Bitcoin stays crazy until traders learn it is not a currency | Hacker News Reader

Bitcoin stays crazy until traders learn it is not a currency

cringely.com

27 pointsrfreytag37 comments

I think that a discussion of bitcoin's price today is incomplete if it doesn't talk about market manipulation, Bitfinex and Tethers.

I simultaneously hate them and am mildly impressed they have managed to print over a billion dollars.

It’s over 2 billion now, and growing.

why are people accepting them?

They've printed 850 million in the last three weeks alone. If they get away with it then... wow.

But yeah, it looks like blatant manipulation - the price of bitcoin approaches $10K, quick, let's print another 100 million!

This is the elephant in the room. It definitely seems that something is up when $100M in tokens flow into exchanges and the price immediately jumps.

I am trying to find moderate-resolution market data to evaluate the effect that Tether issuances have had on prices. Does anyone know of a public data source that's higher resolution than 24h?

I think https://twitter.com/Bitfinexed might have this data. You could try asking them.

Relevant recent discussion:

https://news.ycombinator.com/item?id=16152050

Also bitfinex'ed writes extensively on manipulation:

https://medium.com/@bitfinexed/

> [..] almost exactly like a market that uses only U.S. one dollar bills and doesn’t allow exchanging those bills… ever. [..] And they aren’t just any one dollar bills: they are specific bills, each with its own unique serial number that can be checked against a U.S. Treasury database to make sure the money is real

This guy is talking complete bullshit, it sounds like he heard "bitcoin is trackable" and extrapolated from there (i.e. totally made shit up) without actually researching the specifics.

Bitcoin and all these other cryptocurrencies are fully-fungible, one bitcoin is the same as any other bitcoin and you can split and combine them up and down to whatever decimal places the protocol defines. There are no serial numbers.

What is trackable is the account number (public key) that the money is associated with.

Yawn, bold opinion piece "Robert". This guy is a hack, he predicted IBM would be reduced to a 20B sales company (I laughed out loud), and apparently scammed a bunch of kids with a "Mineserver" crowd fund that never shipped which was just an extant Minecraft server installed on an ARM device.

When I was young and impressionable I repeated some of his crazier assertions in public. I regret it to this day.

I'm impressed at his staying power in the public discourse about tech despite how incredibly wrong he has been.

What exactly is wrong with what he said?

The part on bitcoin is a trivial and common opinion; not newsworthy. The part on ripple is comically stupid. And then the fact that he himself is a con artist is too much.

Again, you're not really addressing what he said. You're just saying it's common opinion. Doesn't make it right or wrong.

(I'm talking specifically about the bitcoin part, don't care about the rest)

Because my opinion on that doesn't matter either. Not newsworthy.

Right now your grandmother is considering to buy bitcoins.

This is the last stage of the Ponzi pyramid. By the end of 2018, people will have learned the lesson the hard way. No need to shout it, just wait.

This is actually a very smart part of the bitcoin design: make a lot of people get coins by expecting returns, then have them discover that it can only be used as a currency and watch them spend the one they have.

We need to have the lightning network working and easy to use by the time the crash happens.

Is USD a ponzi scheme or any sort of manipulative 2008 scheme in general? Or is USD great?

People who get USD do not expect it to gain value on the long term. They do not see that as a speculative investment. Some will use it as a reserve currency, most simply as a currency.

I guess you can argue some way or another that this is a scam, but certainly not of the Ponzi form, where the returns are funded through the new entrants.

> Cryptocurrencies like Bitcoin, Ethereum and a ton of others operate almost exactly like a market that uses only U.S. one dollar bills ... if you need less than a dollar then you and your counter-party have to agree how much of a one dollar bill you each own.

I'm not sure I follow - can't I just send 700 Satoshis to someone's wallet?

(I don't use Bitcoin so may be missing something)

You can, I think the article alludes to the psychological issue of using whole numbers.

Also again, you can, but it'll take a while and/or you'll end up coughing up a big fee.

Yeah, but other currencies have minor units too, like pence and cents. If the issue is transaction times, then this is a really odd way of putting it.

I think bitcoin's explosive change in exchange rate triggered a lot of backlash. Fees became astronomical as a result of greater traffic and higher exchange rate.

Lots of articles underscored just how poorly suited bitcoin was for lots of regular purchases. Instead of focusing on the volatility, now they could also point to the enormous fees. Altcoins with faster blocks and lower fees became much more interesting.

But today transactions in the pennies (~$0.02 USD) will get cleared within a few blocks. We can benefit from the reduced congestion even if our wallets aren't using segwit or LN yet. It seems to me that this is probably not a coincidence -- that many players accelerated their plans to evaluate segwit and LN as a result of the last 8-10 weeks of activity.

Unfortunately major players like Bitpay, Coinbase, and blockchain.info aren't there yet.

Not sure I follow the logic. I think most crypto "investors" already consider it an asset/a store of value that goes up over time, not a "currency". So if that is true, then I would expect Bitcoin to "remain crazy" for a long time (with the minor and major crashes in between, of course).

As for the currency aspect, there are some improvements coming to lower transaction fees and speed by orders of magnitude, but it may take a couple of years to fully realize that transition. It's still not clear if Bitcoin should be the de-facto cryptocurrency, though, even with those improvements coming. There may be better coins for that out there. It's still a wild wild west in that regards, with all sorts of new innovations appearing every year.

Any article about volatility that fails to mention it is decreasing is an insufficiently researched article. Cringely didn't research his topic. Bitcoin's volatility has been slowly, but definitely, trending down for many years. And squinting at a price graph is not how you determine volatility. It can be and should be objectively calculated like so:

https://mobile.twitter.com/lsukernik/status/8649208737189519...

https://news.bitcoin.com/volatility-decreasing/

I think alot of ICOs should be looked at as prepaid gift cards. If a new target store was about to open up in my area I might buy a few dollars worth of gift cards at X% off to help the store open, but I wouldn't invest my life savings in it.

I kind of feel the US/SEC should let people invest up to 1% of their annual income in what ever scheme they want to. gambling, lotto, other schemes/"investments". maybe even let it be tax deductible.

a lot would get flushed down the toilet, but I can dump unlimited amounts of money into being a bad consumer.

Good luck ever closing the floodgates if you allow 1%. People will then consider it a free for all and if they invest their whole account how are you even going to punish them?

maybe set up a special account similar to an IRA.

" It’s not backed by “the full faith and credit of the United States of America.” It’s not backed by, well, anything. In that sense of innate value cryptocurrencies are worthless. "

I take issue with this statement in this article. I would argue that in the same way that 'dollars' are considered to be irreproducible, and this is central to the 'full faith and credit' part of why people consider them valuable, the irreproducibility of crypto is their innate value.

I disagree that irreproducability is the key. The central part of "full faith and credit" is the fact that the US accepts US dollars as payment. Which is important, because it can place debt obligations on people. In short, the US guarantees that there will always be a buyer for dollars. Bitcoin does not structurally guarantee that there will always be someone else who wants to buy Bitcoin, you have to take that on faith.

Dollars are not valuable because of artificial scarcity, they are the sovereign currency of one of the best economies in the world in which to invest your capital.

I understand how reproducibility is necessary to hold value but I don't understand how irreproducibility innately creates value. If I randomly forked bitcoin a bunch the coins would be irreproducible but the value would still be negligible

I used litecoin when I transferred money from biterex to coinbase because of the transaction speed versus bitcoin.

Simplifying in order to gain some clarity about bitcoin is good--and this is a good piece--but you can't make the bitcoin bros listen no matter how simple. They still need to chose to understand.

"What are you trying to tell me, that I can trade my bitcoin for millions someday?"

"No Neo, I'm trying to tell you that when you're ready... you won't have to."

- The Matrix (1999)

People just have different interests these days, and a lot more options to find like minded people to share them with.

The other thing is enough bitcoin bros have made substantial coin from earlier investments, have sold off most of their holdings, and continue to evangelize BTC while they foray into altcoins.

And, I can't blame the people who fall for it. Its hard to argue with someone who cashed out $130,000 off a speculative investment.

Just let me buy some put options with low enough counterparty risk and I won't mind.

Reply on news.ycombinator.com