Bitcoin Exchanges Are Buckling While the Price Surges Past 16,000
bloomberg.com
bloomberg.com
The thing is, individuals and institutions worldwide currently own around $300 trillion in financial assets.[a] If as a group they decide to hold, say, 2% of their financial wealth in Bitcoin, say, to diversify away from all nations on earth, then Bitcoin's market capitalization would go up 30x, from around $0.2 trillion to $6 trillion. The number of bitcoins is fixed, so the price would go up by the same multiple. In short, all it takes is for the world to want a tiny exposure to Bitcoin.
Note that before Bitcoin it was impossible to diversify away from all nation-specific risks.
[a] http://money.visualcapitalist.com/worlds-money-markets-one-v...
B) It's pellucidly clear that holding bitcoin is dangerous in the same way that holding gold is -- i.e. it can be stolen. In fact, it looks like the carrying costs may actually be higher.
B) You can take your bitcoin, encrypt it, and put it anywhere on the Internet in plain sight, and then hold the encryption key in your pocket, or in your head. Totally safe, especially against the real threat, border security. Bitcoin is far easier to physically secure than gold is. What's difficult is securing it in a manner that also makes it easy to do business with it.
> You can take your bitcoin ...
Perhaps you could, but people generally don't. So in terms of actual risk and carrying costs and how that relates to potential market cap, your foolproof system is rather irrelevant.
These problems are mostly solved for "us", on hacker news. You might even say that it's easy to solve. Yet the status quo for anything digital around me is "hello123" as a password, and panic when having to re-enter the gmail password on that new iDevice because it has long been forgotten and neither "hello123" nor "hello321" worked.
Except for gold and tangible capital. How did Germany get through hyper inflation and Zimbabwe didn't? Germany had a real economy and an industrial base.
A person who owns a tractor owns a tractor regardless of the money printing going on. Sure, the State can seize the tractor but the United States can (and has) seized bitcoins - go tell the folks with bitcoins in the Silk Road that there's no nation specific risk exposure.
It's not wrong, but that 2% figure you mention really needs to be justified, not handwaved.
Just spitballing here. It's a very interesting thought exercise.
No person or entity can affect the money supply so the only governance function would presumably be
This seems very murky. It's utility as a currency of last resort seems uncertain and therefore relatively weak. Considering it would have to serve as a source of stability in a time of volatility which is itself a highly uncertain proposition.
To my mind, seems likely BTC is being used by the super-wealthy (persons and fictitious entities, i.e. corporations) to avoid taxes and to pay bribes.
It's still impossible, since your (and your potential trading partners’) access to the Bitcoin network, or even your ability to retain the keys which are equivalent to the Bitcoin itself, are not independent of state-specific risks.
These present real storage, and even moreso liquidity, risks.
Presumably a Bitcoin in North Korea is worth little to most North Koreans because they have no means of accessing the Internet or leaving the country to redeem its value. Should Bitcoin transactions be banned in a given country, but citizens retain mobility, Bitcoins will keep some value in that jurisdiction because of the ability to drive to a neighboring country, buy/sell Bitcoins, and return. Of course this will be subject to limits on cash flows across borders.
Has anyone made a map showing Bitcoin prices across the globe?
The largest risk to the long term viability for bitcoin (and probably crypto in general) are regulatory in my mind. A lot of value can be derived from regulatory arbitrage - just look at the evolution of cryptocurrency's use cases from 1) buying and selling illegal goods, 2) getting around capital controls, and now 3) issuing securities without having to go through the normal IPO process. It's a long road to people using this stuff to transact "real" goods and services. There is a very real nation-specific risk in the form of regulatory regime.
The argument for it as an alternative currency seems out the window. The stakeholders don't care though because the price keeps going up, which is all they really care about.
Buying bridges from strangers looks completely sane in comparison.
The overwhelming majority of which is productive assets. The only major non-transient holdings of non-productive assets is of gold. And that makes up about half a percent. So 2% for bitcoin, which at absolute very best is a slightly better gold, seems like a real stretch.
> Note that before Bitcoin it was impossible to diversify away from all nation-specific risks.
Gold
$300tn * 0.005 * 0.1 = $150bn.
That's my stab at a fair upper limit for a supportable market cap for BTC.
EDIT so I guess that makes me a short. I'd better sell.
It also just involved a click of a button. Nonetheless it was uncovered.
Too often would be cypher-anarchists forget about rubber hose cryptoanaysis. And unlike gold, bitcoin are fundamentally non-fungible and traceable.
The biggest advantage gold has over bitcoin is 5000 plus years of history as a store of value. The biggest advantage bitcoin has over gold is its immateriality. Personally I think the former outweighs the latter (no put intended).
if people decided to invest 2% of the worlds financial wealth into, say, drawings i made of million dollar bills, then my million dollar bill drawings would be worth $6 trillion. since i cant draw that fast, price would go way up
it would be incredibly hard to get 2% of all the worlds wealth. for reference, private equity as an asset class (including venture capital, growth equity, buyout funds, etc) has only like $2.5T in assets
At these scales moving that much money around is not as simple as subtracting a number from one set of ledgers and putting it into another.
This is one of my favorite modern finance quotes on bubbles because it encapsulates so well why there is still momentum in this crypto bubble even after an even casual reading of the news will tell you that everyone and their grandparents believes it's a bubble.
My bet is that heavy regulation in a market where there is heavy trading (e.g. USA, Japan, Korea) will be the blow that bursts this, but as with everything in public markets, who knows?
If you disagree with this, I challenge you to give an example of something that fits your description of intrinsic value. That is, something that would still have “value” even if nobody in the world were willing to pay for it.
air
water
sunlight
sex
If I received iron in trade for some goods/services the _only_ value it would have is as currency.
How can this be if it is supposed to have intrinsic value?
Either I literally always need to consume more iron or the iron has no intrinsic value.
The SALT system allows people worldwide to lend to others. Even in sanctioned countries because they can just source lenders in those countries and the borrower has the universal collateral.
And thats just one utility, only possible because of the speculation driving liquidity.
Imagine you bought a coffee with BTC for $3 in 2014. How much did you really pay for that coffee?
Once upon a time when we realized shuffling around gold bars was slow, expensive, and a pain in the ass, we created a much more liquid network on top of the gold, and called it the dollar.
How long until lightning network runs into limitations due to the fixed supply of gold, err I mean bitcoin, and abandons the "bitcoin standard"?
This is the first time a truly global, decentralized and truly always on digital store of value has been accomplished.
This is a big thing and the current price is nothing compared to the future prospect of this.
It seems that yesterday at around 01:00 UTC, someone with a huge amount of cash on GDAX started a buying bot, which bought BTC in small increments every second or so at market price. Judging by the GDAX volume in comparison to normal volume and an estimated average price, I'd say this person bought about 50-60k BTC for around 800-900 million dollars. Shortly after this buying activity started, the Bitcoin network mempool got clogged by transactions - and it doesn't seem like spam, but more like legitimate transactions with fees attached that would normally go through in an acceptable timeframe. I'm pretty sure this is people realizing that GDAX is the place to sell right now, thus they're trying to move BTC from other exchanges and from cold storage onto that exchange. However, most of them likely didn't get there in time, but the buying bot apparently had no upper price limit and just continued buying its way through the order books, until finally arriving at 19,6k$, when someone apparently hit CTRL-C.
During that time, the price on GDAX and all other exchanges decoupled, as arbers probably gave up on arbing (guess they ran out of coins or cash respectively and weren't able to interchange the funds between the exchanges, just like all the sellers). Even the Koreans, which usually are paying a large premium with regard to Western exchanges, almost lost all of their premium over GDAX for a few minutes.
I have only one idea who could have caused this: a single person or entity trying to load up on huge amounts of coins, planning to use them with corresponding orders on the upcoming futures markets. They probably got surprised with the CBOE announcement of starting futures even a week earlier than CME and thus had to speed up the buying plans a little, regardless of the premium they'd have to pay this way. The tricky question that remains however is: are they going to use these coins as a hedge, or are they planning on dumping them to do the inverse of what they just did (artifically lowering the market price, so their shorts on the futures markets earn them way more than they lose on the BTC exchanges)?
And of course: is this over now? GDAX went down and up again, and the mysterious and frequent buys at ridiculously high prices have returned as well, although the blockchain had practically no time to re-stock GDAX with coins. This person definitely doesn't care at all about the price and just wants to load up on any coins it can get really, really quick.
In all seriousness, I wouldn't be surprised if a group of high-net-worth individuals go short (exactly how you described) in order to shake out all the inexperienced traders/investors in the space for a nice profit.
Also, could it not just be CME preparing the underlyings?
Half of them are saying it's a bubble. The other half say they're getting rich. Nobody's talking about blockchains, fiat currency, built-in deflation, monetary policies of nations, or any of that stuff, because nobody's interested in these topics. To these people, it's a get-rich-quick scheme, pure and simple. The only difference in viewpoint is whether they're in the scheme or not.
I don't know how far it will go, but a new economic order it is not. The players themselves (who are pumping up the price) don't give a damn about economic orders.
"The third planet began its ascent to technological singularity but became terminally fixated upon the repeated calculation of an obscure cryptographic mathematical function. Nearly all geologically sequestered carbon was rapidly oxidized to provide energy for the computation of this function, triggering a runaway greenhouse effect and transforming the planet's climate to one resembling that of the second planet in this solar system."
it is unlike anything most people in the world have probably ever seen
Transactions now taking several hours might then take several days.
Already getting Error 520 on Kraken
And now everything seems like a good investment, you see average companies maling little to no profit acquired for billions, the housing market growing year-on-year, the US stock market up ~20% YTD. What’s the surprise?
Bitcoin exchanges are not exactly offering a high degree of transparency on their cash inflows.
That is the equivalent of Banks closing because of market panic.
I've also been wondering what would happen if this crashes. Could it have any impact on the real economy?
(This was in 2013. I bought my first bitcoin at $55 a piece, annoyingly I only invested ~$100 at the time :/)
Halifax were happy to do so though, also 2013.
I do believe the technological possibility is baked in BTC for 3-way signing a transaction so that a validation requires 2 sources of signature. You could implement an escrow system this way.
https://news.ycombinator.com/item?id=15869803
If some listened they might have made some profit. /s
That said, another fluff piece upvoted. Can we get another section like SHow/Ask HN just for these?
“If some listened they might have made some profit” - I think you’re giving yourself too much credit here.