Bitcoin Whipsaws Investors as Bubble Shows Signs of Bursting
bloomberg.com
bloomberg.com
I can't be the only one who is growing tired of seeing the same circular discussions rehased on every click-bait article posted by Bloomberg/forbes.
There's nothing exciting or newsworthy about the price fluctuations that have been present since day 1. Sure, the dollar value swings are larger - but nothing new is happening.
edit: found the wannabe over-night millionaires.
https://medium.com/@jonaldfyookball/mathematical-proof-that-...
http://www.coppolacomment.com/2018/01/probability-for-geeks....
It's actually a solution to the micropayment problem that has dogged the internet for decades, and resulted in the ad based internet content sites (and pathologies) we see today.
In terms of "something of value" there are many levels of this, and one of them is that bitcoin as a currency is something of value, for people in venezuela and other countries with highly debased currencies its a lifeline. It also is revolutionizing the remittances business. Just a few of the use cases.
Here are a few use cases I'm excited for:
* SONM / Golem as an entryway to fog computing.
* IOTA / WTC / VEN as entryways for exchanging value and information in an IOT infrastructure.
* NANO for exchanging value without deteriorating the original principal through fees.
* ETH / NULS / ECC - Tokenization to represent distributions of hard to divide securities. The doors are open to invest in startups, offices, applications and ideas without having to get approval on what you want to support.
* BTC / ETH as trading pairs. This acts as a new stock market that doesn't close. One where trades can even be private (on a DEX such as cryptobridge or barterdex).
Yes there are massive scams and there is questionable value in the 'store of value' use case BTC is currently defending. Every new idea is bound to have growing pains.
The larger implications is that software engineers now have the power and tools to create distributed shared systems that interact with the population at large in new and yet unforeseen ways.
It won't happen overnight but saying there is no value in what is currently there is purposefully misleading.
(edit) bad phrasing
wtf is that?
Small online communities are thriving in quality but all the business models are gearing on communities becoming huge and exploitable with a content for the average. I.e small communities on reddit have high quality content when they are small and they start looking all the same as they grow, attracting trolls, propaganda and disguised advertising by power users.
-so we have content quality issues due to misalignment of incentives of consumers, creators and gatekeepers.
Here is the thing: Other countries will follow China's model and the current internet giants like Facebook and Google will lose their status of global giants. Even USA has strong anti-globalist movement and a president who is preaching it.
-so we have political landslide towards geographic compartmentalisation.
Bitcoin and other blockchain projects are reaction to the current direction of the internet. Transfer of value, distribution of value and guaranteeing identity are the pillars of the movement.
In my opinion, investing in bitcoin or altcoins with reasonable projects is a better long-term investment than investing in Facebook or Google.
Consider where and how these assets are created, as it's more than likely a system designed to extract wealth from greater fools.
If the system does not let you produce the asset for the same amount of work that someone else put in (cryptocoins generate the bulk of the supply very early, and then cut off produciton to new users forcing low liquidity markets to exploit new users), why would you want to contribute to that cryptosystem?
Trades also do not have to be zero sum, winner and loser, games.
An easy example is this:
I sell my bitcoin to you for your eth. You sell your BTC to rent a vacation home for a weekend. I use the eth to generate a crypto kitty.
The crypto kitty has personal value for me, the vacation has value to you and the owner of the vacation home gets some BTC they can use to find value at a later time.
This. I also can't wrap my head around certain quirks, like for example Stellar Lumens ( XLM ) was/is giving away (for FREE), 16 BILLION of its coins to former Bitcoin Holders.
I just can't wrap my head around paying to buy a coin that the creators have themselves given out BILLIONs of, for FREE.. How do you justify buying into a coin like that?
That like Burger King saying that we'll give FREE Burgers for a YEAR to anyone who has been a former customer of McDonalds (receipt required), but all others have to pay.
Even though I believe in their ( Lumens' ) use case, and they currently have live rollouts of their payment system in partnership with IBM in Asia, I just can't bring myself to buy something knowing they have millions of the same thing to many people for free.
Source: https://www.stellar.org/blog/bitcoin-claim-lumens-2/
I can argue that Facebook's incentive to help politicians manipulate my community has far greater impact on me. Thanks to Facebook and Twitter enabling algorithmic propaganda, I will lose my right to live and work in the UK.
I wonder how organic were all these uprisings that were organised on Facebook and Twitter. These things changed the middle east and Europe.
Check out Zeynep Tufekci, a scholar doing wonderful job in researching these issues. Recent article of hers: https://www.wired.com/story/free-speech-issue-tech-turmoil-n...
In my opinion, Facebook and Twitter will be harnessed by local governments to control the conversation OR countries will replace them with local alternatives like in China, effectively ending the democratic processes.
Decentralised networks with incentives of profiting directly from the users by providing services directly to the users have great potential to become the thing that internet was promised to be.
I actually recommend reading some of Nouriel's thoughts on the matter. I don't recommend taking investment advice from him, or anyone else for that matter. Do your own research and your own critical thinking.
I believe there is immense value in a global currency that doesn't have uninvited middlemen. I also think the immense volatility will slow as people come to understand what cryptocurrencies can represent and better solutions arise.
I've basically been out since then, but might be jumping back in to running a multi currency mine if the stars align right. Again, I don't really care about it as an investment vehicle, I think the technology is interesting and I'm good at the ops around it.
No one really knows what the whole thing is going to be, I think bitcoin, with all it's flaws is here to stay but I think persistent information and decentralized network address resolution is WAY more interesting than money laundering, day trading, buying pizza, futures, ICOs, or buying drugs.
The day I turn on TV news to tell me about my budding technologies is the day you can just dump me in the river. Seriously though that guys yowling doom and gloom is either just ignorance or he's got a bridge to sell. I don't need to google him to find out which.
Was that sarcasm? Because if not, you're completely divorced from reality.
http://www.phoenixnewtimes.com/news/feds-raid-home-of-arizon...
On the other hand, yes, there's some bad news across the board. China, India, and Bitfinex/Tether. Despite that, we only see the price going to a 3 mon old price. Once Tether is sorted out and the regulations are clear in China & India, you could see the recovery.
Bloomberg seem to love speculating on bubbles of all sorts https://www.google.ca/search?q=bloomberg+bubble+bust
Can someone point out a better (actual) reason to downvote it?
I'm confused, doesn't parent fit the narrative of "get rich on bitcoin"? Anyway, my guess for why the downvotes is because it's a reverse of "appeal to authority". The classic appeal to authority is, "he/she is a $MUCKITY_MUCK in this field, and therefore should be listened to." with no real reason to listen other than that they hold a title of authority on the subject. Parent is the reverse: "Authorities on the subject are, of course, biased and should not be listened to."
Yeah, currency traders, what do they know?
Isn't it very obvious that anyone in the current financial world(Traders/FX brokers) doesn't like cryptocurrencies?
Oh, it's obvious. Ever wonder why? Bias? Conspiracy? Ya know, traders would trade cockroach shit if there was a market. It could be bias, could be that these professionals ask themselves, "how can I value this?" and come up empty.
So a finance person not understanding technology without any asset backing it is understandable and so they are not bullish about Cryptocurrencies. Everyone knows the crypto market is crazy, it's difficult to comprehend. But few of the top coins will survive in some or the other form.
Also, everyone in finance not agree on the idea it's a bubble. Goldman is starting a trading desk[1] in 2018 for cryptocurrencies, I will just wait until more traditional financial institutions join.
[1] - https://www.bloomberg.com/news/articles/2017-12-21/goldman-i...
> Isn't it very obvious that anyone in the current financial world(Traders/FX brokers) doesn't like cryptocurrencies?
"Oh finance people just don't _like_ cryptocurrencies!"
Well, finance people make their living either trading or selling anything at all they can get their hands on. Have you asked yourself why it is that they don't have the same attitude towards cryptocurrencies? Why is it that they don't apply the same knowledge and experience that they have from years of trading other financial instruments, to cryptocurrencies? Nothing strikes you as strange here?
Personally I trust the future of finance, governance, security representation, IOT, fog computing and other yet to be developed applictations to software engineers rather than wall street and lawyers.
You also may want to reevaluate your initial thoughts on what representations of value can do for each of these use cases.
A quick example: A secure means of sharing information and value across devices is a building block for the internet of things. How would such a standard exist and how would the value distribution become agreed upon?
There are many crypto currencies in the space
edit: removed coin reference, really not trying to convince anyone to buy anything, just re-evaluate prejudices
Using centralized systems. Why would a more expensive distributed not-quite-trustless system be better than a far simpler and cheaper system built on centralized trusted authorities?
Even as a "store of value," anything this volatile is useless. Call a spade a spade: this is nothing short of pure mania and speculation. It will end poorly for the majority of people getting swept up in the hype.
Strictly speaking, speculation is a genuine investment strategy, but it's only appropriate for those with a high risk tolerance.
This should be contrasted with 'speculation', which best applies to short-term strategy that merely seeks to skim alpha off the top of fluctuations in value, without regard to long-term health of the instrument.
But the point is defining investment so widely as to include this sort of behavior just devalues the term.
I have no doubt that bitcoin is a good investment in the long run.
Except several vendors have recently started dropping it as a currency primarily because a currency which is deflationary makes a good investment and a terrible currency. Bitcoin has no use-case, or maybe you can disillusion me and tell me what you've done other than hold it?
Besides, what this thread has illustrated to me is that bitcoin is a gamble, same as a penny stock.
1. Takes some of the commodity off the market, saving it for the later spike in demand.
2. Promotes more aggressive investment now to hopefully provide more supply later.
Those benefits offer grounding for the speculation. You can do some calculations to see how well those things might pay off, and make a bid based on that imperfect information.
I don't see how that applies very well to any pure "store of value" like a cryptocurrency. How big the spike in demand will be has no bound on the error.
Maybe when cryptocurrencies become a medium of exchange it would make more sense.
Yes it does. For example, venture capitalists are investors, and they engage in high risk speculation.
TL;DR - Bitcoin is an energy arbitrage.
Edit: You might as well try to assign a value to gold based on how much you spent on picks and hammers.
http://www.lbma.org.uk/assets/blog/alchemist_articles/Alch75...
the biggest factor is energy cost and because of this it's a big energy arbitrage.
Most of the coins in circulation already exist, and sellers can easily sell for less than it cost to produce today because most of the coins were produced for far far less than today's cost.
Sorry, the laws of physics say No. The electricity that you spend has been dissipated into the universe in the form of heat. It will quickly thermalize with its surrounding and be out of reach for useful work. Gone. You just proved your argument is a load of BS. Nothing is "captured" by each Bitcoin.
> "Using the “what goes into it” valuing method
Stop spewing BS please. There is no "what goes into it" method. No one cares how much something cost you.
If the spot price of a Bitcoin fall's bellow the production price in electricity, the logic thing for the miners to do is to stop mining, if they do this, the blocks will start to take more than 10 minutes and supply will decrease, moving the market price until it reaches equilibrium.
Hand-knitting a sweater takes about 30 hours. So if you can readily hire people to knit at $20/hour and sell the sweater for over $600, an arbitrage opportunity exists and we should expect prices to fall as new knitter-hirers appear to reap the free money.
But this does not imply that the price of hand-knit sweaters must always be at, or even near, $600. In fact, with a readily-available cheaper substitute that most people find acceptable, the price can be arbitrarily low. If the demand for hand-knit sweaters at $600 doesn't exist, then the market can simply evaporate.
The degree of volatility has nothing to do with whether it's an investment or not.
The fair evaluation is what the market decides just like any other exchange out there.
Bitcoin might very well fail but financial schemes are also investments.
You’re right, and that wasn’t my assertion. My assertion was that it makes it an absurdly poor “store of value.”
I also don't like the term, probably a most appropriate term would be "Holders"