A tale of two bubbles, the dot-coms and Bitcoin
marketwatch.com
marketwatch.com
Adam Ludwin, the CEO of Chain, talks about how when the dot-com bubble happened, everyone knew at least to an extent that online retail would be a thing. Social networks would be a thing. Digital media would be a thing. The required ingredients were competition, Moore's Law, and time.
Bitcoin is different for a few reasons. It doesn't solve economic problems for most people in developed countries. It's also a development far deeper in the technology stack, a change in ledger management and accounting procedures. The last major update to this was double entry in the Italian Renaissance, which allowed the formation of corporations. The one before that was the invention of zero.
We don't know what the implications of Bitcoin will be. I think a much better analogy for the current bubble is the South Sea Company, since that was essentially people speculating on a new asset class (equity) that was poorly understood at the time. But saying that it's a bad investment because the use cases are not immediately obvious misses the forest for the trees.
I think the South Sea Company or tulip mania are good analogies.
The fundamentals of how it works can be changed. It is true that entrenched actors may dig in their heels and prevent it from changing, and so some other more fast moving cryptocurrency may take over. An alternative is a hard fork. I think it's possible that a hard fork that has figured out the "right way" will do better than a fresh cryptocurrency doing the right thing but from scratch, because by hard forking you don't have to convince everyone to bootstrap. I accept it may equally go the other way; we'll have to wait and see.
> Transactions cost too much, take too long, and require too much proof of work.
Let's see what the lightning network brings.
As for requiring too much proof of work, I think that's a fallacy. You're looking at it backwards. "Much" proof of work isn't required; that miners compete by providing it is a consequence of the current value of the block reward and transaction fees. Relatively little hash power is actually required to maintain the network. The reason the current hash rate is so high is because hash rate follows price rather than the other way round. The high value of the mining rewards has attracted many miners. In the future, when the block reward becomes zero and the lightning network has relieved congestion on the main blockchain, traders (actually probably just parties seeking clearing) won't have to bid against each other so hard in fees to get their transactions confirmed. Then transaction fees will drop, so the reward for finding the next block will also drop, unprofitable miners will leave, and so will the hash rate.
So: 1) transactions cost too much and take too long is currently true but if the lightning network effort succeeds then this will no longer be a problem; and 2) too much proof of work is not actually "required".
I agree. I did say that :)
The underlying _why_ for these "first movers" fail are not related at all since it's a totally different vertical.
The deflation and high transaction fees seem to favor btc bc miners wouldn't shift to somthing less profitable and those using btc as a value store profit from deflation long term.
I have faith in the overall Bitcoin architecture. Its greatest threat is a malicious actor taking over enough processing power to alter the blockchain.
I doubt that Bitcoin itself will be the dominant cryptocurrency due to the reasons I mentioned in my original post. These are two different issues and I appreciate your pointing that out.
https://torrentfreak.com/spotifys-beta-used-pirate-mp3-files...
These sites also cater to the leaks scene. Every single hot album to drop recently was leaked 24-72 hours before dropping on "official" sources like Spotify. This makes even those people that have Spotify accounts look for MP3s.
NB: Eternal September was in 1993, when Usenet went mainstream. Facebook, Twitter, etc weren't invented for another decade. Since then, they've both toppled dictators and elected a reality TV star to the Presidency. Change happens gradually, then suddenly.
Other than that minor detail, I generally agree with your comment.
That seems wrong. I'm not an accountant, but I have a damn hard time believing that accounting practices haven't changed significantly since the Italian Renaissance...
this is the currently-accepted way of doing accounting
Another way to think about it is with cars. Cars today bear no resemblance to what they looked like or were capable of when they were invented, but nothing around the core idea of putting an engine on wheels has changed. The airplane was different. (But so was the Segway)
Historically, being early on a new financial technology has rarely gone well for the participants.
There were large markets in car loan and commercial real estate mortgage CDOs that didn't see a crash anywhere near as large as that seen in residential real estate CDOs and construction loans, and that's because they were not subject to GSE loan guarantees and FDIC deposit guarantees, respectively.
New financial tech takes awhile to become popular enough to become dangerous. So while CDOs were invented in the late 80s, it wasn't until 2000 or so that they started to become a craze that lead to dangerous conditions.
The government through GSEs and FDIC did, as you say, constantly blow air into the housing bubble. CDOs were also a big compounding factor in that they were willing to back an enormous amount of low-interest high-risk loans. Exactly the loans which blew up.
I'm not sure that this now oft repeated meme isn't entirely misleading in regards to accounting. Accounting system audit trails have always been immutable in concept and design, and Bitcoin and block chain brings no change to double-entry accounting and current accounting principles.
In terms of general accounting systems, all block chain represents is a strong encryption based means of ensuring immutability of the audit trail - a feature simply not required.
That said, how fucking sci-fi is this?! Remember in the old games and novels how 'energy credits' would be a currency unit in the future. Well, looks like we are in the future then. Bitcoin is pretty much a 'baby' energy credit, it's also more than that, but it is an energy credit in a nascent way. I mean, that's pretty cool to teenager me.
We're not going to stay in that relatively narrow band for long though, with the growth of this thing. There's only so much "spare" on the grid, off-peak, and this whole thing relies on wasteful means of energy production, storage and transmission.
So on one hand (hopefully) the opportunity to scavenge for cheap CPU cycles is going to contract, while the market for bitcoin expands? Yikes.
> transaction fees that are charged to the customer by the Bitcoin network have skyrocketed this year,
topping out at close to $20 a transaction last week (compared to roughly $0.20 when we initially enabled Bitcoin).
On the other hand, the high valuation can only be justified by the expectation of it being a really good tool for transactions (or, alternatively, the greater fool theory) and becoming bad at transactions means it'll eventually become also a bad store of value; so a technical solution to transaction cost is highly needed.
I will concede that other coins exist that don't use a proof-of-work (instead proof-of-stake or other). Those forfeit trustlessness and/or equitable distribution. I will also concede that it may be possible for those coins to fulfill a need and be useful without all of those things. Though I doubt they ever could have been created if not for bitcoin having been created first.
The work done for the bitcoin network has utility, that much we can agree on? And you think perhaps that the utility provided by the network is not a net benefit considering the cost of the PoW? Well, unfortunately that much is subjective and there's enough folks out there willing to spend resources on it.
However it's not madness. Proof-of-work is required in order to have a mechanism that has bitcoin's qualities.
If you want to fight against what you might perceive as waste or madness, it seems like tilting at windmills IMO. But the best thing you could do is build a better mousetrap -- or invest/promote one of the non-PoW coins out there.
EDIT: clarified some uses of "it" in the first paragraph.
No, I do not agree, there is no intrinsic value in wasted compute. The only value that wasted compute can have would be a measure of the amount of entropy spent generating that "value." Entropy has no value. It's just energy that cannot be spent again.
Your bank and other organizations (Western Union, etc) spend a great deal of their time and money to create and maintain networks that permit them to move money from one place to another on Earth. Your bank probably pays to some network in order to be able to send and receive "wires" of money to and fro. Migrant workers use Western Union and the like to send money from the country they work to their families back home. For this, Western Union and the global banking networks charge fees. The fees charged by bitcoin to relay funds can be significantly lower. Probably not universally so, but I'd say all transactions above a certain dollar amount would be cheaper. They'll probably be as fast or faster than traditional remittances. Bitcoin does this as good or better. Western Union and friends could decide that leveraging the bitcoin network might actually be cheaper than their current network, or they might be forced to realize this by competitive pressure from other bitcoin-based remittance companies.
Ok, so that is one use that is IMO unassailable. The people on this planet is putting money into building retail locations for Western Union, they're paying for the power to keep the lights on at Western Union, and they're paying the salaries of the employees at those retail locations, and the folks who staff the armored cars moving the actual cash from place to place. That's not a waste, right? It's spent by us collectively in order to get that value. And maybe bitcoin's difficulty-scaled PoW is not spending electricity well. But it's useful and that's why people do it.
Now your claim is regarding the value of entropy and I will claim that you cannot get a mechanism with bitcoin's qualities (trustless + equitable distribution) unless you have a PoW. But I will concede that you can have a delegated-trust proof-of-stake coin that has some of bitcoin's qualities without a proof-of-work.
In the world of finance, the effective cost of technical transactions is tiny (<0.02USD for mass straight-through processing transactions that can handle batching and delay, <1USD for real time settlement of large amounts). Western Union and friends won't realize that leveraging the bitcoin network might actually be cheaper than their current network, because it's not cheaper, not even close to it.
The fee for payments tends to be much larger because of everything else bundled with the payment, but an equivalent service that provides the same things on top of bitcoin would also have to charge similar fees. For example, a large part of credit card fees pays for chargeback and fraud insurance, and all kinds of bonuses/miles/etc which customers like, so if a BTC service wants to take over that business, it'd have to compete with that. Bitcoin transfers are irrevocable, but most consumers want most of their payments to be revocable in certain conditions, so a future "buying stuff with BTC" payment will have to include an escrow service for an additional fee. The branches that allow you to hand over your local currency cash for a remittance, those are expensive, so a remittance service that uses BTC will cost the same as a remittance service that does not.
I certainly agree that Bitcoin was a breakthrough that paved the way.
Firstly, practically everyone who invests in cryptocurrencies knows that there is a chance that they could drop massively - Nobody is being deceived. If anything, I would say that most buyers tend to underestimate the technical accomplishments and the amount of vision behind most popular cryptocurrencies.
Secondly, unlike companies, cryptocurrencies can never* go bankrupt. They cannot be shut down by any single government. There will always be developers with machines somewhere willing to mine coins.
It's already possible to build businesses/services on top of blockchains and these businesses have a huge advantage over regular businesses; they can never go bankrupt. Also, they are completely autonomous. There was a lot of publicity around DAO (and its subsequent failure) but in spite of this, there are already value-creating businesses based on Blockchain technology which are currently operating under the radar: e.g. IOTA is a cryptocurrency but it's also platform that lets users buy and sell data directly from internet-connected sensors also Siacoin is a file-storage service, Power Ledger is an electricity marketplace... There are many others.
Another huge advantage of most blockchain-based businesses is that anyone with hardware (or virtual machines) can participate in the value-creation process and be rewarded for it.
* Unless maybe there is another massive Carrington Event... But even then it's unlikely that the blockchain of major cryptocurrencies will be completely wiped out.
While the deflation doesn't deter people from spending cryptocurrency in illegal markets, it does deter the recipients from cashing out. And this trend will accelerate as the deflation accelerates. If you're a drug dealer and you receive bitcoin, you have to cash out some portion to pay your people. But now, maybe they're ok with getting bitcoin, too. Even if they don't, you'll hang on til the last second before you cash out, and you'll strive to cash out less and less as the price rises faster and faster, essentially becoming a captive speculator. Of course, if the price crashes somehow, you'll cash out faster, but because accepting bitcoin is a core part of your business, you'll never stop buying entirely.
The question is, where is the natural "floor", based on the volume of illegal transactions and the rate of mining? Is it close to $15K or closer to $1K?
Here's one way cryptocurrencies could go bankrupt: The US government decides it doesn't like cryptocurrencies because of their use in money laundering and other illicit activities, so it puts severe restrictions on conversion between USD and BTC (or whatever other cryptocurrency) by going after the exchanges.
The value of a cryptocurrency is that you can convert it into a fiat currency, ie, one you can actually buy real things with. If that starts being restricted, then the value will plummet.
I think this is your bias based on the people bought in within your circle, but when technologies like this hit the mainstream, that's never the case.
Once they've convinced themselves that it's a valuable investment and have purchased multiple times, the very idea that it could be a bubble is something they will be purposefully be blocking out to keep their view of themselves as rational actors intact.
So you'd probably be surprised how many people will very quickly refuse or mock the idea that Bitcoin could be a bubble. This is especially so if people do the usual thing and actually merge the idea of being a 'Bitcoin investor' into their own personal self image. At that point, all bets are off, and a Bitcoin crash can quickly become a suicide event. It's why we have laws around investments and gambling to try and protect people.
I am certain the concept will persist. I am just unsure which version(s) of it will carry on the torch.
> cryptocurrencies can never go bankrupt*
Well, memes die all the time. CCs can still die, but arguably it will be a "true death" - sort of like a global agreement that the thing has become useless.
I also want to point out that a lot of these algorithms are based on consensus. It is conceivable that someone with lots of resources could build up lots of fictional players to try and swing the "consensus" in a certain direction.
Keep telling me it's a bubble. Keep writing long educated articles about it. All while I consistently get rich. All while it's getting late for you to get rich too.
In general, yes.
But now you can get rich when you deindustrialize: http://instapaint.com/
Have you ever looked at the price history of gold in inflation-adjusted terms? That is VERY much not what gold does.
For example, silicon valley is full of people that were once multi-multi-millionaires on paper by holding stock that had an extremely high price, but didn't manage to get to sell it until the valuation collapsed. There's much more of them than the actual multi-multi-millionaires.
It's easy to get on the train, much harder to know when to get off. I still remember the anguished posts four years ago on HN from people who put their life savings into bitcoin shortly before the market crashed. One Reddit user on r/bitcoinmarkets posted that he had lost everything and took his own life. It took years for the market to recover. Don't fool yourself, nobody knows where this train is going.
People are really underestimating what a shit storm Bitcoin and other crypto will cause in finance.
I'm pretty sure that's going to turn out to be pension, mutual funds, and banks, just like last time, and everyone is going to be screwed. The question as bitcoin rises is how much has been borrowed against bitcoin holdings in how many ass-backward, half-fraudulent, made-legal-by-obscure-clauses-in-amendments-written-by-lobbyists-and-attached-to-unrelated-bills-with-bipartisan-support ways.
Given the body count of exchanges and coins that have collapsed due to unauthorized access, your spelling error is actually a beautiful thing.
But I don't think that cryptocurrencies will cause a "shitstorm". I'm under no delusion that Your Favorite Bank or Stock Exchange won't exist in two years, or in ten or even twenty. Managing and storing/handling/operating cryptocoins is not for the feint of heart. At best, the most disruption you might see would be the Coinbases of the world having a bigger role in some of the global financial market and traditional financial giants having some slightly smaller role to make room.
Holding bitcoin on your own is better than putting money in your mattress, but it's way, way, way less safe than an insured deposit in a bank. The volatility will decrease but it will at best be subject to the same 0.5-1% intradaily swings that a foreign currency goes through. It would take a substantial amount of time and money for it to settle down that much, though.
(But personally I think there is a difference: there's more-advanced competition now.)
The economist John Kenneth Galbraith wrote about bubbles in his book A Short History of Financial Euphoria. If you're intrigued by such economics events, this is a good, quick read (on the "tulip craze", junk bonds, etc):
A Short History of Financial Euphoria
> https://www.penguinrandomhouse.com/books/321392/a-short-hist...
_
JKG's Bio:
> https://en.wikipedia.org/wiki/John_Kenneth_Galbraith
_
_-_ UPDATE _-_
Shiller also published Irrational Exuberance, each new edition filled with more analysis of recent "bubbles":
> https://en.wikipedia.org/wiki/Irrational_Exuberance_(book)
bitcoin solved a problem..A few weeks ago I could not login to my paypal account due to verification BS, so I was able to pay instantly with Bitcoin. problem solved.
The issue is that you might send multiple such transactions spending the same money. If I want to guard against others trying to spend the same money I have to wait until the transaction is a few blocks deep. Generally the advice is 6 blocks which should be about an hour.
A bigger problem right now is that you pay whatever the current rate is. With the current volatility you could easily overspend or underspend by a large amount.
Steam is no longer supporting Bitcoin | https://news.ycombinator.com/item?id=15863182
> due to high fees and volatility in the value of Bitcoin
Even 0 blocks is somewhat safe, as long as you keep resubmitting the transaction and the other person doesn't spend those funds in an earlier block before yours gets included.
https://smsprivacy.org/zeroconf-payments
> We've decided to start accepting 0-confirmation payments under certain conditions:
> 1. The payment amount does not exceed 0.02 BTC.
> 2. The total amount of pending unconfirmed payments across all users does not exceed 0.1 BTC.
Recessions tend to bring down economies when they impact on wider economic activity - eg in the Great Depression it was all the loans taken and functional capital misused to play on the stock market. In the Great Recession it was mortgages in arrears, and the huge credit crunch as banks tried to balance their books.
At least at the moment, Bitcoin is probably mostly made up of small investors using small savings (sub 20k USD) that aren’t leveraged up in any way. If Bitcoin collapses, people just lose their shirts, but not their homes and jobs.
All of this of course might change if/when factories/banks begin to invest heavily in bitcoin.
This could reverse if the average man on the street starts investing significant amounts of money, enough that they'd miss it if it evaporated. Then we'd get a big recession when the bubble popped.
1) Do you think in 50 years there will be 150 nation state currencies or mainly a single global one?
2) Do you think the world superpowers (china, russia, US) will refuse to let another superpower's currency become the single global currency?
3) What will the total market cap of this currency be?
4) What is the chance that bitcoin or some derived form in which current holdings are preserved is that currency?
Now put a value on probability or amount for each of these statements. Here's my personal belief for example:
1 x 2 x 3 x 4 = ?
50% x 70% x 30 trillion x 10% = 1.05 trillion
2. No idea.
3. No idea.
4. About 0%. They're laughably unscalable and wasteful.
What the general public doesn't understand about Bitcoin is that its promise was betrayed by its ruling elite. It is no longer peer-to-peer electronic cash, because it cannot scale to allow widespread peer-to-peer usage. It is increasingly becoming a pure speculative vehicle, with no utility other than as a store of value (and a very expensive to transact one at that).
In other words, the advocacy done years ago to put Bitcoin into the public consciousness was all based on a premise that turned out to be a lie. The investing public doesn't know any of this.
Why I say it 'could' be a bubble, rather than that it is a bubble, is that it could find utility as a form of central bank money. While the masses wouldn't be able to use it, it's conceivable that it could have enough utility to large financial institutions to maintain a very high value.
The author mentions a bunch of candidate use-cases that might perhaps somehow justify it (including ICOs), but finds them all insufficient. If it's not competitive to replace a large portion of world wide consumer payments, then the author doesn't see any other use case (other than pure speculation i.e. holding BTC with expectation that they'll appreciate) that's sufficiently huge for the valuation/market cap BTC is currently trying to fill.
Sounds bad. But here's what Ari Paul actually said:[0]
> So there are quite a few use cases. I think the biggest and clearest, and easiest to understand, is as a store of value that can't be censored and is resistant to seizure. And so, the really clear example of demand for this, that I see, is the offshore banking system. Which is roughly 20 trillion dollars today. And it's not just people trying to dodge taxes. Apple, Amazon, every billionaire on the planet, has wealth stored there. And firms like JPMorgan collect fees to offshore law abiding citizens’ wealth. And people want to store their wealth securely, in a way that no single judge could freeze all of their assets. Right? Amazon doesn't want their entire global business operation to be shut down by one judge in Brussels. They want to be able to go through a lengthy appeals process and keep their business operating. So cryptocurrency performs that same task of the offshore banking, of keeping wealth secure an order of magnitude better. So we see massive real fundamental demand for this use case.
Makes sense to me.
0) http://www.businessinsider.com/cryptocurrency-value-explaine...
Bitcoin is currently (mostly) unrestricted because it has many use cases, it's unclear which are the main ones, and there's a lot of posturing about the legitimate use cases. However, in the long run, if it becomes clear that the other use cases fail and only this one remains, then this one will be (made) useless as well - a single act of law requiring all legitimate sellers to verify the identity (and tax status) of every transaction in bitcoin above USD $1000 (like https://en.wikipedia.org/wiki/Currency_transaction_report for cash), and it's suddenly not worth to store billions in it. Sure, the small scale people will use it to stash their wealth, but they don't have that much wealth to begin with, and that usecase won't justify the immense market cap associated with a $19000 BTC price.
That's especially so for the wealthy, who can afford requisite bribes and whatever. That includes the newly Bitcoin-wealthy, many of whom are libertarians or anarchists. But as you say, "small scale people will use it to stash their wealth", and that's another key benefit. It democratizes privacy from government intrusion.
[0]: Someone will probably comment, "but Bitcoin[1] enables decentralized blah-blah-blah". Okay, but why is the decentralized version any better? Centralization works fine for almost everything, and in fact is the trend in technology.
[1]: Someone else will probably say, "Bitcoin is just an instance of a blockchain/a distributed consensus protocol/whatever you want to call it and that's what's revolutionary." Okay, fine, but what applications does it enable that aren't better served by existing technology?
Transactions now taking several hours might then take several days.
Already getting Error 520 on Kraken
https://www.bloomberg.com/news/articles/2017-12-07/goldman-s...
[0]: Simplifying somewhat since some assets like stocks, homes, etc. have upward trends so the bubble probably ends slightly higher than it started.
Just yesterday it came to light that the ECB was purchasing fraudulent bonds that are now worthless. The Bank of Japan is directly buying ETFs. The Federal Reserve increased the money supply to levels never seen before using QE, and has yet to reduce its balance sheet even slightly. Housing is more expensive than it's ever been. Stock markets are more expensive than they've ever been. Everyone knows the official rate of inflation is well below the real rate. Our savings accounts have effectively negatively interest rates. But bitcoin is the bubble.
Bitcoin is the only safe haven asset available for purchase right now. It's the only asset that doesn't require me to trust an institution or an individual. It can't be confiscated. It's rules are known.
I'll trust in Bitcoin, thanks.
Bitcoin as a populist movement?? No sir. It is pure greed (and probably a healthy dose of good old fashioned MtGox style exchange manipulation) driving this bubble. Nobody buying right now is participating in some kind of mass uprising against the man. They are buying, holding, and praying they can unload their stash onto some greater fool right before the whole thing collapses.
No safe haven asset is as volatile as bitcoin. Bitcoin is over 9 years old. It still can’t, and never will, scale to handle even an order of magnitude less transactions than visa. The blockchain is worthless for almost every application. Bitcoin, at this point, is pure hype.
So many people there saying "Hold! Hold! Don't be scared, even if we see a $7,000 correction tomorrow! Hold! Just keep holding!"
through to people criticizing Warren Buffet as a "know nothing", "washed up old man"...
to the conspiracy theory, "The only way the financial big guys can make the price tank is if they can [shock, horror] scare you into selling! [more shock] hold! hold! hold!"
And the occasional, rare bead of sanity, "Please pay your capital gains tax".
Here it is yesterday performing a lightning transaction on mainnet: https://www.youtube.com/watch?v=a73Gz3Tvx3k
Here's an implementation of Ethereum smart contracts running as a bitcoin sidechain on mainnet: https://www.rsk.co/
Here's Greg Maxwell discussing scaling while keeping the network decentralized: https://www.youtube.com/watch?v=EHIuuKCm53o
Bitcoin has been taken as a joke for 9 years by anyone unwilling to actually learn about it. It's come a long ways since Mt Gox and is arguably the freest market in existence. There are online exchanges in every major country that run 24/7. You can trade without an exchange at all using localbitcoins.com. Anyone is allowed to participate and no one can manipulate the fundamental rules of the currency.
Keep living in denial.
You've got an entire darknet, you've got 80% of the world's population living in areas where censorship resistance is valuable. Chinese wanting capital flight, inflation infested countries looking for an alternative, areas of high political risk and instability.
To say its not really useful for anything is just facetious. Bubble sure, tech isn't there yet sure, no future use cases, now that's definitely not true. Will the use cases be worth 400 billion, that's a better question.
Setting aside the fact that censorship is not a technical problem but a political and societal one, Bitcoin's max transaction rate is so pathetically low that if 80% of the world's population used Bitcoin, they'd be lucky to make a single transaction every 45 years! Bitcoin can't even scale to what would be required to service a single football stadium during halftime.
> To say its not really useful for anything is just facetious
It's useful for anything illegal -- money laundering, drugs, murder for hire, etc. And even then, the traceability, extreme volatility, and long confirmation times make Bitcoin a poor choice for even the sketchiest of mob bosses.
Bitcoin's primary use case is scamming naive, starry-eyed libertarians, an-caps, and goldbugs out of their hard earned dirty fiat.
(source: https://www.wolframalpha.com/input/?i=(5.7+billion+transacti...)
Yes, censorship free money is useful for some people for some purposes - but most people in most purposes won't be willing to pay a single cent extra for this feature; if I'm buying a sandwich for lunch, I'm not going to buy it with censorship free money unless that service is better on its own disregarding the censorship issue, and BTC-as-it-is-now is not better in other aspects nor is it cheaper. While a lot of people might want a few such transactions for some special needs, those transactions are the edge cases that constitute a tiny, tiny fraction of the daily global commerce.
You can also buy fiat currency (dollars, euro, yen).
lol
People fucking love gambling. So it's a useful innovation, in a sense.
As long as you actually understand what it is and why people are buying it you'll be OK. Calling it a safe haven asset class however, is, in fact, amusing.
* To be fair it's also good for buying drugs, credit card numbers, and child porn.
Is it even good for that anymore? I've heard the black markets are moving to other crypto because bitcoin transaction fees are getting stupidly large. But that could be fake news.
If we really want to take this argument to an extreme, the government can kill you, torture you, throw you in a jail cell, or otherwise apply force until you give up your bitcoins.
If I thought the world economy was on the brink (I don't) I would buy non-perishable food, water, firewood, a generator, fossil fuels, solar power, etc. Of course the government could kill me and seize all of that too, so I'd probably want to buy a bunker in some remote part of the world.
Your bitcoins can be confiscated, government can seize all your property for <reason they will come up with when they want to>. If you no longer have your private key, good bye wallet.
The good news is that it doesn't scale.
I feel like this is a strawman argument here, you think your buried gold, bank accounts or any other number of things going to hold up against that?
For an ordinary person, investing in real estate is a simple example that meets this test - you can beat me up with a wrench and force me to do stuff, but I'll be able to recover (most of) it afterwards. For the common person, irrevocable transactions bring little benefit but a lot of risk, it's a drawback not a feature.
Yes, that's not resistant against the government - but again, a normal person is a lot more likely to encounter criminals trying to "confiscate" everything they own rather than government doing the same. Sure, there are edge cases (e.g. fraudsters stashing their gains, deadbeat dads refusing to support their kids, etc, etc) but for a normal person worrying about government seizure is much less relevant than, for example, ensuring that you don't lose your BTC in a house fire that burns all your stuff. Would your fire insurance cover that?
If the chinese government decides they want to destroy bitcoin, they can easily do it at any point: https://medium.com/@homakov/how-to-destroy-bitcoin-with-51-p...
The point is certain large institutions will always have someone to backup. This is why I kept arguing the other week about stock vs estate property (but kept getting downvotes brcause apparently people did not like when I suggested to invest in real estates). When bonds and everything else fail, people will find every penny to find a place to live. But that’s my conservative belief.
Citibank will not fail - someone else come will in and swallow it (or government will bail) - the number of global customers just cannot let Citibank fail completely.
Bitcoin on the hand is completely different - there is no one to back it up. It’s either a up or down game. There is no prediction based on revenue or “exciting new breakthrough”. But its weakness is also an advantage the way I see. Bitcoin and likes allow investors to focus on buy and sell without studying hard about the market. It’s a pure gambling - yes I realized there are maths and logics in defeating gambling games casinos....
Honestly - selfishly, I really want to see bitcoin fail to thr bottom so late riders like I get to buy some :(
But I urge folks to be ready for a sell. There is absolutely no way bitcoin will keep rising this way. It will either crash in 2-3 months back to $500-1000 or there will be a ceiling (e.g resetting the base price).
Bitcoin has never lived through a recession yet. No one knows how it'll behave. It was born in the flames of the great financial crisis. Hopefully it solved the problems that it was created to solve.
I just saved this article so I can laugh at Tim in the future.
First off. This-is-a-bubble. I'm not saying it's not. But, bitcoin IS solving major problems and it WILL fix the problems it has. Will it still be worth ~$20K/BTC? Maybe not, but maybe it'll be more. Hard to say.
I can not imagine how Tim could think that cryptocurrencies, and more specifically blockchain technology, "doesn't solve anything." This is such a stupid statement to make.
How exactly does a way to do trustless computing around the world equal "doesn't solve anything?" Brain dead opinion.
1. Why is trustless computing important?
2. What does trustless computing allow us to do that we can't/won't do now at a comparable or lesser cost?
3. What evidence do you have that anyone cares about trustless computing other than the price of bitcoin and other cryptocurrencies?
2. To establish a system of trust requires physical secuirty, political power, and financial resources that make this kind of computing only possible for the rich and powerful unless it’s already in their interest.
3. Price is an excellent indicator and the fact that we see coins being created means there’s innovation around it, but excluding those I think the best place to look is before there was a financial motive and look at the crypto punk movements and those who’d been trying to do trustless computing since the 90s in order to use technology to make society more fair and democratic.
I really don't get how you can't separate the technology and one implementation of the technology.
By the way, it does, just not for first world countries which is a pretty ignorant position to have. What if your country’s money is being devalued by morons in government? Or you’re being financially persecuted? Or the banking system is horrible. Or you just want to send back your family money. The problem now is the high fees, but once someone figures that out it solves it in a major way, don’t you think?
> Because it is often difficult to observe intrinsic values in real-life markets, bubbles are often conclusively identified only in retrospect.
Most interesting thing is, at least for me, that these are not doing a great job convincing cryptocurrency supporters that there is a bubble. The logic goes - If everyone thinks it is bubble, it probably is not a bubble.
I wonder how much of this record rally can be attributed to the upcoming Futures market. Anyone has theories on this?
-Paul Krugman, 1998
The pricing of the railways was completely insane compared to any reasonable business projections. Everyone was saying that there was a financial bubble (they were well aware of the Dutch tulip mania) as more railways were built with ever more insane valuations, all designed to be repackaged into shares to be sold onto the next fool.
Punchline: because the trains had to stop to pick up coal and water along the way, the railway operators discovered that most of their business wasn't coming from end-to-end journeys between big locations (which was what the railways were built to do), but instead from people getting on and off at stops along the way. With this sudden extra source of income, the railways returned quite a healthy return to their investors.
Everyone called it a bubble until they started making shit loads of money.
The way I see it is not many of the articles talk about the economic perspective of bitcoin and rather dismissive of the whole point of bitcoin. It helps no one but reinforces the support.