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> in order to make a 10000x return requires a strong belief that Bitcoin will actually go that high. Because to reach 10000x you have to resist the strong temptation to cash out at 10x, 100x and 1000x.

Indeed. The article gives no rational explanation for why someone shouldn't have sold at $11,600, or why they shouldn't hold on and wait for $1,160,000. Saying "If you bought at the start of the bubble and sold at the peak you would have made a ton of money" is pretty meaningless, especially when the reasons for buying at the beginning weren't great ("If Bitcoin becomes the new global monetary system"/Bitcoin "eventually replacing a decent size fiat currency").

You could have a system for pulling money out (as a comment mentions), but that involves a different understanding of Bitcoin and also involves earning less money than the article mentions.

You can always buy an asset, bitcoin or whatever when you have money to invest and sell it when you need some to spend and not worry about the price fluctuations. It often works better than chopping about if the asset has good fundamentals. (with hindsight, bkr, amzn, appl shares, bitcoin, etherium etc)

> How many things were discussed on rationalist websites that people were sure were going to be yuge, petered out, and were forgotten?

This is addressed in the article. The potential upside with Bitcoin was enormous, and so many people had predicted it amongst the rationalist community, that it made sense to make a tiny bet on it. The fact that other tiny bets might not have paid out doesn't really matter.

The problem with huge potential upside arguments is that they are equivalent to Pascal's wager, which pretty much no one today takes seriously. And, if you accept them, you have to also accept huge potential downside arguments, which (along with accepting some other dubious premises that are popular in the "rationalist" community) lead you to Roko's Basilisk.

> huge potential upside arguments... are equivalent to Pascal's wager

I see this a lot, and I continue to disagree with it.

Bitcoin was comparable to long-odds betting or penny stocks. $10,000/btc is a large number, but it's completely tractable. The risks of Bitcoin were a high chance of failure and an unbounded context where calculating odds was harder than, say, making long-odds sports books.

Pascal's wager (and in rationalist terms "Pascal's mugging") is about generating a number so large it can't be reasoned with. More specifically, about arbitrarily increasing value until something beats any other consideration. Heaven and hell are infinites, duplicate simulations of a mind are unbounded, human extinction 'kills' an arbitrary number of future humans. And so you start getting nonsense results where risks are literally incomparable.

If someone in 2009 told you 1 BTC was going to be worth $10,000, you'd have said that sounds very unlikely. If they told you it would be worth $10,000,000, you'd have noticed that this would make the value of BTC comparable to the gross output of the entire planet, and declared that no, this was impossible. It's not Pascal's wager if you can slap an upper bound on it and start doing meaningful odds calculations.

(Roko's Basilisk is such a case, but I should reiterate that it was written to display why such claims don't make sense.)

Not that I made myself rich by this, but, when asked by noobs "How high can bitcoin go?" I told them it was roughly analogous to gold. So bitcoin and perhaps a few other cryptocurrencies could, in total, come to within an order of magnitude of the total market value of above-ground gold.

That means a $10,000 bitcoin is plausible, but definitely not guaranteed. Whereas a $1 million bitcoin is unlikely because something would have to happen to make it plausible. Being somewhat analogous to gold would not be enough.

The plausible values for bitcoin are supported by more than "animal spirits." So are the limits to plausible values.

>The total value of all gold ever mined would exceed US$7.5 trillion (wikipedia)

Approx number of bitcoins 16 million (21 max - 1 to go - 4 lost)

So to be equal btc would have to hit about $500k each

True if bitcoin is the only successful cryptocurrency. It seems likely there will be more than one.

> Confirmation bias. How many things were discussed on rationalist websites that people were sure were going to be yuge, petered out, and were forgotten? You can't claim victory for rationalists without factoring in the ratio of failed predictions.

If there are indeed more than 10,000 of these, then I agree it's selection bias to only look at the successful one. Do you think there were? Personally, I'm having trouble coming up with even a single equivalent case, though I'm sure there are at least a few.

> If there are indeed more than 10,000 of these, then I agree it's selection bias to only look at the successful one. Do you think there were? Personally, I'm having trouble coming up with even a single equivalent case, though I'm sure there are at least a few.

Isn't this basically every startup? If it grows up to become Google or Microsoft, you 10,000X your money. And then 10,000 of them don't.

The average person never gets the opportunity to be an early investor in startups. You could buy 10 bitcoins when they were $1. You couldn't buy Google stock until after they were successful.

I don't think the ratio of failed predictions is the correct basis for assessing the quality of the prediction, particularly not with something the predictor himself explicitly states is a low probability event. If I only give a handful of horse-racing tips but one of the long shots comes in leading to a high ROI, your prior for me just being lucky should still be high. Especially if none of the factors I've suggested which might make that horse more likely to succeed than predicted come to play, but it incidentally wins the race thanks to a massive pileup that takes out most of the other horses.

It's that second bit which really matters. Sure, if you had taken gwern's advice to mine a few BTC in 2009 and sold in late 2017 you would indeed have made the $10,000 per BTC mined hinted at. So it's easy to take that as confirmation of the quality of his reasoning.

But what gwern actually says is that BTC has a +ev on the assumption that it has up to a 0.1% chance of "eventually replacing a decent-sized fiat currency" and in order to do so, the value of an individual BTC would need to hit $10k. This replacement of "a decent-sized fiat currency" hasn't happened. The status of the prediction that BTC had a low but not trivially low chance of replacing "a decent sized" mainstream currency is indeterminate.

It's entirely plausible that when deciding whether or not mining was worth a bit of time and electricity gwern also weighed up the possibility that BTC would have great potential as a speculative asset due to an ideologically committed base who would want to hold it, public interest due to novelty and hype, and readily manipulable markets, but that's not in the post. This might even mean that he considered the situation that has come to pass as less likely than a scenario which hasn't. (Maybe he'll be along to tell us what he thought about that at the time!)

From the point of view of people who listened to gwern being richer than people who thought he was wrong, that might be an irrelevant detail. But ignoring the possibility the reasoning about the probability of x being systematically underestimated by markets might be entirely wrong because x occurred anyway is also a form of confirmation bias.