Comment by wpietri | Hacker News Reader

Comment by wpietri | Hacker News Reader

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Definitely. When prices are going up up up and the money is flowing freely, few really question what economic value is being created. But now that it's obvious to even the fools that they can lose money, they're going to have to figure out what valuable service these companies can provide to regular folks.

When I contrast this with the end of Bubble 1.0, the biggest difference I see is the lack of actual use. 2000 was an incredible bear market, especially in tech. Even good startups died, and the ones who weren't creating value died quickly. The Internet, though, still had hundreds of millions of daily users. Things like email and the web browser and downloadable MP3s made people's lives better, and they weren't giving them up.

But who uses Bitcoin for anything but speculation and maybe some light financial crime? As best I can tell, approximately nobody. The NYT tried using it for daily life back in April and it was a bust. [1] The few major online retailers who offered to sell you things in it have removed it again. Even major Bitcoin proponents admitted it was terrible as a currency.[2] And as far as I can tell, none of the zillion other coins have significant real-world use either.

I think there's truly nothing to sustain an "industry" here. Valuations are going to drop to (and probably below) whatever can be justified by cash flows, which in turn is based on economic utility to people outside the bubble. If that number isn't zero, it's at least very, very small. So as you say, this is only the beginning of the end.

[1] https://www.nytimes.com/2018/04/16/nyregion/new-york-today-l...

[2] e.g., https://avc.com/2017/08/store-of-value-vs-payment-system/

You're forgetting one major use: actual crime.

Black-market drug sales probably won't be too affected by the crash, they already had a network before Bitcoin.

But ransomware! Oh man, that's nowhere near as easy nor as profitable without a high-value cruptocurrency. If the crypto crash ALSO took out ransomware developers, that's two birds with one stone, as far as I'm concerned.

Randomware doesn’t care about the exchange rate. They just funnel cash through crypto’s because it’s a simple way for them to take digital payment. In the down market they can’t cash out as many dollars per bitcoins, but the victims also get way more bitcoin for the same amount of dollars.

A low valuation might affect coinminer malware though.

They need payment providers, that are easy enough for an average joe to use. That may be harder to get

Are bitcoin payments somehow easy for the average person to use now? Seems unlikely.

Learning how to properly use paper money was something I learnt at age 7. Debit card at age 15. Credit card at age 23. Bitcoin at age 31. Bartering hides with the natives at age 90.

They do care, though, that Bitcoin has non-crime use. If the crash means that speculation drops significantly (which I expect to be the case) then it could be a reasonably quick slide to where "bitcoin" in effect means "crime dollars". That in turn means that a lot of exchanges will shut down due to low volume and regulatory pressure. There's little point to using Bitcoin for ransom if your victims have a hard time getting money in and you can't get your ill-gotten gains out.

> But ransomware! Oh man, that's nowhere near as easy nor as profitable without a high-value cruptocurrency. If the crypto crash ALSO took out ransomware developers, that's two birds with one stone, as far as I'm concerned.

That'd be great, but so long as there is some nominal value in cash to some cryptocurrency, wouldn't ransomware just ask for the same amount of underlying money? That is, just increase the number of coins required for ransom? The big benefit in cryptocoins for ransomware isn't the increasing value, but the fact there is no intermediary that can turn off accounts or rollback transactions.

I guess that's true, as there's no alternative means of getting paid. But the downward spiral in price perhaps make ransomware a less attractive occupation now.

The downward spiral in price will only result in you having to buy more units of currency to pay the same dollar amount of ransom.

It's the same with the dark markets. It's not like dealers are suddenly going to charge less money for drugs now just because the intermediary transaction currency is worth less.

iTunes gift cards or the like seem to be more popular than cryptocoins it seems.

Banks are much happier to deal with you when your source of income is "The Apple Store", instead of a crypto exchange.

My community has quite a few businesses that gladly take bitcoin, at whatever valuation. Unfortunately when the price is on the upswing people don't want to spend it because it'll be more profitable to hold it, and when it's holding steady they don't want to spend it because they feel it could take off at any instant, and if it's crashing they don't want to spend it because that would lock in their losses and they'd rather wait for it to recover.

Hopefully one day it will stabilize enough to be worthwhile as a currency. We're certainly not there yet, but it's improving. Despite the spectacular fall in values, this isn't as severe a crash as has happened before, percentage-wise.

Do they list the prices in bitcoin, or do they just use a payment gateway that lets them charge USD from bitcoin users?

I wouldn't hold my breath on the "stable currency" part. Actual stable currencies are actively managed by people with expertise and major resources. At best I think Bitcoin will end up following its design of being deflationary, which history shows leads to hoarding. But I think it's more likely it will either drop to near zero or continue wild price swings.

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