage

I would think that people would be leaving BTC and putting their money in alts due to August 1 jitters, but it seems to be the opposite that's happening.

its not the same thing, Bitcoin is decentralized, the others have clear owners, just like regular fiat (dollars, euros, etc)

Perhaps the Petya effect. If users don't trust paying bitcoins will help them recover their data, they don't have any reason to buy bitcoins to pay a ransom.

I still remember when Bitcoin was at $1,000 for the first time. The Economist ran a story and it was discussed nearly everywhere. The price fell by 30%+ after that. A few years later it was at $3,000.

It's normal that markets crash when everyone starts talking about how high they are. Once booming stockmarkets make it to the front page of newspapers it's often the end of the boom. It wakes people up who realise they still have stocks (or bitcoin in this case) and quickly sell it.

So the crash after hitting $3,000 was somewhat expected, given the attention in the media. Doesn't mean that it won't be strong over the next 2-3 years.

Haha, just wait. It's the normal market manipulation...

Crypto currency, the currency for crooks based on air.

I used some bitcoin in place of a wire transfer last week. It worked well. Amazing what air can do these days!

Given the fees now required to get anything through the network, was it actually worth it? A SEPA transfer is normally free these days (though not sure what the status of wire transfers in the US is).

I did it for speed.

you hate it cause you missed the train? not late still

I didn't read that comment as hate. The rise of Bit Coin is absolutely fueled by criminal activity.

Bitcoins utility in facilitating illegal drug purchases is possibly its greatest asset. As long as people want to buy drugs on the internet and use Bitcoin to do it, the BC value will rise.

Can you imagine if Bit Coin becomes the most popular way for people to buy prescription medications from other countries? It would be a necessary to people as Western Union is now.

The rise of bitcoin is fueled by investment speculation. There are other coins much better suited for buying drugs online.

What is the best crypto-currency for illegal activity today?

There is an EU study online recent that says digital currency is not used much for illegal activity

Reply on news.ycombinator.com