No End in Sight for Crypto Sell-Off as Bitcoin Breaches $4,250 | Hacker News Reader

No End in Sight for Crypto Sell-Off as Bitcoin Breaches $4,250

bloomberg.com

327 pointsilamont437 comments

Since the article states "the trigger for the latest sell-off is unclear" I'm really curious if somebody here could venture a guess about the reasons for the sudden drop. The Bitcoin Cash fork seems suspiciously correlated but is it big enough news to cause such a turmoil?

Being a cryptocurrency-skeptic I won't pretend that I don't experience a little bit of schadenfreude when I see CC crash, however if I'm trying to be a bit more constructive I suppose that means that we're nearing the "make or break" point: if the huge investment in cryptocurrency-related technologies over the past four years or so manages to produce something actually useful over the next year I have no doubt that this is only a temporary set-back and we'll see BTC (or some other coin) breach $20k again.

On the other hand if, like I believe, it's mostly scams, empty promises and poor understanding of technology and/or economy, then this might be the beginning of the end. Hype can only sustain a $100 billion market cap for so long. That being said I wouldn't be the first Pythia to erroneously predict the downfall of cryptocurrencies...

Trading volume has dropped significantly over the last 6 months. Large holders have been patient waiting for new money to enter the market. Eventually, when the only activity is a few automated traders and the exchange liquidity provider, large holders are faced with opportunity costs of investing in something else and the limited liquidity the market can absorb as they exit. It's a domino effect as they see each other wiping the liquidity off the books as they market sell. No one wants to be the last one holding the bag.

This is also the result of the federal governments of the world, the US in particular, choking off all the fiat<->crypto exchanges with their expanded and draconian know your customer laws.

As an anecdote, I didn't buy my monthly bitcoin purchase early this month because I've been (and still am) locked out of my ~5 year old coinbase account I use constantly because they are being required to require new forms of ID and I cannot supply it.

Even if the stupid speculation markets and their off chain antics didn't exist this would be a problem.

Yeah, KYC/AML is totally bad because of trying to actually prevent money being funnelled into crime organization etc.

This is why I cant stand ignorant crypto-fans.

Even according to the IRS's own estimates, laws like Fatca would never pass a cost/benefit test. The implementation costs of such bureaucratic monstrosities is in the range of hundreds of billions, whereas the benefit is a few orders of magnitude lower. The established banks do not complain much about it because the high fixed cost of compliance disproportionally affects small firms, thereby protecting them from being disrupted by innovative startups.

So I know next to nothing about these regulations but what do you mean by "cost/benefit" exactly? Surely if these rules are meant to fight (directly or indirectly) organized crime then you can't just judge them on the amount of money saved? If you spend $10 millions to prevent $1 million to reach a terrorist organization, can't you consider it money well spent?

FATCA is about making non-US financial institutions report to the IRS et al about holdings of US citizens abroad. Worrying about terrorist cells in foreign countries made up of U.S. citizens is absurd.

FATCA is the stick used to dissuade tax evasion by US citizens. If people think they can evade taxes successfully, they will. Whether this impacts Bitcoin or other crypto is inconsequential.

if the terrorist organization is able to fund itself, then no, 10 to 1 is not money well spent. You'll lose in the long run.

Exactly. If we want to do a true benefit calculation, we have to look at alternate futures.

One important future to avert is where organized crime is rampant. Even if we look at only the economic costs, one study in Italy suggests mafia domination cost 16% of per-capita GDP. Given the US's $20 trillion GDP, that's quite a lot. And that's ignoring people's preference for security and safety. As an entrepreneur, for example, I think it's great that I don't have to worry about paying for "protection" to keep from having my business burned down or my legs broken.

We also have to look at terrorism. KYC/AML work to keep cash out of the hands of terrorists. Terrorism is, moral and human cost aside, very expensive. The 9/11 incident alone sees estimates in the $2-3 trillion range for total economic costs.

So even if KYC/AML really does cost hundreds of billions, which I doubt, it's a bargain compared to the problems it's meant to prevent.

[1] https://onlinelibrary.wiley.com/doi/abs/10.1111/ecoj.12235

[2] E.g., see https://www.brookings.edu/articles/the-world-after-911-part-... and https://archive.nytimes.com/www.nytimes.com/interactive/2011...

> One important future to avert is where organized crime is rampant... one study in Italy suggests mafia domination cost 16% of per-capita GDP. Given the US's $20 trillion GDP, that's quite a lot.

You’re making two separate, tenuous extrapolations here. Can you justify them?

I probably can. Did you want to ask some specific question? Better, do you you have a way of calculating path-not-taken costs for rampant organized crime that you think might be more effective?

I didn't see any calculation in the parent comment.

Are you asking me to do some sort of calculation? If so, could you spell out what and why?

The point of my original comment was to point out a couple of things we'd have to include in a cost/benefit analysis of KYC/AML regulation, not to actually do a proper analysis, which I would expect to run to hundreds of carefully researched pages.

Maybe I misread your comment. What did you mean by "Given the US's $20 trillion GDP, that's quite a lot"? What is "that" in this sentence referring to?

That "that" refers to the implied product of 16% times $20 trillion. It's meant to provide an order-of-magnitude notion of what rampant organized crime could cost an economy, so that people who had previously read "costs of such bureaucratic monstrosities is in the range of hundreds of billions, whereas the benefit is a few orders of magnitude lower" could more usefully think about what the benefits of crime reduction really are.

Exactly. You have provided no reason at all to think that repealing KYC laws (which were introduced by the Patriot Act in the 2000s) would transform the US into Italy, which is frankly just silly.

It also flatly contradicts the fact that the US didn’t lose 16% of its GDP to mafia activity before KYC laws were introduced.

Let's try this again: What makes you believe that repealing KYC laws (which were introduced by the Patriot Act in the 2000s) would lead to the same conditions as Italy? And how is this consistent with the fact that the US didn’t lose 16% of its GDP to mafia activity before such laws were introduced?

My American relative that was born in the USA and lived there for about 6 weeks finally did their US tax returns a few years ago.

No tax owing and received some hundreds of dollars in refunds from the IRS.

They even corrected a mistake resulting in an even larger refund (forgot to apply for some program).

All because of increasingly draconious laws for non-filers that conveniently ignore that most Americans abroad aren’t millionaires.

Cost: hundreds of US$, data entry and processing.

Benefit to US: ?????

He meant cost bebefit to organizations to implement it. Take HSBC for example, one of largest China/HK bank. They waited until Fatca kicks in, then realized it will be too complicated and expensive to implement, so what do they do? Within 45 days they kick out all us-citizen based accounts off their grid. All gone. Thats how foreign banks “comply” with Fatca. Arguably some politicians say it was actually mean to work this way so us citizens behave nice and just keep their freaking money in us banks. I know of 3 friends who had to sold their hong kong based business because noone there would open them banking account anymore so here it is american politicans screwing over american citizens having business on a foreign land.

Do you have a source for your hundreds of billions (hundreds of billions what?). Compliance costs are usually baked in personnel and IT costs.

KYC compliance: A form and proof of identity.

Actually it goes a bit further than that.

It means to determine the actual beneficiery of a bank account in addition to traceability of the funds used.

The bloke showing id may not be the actual owner of the funds and it's up to the bank to determine this.

FATCA has nothing to do with KYC / AML provisions.

It involves, simplified, reporting requirements of US account holders by foreign banks to the US authorities. It's main purpose is to avoid tax dodging by US persons.

I'm not arguing that it's a great law, since it's not. For example: it can make it extremely hard for US persons living abroad to open a bank account because foreign banks just don't want to bother with those onnerous reporting requirements.

It has nothing, whatsoever, to do with KYC / AML provisions, which are very rightfully imposed on financial instituions. And yes, I work for one.

I bet you also can’t stand people who oppose mass surveillance. Those ignorant people! Don’t they understand the government is just trying to prevent crime?

Money is by far a more delicate topic.

I think it easily falls under the same umbrella.

Financial privacy, especially from the state, is the ultimate form of privacy.

There's a reason we have had bank secrecy [0] a long time before anything like the modern Internet-based privacy movements, with their much more expanded definitions, came along. Heck, some countries based a whole lot of their appeal on the strength of said bank secrecy laws, like Switzerland.

[0] https://en.wikipedia.org/wiki/Bank_secrecy

Unfortunately bank secrecy is quite over even in Switzerland. They constantly get pressured by the EU to share data regarding EU citizens' accounts. The hunt for taxes is ongoing, under the pretense of preventing money laundering. Yet something in excess of 200bn euros was laundered through the Estonian branch of Danske Bank.

why? Why is what you do with your money different than what you do with your speech?

A) Large criminal organizations bypass KYC/AML/ABC just fine.

B) Low-level crooks and privacy minded folks are the ones that get caught.

C) Cost of compliance with KYC/AML/ABC is greater than the money recovered.

https://www.forbes.com/sites/francescoppola/2018/09/30/the-b...

> In that connection, a senior employee from the correspondent bank in question assessed that out of ten non-resident customers from the Estonian branch, the correspondent bank would be comfortable only with servicing one given the customers’ characteristics. The employee also warned Danske Bank against Moldovan customers and customers transferring money to Moldova.

Criminal organizations just mule the cash to a friendly bank. Then things proceed accordingly and the correspondent banks will blindly play along for years.

The end goal of these things are not what is sold in PR-speak. It is about expanding the surveillance state for TIA purposes.

https://en.wikipedia.org/wiki/Total_Information_Awareness#/m...

https://en.wikipedia.org/wiki/Total_Information_Awareness

There is a reason they renamed this the "Terrorism Information Awareness" center and then "shut it down". But, of course, other agencies just quietly use the software instead with some superficial changes.

If you think any of these ever really get "shut down" because overreach or the like...yeah. They don't. They just re-named, classified, and better hidden in some intelligence agency's toolbox.

You shouldn't trust the labels on laws.

> Low-level crooks and privacy minded folks are the ones that get caught

Low-level crooks getting caught is how higher-level crooks get caught.

> Cost of compliance with KYC/AML/ABC is greater than the money recovered.

Recovering money isn't even the main overt point.

AML is bad because it makes a crime out of something which isn’t actually bad. Yes, criminals are bad people who do bad things and they should be caught & punished. But KYC/AML are about making it easier to find criminals by their behaviour, not about crime directly. They violate the right to privacy, among other things, but most people don't care because — by definition — most people are normal: they don't carry $10,000 across state lines; they don't pay cash for everything; they have state-issued identification. They don't care if abnormal people who aren't criminals are inconvenience or oppressed by KYC/AML laws.

Such 'abnormal' people can usually work within the law too, by declaring currency etc.

AML is good because it makes it much more difficult for the proceeds of criminal activity to be blended in to the legitimate economy.

Can you provide me with just one example why money laundring is supposed to be a good thing?

And can you explain how the average person is inconvenienced in any way, shape or form by AML / KYC regulations?

Sorry, but your argument, so far, is just libertarian drivel.

> Can you provide me with just one example why money laundring is supposed to be a good thing?

Money laundering isn't good; the actions which are termed 'money laundering' in the law are neutral.

> And can you explain how the average person is inconvenienced in any way, shape or form by AML / KYC regulations?

https://www.washingtonpost.com/nation/2018/09/01/police-seiz...

https://www.thestreet.com/story/12793654/1/file-10000-irs-fo...

https://ij.org/michigan-man-cleared-wrongdoing-still-fightin...

https://www.chicagotribune.com/news/nationworld/ct-customs-a...

https://www.forbes.com/sites/instituteforjustice/2018/05/15/...

And on, and on, and on. It's a real problem.

Money laundering isn't good;

Just a second, in your original post you say:

AML is bad because it makes a crime out of something which isn’t actually bad.

So which is it? You can't have it both ways.

You conveniently left out the second clause of the sentence: it’s not good; it’s neutral.

There are three moral valences: good, neutral & evil. ‘Money laundering’ is neither good nor evil, but simply neutral. The things it attempts to hide may be evil, but it itself has no moral value.

That is my whole point: criminalising it makes a crime out of something which is neither good nor evil.

Please do not cross into incivility or stoop to name-calling in HN comments.

https://news.ycombinator.com/newsguidelines.html

If it makes you feel any better I have been cut off from my CB account since around the time I opened it, because your ID (for password recovery) seemingly has to be issued by the country you live in. (And their customer support is non-existant). My bad for being unwilling to become a UK citizen for a few steak dinners worth of bitcoin I guess!

Nice snark.

In reality, a driver license is enough.

I was fighting with them over the same issue for several months in order to get access to GDAX. I finally gave up and used competitors services. I sent pictures (via their webcam tool) of drivers license, passport and green card, and they wouldn't accept any of them. Emails to support detailing my situation were always answered with useless canned responses. I like the simplicity of Coinbase, but their authentication procedure fails when dealing with people who reside outside their country of origin.

> they are being required to require new forms of ID and I cannot supply it.

Can't, or won't?

Where’s the line ? E.g. If someone asked me for a certified copy of my birth certificate, because of circumstances it would be an enormous slog. Expensive and time consuming.

Does that count as can’t? How expensive does it have to be before it’s reasonable to call it “can’t”?

I think the bar is lower than the semantics of the word imply. Can’t can mean “theoretically can’t”, but also “it’s unreasonable to do”.

Driver's license or other state/country-issued ID seems like a perfectly reasonable line. https://support.coinbase.com/customer/portal/articles/274981...

Not if it has to be issued in the country of residence, like mkohlmyr reported. For me that would be basically unachievable. Well, I could retake a driving test here, I guess. That’s quite a bar to clear, if you ask me.

I find it difficult to believe that a local identification card is a high bar to clear.

If you live in a country, surely you have some legal status there, which implies some sort of identification, no? How long would I be able to live in London without needing a local ID card?

Welcome to the EU. You know that “freedom of movement” that everyone keeps talking about re Brexit? That’s what this is. I can live here without any limitations.

But actually getting ID, that’s not an EU matter, that’s national. So it’s bound to the UK. Here, after 5 years living here you get to apply for official residency status. 10 years; nationality. But regardless of that you can live here (until Brexit).

So, yes. I’m not making this up. I’m not trying to prove a point out of spite. This is my life, and that of every EU migrant here, that I know.

None of which could be a CB user, if that requirement is enforced.

I broadly agree with this.

My sense is that KYC hurts individuals who value their privacy and maybe catches some mid-level crooks. The big criminals bypass it without much difficulty. The recent case of Dankse Bank confirmed my opinions about this. Here's a forbes piece: https://www.forbes.com/sites/francescoppola/2018/09/30/the-b...

> KYC hurts individuals who value their privacy

If you care about privacy, use cash. Only your income will be reported.

How do I purchase an mp3 or an ebook from someone in another region with cash? This is definitely something I would like to do.

umm, you could buy Bitcoin?

Damn bro I‘m rly sorry. I thought Bitcoin was a decentralized system free of government influence. That was the USP, right?

This is the objective, not the current state of affairs.

Ignoring the debate about whether these regulations are a good or a bad thing, don't you think that the fact that "the federal governments of the world" (not sure what you meant exactly by that) are capable of chocking exchanges and harming cryptocurrencies in the process prove that the dream of a decentralized, unregulated currency is out of reach?

Even though the bitcoin network itself is censorship-resistant clearly you're having issues at the interface with the real world. Doesn't that negate a lot of what made CC attractive in the first place?

First they ignore you. Then they ridicule you. And then they attack you and want to burn you...

To a certain extent it is up to us to chose what the "real world" will be, and preferring cryptocurrencies over existing objects seems consistent with many contemporary trends and aspirations (decentralized, auditable...).

Not necessarily. It only shows that CCs have not gained enough traction as currencies to deliver on that dream.

The theory is that you wouldn't really need crypto-fiat exchanges because opportunities to earn and spend cryptocurrency directly would turn up everywhere, and eventually crypto would just crowd out fiat because it's all-around better.

Well, turns out nobody really cares about censorship-resistance nearly as much as about getting rich without doing anything for it.

That’s ridiculous. Identity proofing is required for securities trading, banking, airline travel, car rental, etc etc. Those industries seem to be doing just fine. To say that KYC/AML is the main force behind the bitcoin sell-off is an outlandish leap that ignores literally every other flaw of bitcoin as an “investment” - and there are many.

> This is also the result of the federal governments of the world

Why federations in particular?

It seems like the bitcoin selloff coincided nicely with the general stock market selloff. I think someone wanted out of bitcoin after staring at a flat price line for 6 months.

Someone wants out and they know there's limited buy side liquidity. Once the primary market maker algos detect a big move, they get out of the way so they aren't overexposed long or short. Once they pull the liquidity it becomes a race to sell first.

As a stock market investor, a flat line for the past 6 months sounds pretty good to me!

but no dividends.

The Saudis facing confiscation and raids back home dumped their cash into Bitcoin which fueled the rally to $20k. They are now pulling the money out.

I never heard this one... what do you have to back it up?

Jonathan Nelson, Managing Director HACK Fund discussed this on last week's sharespost webinar. The slides and replay should be up soon if you check their site. Discussion was titled 'State of Crypto Markets and Regulation: USA vs. the World – SharesPost Expert Series'

The vast majority of cryptocurrency transactions are in Asia, meaning China, Singapore & Japan according to a sharespost webinar I tuned in to last week. Getting money out of China has been a driver of cryptocurrencies in 2017 and early 2018, with little utility other than moving money around to invest in safer havens.

I can see Chinese capital flight as a driver of transactional bitcoin. How does that lead to holding bitcoin as an investment?

This reminds me of an anecdote from Liar's Poker where the writer talks about how not even the oil traders understood what caused the price of oil to move and so they'd just make up outlandish stories about the Saudis.

And Santa wears a hat

Sounds just like a ponzi scheme bursting. No surprise.

Ponzi schemes tend to collapse quickly and spectacularly.

Yup. Liquidity isn't something you need to care about if you trade something listed on an exchange, at reasonable volumes (neither very tiny nor enormous). If nobody else wants it the market makers will automatically take the other side of any trade at the listed buy/sell price, and keep the difference, that's their job.

But Bitcoin, BBS stocks, weird instruments that aren't listed anywhere, those you can only sell if you can find a buyer, if there is no buyer (or no buyer at the volume you care about) then the "price" doesn't mean anything at all.

LOL, numerous listed stocks are way more illiquid than bitcoin.

the recent fork/shit show within the bitcoincash camp (im not getting into this debate just an observation) resulting in 2 forks and split in hash power. the camps being btcsv and btcacb. yes those are their real names, and I think they're all stupid

> ... the camps being btcsv and btcacb. yes those are their real names ...

I think you might have a typo, I believe it would be btcabc:

https://www.bitcoinabc.org

you're right mb

Why would it affect BTC, let alone ETH and others?

I can't swear that it's the cause, but it looks like expectations have changed around whether ICOs would be required to classify themselves as securities: https://twitter.com/prestonjbyrne/status/1064714421061255168

This has been obvious to everyone paying attention for a long time, but most people in this market are there because they don't pay attention.

As a counterpoint, bitcoin has dropped faster than Ethereum, the principal ICO platform.

Only because Ethereum dropped significantly more earlier in the year (from $293 in September to $193 a few days later...)

Ongoing concerns about Tether can't have helped.

https://www.bloomberg.com/news/articles/2018-11-20/bitcoin-r...

> As Bitcoin plunges, the U.S. Justice Department is investigating whether last year’s epic rally was fueled in part by manipulation, with traders driving it up with Tether -- a popular but controversial digital token.

> While federal prosecutors opened a broad criminal probe into cryptocurrencies months ago, they’ve recently homed in on suspicions that a tangled web involving Bitcoin, Tether and crypto exchange Bitfinex might have been used to illegally move prices, said three people familiar with the matter.

I don't having much to say about fundamentals. From a technical analysis point of view, according to EWT, a correction mostly happens in three strokes. First stroke was 20k->6k, second was a year long sideways move, this is the third one that will reach the extreme of the correction. In these terms, what we're seeing this last week is an extension of what was happening beginning of 2018; i.e. to ask why this happened is the same as to ask why the price fell from 20k.

I am a firm believer that cryptocurrencies can offer major value to the world. But if you look at what's out there, Bitcoin etc are outdated technologies.

Since Bitcoin was always leading the charts, in my opinion the whole market had to crash, and out of that it will show which ones offer true value.

You shoudn't focus too much on price, but mainly focus on applicability and adoption/use.

Most doctors here only offered cash payments, but nowadays a lot of them offer smartphone payments. They lose 6 cent on every transaction.

Imagine a world where I can pay instantly, worldwide with a single currency, 0 fees. The technology is already here, the adoption not (yet ;).

We have email, which is basically instant, free and worldwide. Why can't we have the same for payments? Only time will tell if such a major shift can happen.

The thing is that the trading price of crypto does not mean anything to its adoption or utility. You can write a payout algorithm that grows the monetary base so fast the price can't appreciate. That coin could become unbelievably successful without ever being a viable dragon horde to sit on of endlessly growing value due to scarce supply.

Its really a reflection on the doomed state of the mainstream crypto mindset to only really care about getting rich quick in fiat off cryptocurrency bubbles. Bitcoin doesn't matter as a currency, it matters as a pyramid scheme. The people investing in it for personal financial gain dramatically outpace those trying to use it to overthrow fiat hegemony.

There have been coins like peercoin and Steem that have in small regards or parts tried to push the adoption envelope as a usable exchange medium over the pyramid scheme, but they are few and far between and their general unpopularity really shines a light on where the scenes true values lie.

>We have email, which is basically instant, free and worldwide. Why can't we have the same for payments? Only time will tell if such a major shift can happen.

Ever had a free email account compromised? Good luck. Not to mention email isn't free. Someone is paying for it and making money from it. Even if that is concealed behind several layers that aren't obvious to most users.

"Most doctors here only offered cash payments, but nowadays a lot of them offer smartphone payments. They lose 6 cent on every transaction."

What's the opportunity cost of adopting a completely new payment system versus losing 6 cents on an already very expensive transaction?

> We have email, which is basically instant, free and worldwide. Why can't we have the same for payments?

We're getting there, but we're doing it in the mainstream space, not the cryptocurrency space. Within and between an increasing number of countries and groups of countries, this is becoming possible.

But between banks, not with distributed wastes of power like Bitcoin.

Occam's Razor - could just be a symptom of the current stock market crash.

What stock market crash? Vanguard’s Total Market Index (VTI) is up 2% for the year, and only down 10% from its All Time High (excluding dividends):

https://finance.yahoo.com/quote/vti

Tech stocks aren’t the whole market.

True but a lot of Bitcoins investors probably get disproportionate amounts of equity compensation in that part of the market.

Even index stocks are in free fall right now. Check again. VOO has dropped 1.5% today, which is pretty bad for an index stock.

> VOO has dropped 1.5% today, which is pretty bad for an index stock.

Uh, what? An index stock mirrors, as closely as possible, the market it's indexing. If the market goes down 1.5% - which is extremely common - so will VOO.

I think GP meant it is pretty bad in the market if the composite index average (and thus index ETF) is down 1.5% in a single day.

Which is a silly claim. The markets being down (or up) 1.5% is an unremarkable trading day.

https://thumbor.forbes.com/thumbor/960x0/https%3A%2F%2Fblogs...

Per this chart, almost 20% of Dow trading days fall in the 1-2% change range.

Aaaaand vti is down for the year. Imo stock market has just crashed.

>Imo stock market has just crashed.

Were you alive in 2008?

Barring time travel, I'm not sure how a stock market correction starting in September 2018 can cause a Bitcoin crash starting in December 2017.

He's probably talking about the most recent drop. BTW, what bitcoin crash? I'm still up over 2000% ... /s

> BTW, what bitcoin crash? I'm still up over 2000% ...

An individual's stocks being up during a recession doesn't mean there's no recession, does it?

Sorry, I know that sarcasm can be difficult to detect in writing.

Obviously he's referring to the current value compared to the high last year. You know where the current price of bitcoin is over 75% less than it was last year...

Any time something loses 75% of it's value (and still dropping) and you say, "what crash?", you're not fooling anyone but yourself. Even if you got into bitcoin on day one.

I was being sarcastic.

was thinking the same thing. and... it's not (yet?) a 'crash' but we're definitely seeing a downturn in various sectors - apple/fb have been down at lot in the past few weeks. Assuming some correlation between "tech" in a broad sense and "crypto" doesn't seem too far-fetched. Loss of some confidence in one area might be bleeding over in to another?

ETH isn't doing well either, so there must be more than the BTC cash fork in play.

BTC is strongly linked to the rest of the crypto market. When BTC drops, the rest follow almost always.

Perhaps the recent SEC action against multiple ICOs is contributing too?

Long story short, the American regulator has determined that the 2017 hype-fuelled ICOs were unregistered security sales (just like everyone said they are, but ICO promoters pretended to hand-wave away by mumbling something about utility tokens). They've fined an initial wave of ICOs to the tune of $250k and mandatory refunds to all who bought tokens in the ICO.

The catch here is that the refunds must be paid in USD, but the ICOs mostly raised in cryptos. If you did an ICO in December 2017 and raised $10M worth of cryptos but never cashed out any of it, your treasury is now perhaps worth only $2M, yet you're liable for $10M USD refunds. Any ICO administrator within reach of American regulators ought to be cashing out while they can...

I wonder if ico issuers are selling off btc and eth in order to have enough cash on hand to do the asset buybacks and still be ahead.

Anyone who ICO'd in early 2017 (including big names like tezos and filecoin) have enough USD value of btc and eth to comply with the SEC and still have 9 figures left. It's a good time to take profit if you did that, get off the hook and still be incredibly cash wealthy.

That would also explain why ripple is still stable, not as many icos hold xrp as btc and eth

> could venture a guess about the reasons for the sudden drop

It has to decline, I was giving it 2-5 yeas, but it seems it dropped much faster: https://news.ycombinator.com/item?id=15760415

As for the faster than usual now, my guess is few things. Main contribution is NVidia that had their earnings report, they told the planet flat out gpus aren't selling as well, so the gig that everybody is increasingly mining was called up. Normal people check out, traders can't trade if they can't short it and it's starts going downhill. So anybody that's in the business of not losing money stops the bots. But nvidia the most visible thing that creates sentiment among the crypto-evangelist population it seems.

The other reasons wound be, end of a 40 year bull run across western democracies, end of the minor cycle economy run, add to that a trade war, QT, people overexposed on the houses with HELOCs and stuff from that QT, and everybody will be pulling cash from everywhere since cash will matter fairly soon.

The rest is standard, stock market drop by 20% or much more, asset bubble deflation, etc etc. It's all fairly cyclical.

Hasn't GPU mining been unprofitable for at least five years now? I remember everyone moving to asics back in 2012.

Any GPU mining is assumed to be on Ethereum, Monero, or ZCash. Which... at least a few months back... remained profitable. I don't know if its profitable anymore since the prices have dropped so dramatically.

> Main contribution is NVidia that had their earnings report, they told the planet flat out gpus aren't selling as well,

You've got cause / effect backwards. The slide started on Nov 13th, while NVidia's earnings report is Nov 15th.

The NVidia thing was my first hypothesis too. But it doesn't seem to hold up to scrutiny.

Maybe. Although excluding nvidia would have to include a requirement ER leaks don't happen. On something as semi-legal and connected to all sorts of shady as bitcoin.

> Main contribution is NVidia that had their earnings report, they told the planet flat out gpus aren't selling as well, so the gig that everybody is increasingly mining was called up.

So... you know absolutely nothing about Bitcoin, do you?

There is zero connection between Bitcoin and GPUs, except maybe indirectly via other cryptocurrencies, but then those would show the effect stronger.

The latest bubble continues to deflate. I'm not about to make any predictions at all, but a drop to 1500 or so would be quite "normal" for Bitcoin, historically speaking. Again, there's no particular reason to think it will go there, or if it does, stop there. The volatility in crypto is just so high it's hard to say there's any particular reason for price movements beyong trader's reactions to price movements.

With BTC this is just normal volatility. The usual drawdowns that are happening every 1-3 years are about 75% - 95%. If the price of BTC goes under $1000 that will be something new.

I can't speak of other coins as they are a very different market (and I'm a Bitcoin maximalist).

Demand will not recover.

This probably won’t age well

By "Bitcoin maximalist" I assume you mean you want to see it enter widespread use as currency? Any thoughts on the extreme environmental downside of BTC?

Existing (non crypto/legal tender) also has environmental downsides. Is there a serious study comparing the environmental downside of currencies (crypto and not crypto)?

It means that I think it will eat all money (and most altcoins as well) over the next 15-20 years.

About the downside: I hope using coal as an energy source will be shut down ASAP. Bitcoin protocol would easily work with only sustainable energy sources, but it doesn't work without the security of proof of work (all other algorithms for decentralized concensus so far decrease security of the protocol).

Luckily China already took some steps to close down the most polluting Bitcoin miners.

Quite the lexiphanicism aren't you?

Not purposefully I assure you. English is not my mother tongue and I know that my vocabulary is all over the place at times. If you have some feedback about things I could've worded better I'll gladly hear it.

If you're going to use a fancy word like lexiphanicism to criticize someone, you should at least use it correctly.

("Lexiphanicism" does not refer to a person, but to their use of language.)

I like to think it's because of this article:

https://www.nature.com/articles/s41558-018-0321-8

Nothing has soured me more on bitcoin than its impact on the environment. If for no other reason than that, I'm done with it.

I mean I hear ya but it seems a little bias when they are 'projecting'. I mean, if I had 0 wives last week, got married this week, does that mean in 2 months i'll have 8 wives? (no i am not in UT)

"Here we show that projected Bitcoin usage, should it follow the rate of adoption of other broadly adopted technologies"

Even today bitcoin is a serious energy concern. Currently the network uses as much energy as Denmark, while commanding a 0.033% share of cashless transactions. Which countries will bitcoin surpass in energy usage in 2019 as mining gets exponentially more difficult by design?

I discussed the things that happened specifically on November 14th in my Quora answer: https://www.quora.com/Why-did-the-price-of-Bitcoin-plummet-d...

It's very very likely because of the Bitcoin Cash fork. It has become a pissing contest between Roger Ver (Bitcoin ABC) and Craig Wright (Bitcoin SV). While Craig trolls and threatens the Bitcoin ABC side by "bleeding them dry" in a hash war.

Jihan Wu, founder of Bitmain quoted: “I have no intention to start a hash war with Craig, because if I do, by relocating hash power from BTC mining to BCH mining - BTC price will dump below yearly support; it may even breach $5,000. But since Craig is relentless, I am all in to fight till death!

The war is related to Bitcoin as the price of Bitcoin tanks because in a hashing war, both sides are likely to rent hash from the Bitcoin mining pool. This is being settled in Bitcoin, sold on the market to cover electricity, and thus suppressing the price of Bitcoin.

Since Craig is trolling around, threatening a price of $1,000 per Bitcoin in a full out hash war, people are selling before it gets even more ugly.

Another downside which reinforces the price suppression is for Proof-of-Work systems (where miners are rewarded based on their computing power), there's an unfortunate feedback loop in price drops. As said by Colin, founder of Nano currency, Low price -> low mining rewards -> turn off some miners to lower cost -> lower hash rate -> longer transaction confirmation -> lower price.

More details can be found in my Quora answer about this.

I think it's fascinating that this is 100% different than what Bitcoin was sold as.

The theory of Bitcoin was basically "money without people". You wouldn't have to worry about governments and politics; value would be sent and stored in pure pieces of math. Mere governments couldn't possibly do as well as the glorious algorithms wisely fixed in advance by, etc, etc.

But if you're right, Bitcoin has way more politics than a third-world kleptocracy. And it clearly lacks the institutions and formal procedures used to shape those kinds of political currents into useful effects on the currency and the economy.

There is differences between the white paper and the implementation. There is also another elephant in the room... whales who have enough money (thanks to crypto currencies) to influence things.

The problem here is not Bitcoin per se, it is the current state of the real world, where anyone can "buy" and "sell" Bitcoin for legal tender.

Bitcoin, in a world where it is the sole currency, has the benefits you quoted.

No. There are currently two super powerful individuals fighting and are allegedly dragging down every thing on the market just because they don't like each other. What makes you think that this would be a good state of affairs for a world currency?

According to this explanation those super powerful individuals "sell" Bitcoins for fiat in order to pay the energy (electricity) they use in order to mine another currency. It is only possible because Bitcoin is not the sole currency.

The current financial system faces such battle-ordeals and isn't immune, remember the Black Wednesday.

> According to this explanation those super powerful individuals "sell" Bitcoins for fiat in order to pay the energy (electricity) they use in order to mine another currency. It is only possible because Bitcoin is not the sole currency.

Doesn't it? What changes if you take out the fiat intermediary and buy energy (a fungible, near-universal production input and end-consumer product in one) directly and the competition is about a commodity that is not a currency?

The Bitcoin "value" (the buying power it confers) will be mainly determined by bulk transactions and by factors of high-inertia (changing them radically and fast is impossible), not by investors. One of such last factors is the cost of energy production and storage, another is the efficiency of mining equipment and the associated willing to amortize it. Therefore it will be much more stable, and it seems to be the main problem at hand.

>There are currently two super powerful individuals fighting and are allegedly dragging down every thing on the market just because they don't like each other.

Kind of like how nations compete and in the process to drag everyone else down: Like US and China trade war.

If the design of bitcoin requires it to be the only currency in the world, then it will never function correctly.

No true Bitcoin has this problem, of course.

> The problem here is not Bitcoin per se, it is the current state of the real world

If Bitcoin doesn't work in the real world, that's a problem of Bitcoin.

> Bitcoin, in a world where it is the sole currency, has the benefits you quoted.

If Bitcoin doesn't offer sufficient benefits in the real world as it is without being the sole currency in the world, there's no plausible route to it becoming the sole currency.

“My clever idea is great if everyone wakes up one day and abandons all other alternatives for it, but not otherwise” is a long winded way of saying “my idea sucks”.

It may be a process rather than an abrupt change, just like most evolution.

Adoption/revolution.

Ah, of course. Bitcoin can never fail, it can only be failed.

There's no money without people. Money needs people's confidence to work as an exchange vehicle or value store. Jasonwen's theory seems correct if the facts are looked at as a collapse in confidence. If this is true, we shpuld also see capital flight to other cryptocurrencies.

It seems to me that the price is dropping due to large players selling off their coins, not because of some hash-war. AFAIK, mining Bitcoins is barely profitable anymore and wouldn't cause such wild jumps (even if this is true).

I predicted last fall there would be a huge sell-off as short term cap gains (35%) turn into long term cap gains (15-20%) at the 12 month mark. Time to lock in the remaining profit and realize those gains.

"somebody here could venture a guess about the reasons for the sudden drop"

It has no inherent value, is a poor currency substitute, it is a poor store of value, and is on a long term trajectory to zero. People are realizing this and liquidating large/low basis cost positions.

This may all be true - but it fails to explain why it crashed now (as opposed to 2 months ago, or 2 months hence).

"I'm really curious if somebody here could venture a guess about the reasons for the sudden drop"

A more telling question is how it has held any value at all for as long as it has. There was a period where BTC's rise was rationalized via its promise to become the currency of the future. Does anyone actually believe that now, though? BTC instead has become nothing more than a speculation vehicle built on a foundation of absolutely nothing. No rational analysis sees it being the basis of really anything at all, and that mad rush has seen an outrageously inefficient system put in play. It wouldn't be bad if it were actually the basis of meaningful purpose, but instead GWs and GWs are going to effectively nothing.

I suspect at some point a psychological threshold is going to be hit and BTC is going to plummet through the floor. A lot of very specialized hardware is going to derelict.

As an aside, many of the comments in this discussion, and the moderation of the same, is indicative of how profoundly irrational people can become when they have skin in a game. If I held BTC I'd probably be trying to rationalize why it should be worth something, against all rational analysis.

TF are "GWs and GWs" ?

GigaWatts

> breach $20k again

This is so unreasonable for a piece of data which was worth $0.1 a decade ago and is easily cloneable (trivially if not for network effects and integration)

Currency and crypto are only made of network effects, so..

The entire concept of bitcoin requires the network effects and integration. Pretending the hash value of a block is useful in any way without them misses the entire point of its existence.

> On the other hand if, like I believe, it's mostly scams, empty promises and poor understanding of technology and/or economy, then this might be the beginning of the end.

There are several startups that have made progress but not enough progress that the value of their token has increased through network effect. The Brave browser has 5MM MAU. There is still a lot of development to be done to whitelist ads and pay users for their attention. It's a good start though.

Other startups are starting to realize that on boarding new users with Meta Mask doesn't work. The users unfamiliar with cryptocurrency exit the funnel early because installing a plugin and depositing money makes the experience much more difficult. This is the case with FunFair currently.

Increased adoption probably won't happen until 2022. Because these assets are liquid it's likely we'll see an even bigger drop until then.

To me, it’s obvious that the Bitcoin Cash “hash war” has been what’s triggered the fall of the 5K support level (and to me, it’s telling that 200 messages in, no one has really even mentioned it).

The contentious fork has been very disruptive, causing BCH trading to be halted and lowering trading volume across the board. At the same time you have a huge redeployment in mining resources, up to 4exa on the Bitcoin.com pool alone pointed to BCH to defend vs a BSV takeover attempt (along with threats of 51% attacks and long range re-.org attacks) - up to 30% of SHA-256 mining power was pulled, mining at 100-200% less profitability of BTC, which also would have had some pretty big effects on the market (potentially parties dumping BTC to fund hashrate, potentially other miner related effects).

This sort of shakiness/distraction/fud drives the whole market down, which drives more selloffs, which drives articles and discussion like this, repeat.

Now that this seems to be largely over (and exchanges are opening BCH/BSV back up) you’re actually seeing a bit of a price/volume bump after this cratering, although I think people will be skittish for a while. I think it’s right to be skeptical - the people that are building real things will keep doing so, largely under the radar, and the markets will do as the markets will.

I’ve never understood the commonly held view that miners can effect the price. The distribution of coins is on a fixed schedule it shouldn’t matter how many miners there are. Price should not change from any of that.

This may be more related to rapid liquidation of holdings which does affect the short term. Long term it should average out.

> The distribution of coins is on a fixed schedule

No, it's not.

The distribution of coins is affected in the short term by the actions of miners; it has periodic difficulty adjustments to intended to target a fixed long-term rate, but it is not a fixed schedule.

More important than the change in newly minted coins is the fact that the miners (in this atypical case) are selling btc for fiat to buy energy to outmine their competition.

The public is finally seeing the structural weaknesses in crypto. The sales pitches never really talk about forking or it's impact. Now it's clear, I think, to most layman investors that forking is going to result in a long-term erosion of crypto value.

Each fork is dividing the value of your holdings, and most people don't have enough information to know what to do about it. Initially, they might be happy they doubled their holdings, but when the sum value of the forks don't add up to the pre-fork value, then people will eventually feel like they are getting scammed and exit.

Main reason likely natural down cycle following parabolic run-up. Remember btc/crypto still a global, minimally regulated market driven by and large by unsophisticated retail investors (though pros are increasingly getting in). Domino effect / reflexivity on way up and on way down. Marginal buyer was simply exhausted at some pt, and institutional demand expected to be next big marginal buyer didn't materialize as quickly as people thought.

That said one guess on a trigger for the most recent sell off was that Bitcoin Cash, a fork of "reference" Bitcoin, forked in a bigly hostile way, resulting in two new Bitcoin Cash chains (Bitcoin Cash ABC and Bitcoin Cash SV - for satoshi vision lol) each now with its hash power majority controlled by one group e.g. highly centralized. The market is confronting the possibility that proof of work -- the most widely used consensus mechanism -- is way more centralized than it thought, and way more subject to value destruction from a tiny % of people.

For all the hype, bitcoin really is not worth its price to me. I would not sacrifice 4k to have 1 bitcoin for its use today. Its expensive, slow and inconvenient to transfer.

When it hit 18k-20k last december it was absolutely nuts. Bitcoin is not there: it has no mainstream product market fit. Its pretty useless. And it hasn't been fulfilling its expectations of not being so.

What do you think about Gwern's article on Bitcoin from 2011?

https://www.gwern.net/Bitcoin-is-Worse-is-Better

Lightly scanned the article. I dont criticize bitcoin for being imperfect, but for being useless as it is today.

Moving dirty money, or escaping capital controls is great, but still a very limited use case. Its really impractical to do any mundane thing. I.e. replacing credit cards and buying your coffee would be a massive human landmark event. But its not close to that, and there's no clear path to that.

So why would you spend 6k to hold this piece of land today, when that buys you a 3% secure yield or a many other investments with greater returns.

It was quite useful to people getting money out of China.

I am nobody to speak for the market, but if I were the market my rationalization would be the prospect of Algorand

It's the holidays and the market is a bit bearish on crypto so folks are selling to free up some $$$

Wrong hypothesis: the big run up started exactly this week last year.

That big run up was at the tail end of a slow and gradual incline which contributed to the massive bull rush. Now the market has been in a slump so easy timing to dump.

Speculating here but if you look at the price graph this year it looks like someone was trying to prop it up and keep it above $6000. Maybe tether/bitfinex or the Chinese miners, dunno. But anyway this would require $17m or more coming in to the market each week to cover the mining rewards. Maybe that dried up and the buyers ran out of money, then once it broke people tried to sell out before it got worse?

Perhaps a dumb question but how do you know it was one person/organization as opposed to general market forces?

Huge spoofed orders: https://hackernoon.com/meet-spoofy-how-a-single-entity-domin...

Huge influxes of Tether: https://www.nytimes.com/2018/06/13/technology/bitcoin-price-...

I guess you don't really know unless there is some inside type information. Often currencies are officially supported by governments but with bitcoin the parties seem secretive.

I'm really curious if somebody here could venture a guess about the reasons for the sudden drop

One could probably write pages on the topic, but here's my one sentence summary: reality didn't match the hype, and markets are coming to that realization. Corollary: hype-driven price goes up much more slowly than reality-driven drops.

Simplistic though it might be, it's the reason for most big drops in equities markets. That biotech that might be on to a cure for prostate cancer? Up and up she goes...until the FDA trial says it doesn't work. New battery tech company says they'll have batteries that can drive you SF->NY and a full charge takes 30 seconds! Buy, buy! Oh, BTW, the batteries will cost $10K/kWh. <effect: dying_PacMan_sound/> New way of paying for things that will eliminate cash, and all the geeky kids are into it? Those nerds know what they're doing, right? 'cuz I sure don't, and I don't want to miss out! Oh, all I can buy are illegal drugs of unknown quality, and I can lose all of my money if I forget my password or make one tiny mistake and the hackers get it? I bought in at $19.5K, why isn't it still going up? Be glad it's only down to $4500.

I think the bell that rung at the top was the same bell I've seen in other speculative markets: The main people you would expect to see cheerleading throw in the towel and say it's crazy. That happened writ large at the beginning of 2018. There was one presentation at a Bitcoin conference I went to in early 2018 where this long haired huppy guy went through CoinMarketCap and called out every single thing on there as bullshit and scams.

Any chance this talk was recorded? I would love to watch it!

It was at the world crypto economic forum. I can't remember who it was, but he had a beard and olive skin, so that should hopefully narrow it down a bit. I just stumbled in there while wandering out of another presentation I thought was dull. I think he was going off script for whatever the topic was.

Well, there's also some news about the Tether probe: https://www.bloomberg.com/news/articles/2018-11-20/bitcoin-r...

Having seen four of these major wipeouts over the years, here's the pattern for this highly cyclical spectacle:

1. Nobody cares about Bitcoin. If you tell anyone you bought it, they either shrug or laugh.

2. Bitcoin refuses to die. The long-predicted technology show-stoppers never happen and the network keeps chugging. A small but dedicated group of users continues using it on a regular basis.

3. Speculators who had written Bitcoin off as a fad take a second look.

4. Defying any explanation, the USD/BTC exchange rate begins a modest rally.

5. The financial press starts running stories about that crazy Bitcoin idea, and how it's not dead and the modest gains made by those crazy enough to buy in.

6. Seeing this coverage, people without much technical or financial savvy begin getting interested in Bitcoin.

7. Stage 6 continues relentlessly, producing jaw-dropping gains.

8. The financial press gives Bitcoin a bear-hug, dedicating special attention to it with special segments and even dedicated shows.

9. A full-blown speculative mania is now in progress. Gains of 3-8% per day, for days on end are not uncommon. Everyone, it seems, is an expert on Bitcoin.

10. An event takes place. Most likely, the collapse of a major Bitcoin exchange, although it could be something else. Regardless, a sharp decline takes place.

11. A prolonged period of USD/BTC declines unfolds. Initially, the press is all over the story, telling the tales of woe from those who bought in at the peak of the mania and lost it all.

12. Occasionally, BTC/USD shows signs of life, either rallying sharply or falling precipitously. These short-term changes are usually reversed quickly.

13. After months or years of flat to downward USD/BTC motion, the only people left holding bitcoin are those who understood it and wouldn't sell at any price.

14. GOTO 1

"13. After months or years of flat to downward USD/BTC motion, the only people left holding bitcoin are those who understood it and wouldn't sell at any price."

Lol

Quite the paradoxical statement.

Aparently Bitcoin is emo now.

the hodl gang

The brake on the cycle that I see coming is that eventually, surely, everyone that can take part in steps 3 and 6 has already taken part in one of the cycles and quite a lot of them got burned.

Or more succinctly - surely sooner or later you have to run out of naive speculators?

250 people are born every minute. Some of them are bound to be suckers.

One potential counterargument to this is scale. Before 2012, I hadn't heard of Bitcoin.

Back in '13, it was me and a couple of my nerd friends who were talking about this crazy Bitcoin surge. I read some about the algorithm, thought it was cool, and left my money elsewhere. It was mostly low-traffic articles or niche sites that talked about it.

A year ago, my dad asked me about it. My coworkers claimed to be experts on it, but only had the most basic understanding of Merkle trees, and no real context on mining difficulty adjustment.

Each successive bubble has involved more and more people who are new to Bitcoin. At some point everyone who cares about the "get rich quick" aspect will have already heard and gotten burned.

You'll notice that absent from this cycle is any kind of productive use or innovation with bitcoin. Its all cyclic hype.

Bitcoin is a solution, that is still looking for a problem.

Simple....and well crafted ..but this is not limited to BTC and company. The same pattern happens in other markets , equity, bond and debts , fx , and the rest. But BTC was unique because one does not need to pass lengthy huddles before buying it unlike say buying Google stock if you live say in Libya .

This is really strange but it's like I'd rather be right than be rich.

For example I am in no way a believer in bitcoin as having a future of anything. I did not buy any for that reason (among other reasons for example I am not a gambler and think rationally).

However I have made a great deal of money over the past few years (like a really large amount 7 figures) catering to people and companies that believe in bitcoin and crypto.

But all along I am waiting for it to end.

Because it's like I'd rather be right and smart with instincts than be wrong and have the money. Ok maybe I don't mean that literally. The money is nice. But it comes close to how I feel. As if I will have the satisfaction eventually even if the money ends for me (because bitcoin and crypto goes away) since my instincts will have been right.

I am wondering how many other people feel this way. I don't mean people who haven't profited (but would still like to hear what you think) but those who have profited off the ecosystem around bitcoin.

And I wonder if it's similar to what the people selling pick axes felt.

I never felt this way back in the 90's about the Internet. Was very clear that appeared both valuable and would end up being a big thing.

The problem with this hypothesis is that step 9 kept having a higher and higher Bitcoin market cap, until it hit a ~$300 billion in January (and cryptocoins in general hit $800 billion market cap). It is like subprime mortgages or dot-bomb stocks or tulip bulbs or what have you, at some point it becomes significantly large enough for people like Charlie Munger to have to contemplate it and deem Bitcoin "rat poison". Then its $300 billion market cap falls to $80 billion, which is its current market cap. IMHO, Bitcoin's market cap will be near $0 eventually, as it is worthless. So there is still air to deflate that balloon. Unless investors want to pour $220 billion back into Bitcoin to reinflate it.

That's not really how market cap works. Market cap as calculated doesn't equal the amount of money put into the system.

The past is not always the future.

FWIW, the universal convention in FX markets is to quote in terms of UNDerlying currency/ACCounting currency (sometimes also called BASE ccy/QUOTE ccy), ie the price of one unit of the underlying ccy in terms of accounting ccy.

Thus, the generally quoted price is BTC/USD (around 5000 as of this time), namely the price of a Bitcoin in USD. USD/BTC, on the other hand, is the price of one USD in BTC, or about 0.0002. (Of course it might well be the other way around in a year or so.)

Note that CC1/CC2 * CC2/CC3 = CC1/CC3, and thus

CC1/CC2 / CC3/CC2 = CC1/CC3,

which is where that odd convention originates from (because setting eg CC2=USD, you divide the dollar price of CC1 by the dollar price of CC3 to get CC1/CC3).

EDIT: clarify

That's what happens when you screw over the general public in a giant pump and dump. There is just no more money left to steal. First time was for the early adopters at $1000, second time was for the late majority at $19,000. You're not going to see that happen again.

What about $35 and $250?

Innovators. No one really heard of Bitcoin prior to the $1000 pump.

Reddit heard plenty before 1000$

I was there the week it was released. Lost 100 bitcoins to a hard drive crash and never looked back. They use to literally hand them out like candy. Mt gox happened and I never took it seriously ever again.

If I asked my mother what Reddit is right now, she'd have no idea what I was saying.

If your mother has never heard of Instagram, Netflix, eBay, or Yahoo, that doesn't mean nobody has heard of them. They're still almost as popular as Reddit.

Instagram, Netflix and Yahoo are world brands. Reddit is mostly anglophone.

I lost a batch on MtGox but it looks like I might get something back.

I'm quite grateful the trustee sold off a few hundred million dollars worth at around $12k. At least there are some funds available to pay out to creditors.

Silk Road had been talked about plenty in the mainstream media before it even hit $50.

I learned of it from this very website when it was 2.3$

By virtue of being of participating in this site, you are operating in a realm that is so far out of touch to most people. We seem to forget that we are definitely in a bubble here.

When was that - early 2017?

In mid 2016 mass market newspapers in the UK were running stories about using Bitcoin for holiday spending money - I vividly remember having a discussion with my wife about it.

2014-2015-2016 saw _A TON_ of stories about Bitcoin. I still remember reading the headlines "Bitcoin hitting $1,000!", "Bitcoin back to $150-200!" etc.

Most people still don't care about crypto

Being in college around 2014, everyone knew bitcoin because that's how you got your ID for bars.

At $250 I was explaining to my parents what bitcoin is. At $19,000 I was overhearing Starbucks baristas talk about it.

At $4 I was trying to explain to my professor that my capstone project wasn't based on drug money.

At 4$ I was pissed I traded 150 for WoW gold. AT 10k+ I was once again reminded the universe hates me.

I think that's why crypto-currencies will be doomed. Because too many people see it as something they can maybe buy for a pittance and at some point in the future cash out for a 5,000% increase.

It's not currency, people don't want to use it like currency. They want it to be a viable get rich quick scheme. Because whenever you refuse to use it for normal commerce lest next week, next month, next year, you regret your purchase because of huge price swings. Everyone would engage in that sort of behavior and I'm sure it's not the basis for a healthy economy or currency.

>AT 10k+ I was once again reminded the universe hates me.

Why? You'd have sold them at 150.

Maybe, more likely I would have halved my amount each time I sold. Which is what I did with my cheap ETH.

At something less than 1¢ I was just playing with a thing I came across on some forum, or Usenet, or something.

I found the hard drive from that computer a while ago, but there was no trace of the coins. There was no reason for me to keep them, after I'd finished playing with the software.

At $10k, car service mechanics were buying into random cryptocoins. Nobody understood them, everyone just wanted to get rich. A speculative asset, not a currency.

But what could we have done about it? It's unfair to be liked by fools. The core idea is still interesting to experiment and explore but now it's tainted by greed.

Many of the core ideas (well, all of them or almost none, depending on what you consider the core idea) could have been implemented with regulatory instruments in place that optimize for stable prices/controlled inflation instead of being effectively deflatory, similar to how regular currencies do it. Anything that does not will either fail in other ways or be loved to death as a value store/greater fool game. The two can never be torn apart.

The problem is if they were implemented with regulatory instruments and whatnot, they would share their critical weakness. If tomorrow China says 'we know your banking computer systems are insecure and have no integrity. We do not trust that the numbers on them represent anything', the US economy is over. They can't prove that Walmarts net worth came from trade rather than from some malware or error or some other fraud. That would leave cryptocurrency being the only thing that can actually be proven to be real.

Basing your currency on trust is great... until the trust is gone. And trust can disappear with a glance.

At $80 I was mining using custom ASIC. At $20k I was trying to convince myself not to sell and that I was in it for the long run. I'm still in.

How much does it hurt?

I never felt like I owned anything, so it's not that bad.

I virtually went from £0 to £4k to £800. The ASIC miner (which I can now use as a nice doorstep) was paid off by selling half the amount I mined back then, so as of today that is still a £800 profit.

When the cleaning lady asks if she should buy bitcoin, is when you should dump and sell everything.

"When the street gets in, its time to get out."

peter lynch

People have asked me if they should buy in. I've simply told them as a complete gamble. Suggested if they want to buy go with a small amount of money and not be concerned if they lose it all. I don't know they bought but I made it clear it is risky and volatile. Sure there is a possibility of a good return, don't take out a second mortgage.

IDK how popularity matters here?

Same but I brought some at 19000 fomo

I got the Starbucks barista effect last dec. When it pumped, people with no money asked me about it.

Glad i told them to stay away.

At 330 shoe-shine boys were buying into the Dow Jones Industrial Average. It went down to 42. It's at 24,581 now.

Yeah, and 400 years of inflation later, tulip bulbs are still way down from their peak, as long as you want to draw conclusions based on irrelevantly long periods of time.

Memorably when it was at $15K+ I was on the phone with my dad (who still uses MapQuest and pronounces CD-ROM with a heavy emphasis on ROM) said "well I think it's time for me to put my money into Bitcoin."

Thankfully he was joking.

"You're not going to see that happen again."

I've heard that during the last 4 bear markets. Give it some years it always comes back stronger to absorb fresh money

Financial markets retract. Doesn't mean its a pump-and-dump.

I know the feeling, but at one point you gotta stop repeating the same thing forever. Bitcoin is not a new thing that will repeat 1000% growth.

You are aware Apple was worth $1tn as a company? $150bn more or less in the grand scheme of things isn't a lot of money, which is about the size of the crypto market.

I just don't see banks and institutions (i.e. Nasdaq and Vanguard) building out crypto capabilities to then not use them. They'll market the hell out of them at some point, and the cycle will repeat.

Orange/Apple IMO

That said I forgot banks were working on crypto currencies. Still I'm tired of bitcoiners ~analysis. Enjoy your ride

> I just don't see banks and institutions (i.e. Nasdaq and Vanguard) building out crypto capabilities to then not use them

Let me start by saying that I agree there will be a repeat. But, the assertion that companies build some capability to always use them is wrong. What companies did was look into a hype cycle and bought into it as the next "cool thing". After sometime they will forget it even exists. And move on to the next "cool thing".

Wanna bet?

Add some volume statistics to this comment

I sold around $14k after holding for years, and I was thinking about placing a short at $6500 but decided not to, the best traders in this space make money on the way up and down

How do you know how to position if up and down is determined by random bouts of speculative buying? Or in this case, egos clashing in a completely different crypto. There is so much more data and tangible information to guide you with traditional investments which may also have their speculative runs, but are more often based on the objective success of an asset that can be easily estimated, determined, and predicted.

At maybe $10k on the way up, my 70ish y.o. dad (40 years as SWE) said that all the young guys in his department were talking about something called Bitcoin.

I said, dad, you better not.

He said, don't worry, I won't.

At $10k on the way down, I asked him if he did. He said he didn't, but a bunch of those young guys did.

(I don't remember the exact value. Probably actually more like 12 or even 15.)

'Early adopters' at $1k. Haha. I can't help but laugh, after buying into bitcoin at $3.30.

picture of a bitcoin man on a free falling rollercoaster screaming /weeeeeeeee/

What's the purpose of that article? What can be discussed about Bitcoin and the other crypto currencies that hasn't been discussed here several times already?

There is no news besides the price collapsing but that has happened before as well. But this time it's different They are saying that during a bull run and during a bear market.

I don't believe that, there's no limit to human greed.

Few people have not heard of crypto. If it is a ponzi there are no suckers left.

> What's the purpose of that article?

I stopped watching cryptocurrency prices about a year ago. The novelty wore off. These articles say “hey, that thing you forgot about is doing something interesting—give it a minute.”

And still, even on HN, the discussion of cryptocurrency is oscillating between totally different axioms?

Some of us speak as prophetic market analysts and bring up "nails in coffins" and other crystal ball bull shit, and some of us wonder about the technology itself and understand that the price against the dollar only matters to gamblers.

Has anyone come up with a use case for blockchains yet, that isn't buying illegal drugs or money laundering?

I keep seeing pie in the sky hypotheticals like "supply chain trust" from people who think farmers are etching their cucumbers with serial numbers, but I've yet to see any use case presented for a blockchain that has real utility and isn't better solved by existing processes or systems.

stablecoins seem like a good idea. But, besides, isn’t buying drugs a pretty good application of crypto? I know I have derived value from that.

Ignoring the question of legality for the moment, it sharply limits the potential size and increases the costs. Legitimate businesses are going to be less likely to use a service which is strongly associated with criminal activity, exchanging for useful currency is going to be riskier and more expensive, and transactions are going to be easier to monitor with lower transaction volumes. All of those world-changing pitches are a lot harder to sustain when the volume is that much smaller and most of the players have a strong incentive not to talk about it.

Personally, and by no means am I a bitcoin-enthusiast, there's a lot of value to be had by something that allows relatively frictionless international money transfer. I realize that's not necessarily a feature of blockchains, though it is a feature of cryptocurrencies (for now, at least).

We had a friend who lives in a commonwealth country working for us as a contractor, and figuring out how to pay them was a pretty big PITA. I was really close to just paying them in bitcoin, because it was that much of a hassle.

Ultimately I was too afraid of any potential tax/legal implications to follow through on that, and we ended up just using TransferWise instead. Still, it was that much of a pain.

Tranferwise makes me cringe. I fell for the hype. I failed to do research and fell into the same tarpit that even a cursory glance would have revealed.

They withdrew my funds. Promised a transfer date by the following date. Three days pass and the suddenly lock me out of my account and asked for a bunch of documents to complete the transfer.

I can say from the sender side, it was fairly straight-forward and great to use. Sorry to hear about it being a pain from the recipient side.

For most people making normal-person-sized transactions, TransferWise is fine, and doesn't need lots of documentation.

For example, paying rent on a holiday home, or sending money to a son or daughter studying abroad.

Larger sums, or transfers involving Americans, are more likely to need the additional identity checks.

(Source: my usage, and feedback from people I've recommended the service to.)

True ownership of scarce digital assets is something that blockchains excel at, particularly decentralized blockchains (because true ownership means no individuals have the power to control your asset) - there are still endless questions about what this means and how this plays out in practice, but it’s a real use case with a fascinating future that will live independently of the get rich quick fantasies of most blockchain proponents.

What "scarce digital assets" exist other than blockchain-backed cryptocurrencies? You've invented a problem for your solution.

There are plenty of scarce assets defined by no utility except for their scarcity; we call those assets money.

That said, even before Bitcoin arose, most real-world (fiat) currencies were handled primarily through electronic transfers. There, the double-spend and scarcity-preservation was largely maintained through a combination of accounting convention, interbank agreements, audits, regulations, and occasional criminal prosecution (for things like counterfeiting). So "scarce digital assets" in the form of entries on the Fed's (or the ECB's) balance sheet existed before and continue to exist after the emergence of blockchain-backed cryptocurrencies.

Gold-backed ETFs represent another form of "scarce digital asset", but more of a hybrid asset since they only arose and kept their value stable after creation/redemption mechanisms were formalized, and continue to maintain counterparty trust through auditing. But they do provide a liquid means of owning electronic gold; gold being the traditional scarcity-based asset.

>> There are plenty of scarce assets defined by no utility except for their scarcity; we call those assets money.

Money doesn't hold value because of its scarcity. Money holds value because of the faith and credit of the entity that backs it.

If a person issued a single unit of currency tomorrow and promptly died, it wouldn't suddenly hold any value simply because it is scarce and guaranteed to remain so.

To put it another way, money's value lies in the fact that it is "legal tender". That status is backed by a powerful organization and people have to trust that organization. When the trust is gone, the value is gone, regardless of how scarce or plentiful the units of money.

> What "scarce digital assets" exist other than blockchain-backed cryptocurrencies?

Other digital collectibles predate cryptocurrency (a fact pointed to be the name of a prominent, and now famously defunct, early Bitcoin exchange.)

They aren't cucumbers but over here in Europe, eggs do have a serial number.

Making an analog asset machine readable and tied to a trackable digital asset is certainly an entertaining thought.

Especially for an industry like the food industry where currently we have to trust that the state is controlling them correctly or even that they are controlling them themselves (which several food scandals showed that this isn't working very well).

But we're still early days in that regard. None of the existing crypto coins could handle the necessary transaction volume.

do you have a counter argument for: "you still need to trust the devices that write to the blockchain" -- so ultimately you would be trusting the supplier.

But that is much less of a problem than other similar constraints.

You can use any computer, wipe it and use something like Tails to access the blockchain. There is not a centralized supplier of blockchain manipulation devices.

In order to write to chain you need a key. If malicious activity is found, these keys can be banned from the network along with any products that they verify.

It's not that the system can't be exploited, it's introducing incentives to make it economically unviable to do so.

And also making it very difficult to post a story and change it later. This is why I'm skeptical about needing higher transaction volume to support supply chain use cases. The supply records a record, immutable(like a git commit log), and posts the resulting hash every hour-is to the public chain. The information recorded remains confidential, but the posted public hash can be used to prove during an audit that the log didn't change. The confidential log can have extremely high transaction volumes, because its internal.

I think the next big breakthrough enabled by blockchain is going to be self-sovereign identity--the ability to represent yourself online, without a centralized intermediary/point of failure. Several companies and foundations are trying to do it--Sovrin, Evernym, uPort, Jolocom, Iden3, and others.

I'll go out on a limb and say that if we expand "buying illegal drugs" to "buying anything", or more accurately, "sending money securely, reliably over the internet in a censorship-resistant fashion" then that seems like a sufficiently interesting use case.

Even treating Bitcoin as a settlement layer, and saying that we have "an electronic bearer currency that is deterministically produced and cannot be forged" is pretty powerful as a use case.

I'm a huge skeptic on the remaining uses of "blockchain" such as it is. If we define "blockchain" as a one-sided Merkle tree, then we have things like git that qualify, that are very useful in their own right. Similarly log-based database updates are also chains of blocks that are used to represent immutable updates that can be combined into a mutable view of the present, and those are also useful in databases and filesystems. But a bitcoin-like blockchain is not novel or interesting in this regard.

There's this big wall between "buying illegally" and "buying anything". The only reason people are using it to buy things illegally is because they can't use normal methods like credit cards. It's strictly more annoying and higher friction to use than a credit card for non-illegal purposes.

It's kind of like those free speech platforms. If you're a free speech anything goes platform, but everyone who isn't saying terrible things isn't encountering any problems on Twitter, then you end up with only people saying terrible things on the free speech platform even if that wasn't the original purpose.

All this is to say, I think for Bitcoin or crypto to overtake credit cards, it has to provide massive benefits above and beyond credit cards to get people who have no problems with credit cards to switch to it. Right now, that's not the case.

I don't see it being higher friction per se; spending Bitcoin and most other cryptos is actually pretty easy (modulo fees, which I'll grant is a not great area right now). If you look at Bitcoin more as a cash replacement than a credit card replacement, then it works better, and there really is no "cash" alternative in online systems, which is fine, mostly, for consumers, but not great, mostly, for vendors.

Credit cards are convenient because there are so many protections for consumers in terms of fraud, but that is an increasing burden on the consumer, as credit cards get rejected because of "unusual spending patterns", and dealing with credit card theft and arranging a replacement card, and having to answer questions like "did you spend $7.23 at MTG ENT LLC last Thursday". Consumers get the benefits of reward systems and deferred payment (which is a blessing and a curse for many consumers).

For vendors the advantage is clear (except for the problems involved in storing bitcoin); in a hypothetical world where bitcoin's value is stable, they could offer substantial discounts for purchases made with bitcoin instead of credit cards, because of the diminished counterparty risk.

All of that said, there's no reason that credit cards can't be offered for cryptocurrencies as the settlement currency, and offer many of the same benefits of existing credit cards; this more goes to the notion of Bitcoin as a settlement system.

The biggest problem with adoption of Bitcoin as a spending platform is price volatility, which is a chicken-and-egg problem; if the supply chain is denominated in bitcoin, then that will make the price stable, but nobody will denominate their supply chain in bitcoin unless the price is stable. I've expressed the idea before that power companies in particular could charge for electricity in bitcoin very easily, because the conversion is pretty direct -- the price of electricity is the number of bitcoins you could mine for that amount of electricity, and the electric companies have a built-in solution if demand falls too low -- they can just mine bitcoin with the "unused" power. This is a little pie in the sky, though.

>The biggest problem with adoption of Bitcoin as a spending platform is price volatility

Are you sure it's not the fact that nobody seems to be able to securely store bitcoin/other crypto, and that when your bitcoins get stolen there's zero recourse, unlike fiat currency where banks are regulated?

I'm dubious but I can't dismiss this as a reason because all I have is anecdotal evidence; I've never had any stolen from me, and I've just used off-the-shelf wallets, including the gui client (bitcoinqt) at one point. The closest I came was I had some on deposit at MtGox, but I had luckily withdrawn to my personal wallet well before the collapse. I also came close with Bitfinex, but I had to withdraw because they decided not to allow New York residents to hold accounts, so I got lucky.

I also don't know personally anyone who had any stolen either. The generally available wallets are fine; you just get a pass phrase that you write down somewhere. Paper wallets are fine for cold storage (though the barriers are higher for the casual user).

And it's not regulation that saves banks, it's mandatory insurance. If the banks lose your money (through incompetence or theivery) the FDIC (in the US) will pay out (or national organizations through the EU). But this comes with built-in limits; the US maxes out at $250,000 but I don't think the insurance exceeds EUR 100,000 in any country in the EU.

Some use cases for digital p2p cash :

* Porn

* Donations to wikileaks

* Pot

* Sending money to Venezuela

* Leaving Venezuela with your wealth intact

* Payments without giving all transaction info third parties (PayPal, VISA, etc). Look into Monero for untraceable transactions.

* Digital payments for the unbanked

These are all served better by cryptocurrencies than other alternatives.

This is pretty silly.

There is no technology to bet. Nobody bet money on Linux or Android.

They just happened.

These things are not money problems...

They are people problems: greed, stupidity and thinking they are better than the average Joe or Jane.

Well... surely you could make the point that as android was starting “to happen” money did get involved and cemented that. Samsung, LG, Sony, etc did spend big to support Android early on.

Developers bet expensive time and professional standing on Linux. Google bet billions on Android.

Technology doesn't just 'happen'. Someone has to foot the bill (sign at the bottom).

The point is that these things are free already. There is nothing to invest.

Linux took the creativity and hard work of several people. Nobody involved in it actually got richer as you might imagine people did with shitcoins...

People are investing into cryptocrapto like it is some fintech.

It is fintech. Since they carry utility it intrinsically has value. Since thousands are unique that value is amplified. If the was a limited number of linux images and they could not be copied, you would see them carry a value.

"Linux took the creativity and hard work of several people. Nobody involved in it actually got richer as you might imagine people did with shitcoins..."

Not necessarily true. Both RedHat & VA Linux gifted Linus Torvalds with stock during the dot-com boom, enough for him to become independently wealthy.

Good. Bitcoin is too wasteful when it’s at a high valuation. The amount of resources in both electricity and gpu hardware that gets locked into mining is too high.

It can still do it’s job as a currency with a lower valuation.

It's interesting that transactions have been steadily increasing since the crash at the end of 2017, even as the price keeps falling: https://bitinfocharts.com/comparison/bitcoin-transactions.ht...

That to me is definitely a good sign. Less hoarding, more spending. I do wonder what happens if the network starts to get transaction-bottlenecked again. It's not like all the problems with block size suddenly went away.

The problem is that all that computing power still exists. If the hashrate drops, then a 51% attack becomes possible.

Remember that those mining farms still exist, even if they've temporarily turned off their mining equipment. Someone can turn all that equipment on suddenly to attack the network and start double-spending their coins.

In effect: the hashrate MUST remain high if the BTC network is to remain secure. That's just how Bitcoin was designed. A big drop like this where "good" miners start to turn off and sell off their equipment puts BTC in a highly vulnerable spot.

The electricity usage will remain high, OR a 51% attack will happen. The electricity usage can never drop without severe risk to the entire system.

That doesn't sound like a good system.

> the hashrate MUST remain high if the BTC network is to remain secure

Reminds me of something else that places a continually increasing demand on resources to remain stable...

Building the Red Queen problem into currency is insane.

At the risk of sounding overly flippant... should we (the general non-bitcoin holding public) really care whether a 51% attack happens or not?

I don't believe it would affect USA's financial system. There are certainly a number of individuals who hold BTC who would get wiped out in such an event, but it seems like it'd be relatively isolated.

It looks like some countries where BTC is more popular may take a bigger hit under such a doomsday scenario.

In effect, a 51% attack would cause the attacker to scam a lot of money from people in a short period of time. Then everyone will notice it on the blockchain (remember: the Blockchain is public. 51% attacks would be relatively obvious to see). After that, BTC's confidence will be broken and the value will march towards zero: no point holding a coin when some unknown entity out there can double-spend their coins. That's how it happens for other Proof-of-Work coins.

But at the same time, BTC is the biggest coin, so its the least likely thing to happen. Its far more likely that BTC miners understand the importance of their mission, and remain wasting electricity perpetually.

Some would argue that the BTC community is too vested into Bitcoin. So even if a 51% attack were possible, the people who could do it would never torpedo the coins that the own.

I perhaps downplayed the flippancy in my previous comment. I'm aware of the theory and impact to the cryptocurrency world of a 51% attack.

I honestly believe that the electricity usage - and therefore climate-change impact - of cryptocurrencies to far outweigh the benefits they bring.

I think that the "value... march towards zero" is a good thing because "wasting electricity perpetually" is a bad thing. I don't think we should care about the losses of people who willingly bought into a wild-west scheme.

edited: formatting

I don’t know who to root for between the people who don’t care bitcoin is a massive waste in power but engage with it anyhow because I enjoy the hypocrisy and sight of their surface level convictions - or - the people who want tech to crash and people to be burned by that.

I guess the latter as future techs could be made less wasteful.

To be clear, it's not wanting "people to be burned" by this, it's a "not caring about their losses" due to this. But I see where you're coming from.

> So even if a 51% attack were possible, the people who could do it would never torpedo the coins that the own.

So, BTC is popular in large part for offering the ability to evade state controls (both regulation of supply and transfer, and taxation) that fiat is effectively subject to (whether or not they theoretically also apply to BTC), and to avoid control of the banks, but it is unthinkable but that an incumbent nation state, or set of banks, or combination of one or more of the former with or without the latter, would sacrifice the resources to thoroughly discredit BTC?

I think if the general economy cared about cryptocurrency the effects would have been felt already

> The electricity usage will remain high, OR a 51% attack will happen. The electricity usage can never drop without severe risk to the entire system.

Sounds like the best argument against bitcoin I've heard yet.

The forking also seems to have had some unintended consequences of changing the use of hash power such that the main chain is more vulnerable.

It also ruined the concept. In its most innocent terms, bitcoin is for sending money to people. What happens when person A has all their wealth tied up in Bitcoin Cash #1 and person B has it all in bitcoin cash #2. What coin does person C who wants to send something to person D use? With every new coin, the argument for switching to bitcoin for transactions weakens.

I mean, that argument works for any currency. All my wealth is in US Dollars, all my cousin's wealth is in Russian rubles.

What does Person C use to send something to Person D? Whatever Person D deems as acceptable.

Hence medium of exchange, not so much store of wealth.

Also, as a paper here proved a few month ago, a 51% attack only needs 30-40% if a miner grows a "local" long blockchain.

> It can still do it’s job as a currency with a lower valuation.

This is true, but it can't do it's job with high transaction volume.

Counterargument: There are ways to correct it and intermediate services between BC and users will fill the gap between verification and use....

Counter-counterargument: If you need intermediaries, Visa and MasterCard already exist and their payment system is cheaper.

>It can still do it’s job as a currency with a lower valuation.

If in one year it can go from $2000 to $20,000 to $4000... Isn’t it better to think of it as a crypto-commodity instead of a currency? It doesn’t seem to me to share many properties of a successful currency, number one being confidence in its value.

Only a few months back, I happened to talk to a person associated bitcoin trading. You instantly get that feeling of talking to a person deep in a pyramid scheme.

He talked endlessly about how he plans to buy a luxury villa with all fancy facilities worth crores, and an expensive car, and it would all happen, and he would defy the world and rub it in their face. All with bitcoin money. He continued to justify his actions, decisions with unimaginable zeal. The closest I've seen this kind of conviction is among high religious people. It almost felt the same way.

The general feeling among this crowd is their heaven is only steps away, and will come to pass sooner. Other people will left watching, and will come to be envy of their success. And he can do all that by just investing in some coins and watch it become very big.

I was tempted to debate, but given how deep he was in fantasy, I thought it best that he be left alone, at least the guy can have fun in his thoughts while he can.

But the larger problem is with people, so many people want to do so much with one life. Many people go into wrong academic tracks, end up being accountants, or real estate brokers or whatever. And they see no bailing or escape from low paying jobs, and living working through a mediocre career, under achieving all the way. Its easy to lure such people into any thing that mildly looks to pay disproportionately with little effort. What follows next is religious conviction in such pursuits, even if they can proved totally irrational. People do like to believe miracles can happen in the face of every day mediocrity. And when ponzi schemes come along, they helpless fall for them.

Miners in China supposedly throwing out their rigs after this latest crash made them too expensive to keep running.

https://twitter.com/DoveyWan/status/1064878600594305025

It's difficult for me to accept that it's cheaper to wheelbarrow out a bunch of machinery, than it is to just cut power to a warehouse for a month.

Does this mean GPUs will be flooding the market? I've been looking to buy something for gaming...

https://us.bidvoy.net/gtx_1070/27386

Guess not. I suppose if most of the miners are on BTC, they'll be using custom ASICs.

The price of other crypto's reliant on GPU's will also fall with the price of Bitcoin, likely making them unprofitable.

GPU prices are fairly cheap right now to be honest. I just picked up a GTX 1060 6GB for $139.

As replies point out, the man is dressed in summer clothes. Many replies say it clean-up from a flood earlier this year.

Is any of that hardware useful or anything other than mining? Or is all of that hardware investment a loss?

If it the latter, then what an incredible waste.

Bitcoin still has a $77B market cap. This is bigger than many well-known and long-living companies. Let's be real - Bitcoin still has a long way to drop.

Market cap is a silly way to look at crypto.

A well-known and long-living company that went from $19k/share to $4k/share would be rightly deemed to be struggling, and folks would have concerns about its long-term potential.

The thing about a company is that its share price doesn't have to be related to the health of the company. Lots of companies' share prices dropped 50% in 2008, but that didn't mean that the firms were struggling, it meant that people were afraid of the firm struggling, or even merely afraid that they wouldn't get their money out so they sold at a loss to get something. Imagine if Coca Cola (KO) dropped 50% today. Is KO struggling? Not at all. You have cause and effect backwards. The firm deemed to be struggling tends to have its share price decrease. And those that can tell the difference between a company that appears to be struggling and one that actually is struggling make money.

Unlike most companies, though, which provide tangible goods and services for which people pay and has factories and stores and real estate you could sell, Bitcoin is just a list of numbers floating around.

> This is bigger than many well-known and long-living companies

And not in any way comparable, as it is merely the spot price multiplied by the supply, not any sort of reflection of total value or productivity.

> Bitcoin still has a long way to drop.

Is there a way to short Bitcoin?

Some exchanges allow this.

Some of the sketchier ones are suspected of pumping/dumping to liquidate their customers' shorts all the way to their own wallets, too.

The safest way is probably to sell futures on CBOE or CME (those are the exchanges, but you'd do the transactions through your broker). I say safest because you don't have to worry about counterparty risk from a sketchy offshore Bitcoin exchange. The futures are cash settled based on the price of bitcoin, much like SPX or similar equity indexes.

Obviously there's a ton of risk involved, there's no reason it can't double for a dumb reason and you get caught owing a fortune.

If I fork it and sell myself a coin for $10k, I have a coin with double the market cap.

Investing in crypto currencies because you believe in blockchain technology doesn’t make sense. Any good use case I’ve thought of doesn’t require public chain.

So why invest in a specific crypto? How is Bitcoin fundamentally more valuable than Ethereum? How are either fundamentally more valuable than EOS? As a currency or store or value, each have essentially the same properties. Leaks in the ecosystem, like scam ICO and products like Tether only siphon money from the market. At least gold or silver doesn’t have this problem.

Ctrl-F gold... This movement may answer the question whether Bitcoin will react to a bear market like gold or like oil. There are good arguments for both and no past behavior to analyze because Bitcoin appeared after the 2008 crash.

I also continue to believe that true value will be in firms and products, not tokens. Token prices reflect an assumption that people will actually need to own these tokens at some point in the future, which is extremely far fetched to me.

I'm generally with you— but the value in a public chain is probably just not having to set up the larger infrastructure yourself, and rather just tie into the existing network.

Couldn't you say, why invest in companies that support the internet backbone rather than Cisco?

Definitely couldn't answer why one is more valuable in dollars over another. There does seem to be more practical use and development of Ethereum out there than the others (at least from where I've stood).

But that more or less would support your point—I've definitely seen more groups just creating their own private fork or networks rather than directly tying into the public chain— JP Morgan, Microsoft, etc...

Disclaimer: I do own a few Eth, I bought some time ago and have just been sitting on. It was never to be a serious investment, just wanted to play along. Never bought into the ICO madness.

All that said, I always thought this was interesting as a use case (also further supporting your point):

https://qz.com/1118743/world-food-programmes-ethereum-based-...

> Building Blocks replaced the payment part with a ledger that records the transactions on a private version of ethereum that it developed.

IBM, Microsoft, and AWS each have private Blockchain solutions that can be launched in under an hour. It’s not easy to build your own network, and it might not have a native currency, but I’ll use one of these solutions if the business case requires privacy and permission controls. Public Ethereum is an amazing invention for many reasons, but asking users to pay for their transactions is a tough sell from a UX perspective.

I definitely agree. Though I will say, even though I can't easily picture a use case—that fact hasn't entirely convinced me there isn't one.

Cryptocurrency crash will hopefully bring expectations back in line with reality. Legit blockchain projects will only have to deal with the stigma from being associated with a giant pump and dump when they approach VCs.

You meant to say "Legit distributed public ledger projects". Care to name a few?

I think there are several projects trying to solve this, but DLT can make an impact in secondary markets for privately held equity. Ownership is difficult to verify, settlement is complicated, and there are many rules that govern the transfer of privately held shares. Nasdaq Private Market has been using (or at least evaluating) DLT/blockchain since 2014 when it was SecondMarket. Harbor, Polymath, Securitize etc are sort-of making an approach to this, but it's heavily token and ICO driven.

You are describing a ledger. You are not describing a "distributed public ledger".

I have yet to see a single blockchain project that's actually interesting and worthy of anyone's attention.

I think secondary markets could benefit from a distributed trusted database with smart contracts.

I also think that behind the scenes on wall street there are some interesting things around securities settlement, something that is very time consuming and it's handled with some antiquated technology.

If securities trades are settled faster and ownership is more easily verified it could lead to some very interesting shareholder voting behavior.

The problem with all of these is that it requires a deep understanding of the process and the nuances of the industry to build a DLT solution that works.

The problem with smart contracts is that you settle for a "all bugs are feature" solution.

For any solution for settling trades, the one without the blockchain will be faster. And the use of electronics for trading systems where it makes economic sense is already a done deal.

I'm talking about inter-broker settlements. Like settlements of securities between large banks. The actual physical securities that are stamped and all that.

* Basic Attention Token (BAT), Brendan Eich, digital advertising

* FunFair (FUN), Jez San, online gambling

How is BAT not just a money grab? It could've been done with cash. New blockchain tokens just create speculative hype and make the creator rich.

Also, how does blockchain help in its objective over any other solution beyond making the creator rich?

They needed a way to bootstrap adoption and spread BAT tokens out into the wild. If they didn’t generate them they would have had to pay for something else and they didn’t have the money to do that.

The money raised is being used to build the product and hire talent. It isn't being used to enrich Brendan Eich personally. If you have evidence to the contrary please post it.

BAT's quite interesting game-theoretically because they're using the token to set a price on attention. When you view an ad on Brave, it's not a simple transfer of BAT from advertiser to publisher. Rather, some fraction of the BAT goes to the user, and then can be traded on an exchange for other currency.

Because viewing ads is voluntary, and users receive a tradable token in exchange for it, it lets you put a price on attention. The idea is that below a certain price of BAT on the exchange, users won't find it worthwhile to view the ads, and so they won't, which limits the amount of BAT users will sell, eventually forcing an equilibrium. That equilibrium price is the value of the attention that ads cost them. The price then carries over to the amount that buying ads will cost an advertiser, and the amount that publishers receive for them. Basically, they're rectifying an externality by throwing a tradable token at the user: instead of advertising being a transaction simply between advertiser and publisher, it becomes a four-way transaction between advertiser, publisher, user, and Brave itself.

None of this is possible without a dedicated currency, because the currency's other uses would factor into the market price, making it impossible to get a clear signal for how much users value having their attention taken from them.

It's still early so it's difficult, but better infrastructure and tooling is being created to enable more potential and also make it easier.

What is interesting, the losses of those who got in after $10k could be approximated by analyzing daily trading volumes, and the sum of loses is about to exceed by far the .com loses.

Such a huge loss of real, usually borrowed, money must affect the economy, at least in US and Asia.

Now this is the article i want to read

Ouch for my crypto investment, makes no difference to my crypto product. And that's the point, price of bitcoin is irrelevant to most crypto products. We're in the business of Fiat > Crypto > Fiat instant money transfers which is immune to what the current market is.

Crypto as a technology will keep moving forward.

How is it possible that the USD/Bitcoin pair price doesn’t impact currency transfer businesses?

> We're in the business of Fiat > Crypto > Fiat instant money transfers

Moving in and out of crypto is not instantaneous. You might move cash before confirmations are in, in which case you’re taking on credit risk, but you’ll still be losing money on your collateral’s value falling.

> We're in the business of Fiat > Crypto > Fiat instant money transfers which is immune to what the current market is.

You should chat with Pablo, Luiz and Patel. They own a bodega, a bill pay stall and an electronics stall in a rapidly gentrifying part of Brooklyn. All three of them have been providing this service for years, without the need for expensive computer equipment or bitcoin. Some of their customers don't speak English, have a fourth grade level of education and just fill out slips of paper to send/receive money worldwide within a few minutes.

Still nowhere near low enough for me to feel okay about ditching back in 2016 ...

I remember looking at the price of Bitcoin when it was $23, $250 and $400. I didn't have any money, so I couldn't buy, but still fun to think about 10x-ing my current bank account.

To be completely honest, even if I did have money, I wouldn't have bought. The price used to go up and down by 10% like daily. At that point it feels like gambling.

Sometimes I nearly shed a tear when I open my wallet that shows me how many coins it held over its lifetime. It even converts it into my local currency as if to mock me. I remember times where those Bitcoin faucets (is that still a thing?) gave you 50BTC every X hours just for entering your wallet address. Of course I spend nearly all of them on stupid stuff later on but before they gained considerable value. I still have an old external HDD with somewhere between 20-50BTC on it that I broke and haven’t had the money to fix it and retrieve them.

You can't afford to fix a hard drive with $250,000 on it? Can't you borrow some money against that?

It’s questionable if the data can even be restored.

Plus there’s more sensitive data than just Bitcoin private keys on that disk I’m not really that comfortable sending that in to some lab for data recovery.

When the disk broke I inquired what it would probably cost to retrieve the data and I was quoted with something around 150-300€ which to me is too much just for the small chance to actually get those coins. I don’t like to gamble.

Discounting the sensitive data issue (I don't know what keeping that confidential is worth to you), a few hundred bucks for what I presume is a good chance at a 1000x up-side doesn't seem like much of a gamble to me.

I assume you have more disposable income than me.

For me this would be a gamble and like I said the chance of data recovery isn’t to high in my case that’s why I haven’t done it mainly. I had someone who works with HDD’s take a look at it and he assumed that most likely the platter itself was severely damaged/scratched. And there was something about the encryption in addition to the scratches that would’ve made recovery not that likely.

Please note that I have absolutely no idea about HDD data recovery and am only remembering what I’ve been told a few years ago.

Sell it as-is for €1,000 to someone that is willing to take the risk. :D

While 1k does sound somewhat enticing that disk was my secure storage holding all my passwords (albeit old ones), ssh keys, wallet seeds, pgp keys, 2FA backups, payslips, bank statements.. you name it it’s probably on there..

I just keep it in case I get some unexpected money that would allow me to get it fixed securely under supervision. I’m a tiny bit paranoid about that particular disk falling into the wrong hands even if it’s broken :)

And well.. I didn’t exactly loose any money on it since I didn’t buy those coins with real money so I’m not too frustrated about it.

But it was a great lesson advocating for redundancy! Now I have everything storage related in pairs. One storage server at home, one offsite etc.. (I didn’t loose everything, most stuff wasn’t that important)

Still up 500% since January 2017.

Still down 78% since December 2017.

What's your point?

Just because a bubble pops doesn't mean it's useless or dead. Many bubbles pop in the real world, they always recover.

Ever heard of BitConnect?

Was scam from the beginning.

They don’t always recover. It’s hard to recover when you are a commodity that doesn’t have any inherent utility other than being a method for completing transactions.

Also - Tulips.

It's a lot easier to recover when a recovery mechanism is built in - aka the halving. We're a solid year and a half away from that event happening, it'll go lower than this in that time but once the new supply restricts it'll make its slow ascent back up, people will see the opportunity and the demand will skyrocket again.

I say this a lot, it's helpful to think of bitcoin as an algorithm, I just see this pattern playing out the same way over and over and over again every four years.

This only works if demand continues at all. "The halving" is of little consequence if nobody cares.

Yeah I'm sure nobody's ever going to care about bitcoin again you're right.

Not nobody, sure, but the halving really only matters if interest is at least half what it has been in prior bubbles.

Reduced supply may push up the price... or it may not if there isn't much of a market for the supply anyway.

The interesting thing is is that bitcoin enthusiasts tend to buy a fairly steady supply over time, this is what's maintaining the current price. Eventually demand will starts to wane off after a big run up but the core people are still buying in steady amounts, then once the halving comes and the demand stays relatively steady you start to see the price trend up, this draws in new interest and runs the price up even more, then you have all the rest of the people who are tuned out and they come rushing in and you have full blown FOMO, all the people who've been buying steadily begin to cash out and the price drops off.

It's happened before and it'll happen again like clockwork and that's because bitcoin is just an algorithm.

>> this is what's maintaining the current price

The price that's tanked about 30% in the last week alone?

>> It's happened before and it'll happen again like clockwork

I'm afraid this is a very bold prediction.

That will be the test for Bitcoin, can it survive a "popped bubble"?

Stocks normally don't survive, unless there's something of value in the company behind it. Bitcoin doesn't have anything of value behind it, and it's easily replaceable by other currencies. If the value drops to something like 5 cents per Bitcoin, or even just a few dollars, you have to wonder if people won't abandon their wallets over time.

> you have to wonder if people won't abandon their wallets over time.

Storage is cheap enough, I think the early forgetful adopters learned their lesson from that.

Still up thousands of percent since 1783.

Funny that the top in bitcoin was the day futures started trading on it

Is this below the price where it is economic to mine? Presumably at some point the miners would have to pull the plug to avoid loosing money.

Difficulty adjusts dynamically to ensure there is always an incentive to mine.

Difficulty adjusts when total hash power changes, so for difficulty to adjust downward some miners will have to take equipment offline, ie "pull the plug".

The only way this unplugs is if it was loose to begin with.

Is there something useful that all the custom built bitcoin mining rigs can do now that it probably is less economical to use them to mine?

Nope. GPUs can be repurposed but the asics that are used for Bitcoin mining are expensive paperweights without demand for BTC.

Well they are relatively good space heaters at least...

Bitcoin mining has been custom ASIC dominated for years now. Almost all miners (in terms of hash power) are custom purpose built machines. So no, they really can only do sha256 hashing on payloads of comparable size to bitcoin blocks.

Which might make them harshly powerful password crackers for anyone daft enough to use SHA256 as a password.

Except that BTC does a double hash, so it won't work on any 'regular' single hashed password.

I hope we start to realize the power consumption from crypto will contribute to global warming and take appropriate measures.

This is good for Bitcoin.

I agree this is the market correction I've been waiting on.

The price has been bouncing off the 6k magic "resistence" for ages now. Each bounce reaching lower and lower highs. It was only a matter of time before the that energy disapated.

Technical analysis of stocks and efficient markets is a fool's tool, but BTC is fool's money so TA is an efficient tool.

Yes, I did explain this prediction half a year back to my BTC holding friends. As you can imagine; they ignored the advice.

It has taken 10 months for the trail off in public interest to feed into the pricing model. In those 10 months a great many tricks and scams have been played to prop up the price, we'll see more news about those tricks unwinding soon.

> The price has been bouncing off the 6k magic "resistence" for ages now

"Resistance" is from above, "support" is from below.

Last week, the 6k USD / BTC price looked solid. Every time 6k was tested, the community would buy up BTC and the price would go back up. Today, we have blown through the 6k USD / BTC "Support" and selling has continued down, beyond the 5k mark.

Its hard to say what the next support mark is. If you asked me yesterday, I would have thought that 5k was the next support. But now that's been pushed out now. So 4.5k is my assumed support area for now.

There's no "resistance" on the upper-end of the BTC market depth charts until ~7k USD/BTC. Someone really wants to sell at 7k USD/BTC, where there is ~300,000 BTC waiting to be sold (if the price ever got back to that height). The community as a whole would have to spend over $2.1 Billion to grow from $6.9k to $7.1k (wiping out the 300k BTC available at 7k). Such a huge-sum of money is why that point is called a "resistance", because it will "resist" efforts to bring the price above 7k

Just an FYI.

Don't let the order book fool you. Big players spoof the market all the time with these massive orders.

TA works well in traditional markets too. Good crypto traders who have never owned a stock in their entire life have no issues transitioning.

https://twitter.com/CryptoDonAlt/status/1064585203237167106

No utility = no value. Tell me, how much utility is there one ethereum? Currently close to none. Why in the world would anyone pay anything over transaction value for eth? I think the answer is clearly hype and irrational behavior we saw in 2017 crypto rush. What we are seeing is natural return to real value, which for most crypto is next to nothing. Bitcoin is a bit different as you know and my bet with that one is someone or multiple someones with hefty bags are liquidating to save their asses.

>the trigger for the latest sell-off is unclear

What I think has happened, a stop loss order of a big actor was hit by a random small move and that started a chain reaction. Totally possible.

Well, what's interesting or perhaps not-so-interesting to those that understand the underlying mechanics is: there's 'crypto sell-off' but only Bitcoin is mentioned in the headlines. In other words, the implication is BTC crashing leads or is concomitant with ETH and LTC and others crashing, and no one is surprised or curious by this.

I really makes one laugh at all the "diversify your portfolio" advice of yesteryear's crypto shills.

Assuming mass adoption and use is not going to happen without a turn of events, what's on the crypto horizon, medium or long term, that could reverse this trend?

Eg, proof of stake?

What I wonder is why BTC is still the main "entry point" for acquiring crypto with fiat. Having so few ways to trade crypto for fiat, and so few ways to spend crypto, means that the various cryptocurrency markets are highly correlated. It's a bad situation for cryptocurrency as a whole.

Nvidia stocks are dropping like a rock, too: https://www.google.com/search?hl=en&q=nvda

Ethereum’s dropping too, maybe I can afford a new GPU next year!

Crypto coins are all worthless. Just my 0.0000^-11 Bitcents

"No End in Sight" stupid title for a chart which has nearly recovered (thanks to manipulators but still).

keep a close eye around any volatile times (potentially related to scares of manipulation) :) for checking up on trends and ai forecasts of the next few hours checkout https://bitbank.nz

Wonder how this will affect coinbase. Didn't they just raise a ton of money?

What would a "pump and dump" for short sellers look like?

Just curious, do you guys throw a bit of your retirement portfolio into BTC just to diversify? I do, I keep maybe 3% of mine in BTC just in case.

Just curious, do you guys throw a bit of your retirement portfolio into roulettes at the casino just to diversify? I do, I gamble away maybe 3% of mine just in case.

BTC is an asset according to G20 and many others. It's obviously highly speculative which is why I picked a low percent. I was just curious if others were doing the same, and was hoping I could ask that without getting this sort of snark. Oh well.

I get the gag here, but it's not a very apt comparison. The expected return from a roulette spin is really well understood: a loss of about 5% of your bet, albeit with high variance. The future of these investments is less understood. Again the variance is high, but its performance over time is also really good. Perhaps you have plenty of reasons to doubt the future performance of BTC, but it's not like it's a known bad bet.

The point is it's the same as gambling. Pure luck, no proven way to project future demand, does not generate cash flows. It's also hyped AF so you can't even tell what's real vs. speculative demand.

HODL, buy low!

My suspicion is that insider trading is rampant in the crypto world and that someone might have been tipped off as to what the outcome might be in the Tether investigation.

At risk of a downvote party I will express my opinion that, since many other interesting cryptocurrencies still closely track Bitcoin’s price, this “black friday sale” is a buy opportunity for some great other concepts.

Here's a rumor. https://twitter.com/GeoStar79705164/status/10585100371260211...

One of the people that decide the price of Bitcoin lost upward control so they are doing the next best thing. They will then re buy at the bottom which is a number only they know, then artificially Jack it up to 5k and sell off again and probably get out permanently.

The legacy of Bitcoin should be studied to understand better how memes or semantic viruses are spreading through social groups and affects our inner representations or models of the world, trained by endless screaming streams of bullshit^W information we are forced to process.

There is nothing more fascinating than this - how a global Ponzi Scheme based on a few memes about poorly understood abstract concepts unfolds.

s/Bitcoin/Central Banking/g

Everything sells off this time of year. Nasdaq is down 7% on the month. It’s end of year profit-taking for tax purposes. As BTC has become completely mainstream now, this makes sense.

Except the amount it's falling is not normal.

What would be normal behavior?

Not freefall

And how do we know this isn't what this system was bound to do eventually? It's not really been around very long.

How is this a relevant question?

Because I'm curious what the other person thinks? Did I miss the syllabus?

No, it is almost certainly related to the network split, as mentioned in the article. There are issues with bitcoin that limit its long term potential. For example, the effective limitations on the number of transactions per second, and the huge energy cost for providing proof of work.

> No, it is almost certainly related to the network split,

Please explain how turbulence in BCH affects Bitcoin and Ethereum.

BCH is a totally different coin, on a different blockchain, with a far smaller market cap than the "big boys" BTC or ETH. Its a poor explanation at best. Its the only thing that correlates to the drop, but it doesn't make sense as an explanation.

You mean the fact that it can be split ad infinitum and new bit coin like currencies with much better properties can be had at the drop of a hat by any dude or dudette in his-her den?

You're right, a "store of value" product being down almost 80% in the past 11 months is completely normal and not at all newsworthy.

>You're right, a "store of value" product being down almost 80% in the past 11 months is completely normal and not at all newsworthy.

It's not "down 80%" for anyone but dumb money who jumped in at the peak last November. BTC is up over 10,000% since 5 years ago.

Feel free to explain me at what price point the brilliant technocrat early adopters became dumb money.

Exactly one year ago btc price was heading to the moon.

yeah just volatility in a relatively new market, I expect 10,000 by February

If that's the case I'd expect you to be investing every spare penny you have into BTC at the moment...

Man all those hedge funds with 100s of data scientist are just waisting resources when the situation is so simple "Everything sells off this time of year"

Why is this downvoted so much? I don't hold any crypto and my portfolio is not looking too great this last few months either. One of my tech stocks lost dropped over 30%.

The recent behavior certainly goes against the notion that BTC is digital gold. Seems like it's correlated with general market sentiment like most other financial instruments.

I'm reminded of the "dog in the burning house meme".

> Everything sells off this time of year.

Come again?

One year ago it was at 8K and a month later at 18K. It's not linked to "that time of the year".

>One year ago it was at 8K and a month later at 18K.

And two years ago it was at $600. Everyone who jumped on the bandwagon last November during the $18k pump completely misses that fact. BTC has been the single biggest wealth transfer from institutions to individuals of our generation.

These discussions are interesting as a distilled, pure exhibition of cognitive biases.

Nobody has any way to accurately value BTC. Yet when it goes up everyone discussing knew it and was right all along, and when it goes down everyone discussing knew it and was right all along. Logical arguments are applied to observed history & present conditions and used to forecast the future of something fundamentally impossible to predict.

You know the future price of bitcoin about as well as you can predict my next coin flip. Afterward, if you've guessed correctly, you might believe supreme intuition or reasoning led you well. And if you believe you've done something well, you're more likely to say so on some public channel such as this one.

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