Hacker News Reader

The market can stay irrational longer than you can stay solvent.

You can know that bitcoin is doomed to fail, but that doesn't help you if there's a temporary price spike and you get a margin call.

On the other hand, everything is doomed to fail eventually, so that's no prediction at all.

Concise rebuttal to a statement that has bugged me for a long time. Thanks.

What do you think happens if lots of miners abandon bitcoin?

(this will have occurred in the scenario where a few (or few hundred) bidders matter)

A lot of people just made money shorting bitcoin... it literally just dropped 50%. Are you trying to say that that wasn't a crash? Or that it's not a bubble? Doubling in value then losing half of it within two months seems like the very definition of a bubble popping.

All I'm stating is that I do not think the price will reach exactly zero. Of course it's a crash, and of course shorting it is profitable during this, I was short myself in it for a bit.

But the bubble has supposedly popped many times, keep in mind Bitcoin has had crashes far greater than just 50% before (closer to 90% has happened multiple times, see https://en.wikipedia.org/wiki/History_of_bitcoin#Prices_and_...). So if this is 'the' bubble pop, rather than just another large crash, will remain an open question for quite some time.

Sure, it was a bubble popping, but it's the overall trajectory that's important. After the dotcom bubble, investment in the web dropped for a noticeable period of time. It's too early to tell if this current drop has shaken investors in the same way.

What seems apparent to me is that all the Bitcoin miners that have invested heavily in mining equipment want to see it continue to grow. The market may only slow down once miners no longer see a return on further investment (when the increasing price of electricity + mining equipment, combined with the steady rise of hashing difficulty, no longer makes it profitable), or when the transaction fees and transaction speed become too much of an issue. In other words, it's the technical limitations that seem most likely to stop the rise of Bitcoin (in my opinion).

How much money would Second Life currency be worth if Second Life went bankrupt and offline?

How much money would World of Warcraft gold be worth when that game eventually shuts down?

How much money will any amount of Bitcoin be worth when the Bitcoin network frays apart and ceases to function?

bitcoin is NOT money.

Not sure if you're joking or if you genuinely don't know how bitcoin works.

Not sure if you're joking or genuinely don't know how Bitcoin works. Without a consensus network it's just random bits.

The difference between your first two examples and the final one is that Bitcoin is decentralized. It only takes a single miner to keep the Bitcoin network functioning (in practice you'd need to wait for difficulty adjustment and it wouldn't work out very well, but the point is you don't need to rely on any single entity not going bankrupt).

It's true that is the price goes low enough mining would decrease significantly, but after difficulty adjustment it would still exist to a nonzero extent. Bitcoin can absolutely still function as a system even if 95% or even 99% of all miners end up quitting it over the next few years.

BitTorrent is truly decentralized. So long as there's one seed of something you can repopulate the network, you can rebuild from that singular copy. Even N partial copies could do it so long as the sum of all those parts is at least one complete copy. This is because all you care about is data, and data can be copied easily.

Bitcoin isn't. It's merely distributed and it depends on having a singular, healthy, functioning consensus network. Where that network splits you suddenly have more than one blockchain, as is the case with Bitcoin Gold, and Bitcoin Cash.

It also depends on having a healthy balance of mining power in that network so that no one entity can take control and start to dictate terms.

If all that's left is a single miner then four other miners can easily take charge of that network and effectively destroy it.

> Bitcoin can absolutely still function....

The blockchain component of Bitcoin can technically function, sure, there's no problem there, but as a unit of value, as a unit of exchange, it's functionally useless. You can't trust it, you can't use it for anything.

There is, by design, one blockchain. When that assumption fails, the network has to work to achieve consensus, and if that can't be achieved it splits. That can be fine with things like IRC networks or peer-to-peer exchanges, you can always do a messy reconciliation later, but with something that's supposed to represent a medium of exchange that's a problem.

I think you are lacking imagination here, would you still pay 1 cent for BTC that everyone has completely abandoned and doesn't care about any more? I am pretty confident this will happen at some point in the (maybe distant) future.

Everyone wont completely abandon it and not care anymore. That is basically beyond the realm of reality. I bet the majority of the people reading this would jump on buying thousands of bitcoin at that price, thus raising the price. It is very difficult, nigh impossible to actually imagine bitcoin not being worth anything.

Why not? There's plenty of other dead currencies that can't be practically exchanged for money. Or if they are, it's because they're interesting looking enough to attract collectors, which is not something that could be said for Bitcoins.

Non-negligible value of BTC also depends on constant investment of electricity in mining more Bitcoins and companies dedicating resources to maintaining payment/exchange infrastructure

This is a really interesting point, and I could see the parallel with currencies such as Confederate or Deseret money, or pre-Euro/pre-WWII currencies, but even those have insane values now that they are defunct. Look at the price of this old Utah territory money that existed as long as their own language (not very long) http://www.rustcoin.com/Deseret-Currency/

I can imagine a situation where it would completely collapse and fail to have a market price at all, but it takes a lot more than just "people selling it because it's going down". I can imagine similar scenarios for other assets like gold or the euro, but they are very far-fetched and I don't expect them to ever happen.

Gold has a history of being a currency as long as civilization so it probably will always be accepted as valuable, and it has actual uses as well, but mainly history. Euro Governments will always accept Euros for taxes, so they will always be useful, and if they stop they will still have a transition plan so you can turn your Euros into something they will accept. At this point if Bitcoin's value isn't going up a lot of people will use interest since honestly that has been its main appeal. And if it isn't technically better than some other cryptocurrencies out there there isn't a reason to think anyone will be using it long term.