Comment by charlesdm | Hacker News Reader

Comment by charlesdm | Hacker News Reader

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I can't predict the future, but my gut feeling is telling me you're wrong. Institutional money moves the needle and I wouldn't be surprised if this goes another 20x (into trillions of dollars) before we see a major correction. The current market cap ($180bn) is nothing.

Facebook went 10x, from $50bn to $500bn, after it was added to the S&P500. A similar pattern can generally be seen for other stocks being added to the index. That's one company / stock.

There is only one Bitcoin. There is only one Ethereum. You have investors globally buying mostly those two assets. Want to buy the asset class? You buy one of those two (or both)

Pension funds manage around $300tn. If those allocate 1 or 2% to crypto, a sparkly new asset class, you'll have a $3-6tn market cap. Which they might, given the above average returns it's been generating.

Gold is worth $8.2tn globally. Bitcoin in my view qualifies as digital gold. Why was gold originally picked as a store of value? You could've picked other metals. Or diamonds, etc. But someone decided gold was the one. Gold in itself isn't very useful. It's been given its value by people, because they believe it to be a store of value. (I'm not a gold bug and I personally don't think gold is worth holding) But think about this: how high could gold and silver go in a speculative bubble? $13tn? $16tn? Higher?

There will be 20-30-40% corrections along the way, but in my view, it's going much much higher -- very much like the .com bubble (which went up to approx. $5.6tn). Wouldn't be surprised if this entire space achieves a multi trillion market cap ($2-4tn) over the next few years, with most of that ending up in Bitcoin and Ethereum.

Note: this is not investment advice. Do your own research and make up your own mind.

Gold wasn’t picked as “the” original metal for coin, it was just one of many metals used. What they had in common that bitcoin doesn’t, was the value of the material the coin was made of. It wasn’t the idea that made gold coins valuable, it was the ability to melt them down and produce jewelry, teeth or other valuable things.

Gold still has that value even though it’s price has been inflated and corrected many times.

Bitcoin on the other hand has no real world value outside of crime because it never evolved to a real currency. Which means that the only way to gain a net value on your investment, is for orher people to come in and buy bitcoin after you.

Which means you’ll also have to sell it before those people too.

I’m not telling you not to buy bitcoin. It’ll probably go much higher than it is now, but it will some day go to zero because it lacks any innate value.

...it was the ability to melt them down and produce jewelry, teeth or other valuable things

Not true. Gold has its value mostly because it is rare. Jewelry can be made of silver, copper, and any number of other metals. Its "real" value exists because people believe in its "intrinsic" value, not practical value.

That's not exactly true. Bitcoin does have intrinsic value. Bitcoin is expended to move bitcoin. This sounds a bit circular, but if you think about it, it's not really. Value transfer is a service that Bitcoin (the network) provides. It provides that service using Bitcoin (the currency) as its incentive mechanism. This is the kernel of intrinsic value around which Bitcoin's valuation is built, and why it is, in fact, analogous to gold.

Now, what that means for the price is nothing really. Speculation commodities (like Bitcoin and gold) go up and they go down without a whole lot of rhyme or reason. But the analogy to gold is valid.

Gold gets it’s value from it’s application and bitcoin has none of that outside of crime.

You’re right that you need to expend bitcoin to trade it, but this is more a weakness than a strength. It gives you a banking system of sorts, in that you’re guaranteed someone will handle your transaction for money. This also means that if the value of bitcoin drops then nobody will be around to do the calculations required to do transactions, making it an inherent risk.

It's use as fuel for transactions is its application. Gold's intrinsic value is very very tiny relative to its price. Same with Bitcoin's.

Financially that's not application though, it's a scam along the lines of your bank lending you money to invest in your bank.

You can downvote it all you want, but the value of the transaction is directly tied to the value of Bitcoin. This makes it profitable on the way up, and an outright danger in the way down because it'll prohibit you from selling your bitcoin when the value crashes.

Like I said, invest all you want, there are plenty of money to be made still, but at least be aware of the risks.

You have it backwards. Jewels are valuable because they are made of gold, not the other way around.

I think bitcoin could go a lot higher since the supply is limited and as of yet there hasn't been an easy way for institutional investors to buy into it.

But at the same time I don't think the comparison to Facebook or any other listed stock is apt - they trade at a multiple of earnings, you can base the valuation on some underlying fundamental. That is not the case with bitcoin

Also, if someone is confident BTC will fall, they should short it and make money on the way back down. But people tend not to do that.

Not necessarily. 'The market can stay irrational longer than you can stay liquid', etc. To short you not only have to believe something will eventually go down, but that it will go down soon.

which makes sense, because the market is cyclic, there's going to be a crash sooner or later. crying "it's going to crash" doesn't say anything useful.

There's no good way to short BTC today. Real financial institutions hardly touch it, and if you make a bet on a crypto exchange, there's no guarantee you'd ever get paid. If BTC tanks, likely the exchange will go away too, and you won't be able to cash out.

You can easily short BTC since 2014.

https://www.youtube.com/watch?v=K844yk2BAuI

people do, but they often lose money and you never hear from them (except for the rare instances where some make money and then they don't shut-up about it)

No. There are tons of coins. Two are being hyped.

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