Bitcoin plunges again. Now the only currency worse than Bitcoin is Venezuela’s
latimes.com
latimes.com
I can't help but feel some similarities to housing bubbles here.
Something like Ethereum, with a real value-proposition, is a more worthwhile cryptocurrency.
Basically, I see crypto evolving into pseudo-fiat currencies with some large financial institution (that isn’t a nation-state) ensuring it’s a valuable commodity. I’m just not convinced we can (or should) escape a fiat-like economic system.
When you buy bitcoin or ethereum, you get what? A number. I can sell you a number. Better yet, I can sell you a cryptographically signed number if you want. But that itself is just a number.
At some point, even something like gold has a certain amount of scarcity. But with crypto, there's no scarcity, even if you can artificially limit the number of coins. One can always just create a new bitcoin alternative...
The point is, there is nothing, absolutely nothing, that underpins the price of a BTC to anything in the real world.
"Each one will be a unique and priceless number using the largest of prime numbers. Each number comes with a genuine certificate of authenticity hand signed with the author's private key..."
Here's another way to illustrate the issue:
I have two numbers.
1. The first takes your user id "yebyen" and appends a number to it so that the SHA-256 hash is exactly 0x0. It will take 20 years of processing power on the NSA computers, so it should be worth something to you.
2. The second number is an encrypted location somewhere in the US where I've buried $1000. It will cost you $1010 to acquire it from me. I'll decrypt it for free but it will be worth exactly $0 afterwards. But until then it's worth $1000 and you can give the number to whoever you want to.
Which number has a bigger intrinsic value?
This is a good metaphor, but it's not perfect. You haven't explained how or why you'll be burying $1000 exactly 21 million times, every 10 minutes until 2140. Or why it becomes worthless immediately upon decryption... nobody can unbury the cash value of an individual Bitcoin, rendering it worthless, but they can be transferred instantly from party to party, which partially funds the ongoing operations of the network.
Even Satoshi himself cannot end Bitcoin at this point.
Even if he still lives, and has the keys to the large stash of Bitcoin he mined in the beginning, it could be a major market-altering event if he dumped them all at once, but it would likely not be the end of Bitcoin.
Sure, it's great marketing, with an extremely long con...
That's an engineering problem. ;)
And it's also beside the point. One has intrinsic value, one doesn't.
> Or why it becomes worthless immediately upon decryption...
The reason the number is worth something is because there's real money tied to it. Once the guarantee of value disappears, the value of the number also does.
That's the reason why Tether and stablecoins like it ostensibly have value. Bitcoin and friends have value because they are fungible and because people assign a value to it. (Much like fiat money.)
There was never any guaranteed value, but many people saw Bitcoin transacting at $0.05 and put it through the paces, understood what they were observing, and saw that it was massively undervalued as a new technology. Since then it's been proven to work on a repeatable basis, with some caveats like the issues that come with increasing popularity scaling up the volume and value per coin, like $50 transaction fees, but that's another engineering problem.
If you told me for some reason that you thought Bitcoin and every cryptocurrency will simultaneously become worth less than that $0.05, overnight, I would assume that you are either a kook, or again, perhaps, that you've discovered another engineering problem... demands further explanation.
We're not talking about Tether though, we're talking about fungible instruments. You wouldn't say that a stock is valueless because its value fluctuates.
The dollar is the official currency of the US, and all transactions the government makes is required to be in the US dollar.
Bitcoin is an optional currency, made fashionable by the likes of Aston Kutchner, and appears to be more akin to a polyester leisure suit of the 1970's than the US Dollar.
Both Bitcoin and a polyester leisure suit at one point had value, and they both got their value based upon fashion and celebrity.
> We're not talking about Tether though, we're talking about fungible instruments.
I can make 1 fashionable number worth $1M. Or, I can also make 1 million fashionable numbers worth $1 each. It doesn't matter that the price is fixed, if I have infinite supply.
From wikipedia:
https://en.wikipedia.org/wiki/Tether_(cryptocurrency)
Tether claims that it intends to hold all United States dollars in reserve so that it can meet customer withdrawals upon demand, though it was unable to meet all withdrawal requests in 2017.[33] Tether purports to make reserve account holdings transparent via external audit; however, no such audits exist.[8] In January 2018 Tether announced that they no longer had a relationship with their auditor.[34]
I really am not an advocate of Tether, or Bitcoin anymore at this point to be honest (it's proven to have on-chain scaling issues, and I still have doubts about lightning network)
I am not a "maximalist" for any one coin, I'm just saying you have to be an absolute luddite to not see the value of the innovation. I'm not one of those who says "all money will be on the blockchain by X date"
But if you honestly think that the technological advancement of cryptographically secured distributed mobile currency is on the level or same plane of value as a 1970's leisure suit, sponsored by Aston Kutcher, then I'm not sure there's anything I can do to help you...
Bitcoin can fail, Bitcoin can go to $0, but Bitcoin was only the first. The ones that follow may not make anyone rich (directly, in the sense of "to the moon"), but I think it's no exaggeration to say they have changed and will continue to change the way we do money forever.
"The market can remain irrational for longer than you will remain solvent." I certainly am not one who has made out, inasmuch, like a bandit as many Bitcoin investors may have, but I've been following Bitcoin for a long time (as long as it's been around) and the best, most outlasting advice, true in most markets and not unique or special at all in any way is still "don't put all your eggs in one basket."
If taxes come to be accepted in Bitcoin across the nation, this might turn out to be a game-changer. Or it might mean nothing. I don't know what the state taxes are like in Ohio[1], but this is an interesting development to be sure. Regardless, you should continue to plan around the uncertainty that comes on either side of "tax season." Bitcoin or not.
[1]: https://techcrunch.com/2018/11/25/ohio-becomes-the-first-sta...
April 15 is usually not in March.
April 15 is when US individual income taxes are due.
When to pay (for some people, both days) depends on how a person has their finances set up.
YMMV IANAL this is not legal advice, if your tax budget is not already ready to be paid off in March, then I wish good luck to you.
There's a theory that the BCH-ABC vs BCH-SV war brought to light: that "trustless" doesn't really mean trustless. It means "trustless, as long as you trust the coin". Innately, the BCH-ABC vs BCH-SV flamewar destroyed the notion of trustless and decentralized.
Anyway, I don't really know why BTC has done so poorly here. And the correlation to the BCH-ABC vs BCH-SV war may have just been coincidence. But its worth thinking about and discussing... maybe we can learn something from the past few weeks.
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Alternatively: "Store of Value" was a self-defeating prophesy. BTC was a "good" store of value, until it lost 50%+ in just a week or two. So as BTC fell, it just fell harder and harder, as the "store of value" argument was defeated.
What is your intended meaning here?
And it was most obvious when people were forced to pick sides in the BCH-ABC vs BCH-SV flamewars.
Are most exchanges picking a side yet? (What side are you on?)
This isn't a nitpicky point either. Bitcoin has specifically avoided any sort of automatic update mechanism, and not just because of the security risks involved. Additionally many companies and miners take their time evaluating new releases before upgrading.
Really? After spending years watching the pro-bitcoin people shill their crap, this is the first argument I've seen espousing a requirement to understand the code before using your wallet.
As far as I can see, there's no particular reason to expect the slide to end here. Stocks have a valuation floor based on income and assets. Commodities have floors based on the people who use those commodities to create economic value. Most currencies have a floor for many reasons, but partly because a central bank will stand behind it and defend its price. Bitcoin has none of those.
The real bottom is underpinned by the "True Blue Bitcoin Believers", who will most likely die than sell their bitcoin shares.
In a few years we'll realize the true value of Bitcoin wasn't the blockchain, but it's existence as a curiosity of sorts, where people were buying and selling purely imaginary things -- numbers -- which had no real value in the real world.
I heard somebody refer to Bitcoins as "math beanie babies", which certainly fits your model.
Although Craig Wright has never proved his ownership, he is wealthy by any stretch, and threatened to sell his bitcoin into the market. The people and funds holding support levels around $6,000 USD pulled their bid in the face of this, and helped panic sell.
Craig Wright has not moved any of Satoshi Nakamoto's mined coins.
Secondly, Roger Ver exists on the other side of the war. He owns a large cloud mining farm, and has been redirecting hash rate that customers paid for. He has been redirecting it away from Bitcoin to his Bitcoin ABC fork, to help win this ego war. He is paying the customers in his bitcoin still, so that they don't have a disruption in payouts.
Ultimately, there is a lot more bitcoin on the market to fund the bitcoin-cash war, between two very wealthy people.
This has nothing to do with your theory of trust. There's just more supply than demand. Anybody can hedge their store of value. You can hedge the USD value changes with futures, you can hedge gold, you can hedge bitcoin, any currency or commodity really. Your conclusions are misguided, but there is room for market maturity in bitcoin.
There's some evidence for that in both their Twitter statements and the fact that BCH-SV has skyrocketed as every other cryptocurrency plummets, but ultimately I find it a little unconvincing. BAB (BCH-ABC) has also dropped recently, and I doubt that even a rich egomaniac can affect the whole BTC market as much as has happened recently. I'd chalk it more to capitulation as the previous bubble bursts.
Bitcoin is volatile. No one disputes that.
Would you say equities or housing are a poor store of value, comparing early 2007 to late 2008?
Why I don't have to use your trust minimized machine arbitration system, when I can build my own, just like the 1,000 or so other alt-coins.
Even if a "trust minimized machine arbitration system" (which Bitcoin isn't) had much practical use and so displaced existing non-automated services, your notion of value still doesn't make sense.
As an consider email. People used to spend a lot of money preparing and shipping/mailing physical documents. Much of that has been replaced by email. But what's the price of sending an email? Zero, or as close to it as makes no difference
Is email valuable? Surely. Does that translate into a high price? Definitely not, because supply is approximately infinite.
To answer your question, equities and stocks are in fact not great stores of value. Cash in a bank is the most common one.
Your comparison is also pretty bad. Housing and stocks had hundred-year track records before they fell. More importantly, they have demonstrated value. Stocks are backed by real, income-generating businesses. Houses are things people live in.
Bitcoin, on the other hand, has no real demonstrated utility beyond some light crime, like buying some drugs, penny-ante extortion, and a little money laundering. You can't live in it. You can't even make jewelry with it, so unlike gold there's no practical use propping the price up.
Calling it a dip doesn't make it a dip. You need concrete reasoning for why it's going to go up to previous prices again if that's what you believe will happen. Many people got burned in the last bubble, so they're going to be cautious about it.
Every national currency is far, far worse than Bitcoin over the last 24 months, 36 months, 48 months, 60 months, 72 months, and so on back to its inception