Bitcoin hits a new record high above $5,100
cnbc.com
cnbc.com
Yet the price keeps going higher. Where is this money coming from and where is it going? Is it really all coming from speculators who don't actually use the system at all or even read about it?
For us who take it seriously and trust the Core team to be a great team of cryptographers and cautious programmers, Bitcoin is maintained well and doesn't need any new feature to be good as a store of value. It's great that it can scale somewhat, but I consider all those improvements as an extra.
If we look at fiat currencies actually, they are a low bar as a store of value to hit.
Bitcoin has no intrinsic value. It's simply an abstract asset with no value other than what someone else is willing to pay for it. And there are no fundamentals that justify its price. So it's just pure wealth transfer from later arrivals to early arrivals. It's a zero sum game.
It'd be fascinating to chart the transfer of wealth in Bitcoin across the globe to identify the big winners and losers.
Even at its downs, bitcoin has found demand still. That is a very interesting signal. If it were just the ponzi as you say, it would have come crashing down on its downturns.
That is profoundly faulty reasoning.
For a lot of people, a drop in bitcoin is just a signal to buy because they have an irrational belief that it can never really go down permanently (which, to anyone who remembers 2007, should sound familiar).
A ponzi scheme can go on as long as you can find new market entrants, and what makes Bitcoin remarkable is that it can tap into revenue sources throughout the entire world, and in particular in places where socioeconomics and geopolitics makes something like Bitcoin extremely attractive. That's a lot of fuel for this particular fire to burn before it fizzles out (presuming fundamentals aren't established before then).
The world has never really seen anything quite like this, and it'll be fascinating to see what happens over the next 10-15 years. And, meanwhile, again, there is a lot of wealth being transferred, and I'd love to see where it's going...
Its not faulty at all. When a ponzi stops paying out it crashes. Bitcoin had long periods of not paying out. The never ending demand for it signals the opposite of a ponzi: all assets with demand have a floor where people stary buying again.
I also dont see bitcoin's value as most people. I sold most at 60, figure that out. Who knows where this ends..
It's more like a MLM where sellers are buying their own product for resale with the expectation of future returns.
This breaks the normal dynamic of a Ponzi scheme since there's latent inventory lying around that can be bought, sold, or held until another sucker comes along. And that delays the crash.
Of course, the big difference is a normal MLM at least offers a product with some nominal base value, whereas the base value of Bitcoin is precisely zero.
Bitcoin is the currency of choice for most international/domestic drug trade. This is a well known secret.
$19 in 2010 => ~$1,069,054 in 2017
It might actually be a canary in a coal mine that if it went bust, then all other assets could promptly follow.
The big question is what is actually happening with china: is the outflow of money permanent, increasing or decreasing? If china was strangled by a crisis and devaluated internally, for example, and money came back into china, that could be devastating for the world.
The cognitive dissonance around Bitcoin was understandable during the first move to $1000 but anyone yelling bubble now really needs to consider how tiny 86 billion actually is.
Let's take the American real estate bubble. According to Wikipedia:
"Total home equity in the United States, which was valued at $13 trillion at its peak in 2006, had dropped to $8.8 trillion by mid-2008 and was still falling in late 2008."
Two years, a 5 trillion dollar haircut.
The Bitcoin Bubble? For an asset that taps into capital markets across the entire globe, $86B is adorably small.
IMO, the bubble is still inflating and there is a long way to go, yet. To me, the real test will be when the next major worldwide recession sets in...
but anyone yelling bubble now really needs to consider how tiny 86 billion actually is.
As a statement that the current price means the bears were wrong and that this isn't a bubble.
I probably misunderstood! I'm still working on my first coffee...