Beyond the boring blockchain bubble
techcrunch.com
techcrunch.com
Now I have non-technical friends and coworkers who are suddenly millionaires (literally, a friend bragged to me about having a few hundred BTC. He since quit his job) because they decided to dump their life savings into this stuff knowing nothing about it. It frustrates me to no end when I have family members ask, why didn't you buy or mine more? Why aren't you a millionaire? You were so into this stuff, weren't you?
Yeah, I was. As a developer, not as a speculator. It's not just about the markets. But all of the exciting tech constantly gets drowned out by the noise of people going on about lucrative investments and comparing coins to gold. I'm so sick of the hype. I'm disappointed at the lack of millions I could have made (maybe, if I were a serious "hodlr"), but I do actually see value in the tech so it's extremely frustrating...
Distributed ledgers and consensus algorithms are neat. Greed isn't.
In addition, even now, at $3200, the market cap of bitcoin is still only ~50 billion. If you believe it has a good shot of being a superior global reserve currency, then it is still cheap and you should be glad that you can buy it for $3200.
Most people I know who knew about it but did not buy constantly thought it is worth less than the current price, whether that price is $3000 or $30. So they never buy. Your job as an investor/speculator is to guess what something is worth, not just look at a chart going up and wish you got in at sometime in the past. In addition, you need to realise that the people who really do well in any bull market or bubble are people who did stupid or manic things and managed to catch the upside. Sensible people rarely make outlandish returns. If you are a very level-headed, sensible person, you will not make outlandish returns, especially short-term.
You missed the part where he wrote that he was into this "as a developer, not as a speculator."
He might say (and even believe) that he's looking at this purely from a dev standpoint, but it's just another investor angry over sour grapes.
We are all "investors" whether you/he likes it or not. Even if you choose to keep all your funds in cash stuffed in your mattress - that's just investing in fiat currency :)
The technology hasn't fallen back. It's evolved, even. (With the new fork we'll potentially even see competing alternate realities soon :D) Several devs I know are still happily tinkering away and following the progress of various cryptos - if you're "sick" over the sphere as it currently is, don't blame it on external forces.
When I made the decision to sell my BTC, I was completely uneducated regarding the economics of investments and didn't have any family members with any sort of investment at all, so there was nothing pushing me in the right frame of mind to consider BTC anything other than another tech-toy I created.
So the anger that I heard from many in a similar boat mostly stems from this sentiment "hey I was there, I was a programmer, I understood this, but still the wrong people won out, as always." because one wasnt educated to be a evil capitalist/banker/investor. (The evil connotation stemming from group think especially in Europe where rich = villain)
We will see more of this kind of behavior the next time a big tech crunch happens and the VC dries out for years. "Why did nobody teach me how to raise capital when it was still plentiful?"...
And what's stopping him? There is nothing he could do yesterday that he cannot today, other than invest at yesterday's prices.
Hell, it's probably significantly easier to develop with today's landscape - services and libraries being much more numerous than before - so you're going to have to enumerate specifics if you want to argue otherwise.
It's a strange enough position to me that it makes me question whether people who say this actually understand the technology.
Plus, who cares about other peoples' "greed"? There's lots of greed in traditional finance but that doesn't stop most of us from investing in stocks and that kind of thing. If I think GOOG is a sane, rational long-term investment while others are going bonkers over it, I don't see why that would change my mind.
I don't really understand finance, so bear with me here : why should being a "superior global reserve currency" entail a stratospheric valuation? The USD has been a de-facto global reserve currency for the last 50 years, yet it's not like an individual dollar is worth 5000+ GBP, CHF, EUR, or JPY.
It seems to me like the high BTC valuation is being driven by speculation. That's fine and dandy, and as the Economist said is part of a "harmless bubble" - but ascribing this insane valuation to some kind of innate feature set of BTC seems to be misleading.
Happy to be proven wrong and/or educated. This isn't exactly my wheelhouse, after all.
Given that bitcoin has a hard-coded cap of 21 million coins, if bitcoin became a reserve currency of the importance the USD currently has, you could assume it would reach a market cap of 12 trillion, meaning each bitcoin will be worth $570000.
The reason the USD value has not spiraled to $5000 each is because the economists advising the government believe in inflationary currencies, and believe for some reason that the best thing for a currency to do is to devalue by 1-2% each year. They give some reasons for this which, like a lot of economics are driven by conjecture and not evidence-based. Money is printed approximately to achieve this target, however in recent years, 4 trillion dollars has been printed and given to banks, again based on very little other than economic conjecture. I'm not going to argue with proponents of this sort of economic theory because its a waste of time, however I am glad that a currency not linked to a nation state is going to be able to challenge all of these assumptions.
that is because Fed doesn't want it to be that way (and for a good reason) and prints [tons of] new USD. BTC can't be printed that easy and that unlimited.
His answer is right there in his original post, he understands the tech, which is cool, but he doesn't understand money and markets, which is the real reason the entire edifice has any value at all. His observation is akin to being interested in technology purely at the intellectual level, and not understanding how it can serve humanity and fill needs that are desperately unmet in our present paradigm, and people are more than willing to pay to have those needs met. What they already pay to have what we have instead of that is the net economic cost of all states and state controlled financial infrastructure in the world (which, to be clear, I mean all financial infrastructure, because there simply is no such thing as a private unregulated financial instutition outside the bounds of cryptocurrencies), which by comparison make the entire cryptocurrency market cap even now after the rapid appreciation look like the office tea budget.
You need to understand both the tech and its utility to markets, and in turn the real utility of markets to humankind, and imho ideally the terrible threat represented by political authority, to do well out of the cryptocurrency wave. All these people that have loaded up without understanding the technology are eventually going to get taken as that technology matures and differentiates between all the available options, and they'll have no idea how to gauge the actual product level value of one relative to another, and they'll transfer value to those that do.
You can't win with just one side of the equation.
It's not a direct quote, but the gist is worth taking to heart. It's easy to say, not so easy to do. But you gain nothing by tossing and turning.
Zachtronics' games are some of the most fun I've played, and from a brief encounter (not irl) with the guy he seemed unperturbed (or like he'd made peace if he ever was) by the outcome.
I was at the office one night kinda late, and I walked around the corner to see him working on the server. He was installing what looked a lot like a graphics card. Sure. Not mining.
In the end, he never got caught. I recently looked him up on LinkedIn and he hasn't been working for over a year. I obviously don't know this for sure, but given what a bitcoin enthusiast he was, I would not at all be surprised if he made a fortune mining for free by stealing the company's money and also investing heavily.
Indeed, greed in cryptocurrency is a thing.
(Created a throwaway to protect the privacy of the guilty, even though they don't deserve it.)
Do you really think you can hide the amount of heat from anyone - my rigs are basically a furnace - and in 2011, I think I could probably melt steel =P The guy may have had a few cards in there, but $20k is absurd.
I would feel the same if I started Google - to build something cool like a powerful search engine just to sell ads. Ewww!
There are better and worse ways of making money. Crypto speculation and ads are the some of the worse, in my opinion. Charge for your service - it's the only honorable and clean thing to do. Don't be a sellout!
Shortly put, I do believe in the blockchain, I don't believe in Bitcoin, which is majorly driven by low-class Chinese speculators and exchanges!
It is just how they make money. What they DO is make the best search engine, host every video and livestream anyone on earth wants to upload, run the best email service on earth, run the best cloud office suite etc etc.
I was an early adopter of Contributor, which got shot down in its original form! This speaks loudly about nowadays Google!
Stability is boring. It doesn't garner attention. It's the high fluctuations that generate interest and bring in new people to the ecosystem.
Without it, Bitcoin would have been basically another technology that most people would have never heard of.
$1 -> $65,000
I have failed to recognize and/or act on a number of opportunities so far in my life.
One was when the consumer Internet was "waking up". Domain name registration was free. And, even later, as Network Solutions started to charge for them, domain names, good one's, were plentiful.
And so, there I sat, living through the technical birth of the Internet, fully understanding it from an engineering perspective and yet, due to my lack of experience at the time, never made the mental connection to the opportunity that lay ahead. While other less technical people gobbled-up tons of good and very valuable domains I was geeking out making use of the embryonic consumer Internet. These people made millions. I did not.
Another missed opportunity happened during the economic downturn of 2008. The market crashed. I had been a day trader a decade earlier and have always kept a level of awareness about the market. I was on the phone with a friend and made the comment that Ford was an absolute goldmine as it had dropped down to about $1.50 per share. The company had none of the problems the other auto makers had. It just got dragged down with the rest of the market. It told him I should get off the phone and buy 100K shares of F.
In other words, I recognized the opportunity and had the ability to take advantage of it. Yet, I did not. I would have made somewhere in the order of $1.7 million inside of a year and a half or so.
I'm sure people who also recognized the opportunity and brought themselves to pull the trigger made a killing. I, for some strange reason, did not.
I look at cryptocurrency and your comments the same way. You probably recognized the opportunity yet did not act. This has nothing to do with being intelligent or dumb. I have no clue what it is but it happens.
I wouldn't feel bad about it at all. Plenty more opportunities ahead. Just try to grab onto of one when the time comes.
In my life so far:
- electronics
- digital
- computers
- the web
- cellular communications
- smartphones + app ecosystems
- crypto currencies (in progress)
- deep learning (in progress)
Not doing much with deep learning yet other than spending as much time as possible learning. Need to identify opportunities.
I did jump into the iOS fray years ago. It proved to be a bust. The App Store is so bad in terms of discoverability, building relationships with your users and the race to the bottom that it became impossible to make a profit.
https://www.reddit.com/r/ethereum/comments/3ird55/holy_shit_...
https://www.reddit.com/r/ethereum/comments/6qlxxa/i_lost_150...
https://medium.com/security-news/report-shows-230k-of-crypto...
http://www.altcointoday.com/chinese-exchange-yunbi-lost-4000...
There's not much sense losing sleep over that statistic though. Most of us had $3k and didn't do that. All you can do is keep your eyes open for the next opportunity, which may never come.
> hence it sounds like the scene of Housing crisis.
If everyone wanted to sell BTC and no-one wanted to buy, it would crash just like anything else.
It's up for anyone's guess how big each of those groups is relative to the others. Believers tend to assume that the last one is big, e.g. the "send money back to the home country" use case.
Ha
(replace "encrypted" with "untraceable" and make the skiddie a webmaster of some unregulated exchange and you can see the future of this situation)
(Not that I'm arguing or worrying. I was just curious.)
I know there is the other side of that, that the government can seize your funds in a bank account, but realistically they won't target you out of millions of people who have millions in their name.
Raising $120M in an ICO isn't the same as raising $120M from a VC. In the latter case, you get nothing if the business fails.
The big question is, why are people dumping so much more money into ICOs than into Kickstarter projects? Why does an ICO seem so much more legit? It's mostly the same thing. Yet ICOs are somehow raising 10x more than the most-funded Kickstarters without breaking a sweat.
Neither will you with ICOs. They normally don't give any ownership or the like.
https://blog.golemproject.net/golem-network-token-gnt-sale-2... All transactions in the Golem network will be subject to a fee, approximately 5% of the transaction value. This will include both transactions between the users — payments for computing power — and transactions between users and software developers. The latter will consist of payments for the software used on the Golem network in a SaaS model. Where applicable, a blend of both open source and proprietary software will be used.
Because most of it is "free" money. It's not a coincidence that the great altcoin explosion happened after Bitcoin value had increased by several orders of magnitude, and the ICO explosion happened after Ether had.
Some people bought what they considered a lottery ticket for a few grand, found themselves with a jackpot, and decided to buy another lottery ticket with (parts of) the winnings. It doesn't feel like real money to them.
I don't know if we should feel better about it because of that, but at least it explains why so many of the altcoins and ICOs which are so clearly scams/ponzis can attract so much capital.
A cap on the ETH to a level that's realistically usable for development can also be a good idea.
Because an ICO gives you equity, which you can resell to a bigger fool.
People buy into ponzi schemes, too, knowing full well that they are ponzi schemes.
Ponzi schemes are only bad if you are in the last batch of investors. The first ones do get a nice return (otherwise the scheme itself would not last long).
A smart investor could decide to put some money in a Ponzi scheme, as long as he knows what's his number in line, deciding to gradually disinvest some % as times goes on in order to collect the enormous gains.
BUT if you understand that there are two (non related) faces of the same "coin" (pun intended) , you can use your technical expertise to have an edge on the speculative side, why all the craziness with crypto? check out this stats: https://icostats.com/roi-since-ico
Where in the world you can bet 1000$ and earn 1.000.000$ ? , Are all ponzi schemes? Definitely many are totally scams but many of them are here to stay as a part of the future.
Now do this exercise, pick a number from 1 to 100, done?, go to this link and check your crypto with the number you pick searching it by the first column. https://coinmarketcap.com/historical/20170101/
Write the coin the price on January 2017, now go to : https://coinmarketcap.com/
And check If you had bought 1000$ at the first price how much did you win or lose today, you can answer this exercise if you want here!.
My point is, why not use our technical expertise to separate the wheat from the chaff?, understanding that you are playing on the speculative side with the help of your tech expertise the odds are in your favor.
What do you think?
All of the successful ICOs seem to have a team full of PHDs, investors, and seasoned entrepreneurs and they also have commitment from a few well known investors and entrepreneurs as social proof. Some even have "pre ICO sales" to reward their inner circle.
For people in the know, I have a few questions:
* Who invests in these ICOs apart from the "pre ICO investors" who are generally close friends of the founders?
* How do ICOs reach these people (I'm guessing a subset are clueless retail investors and the average Joe who gets excited by the words blockchain, cryptocurrency and ICO)?
* What is the legal status of ICOs?
* Are there any case studies regarding how successful ICOs take place?
(I have no plans of starting my own ICO, just want to understand how these ICOs work.)
> How do ICOs reach these people: - There are numerous forums/chatrooms/reddits/twitter posters etc etc. One of the common tricks is for ICOs to reward 2-3% of tokens in "bounty programs" which basically rewards participants for facebook/forum/blog/youtube posts/spam. Very large ICOs like bancor have done this
> Legal status of ICO's - Unclear, but they are global and switzerland - where many of them are based out of seem to have liberal laws. For the SEC they seem to have indicated that you are likely to get in trouble if ICO's are more equity based, whereas "token" based network payment stuff is less clear.
The high early liquidity of ICO's basically mean that if an ICO has capped investment and has any sort of credibility, the ICO will reach its cap rapidly and when it opens on the exchanges it'll be up 3-10x and you can dump it and make a fortune, regardless of whether it is actually vaporware or a ponzi. This does not really happen in the past 3 months as the high demand ICO's generally take as much money as possible and don't cap it.
I think its sad that this business is going the way of the venture capital biz where well connected people get early/cheap dibs and average joes only get in once all the potential gains have been sucked out. Compare this to the ethereum ICO where everyone really got a fair short. I also think that if these have ponzi elements, being a preferred/connected/private investor in a ponzi makes you complicit in the ponzi scheme, whereas being an average joe just means you're playing the game.
Can you post a few links to the forums/chatrooms/subreddits/twitter accounts?
Mostly memes and mindless speculation, but you can get an idea of sentiment here: https://www.reddit.com/r/ethtrader/
That's the tip of the iceberg.
coinfund.io/steemit.com
Mostly idiots. or people who think they can pump the price and flip it to a greater fool before the "founders" exit scam everyone.
> How do ICOs reach these people?
Reddit forums, Ads on crypto-currency related sites (ie: coindesk.com, etc...) and on Facebook etc...
> What is the legal status of ICOs?
SEC says[0] if you operate your ICO like a securities offering then your tokens are securities and you are subject to applicable federal laws.
[0] https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_co...
> Are there any case studies regarding how successful ICOs take place?
No idea, most ICOs I'm aware of are hugely problematic and on the grey side of ethics at best. If the founders are pre-mining/keeping a large portion of the coins for themselves I would stay way far away. Bitcoin by contrast wasn't an ICO the only way someone got Bitcoin was by mining it.
Be careful of getting emotional about it. It could well be techies and goldbugs who knew about it early on and regret not buying earlier that succumb to fomo last after stewing over it too long.
It's best to buy just enough to assuage your feelings so that you're comfortable with whatever happens and then forget about it.
With so many being created, cryptocurrencies will come and go so speculating on which will become the winner is a time consuming obession. As dev Andreas Antonopolous says the best investment you can make is in learning the tech.
Solidity and other smart contract developers are in serious demand, paying stupid salaries as every finance company plows money into them. The space is still full of opportunities for developers if you look forward and around and not back.
Selling ten times that (40.000 BTC) would only net you ~$26.5m so, to answer your question: selling just $10m worth of BTC on a single exchange will move the price significantly. For $1m worth of BTC you’d move the price very little.
Anyway, if you have enough money, why not hire someone to write you a multi-exchange execution tool, and save some more money.
Which says a lot. These are crypto commodities at best. The real currency is the US dollar.
I really wanted crypto currencies to work, instead they've made me see the value in the Federal Reserve System even though I don't like the way it's run.
The promise of a systematic currency supply growth was enticing, but now I see what spiking demand can do with a fixed supply. Perhaps this is a problem that could be solved via a new supply algorithm.
Anecdotally, but you can also see the trends in wallet increases, nearly everybody I know under 30 owns crypto.
Will there be a bubble bursting? Sure, much like the dotcom bubble, crypto will see its downtrend too. But look where we are now. Businesses like pets.com could thrive.
Not all early internet developers got rich. People who bought domains like pets.com and pizza.com got rich, and they did not need a lot of technical know-how. If they did, the internet would have always been the playground of highly technical people, and would not have seen wide adoption or eternal Septembers.
I first got into Bitcoin around 2013 after lots of articles were posted about it on Hackernews. Second stint in 2015. Finally started again two months back. There is still (a lot of) money to be made. Some people say I missed the boat by not buying the outlier BTC when it was 1$, but I could have also bought it at 50$ or 200$. Heck, you think Bitcoin is going to stay at 3300$ forever? Ethereum was 1$ 2 years back. That's a 200x-300x ROI there. I have no doubt some newer coins will do an easy 5x in 12 months. Past two months for me have been life-changing (possibly life-changing for my family too).
Some of these crypto companies are going to be the next Google's. Or they will use their winnings (or ICO) to bootstrap a competitor.
Are there scammers, hackers, hoaxers? Yes, it is still very much the wild west. Compare your email box around 2000, and the amounts of spam you had to sift through. Some less tech savy and/or naive people will get suckered in and some people will invest more than they can stand to lose. This is unfortunate, but beyond my control. I may even make some money of their irrational behavior. But people who read HackerNews? I've no doubt they can sift through the crap to find the diamond mines in the making. To spot if a team is technically advanced or just faking their marketing and headcount.
About the blockchain. To me it is like the early days of the internet ~1997, but for the financial world. It has the potential to disrupt Central Banks, FinTech, Money Transfer, Micropayments, Identity & Privacy, Money lending, Smart Contracts, Provenance, IOT, ... Far from boring, far from bubble.
This month will see the third wave of large-scale Bitcoin interest. I've spoken to web developers that are learning blockchain and smart contracts to prepare 3-5 years out. People are actually betting their livelihood on this technology. Is that a guarantee that the crypto market cap will increase? No, but it is a sign of the times we live in and the sweet spot that Bitcoin hit this month.