Bitcoin surpasses $50K as major companies jump into crypto
cnbc.com
cnbc.com
What am I missing?
Hardcore tech people and those who don't (or can't) trust institutions with their Bitcoin will pay the transaction fees to get their money out of exchanges and into their own wallet. The average retail investor, however, doesn't want to be their own bank. They just want in on the price action, while letting the exchange manage their money. Does anyone really think the person buying crypto $100 at a time in their Robinhood account wants to pay $18 (current average transaction fee) every time they want to move that BTC into their wallet? Of course not, which is one reason why Robinhood doesn't even have an option to withdraw Bitcoin.
As with any frenzy, the misinformation being circulated by people who want everyone to buy Bitcoin is getting out of control. How many average people buy Bitcoin because they think Bitcoin is the only way to avoid losing purchasing power? Meanwhile, everyone else has been protecting against inflation by purchasing stocks, real estate, or virtually any other investment long before Bitcoin was even invented. (Yes, I'm aware of the 21 million maximum BTC cap). The current Bitcoin narratives are more like a religion than reality.
That said, Tesla's Bitcoin purchase does make a lot of sense. Elon Musk went on Twitter and called Bitcoin "BS" to drive the price down so they could buy at a discount. They then announced their Bitcoin purchase with fanfare that drove the price up, marking a quick return on their investment. They used Elon's influence to make a quick profit on the frenzy.
Tesla is a car manufacturer! It doesn't make any sense at all! At any company that made sense, a CEO would lose his job for gambling $1B of company money in a casino totally unrelated to the company's business interests.
"at any company that made sense" is true, to a point. But the point of tesla has been, for a not-insignificant number of people, not meant to make sense. It's faith based. It's cult based.
Elon Musk has strong parallels to Trump's appeal. It might not make sense. That's not the point.
That's what you think.
Is that even legal? It sounds like pumping and dumping.
Better thought of as a configuration value set by people with most of the mining power, which last time I checked was PRC
Title: Reddit Post Reporting Tesla's Bitcoin Purchase From a Month Ago Was a Hoax
Reportedly, the person claiming to be a Tesla insider with intel on the bitcoin purchase was actually some political science major college student tripping on acid. Crazy how so many people ate this story up.
I'm curious is this the transaction per $100 or is $18 a flat fee regardless of transfer amount?
I don't see an inherent problem with this. People who were too gullible to believe influencer crap and caused bitcoin's price to go down by panic selling are now gone from the market, and the believers stayed in and made money. That's a good thing, and weeds out gullible people from the system. This isn't the stock market where fundamentals matter.
Honestly what more do most people have? You could work your entire life but even all the earnings and scrimping and saving isn't even be a tiny fraction to what you would have if you had been the one to fulfil the order for the bitcoin pizza and just held.
Think a lot of people misunderstand just how hopeless the world is for most people.
GME and Doge are just the start, get used to hearing people are sinking their entire savings into far flung gambles multiple times a year from here on out. Especially in a post pandemic world where people are been completely downtrodden to their limit. Property is so exorbitant, pay is so low we're now entering a world where just gambling seems the smarter option than living within your means because anyone who has tried that can tell you it gets you nowhere. Pay just hasn't increased enough in line with property and your dollars are worth less and less every day.
I see it less as desperation and more of 'whoa, i have more money now, i want to put it into things that go up in value!'. I haven't seen the data (so do correct me), but I would suspect that less sophisticated retail investing is on the rise over the last year, correlating with increased savings.
The narratives we craft define how we move in this world. This is a toxic way of thinking. It takes about $500/month throughout a working life to retire comfortably investing in just VTSAX.
People have certainly paid for a better standard of living, but they didn't get there with just wages.
It has become a total HN cliché that the top comment is a negative takedown of the tech or startup in question. From Dropbox, to Coinbase, to Ethereum, and now to Bitcoin at 50k.
Not refuting anything you're saying here. Just find it amusing to have seen this pattern play out so many times here on HN.
engineer working at morally dubious ad-retargeting analytics company: "this has no utility whatsoever ($30), I could do that with a database ($7,500)! I'm going to ignore this for entire decades! ($50,000)"
The reason it has value is because people have demand for it. People have demand for it for a variety of reasons. I think it's reasonable to presume that a non-trivial portion of that demand is driven by the features that make it a rather good black market currency. It's also obviously quite appealing to certain groups of privacy conscious individuals. I've heard it's somewhat popular for international remittances, which makes sense given the economic stability issues various places have around the world. On top of those fundamentals, demand is further inflated by speculators.
Your biggest criticism seems to be that it would be a bad national currency because you can't implement a bitcoin monetary policy. But none of the demand for bitcoin is driven by that factor, so the observation is simply irrelevant.
The question to ask is, do the fundamentals you mentioned justify the valuation?
How does a static rather than unconstrained supply make something a LESS good store of value?
Bitcoin-fanatic-USD-bears claim that Bitcoin is a good store of value because it has constrained supply. But they miss the demand side of the equation. Similarly, they claim that the USD is a bad source of value because it has "unlimited" supply. That also misses the demand side.
The demand for USD is robust because people need USD to pay taxes and to purchase most goods and services offered by US-based organizations. The demand for Bitcoin is based on... how many people Bitcoin-fanatics can get to buy and hodl Bitcoin.
(I don't count organizations that accept Bitcoin as payment because almost all of them exchange received Bitcoin into the local currency, negating the demand effects of the original Bitcoin purchase. In the US, that's usually USD.)
The usual fallacy is when proponents claim that Bitcoin is the only asset able to escape inflation due to fiscal policy interventions. This couldn't be more false. The very definition of inflation is an increases in prices, or a decrease in buying power. However, investors have been buying assets and investments to avoid inflation long before Bitcoin was even invented.
Bitcoin isn't a particularly good store of value because the price is driven purely by demand, which is currently in a state of market mania. It's not even the first market mania around Bitcoin. Past bubbles were also met with a "this time it's different" attitude before the inevitable sharp losses.
Bitcoin has value not because someone coded a 21 million coin limit in the code somewhere. Bitcoin has value because people want Bitcoin. Why do people want Bitcoin? Because the price goes up up. Why does the price go up? Because people want Bitcoin. As soon as something breaks that cycle, it doesn't matter what the maximum number of coins is. Without demand from the belief of future increases due to increasing demand, the price will go down. The purchasing power decreases.
Everyone likes to demonize fiscal intervention, but the reality is that counter-cyclical fiscal intervention tends to benefit the average person. Running inflation too hot is bad, but swinging to a full deflationary currency (Bitcoin) would also be bad for the economy.
Because a healthy capitalist economy needs an incentive to invest. A steady, low, positive inflation rate is essential to encouraging those with capital to rent that capital out to those who need it for productive uses.
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https://goldprice.com/project/facts-about-gold/
There’s no such reserve value for Bitcoin. You can’t look at it or hold it or do anything with it other than as a currency.
I’ve seen widely varying stats estimating gold’s jewelry share but all of them are large.
I hold because i expect us to continue approaching the game-theoretic attractor. I've held for years and will keep holding. Every year, i see more and more people coming around to my perspective.
How many years can you watch the price keep going up before you'll eventually consider that you might be missing something?
> We know transactions are slow and expensive,
lightning network obviates this problem
> it’s often regulated such that it needs to be fully declared (removing the whole anti-gov part)
The government still can't print more bitcoin, which is the main appeal for me.
They also cant technically block anyone from recieving coins. They can make doing so a crime, but don't have the technical ability to, say, freeze funds.
> typically markets eventually correct when there’s no underlying true value proposition
Given that bitcoin is over 10 years old, shouldn't its longevity be taken as evidence that there is, indeed, a true value proposition?
> which can be executed “well”
Why is 'well' in quotes here?
Are you open to the hypothesis that money printing exacerbates might cause long term issues in society?
Make your money the way you want, but I wont participate in something I have no chance to control.
I first heard someone mention this circa 2014. What happened? If anything fewer people try to use bitcoin for transactions since then.
And if the point is to hold and never sell why buy anything with bitcoin?
If the governments of the world made it a crime for miners to include transactions involving certain blacklisted addresses in their blocks that could be a big step towards a freeze.
You're not missing anything, you said it yourself it's a store of value. Maybe markets eventually correct, but in the last 10 years Bitcoin has only gone up, so if you had planned to use it to store value for 10 years a decode ago, then it worked pretty well.
> It also pushes only towards deflation, so it’s terrible as a wide spread value store because it removes an important tool that governments have to handle the economy
Well it's a store of value, not a tool for the gov to handle the economy.
It was $19k in Dec 2017 and $3k in Dec 2018.
That's what you're missing here, not everything needs to be on-chain to be valuable. Exchanges and businesses and services can aggregate.
If you never actually use the blockchain, then you don't really know if those BTC you 'bought' even exist.
> We know transactions are slow and expensive
^ You're missing this.
* Cross-border transactions which would take days for Swift are instant
* Expensive: no not really. In the filled mempool days, yes prices shot up, but that was a few years ago. Fees are incredibly low now.
* Non-int transactions are still just about the same speed as a Visa cc/debit swipe. Again, when the mempool is going insane (hasn't happened in some time), yes TXs could take time vs. fees. However, nowadays it's just about as quick to reach a "basically verified" TX as it whatever risk mgmt balancing Visa is doing in the background. This time, instead of Visa's fraud department doing some checks, it's 1 or 2 blocks to very likely confirmed, 6 blocks to definite. Just different ways of skinning the same cat.
You're correct on this
> also lacks a lot of the controls that traditional banks have for good reasons,
But you're blending some arguments that are counterfactual if taken together as something cohesive. It's fast because it doesn't have these controls, for instance.
As you have made a totally new account you probably weren’t around for this.
Also, I don't know if all investment need to make sense based on economic fundamentals, bitcoin makes sense at a psychological level why it is a good investment for now, as more and more people slowly decide they need to dip their toes in it as well.
> We know transactions are slow and expensive, so it’s not a good replacement for ordinary commerce.
I don't think that this is obviously true. Digital transfer of the US Dollar is similarly slow and expensive (see: ACH, Wire, SWIFT). The response you'll hear the most frequently is that BTC (and digital currencies) should be compared to the US Dollar, not to Visa and Stripe and Venmo etc. Right now, if you want to send US dollars to somebody and you're unable to do it through PayPal/Venmo/Square/Visa/MasterCard, your best bet is to literally mail cash to the recipient. BTC solves that problem; you now have the option to send someone "cash" in a trust-less way, but that's probably not how the majority of people would use BTC.
The blockchain doesn't have to be used to settle every single transaction in real-time, just like you don't have to use ACH/Wire to send $5 to someone electronically for every transaction. Just like banks today send a batched ACH files of all money movement at the end of the day, they may do the same on the blockchain hourly/daily. The benefit of BTC over USD is that there is a way to "mail someone a briefcase of cash" without having to actually mail them; instead you can "mail" it to them on the blockchain and have it take a few hours rather than 3-5 business days. If you want to send US dollars faster, you can rely on centralized institutions that build financial products on top of the US Dollar, but the same can happen on top of other non-government-backed currencies. Just like you have a bank account where you can see in Dollars or Yen or Pounds what your bank balance is, one ought to be able to open an account and see what their balance is in BTC or ETH or Nano...or so the argument goes.
> It also lacks a lot of the controls that traditional banks have for good reasons, so fraud becomes harder to tackle, and things like refunds are just at the mercy of the other side of the transaction (making commerce even harder, as well as basic banking)
Again, you want to compare BTC/ETH to the actual currencies, rather than the institutions that engage with those currencies. All of what you said is true of any fiat currency: I can physically hand you a $20 bill, and that transaction can happen in a totally un-traceable way already. There’s a common saying that if cash were invented today, it would be illegal, since it’s hard for the government to track and they wouldn’t like it.
> So then it becomes a digital store of value, one that is only as valued as the market gives it, and typically markets eventually correct when there’s no underlying true value proposition (as we can see with $GME).
This is a good point, but I found a good "counter-point" in Matt Levine's latest Bloomberg Money blog post: https://www.bloomberg.com/opinion/articles/2021-02-16/goldma...
Here is the relevant bit:
"We have talked a lot recently about the Reddit-fueled rally in meme stocks like GameStop Corp. One thing I have said about this rally is that it reflected Reddit traders’ correct understanding of a simple market dynamic, which is that if they all bought the same stock at once then it would go up. So they did. Institutional Bitcoin adoption, as we have also discussed, has a somewhat similar dynamic: Each time a big institution says “we like Bitcoin now,” Bitcoin goes up, because widespread mainstream institutional adoption is clearly bullish for Bitcoin at this point. So if you are a big institution or corporation, you can make some free money by (1) buying Bitcoin, (2) announcing “we like Bitcoin now,” (3) watching Bitcoin go up, and (4) selling the Bitcoins you bought for a quick profit. (Or keep them as a bet that other institutions will do the same thing and you’ll make even more profits.)
This dynamic, separate from any particular institutional decision, is good for Bitcoin: If it’s in every big bank’s and corporation’s short-term financial interest to quietly buy some Bitcoins and then noisily make a show of adopting Bitcoin, then a lot of them will, which will have the effect of pushing up the price (both because of their buying and because of their announcements). Unlike meme stocks, there is no underlying business, no cash flows that do or don’t make the price make sense: The price of Bitcoin makes sense or not purely as a social fact; if there are “fundamentals,” they are things like “widespread mainstream adoption,” which you can provide. “The fundamentals of Bitcoin are strong, look, Morgan Stanley is buying some,” Morgan Stanley could plausibly say, after buying some Bitcoins. So it might as well do that.
With the meme stocks the natural thing was to worry about the endgame for that process; you can’t have a stock price that is divorced from fundamental value forever. With Bitcoin, you ... can? Like if the endgame for Bitcoin was “universal adoption by corporations and institutions as a digital store of value,” then that sounds like a good and permanent and somehow fundamental result?"
> so it’s terrible as a wide spread value store because it removes an important tool that governments have to handle the economy (dealt with debt via inflation aka printing money, which can be executed “well” (US) and really poorly (Zimbabwe)).
This is very debatable, and you've more or less illustrated the controversy by pointing to a "good" version and a "bad" version. The political question is whether the possibility of "bad" means that the concept of government-controlled inflationary assets is inherently bad. I won't pretend that there's an objective answer, but neither should you; the fact that it removes the tool you describe can both be described as a feature or a bug, depending on your political leaning.
And with ACH, wires, swift, the slowness is a feature not a bug. It's one of the ways fraud is combated, for example. I seriously doubt it's fundamentally a technical limitation of the technology used, but rather a choice.
But as you said people aren't doing this with BTC -- and if they're not, then this removes one of the use cases that would warrant it's value, so you're only arguing my point.
> The benefit of BTC over USD is that there is a way to "mail someone a briefcase of cash" without having to actually mail them
You also seem to forget about checks -- no one ever sends bricks of cash in USPS unless you're a drug dealer running a YOLO life. But you also ignore ACH/wires/credit cards and all the ways most money moves today. What is the fundamental issue there that Bitcoin solves?
> Again, you want to compare BTC/ETH to the actual currencies, rather than the institutions that engage with those currencies
You're right, however regulations exist that enforce institutions use USD. Those are largely good things.
> With Bitcoin, you ... can? Like if the endgame for Bitcoin was “universal adoption by corporations and institutions as a digital store of value,” then that sounds like a good and permanent and somehow fundamental result?"
But is/will that happen? These issues that I point to make it a less good option.
> I won't pretend that there's an objective answer, but neither should you; the fact that it removes the tool you describe can both be described as a feature or a bug, depending on your political leaning.
It's a tool that gets removed. Being global means there's no local way to adjust things to current circumstances. Just look at Greece in the EU -- because they went on the Euro, with a totally different economy than Western Europe, they got all of the deflation with a GDP that couldn't keep up, and as they piled on the debt they didn't have any levers to pull. Unifying global currency is a terrible idea when you have very uneven economic realities around the globe.
i call a bunch of people serving 1% of the population without question lemmings. to try and falsely frame a legitimate worldwide, grassroots counterculture movement as just a bunch of stupid lemmings betrays your prejudice and makes it hardly surprising that you don't see any value in the space.
i can't believe a bunch of "hackers" shit on the open source, decentralized internet of money. it's a currency created by real hackers for the internet. it is the first of an entirely new asset class that allows any person to be their own bank and has a hard cap on supply. Yes it's slow, but it's also extremely secure and resistant to change.
>it’s often regulated such that it needs to be fully declared (removing the whole anti-gov part)... so fraud becomes harder to tackle
which one is it? cash is the king of fraud and illegal activities anyway: fungible, anonymous, hard to trace. a public immutable database ought to make fraud much easier to weed out in the long run...
>no underlying true value proposition
it has outperformed every other asset in the world over the last decade, maybe you need to look a little closer to understand the value proposition. just because a bunch of bigots decide it has no value proposition doesn't make it true and obviously the market strongly disagrees with this sentiment.
>It also pushes only towards deflation
you mean poor people can have their money appreciate over time instead of having their meager savings robbed by an unseen, man-made market force? you mean people won't be so eager to waste their money on crap that causes pollution and ends up as landfill? i've never really understood the deflation argument, it's a textbook slippery slope.
> removes an important tool that governments have to handle the economy
if the government were truly democratic and benevolent this would be the case. unfortunately we live under a bunch of warmongering kleptocrats who need to be kept in check.
more like an important tool to bail out themselves and their cronies after they fuck up the economy so badly with their corrupt, short-sighted practices.
the people who seem to screech the loudest against cryptos seem to have a massive vested interest in maintaining the status quo. you really can't get how the economy might actually function better for most people if it wasn't serving as a welfare state for the elite?
meanwhile the btc supercomputer keeps producing blocks, just like it has since day one.
They were all over in 2017 before the price dropped to 3k,I admit I was a bit of a savage when that happened.
In all seriousness with the scam you re running online, be careful and protect your family for when it goes back from 50k to 3k. A lot of people will have lost a lot of money :(
“Stability in value is presumed to be the decisive factor for acceptance. Hayek makes the assumption that competition will favor currencies with the greatest stability in value since a devalued currency hurts creditors, and an upward-revalued currency hurts debtors.”
Stability is not the observed behaviour in BTC.
- they've missed an opportunity to get rich with minimal effort from crypto
- still have absolutely no interest in jumping in at this point?
As my friend nicely put it: only way we could have gotten rich from BTC is had we bought it when it was pennies and forgotten about it up until last year
On one hand I made a few thousand from nothing. However if I held it I would have been a pretty rich right now.
I truly believe that bitcoin is something that cannot work, so I have not and will not reinvest in it. But the sting of it doing so much better does bother me at times.
I bought BTC at $20. I sold at $1000. When I sold I had something like 1.95 BTC (had a bit of it stolen from poorly secured exchanges, lost some trying my hand at bot trading). Still happy with it because what I bought at the time with with it made me happy (Sonos speakers and photo gear). Would it have been nice to hold onto it until it was $50k? Maybe. But I have been enjoying the benefits of what I got for far longer.
Having said that, I think XLM is in a good position to jump up in price and I still have their free initial allotment.
I have had this conversation with many a friend, who actually view Bitcoin as a Ponzi, and therefore decide not to play the game (a ponzi ca be lucrative if : a) you know it's a ponzi b) you're smart in your timing and not too greedy but it's still a crapshoot).
The real questions are:
- what if it isn't a Ponzi ?
- how much will your "won't touch it with a 10 feet pole" attidude cost you then ?Or, you can continue enjoying your life the way you are without worrying what others are doing. Many times, they are only projecting one side of the story.
Jumping in now is a bad idea because it's at peak hype; never buy at peak hype. It MIGHT go up a bit more, but it won't be a 10x increase at this point - you should've bought a year ago in that case.
But a year ago, nobody could have predicted it would go up 10x.
It helps that I have all my necessities well covered.
And I've repeated that thought on 1.000, 10.000, 20.000 and again now.
So yes, you are not alone in feeling this is a missed opportunity.
Had I invested, I'd have wasted the coins long time ago, and would be just kicking myself daily or on suicide watch.
I'm not exactly interested in risking enough money for it to be worth it long term anyways.
Now if only I still had my original wallet...
I'm always tempted to make some kind of agent simulation, where all agents know they are in a bubble, but hope they can get out before everyone else. Then eventually the price pops and, pop.
But regardless of your opinion on crypto you haven’t missed your opportunities. Projects still 100x.
Next time it’s off everyone’s mind and not in the news, just pick 3 or 4 newer projects that have a decent sounding team, put $1000 in on each, and forget about it. Check back when everyone is manic again.
Had I spent £1k of spare cash then, I would now have enough to buy another house.
EDIT: And I’ve just now remembered that someone gave me £0.50 of BTC as a “thank you” on Twitter, which I sold to a friend for £25 and which is probably now worth £250.
I started putting a small amount into BTC each month on Coinbase. It’s money I can lose and that I would have spent on a vacation this year if not for COVID. I figure I’ll pull it out at the end of the year and if it’s gone up, then next year’s vacation will be a bit better.
I don’t understand BTC at all and consider it gambling. But like Nick the Greek said, the next best thing to gambling and winning is gambling and losing.
Now I'm not sure that crypto coins without being jacked up by central banks (like gold was during the great depression) are a powerful enough force to cause the type of havoc that gold did.
Then again, the potentially stronger network/memetic effects of cryptocoins, along with the amplification factor from markets being synchronized through instant all-encompassing global communications nowadays might make them dangerous to the economy even without central bank involvement. We saw how much people can get hypnotized by these things during the Gamestop episode. I don't think unsophisticated investors' hoarding is enough to cause big problems but it is a bit unsettling that Tesla and other companies are jumping on the cryptocoin train. If enough businesses follow suit, you get into scary territory (It would also be worrisome if companies widely moved to add billions in gold to their balance sheet but I thought the lesson had been learned in the 1930s with gold).
In theory, if central banks stay stimulative enough through all this, you can have growth in both crypto and businesses. As long as these central banks don't blink at the sight of what may look like crypto bubbles.
Yes, fully agree. But then ask yourself: aside from COVID, who created the economic conditions that lead corporations to decide that stashing treasury as Bitcoin is better than investing in the "productive" part of the economy.
QE, interests rates at near zero, corporate bonds near worthless, stock market at stratospheric 2000-like levels, real estate easily taxed to death ... how do you protect your treasury other than stashing it in hard assets (crypto, gold, commodities)?
To be clear, the above is good, if interest rates on government paper were above risk adjusted market returns for new capital this would gridlock the economy. Stock market being high incentivizes creating new capital.
> how do you protect your treasury other than stashing it in hard assets (crypto, gold, commodities)?
The government should not create artificial assets that "protects" wealth from being subject to the real economy because people divesting from the economy destroys the economy.
Now there is a question whether the market will choose to go into crypto and divest from the real economy anyways. The reason this is a question is that people have been known to pile into bubbles in the past, and this is the tricky part, on some level they are not totally irrational in doing so. To the individual, being early in a long running bubble is advantageous. When you do it, and do it first, you gain. Everybody doing it however, may cost you and your friends, family's and everybody's careers.
It's a prisoner's dilemma, a bad Nash equilibrium. It's Moloch.
Example: what happens if other companies followed the likes of Tesla and MicroStrategy? Sure the $1.5B Tesla invested is pittance in the context of their market capitalization, but if Bitcoin price crashes 80% then they've lost $1.2B. Even Microstrategy, with its alleged 85% of its cash reserves in Bitcoin, might well go under if the Bitcoin price drops even 50%.
A "run on Bitcoin" could become a real thing and as impacted companies are forced to cut production and expenses to offset the losses, it creates a domino effect across the economy.
Extra volatility in the crypto coin market disincentivizes hoarding. So while it might hurt specific companies that over do it, it may prevent an economy wide gridlock where all companies are hoarding coins instead of investing in real production.
In a way, volatility caused by corrections is a natural cure for the bad Nash equilibrium. It's when the correction mechanism stops happening that things can build up into dangerous situations. That's why when governments tried to stabilize gold in the 1930s, preventing it from naturally correcting into a volatile asset, it caused the great depression.
We've just been through a year of businesses being forced to close whilst their landlords continue to collect rent, and everyone seems to think the latter is just an amusing oversight.
In that sort of environment, it's far more logical for me to just buy hard assets and sit on them; it's been made very clear that we're going to just force that to be the winning side of the trade via legislation.
The sentiment on HN seem still be mostly against it whenever it comes up. I wonder why that is? I'd imagine 10 years from now Bitcoin will still be around and likely much larger than today - I'm less positive about Facebook outlook and posture in 10 years actually.
I wonder what will change the opinion of the skeptics?
I also happen to be skeptical of Bitcoin's long-term outlook, but that's not why I'm actively against it as a technology. If it wasn't for the planet, I'd say people could put their money wherever they wanted. Actually, I still think they can—as long as they're willing to pay for the negative externalities they create. But then no one would actually use Bitcoin...
To be fair, Bitcoin does not do what Visa does. Visa uses trust in existing institutions to accomplish transactions. Bitcoin mining creates trust out of electricity. And trust is a valuable resource, no different than any other form of value creation.
(Still think proof-of-stake is big improvement though.)
You compare it to Visa, but actually visa does only part of what bitcoin does (transactions), and does it using _other_ systems themselves also using energy (security, banking, etc).
Nowadays bitcoin is mostly seen as a store of value, to which it should then be compared to gold. Gold has a much higher carbon footprint than bitcoin, both for mining, storing, transactions, etc.
there are a lot of writings about this, some answering a recent article posted on HN here https://www.coindesk.com/what-bloomberg-gets-wrong-about-bit...
If you want to learn more about this concept, you should research about Slavoj Zizek's work on ideology. Bitcoin is not just technology, but a multi-faceted ideology founded around cypherpunks ideas, liberty, sovereignty, austrian economic system, free markets.
Even the way Bitcoin is developed (slow, methodical) and Bitcoin apps are built is different to SV way which is move fast, break things, iterate.
This is the narrative that people use to make it seem more savory. But it's just about the money. No one cares enough about any of those ideals for them to be a meaningful part of what Bitcoin is. Those ideas have existed forever in the back channels of the web, and are memorialized in the endless plethora of abandoned decentralized technologies that were never profitable. It's money, plain and simple. There's nothing wrong with that, but for whatever reason the crypto community has some kind of chip on their shoulder about hiding the fact that it is just about profit.
I didn’t buy crypto as a Ponzi. I bought it because it makes perfect sense if you have a libertarian / Austrian / free market / individualist / free people mindset. Which I do!
If you were to sell 50% of all the bitcoin floating around in the world, how much would you impact the price? Would it remain above 40k? 30k? 20k?
What's the cost basis of all the bitcoin holdings in the world?
If the US government cracks down on bitcoin purchases by public companies, what happens to the price of bitcoin?
Skeptics aren't skeptical because of lacking adoption, so they aren't going to be swayed by increasing adoption either.
Also, Facebook isn't some magical Rubicon for asset valuation. It's a company that sells ads.
One of the fundamental problems with "things are going good, what could go wrong?" is that inevitably, every crash is clearest in retrospect.
Facebook on the other hand, is deeply entrenched in half the world's daily entertainment routine.
I understand the hype around BTC, but I don't know if it'll all come crumbling down if a few big fish get irked and decide to liquidate.
1) It is volatile and impossible to value; any price is as reasonable as any other. What is my benchmark here? The amount of USD in circulation? The value of outstanding U.S. Government debt? (if it is indeed going to replace Treasuries as reserve currency / safe haven asset). Can someone more knowledgable than me chime in?
2) Its utility as a currency is inversely proportional to its utility as a speculative instrument. And speculation appears to be 99% of the interest and discussion.
Volatility of currency goes away (or rather, gets abstracted) within the context of locales where that currency is used as a unit of account and goods and services are directly priced in it. So far, this hasn't happened yet for bitcoin, because there is no central authority forcing it upon people.
Nobody knows if, when, where, or how this unit of account transition will happen. Maybe Tesla prices the new roadster or cybertruck in bitcoin as a publicity stunt that starts a cascade. Maybe some country with a failing currency decides to issue a new currency backed with bitcoin, or their people start using it without permission and pricing emerges organically. Maybe Iran, Turkey, Venezuela, North Korea, Syria, and Cuba start using it as their currency for international trade.
Or maybe it never will become a unit of account, and bitcoin will just find a role as an inflation hedge and long term store of value like gold, which is currently 10x as valuable as bitcoin.
I think the opinion changed from favourable to skeptical as no use cases emerged.
A lot of the proponents of Bitcoin are pushing it in the same way people push MLM and ponzi schemes and for the same reasons, which is unfortunate.
For many, including me, it seems a great shame to be consuming so much computing power (and energy) to solve increasingly difficult mathematical problems for no human benefit when the same effort might be used for better ends.
But I imagine there is also a lot of opportunity for innovation in that realm to move to clean solutions for instance.
For anything you want to do with btc|fb, there is something else that does it better. But not enough people use those other things, they aren't trustworthy, they're more difficult to use, too fragmented, I already use x why would I use y, nobody knows about them, etc.
I agree it will be around in 10 years, but think it will always be highly volatile. Between now and then, I could see it being worth much more and worth much less than today's price.
https://goldprice.org/charts/history/gold_all_data_o_usd_x.p...
Bitcoin, like gold, is not a productive asset. It doesn't pay interest (like bonds), dividends (like stocks), or rental income (like real estate). Warren Buffett has a good explanation: https://www.youtube.com/watch?v=LtITDtZPYEw&%3Bab_channel...
The problem is that Bitcoin is not productive, so it only makes sense to own it if someone will pay more for it in future. But how do I estimate that without any long-term price history? I can see that the demand for gold increased in, say, 7 of the last 10 decades so that would give me some confidence about demand over the next decade.
So to answer your question: the only thing I can see that will change my opinion of Bitcoin is if demand generally increases over many decades.
Nothing. It's an ugly system, for soulless players: it's eating up hardware production capacities, energy supply, and the money of the ordinary folks.
Because it tops out at four transactions per second while consuming as much power as Argentina. It's not rocket science.
>I wonder what will change the opinion of the skeptics?
All of the following are necessary but not sufficient:
1. Bitcoin users must panic when Bitcoin experiences deflation rather than celebrating it going TO THE MOOOOOON!
2. Someone has to find a way to make it scale.
3. Tether must be audited.
1. BTC price increases
4. There is media attention about the price raise
5. More people buy BTC, because FOMO
6. Back to point 1, but now a bigger group
This loop is a pump, increasing the price as long as the loop isn't broken.
The same pump can reverse, very quickly. Once the loop is pumping there is no way out.
1. BTC price drops
2. There is news out that that the price drops
3. More people sell bitcoin
4. Back to point 2, but now a bigger group
The fact that there is a limited supply will ensure the prices keeps raising, because nobody can "make more bitcoin"..
But this part of the BTC system causes it volatility, it's inherently baked into the system.
It's not the underlying performance of bitcoin, or the profit the system is making. Its pure viral loops logic that cause pumps and dumps.
You can impact it, if you hold a lot of assets. Just PUMP or DUMP a lot. It triggers a pump in the direction of your choosing.
Next to that, ETH is a factor better in design and utility, and still the price is lower. Why? Cause there is less news about it. Not because BTC is a better product.
This is a common claim, but nothing is ensured here.
Almost everything else we put a value to has a more real underlying value that's also growing. Gold has uses in technology, with stocks most companies have real assets that could be sold off, even with art I think most people would be willing to buy an art-piece for the right price. The value of a Monet for me might be a tiny fraction of its valuation, but it's there. But nobody has any underlying interest in a Bitcoin. Its value as a currency for paying for products and services seems to be diminishing as well.
You can't make more Bitcoin, but you can easily make more cryptocurrencies, all with the same limited supply (which according to some people means the value MUST increase). And they're all equally interesting. The one exception with Bitcoin is that it was first. You could say it has a tiny bit of underlying historical value.
To me, I think it implies that it's inevitable that Bitcoin will have a crash that's very deep and very long lasting. It's impossible to predict when though. In the very long term it'll probably increase due to hits historical value. But by that point I doubt it'll significantly outperform other investments.
I also think there's a very high likelihood that many governments will regulate cryptocurrency exchanges to death at some point. A rally against Bitcoin specifically can easily be justified as part of the fight against climate change, since it wastes so much energy.
Also ETH doesn't have an upper limit to the total supply, therefore its scarcity is not the same as BTC.
Even worse: If people can't get out fast enough, and the banks didn't judge the risk properly, it can threaten banks - see 2008 for how this works.
When the panic selling starts is game over.
The limited supply logic has meaning if people hold, if they don't, nobody will care it's limited in supply because there's no demand for it.
"This time it's different" isn't an argument I find compelling for why something that is known to have bubbles and manipulation isn't in a bubble.
The first is that Bitcoin is thriving as a store of value. It hasn't seen much adoption as a payments system and is unlikely to do so in the future, but 2020 saw many notable people using adopting Bitcoin as a store of value. See MassMutual, Paul Tudor Jones, Stan Druckenmiller, Tesla, among many other examples.
The second reason is that defi protocols grew in usage by an insane amount in 2020. Decentralized exchanges like Uniswap are beating centralized exchanges in volume and lending protocols like Aave have billions deposited in them. These defi protocols are generating huge cash flows. This is real people using decentralized technologies built on blockchains like Ethereum.
Even if the 2021 bull run ends up like a bubble, 2021 will be different in that a lot of the price rises will be based on fundamentals, not pure speculation like in 2017. One thing to note though is that a Bubble is not necessarily a bad thing. In every past Bitcoin "bubble" (2011, 2014, 2017 etc) the price Bitcoin crashed to has always been higher than the price it started the run up at.
What are people doing on these systems? Usually to say “generating cashflows” means some kind of productive business activity.
Are people actually touching the real economy or just trading coins amongst other people in the crypto world?
I'm fairly new to Crypto so I don't understand this: it's looking like all cool new things are built on Ethereum (which, itself has grown quite a lot) so why is Bitcoin rising? How are Bitcoin & advances in Ethereum-based techonologies correlated?
Bitcoin as collateral. Given many people got extremely rich off of bitcoin, they can use bitcoin as collateral for altcoins.
Wrapped bitcoin. Bitcoin can be wrapped in a ERC-20 ETH token backed be an actual bitcoin, similar to stablecoins (USDT, USDC, etc.) and traded using smart contracts
Let me give you my favorite quote, pulled from another HNer comment: "I enjoy reading comments about Bitcoin here because even without any venture backing, it achieved a bigger valuation than all of the Y Combinator companies COMBINED, yet people still think it is unstable and has no future."
2015: "Most advantages of Bitcoin which matter are captured by, and improved upon by, a LAMP app which simply holds account balances."
2019: "I acknowledge that when Bitcoin was $17 I said it had no use case, should be worthless, and likely would be at some point in the future. No evidence has come up which would make me change my view. (Though my is it taking a while.)"
What has Bitcoin created?
I struggle to come up with an answer which isn't overwhelmingly just a way to fund illicit activities, for which sure there's always been a market, but it's a far cry of it's origins. Who actually uses bitcoin for transactions today other than extortionists hackers and drug dealers? Everyone who owns is just planning to HODL and hope that it will become equivalent to an infinitely high fiat equivalent. Had bitcoin succeeded we wouldn't be talking about insane valuations. We would be using it every day no different from a credit card.
I don't own any cryptocurrency and can't put a dollar valuation on such an achievement, but it's certainly not an everyday thing.
The biggest impact on the world from bitcoin's creation was not a democratization of finance, it was a widespread mechanism to facilitate payment of blackmail.
I used it to buy the phone I'm typing this on:
https://news.ycombinator.com/item?id=25598831
Despite the run-up since, I'm still happy with that transaction!
Personally I think Bitcoin has at least two bubbles left before it pops permanently. So $1M price could be achievable.
The real question is what happens when it does reach a ceiling. At some point there's not going to much more potential interest for Bitcoin, and what then? Are people gonna start moving their pension funds to Bitcoin? I think the governments will crack hard down on that, because you really want investments in building the economy, not in a pure investment/gambling scheme.
If most people start thinking there's no one else interested in buying their Bitcoin down the line, it'll crash hard, and the crash will likely be permanent. Because there's no real value behind Bitcoin. The money you invested is already spent by someone on something else.
The reason why it's interesting that Bitcoin keeps having bubbles is that there's not much reason to think that will stop. Yeah, the value keeps growing over longer time periods, but eventually a bubble will be so large that it'll seriously disrupt the economy, and that's when you'll start to see governments and peoples attitudes change.
> I enjoy reading comments about Bitcoin here because even without any venture backing, it achieved a bigger valuation than all of the Y Combinator companies COMBINED, yet people still think it is unstable and has no future.
The problem is that the valuation is more imaginary than the valuation of any company except for those that are just Ponzi-schemes.
Most money put into Bitcoin has been cashed out or used for mining expenses. If everyone tried to cash out, the price would very quickly race back down to zero. If the same happened with a stocks in a corporation, at some price level someone would just buy up a controlling stake of the shares and liquidate all the assets for a profit.
By that logic, do you support government prohibiting pension funds from investing in Gold?
You post was very interesting (what happens to Bitcoin when it becomes so big it's capable of tilting G7 type economies) up to the argument above, which is:
a) wrong because Bitcoin does have some actual utility
b) wrong because "value" is only something that carries any kind of meaning in a supply and demand framework
c) parroting an argument that has been trumpeted on HN almost as much as "oooh, bad for the environment" and has also been thoroughly debunked.Truly is a paradigm shift and I think a big problem on HN is that VC can’t see they are being disrupted and have no way of avoiding it, plus they think they are untouchable geniuses, so being wrong this hard isn’t pleasant for them.
On the contrary, VCs are making bank on cryptocurrency. Retail investors are just along for the ride.
> plus they think they are untouchable geniuses, so being wrong this hard isn’t pleasant for them.
Again, VCs were all over cryptocurrency investments in recent years. They're ecstatic when the price goes up, because retail investors are pumping an investment they were in long ago.
I don't know how we arrived at this narrative that crypto was a win for the little guys at the expense of institutions.
It's not really the same relationship as investment in a company, but it's not absent either.
Notice how the trend is eerily aligned? Just because you couldn't find it doesn't mean you have to be snarky about it.
Stock-to-flow is based on assumptions, but they're not unreasonable.
The predictive power hasn't been half-bad either.
https://www.businessinsider.com/wework-valuation-falls-47-bi...
(I don't think WeWork was YC, but it does drive home that achieving a valuation is primarily a reflection of your ability to convince investors to give you money)
Counterfactual: asset prices and incomes have been rising, almost uninterruptedly, for 12 years.
Exhibit A is Tether being able to publicly admit that they don't have the cash they said they had and keep going.
This is the wrong metric. A million dollar market cap bubble is not hard to sustain, even a billion dollar market cap is a footnote to the rest of the economy. The entire worth of Bitcoin is still less than half of the worth of the market cap of one company such as Apple. At some point it becomes large enough that its real value has to be considered, which in my opinion is zero.
Stocks like pets.com had long runs in 2000, subprime mortgages had long runs in 2008 and people were saying then what you are saying.
Stocks and real estate are frothy now so Bitcoin and Dogecoin have company. I would rather own a house than 10 bitcoins though.
For some reason, even though BTC was meant to be "money", it is now being treated as an asset (at a basic level, an asset is something you hold onto, as it produces additional value, unlike money, which tends to devalue if not put to work).
It's almost as if the next big idea in distributed money will be around disincentivising "asset" like behaviour.
Assets are terrible things to use for everyday transactions, which is why I don't quite consider Bitcoin "money" just yet.
Bitcoin's real invention was censorship resistance, by incentivizing distributed miners to arrive at consensus about transactions in a way that no single miner could control. Sadly, that same distributed incentive is responsible for Bitcoin's ever-increasing energy usage.
In the last 24 hours, there's been $108B traded.
Also, I don't quite understand your first question. Care to elaborate?
Monetary policy
https://docs.nano.org/protocol-design/introduction/#abstract
ERC-20 tokens are the magic that enable second-layer "currencies" such as DAI and others to work on top of Ethereum. There are other tokens, even WBTC (Wrapped Bitcoin).
DAI itself is backed by a basket of token-based assets such as WBTC, WETH, USDC, USDT etc.
The Ethereum dApps are definitely a fun rabbit-hole to dive into, e.g. UniSwap, Synthetix and other DeFi applications.
The main problem as I see it is the transaction costs are very high (I looked into using UniSwap but it was going to cost > $50 to transact what I wanted). However, in the next few years the Eth2 improvements will help scale the network and hopefully see transaction prices fall.
I designed Bitflate. It's a cryptocurrency with 7% inflation. The rate is moderately high to make it the opposite of Bitcoin. But it's not too high to cause hyperinflation. Bitflate is a Bitcoin software fork. So there are possibilities to create hybrid cryptos that have inflation rates between 0 and 7%.
Check out my project: https://bitflate.org/.
But how can this encourage adoption?
Who would want to hold an asset that is designed to lose purchasing power?
If nobody wants to hold it, then nobody wants to get it as payment.
Bitcoin has shifted in the mind of investors from a currency to an “asset class”. What this means is that to investors it is more like gold than dollars.
Gold’s value is not linked with its usage in the industry or jewelry. Holding gold doesn’t yield interest. its value comes mostly from people scared of devaluation.
While the interest rates are still low and the economy is not doing great, it makes sense to diversify one’s cash in various “refuge” values.
That Bitcoin is becoming a refuge value while its volatility is still insanely high is somewhat weird. It mostly indicates that there are many cash-rich people/companies out there who dont really know what to do with it.
Its like the low hanging fruit of engineering has been picked, or we are waiting for the next big technological breakthrough to come about. I look at even the lifestyle 30-40 years ago, and despite more efficient engines in cars (which isn't a problem with cheaper fuel anyway), the mobile phone and the internet (which isn't all good news IMO) not much has changed lifestyle wise. In some measures such as food prices, house prices, deep social connections, and other more base needs its gotten worse for the average middle class worker in a typical Western country.
IMO it feels like we've hit a stagnation which is reflected in investor preference to hoard value.
https://youtu.be/_93CXTt2K7c - There is an associated research paper on this Ted talk.
At the moment I feel a centralized privacy coin would work best for me. Centralization brings performance and the private part avoids excluding participants.
Needs more adoption from the mainstream crypto payment providers though. Honestly I suspect half the reason support is lacking is because nobody actually understands how it works (because it is quite different).
* Basic Attention Token (BAT) is another "internet money" contender because the user can earn it through viewing ads. No fiat onramp needed.
I haven't researched Nano but I would be interested to hear the trade-offs compared to Ethereum and Bitcoin.
Crypto is the HN equivalent of what the ipod was to Slashdot: "lame" to the people who think they are the typical user, who declare there is no product-market fit. Maybe after 12 years of being constantly proven wrong, it's time for the old guard to stop being luddites and concede it has been very wrong?
I actually tremendously enjoy hearing a well constructed negative argument against Bitcoin/Crypto that presents a perspective I haven't heard a 100 times before and/or hasn't been debunked in depth.
These are actually necessary given how new and different the whole shebang is.
But that hasn't happened in a rather long time on HN, or if it has, it's buried 10 level of indent deep amongst HN randos parroting lame climate change arguments they've heard on reddit of FB.
So my advice on owing crypto, is own enough that if it goes parabolic you aren't kicking yourself later, but not so much that it breaks you if it goes to zero.
Cool. You got rich. Good for you.
Why does that in any way make criticisms of environmental impact less legitimate? Loads of people have gotten rich off of systems that have unpriced negative externalities. You aren't the first.
I hope that you use some of your newfound wealth to give to effective charities and help the world.
But by far and large, there is no product-market fit still. And people are rational in being against it for various reason, please don't call them luddite.
Personally, I'd still support crypto in the same way I'd support FSF (though much less of a support, just for clarification!). Because I think there is something there with the idea, and I like the principles. But there is a high chance the detractors are correct in their assessment.
The same applies to Bitcoin. It doesn't offer me any tangible benefits over traditional currency and it has some major drawbacks in areas that I value. The only reason I would purchase is if I felt like gambling on speculation.
Sticking with PoW long term is my only concern about Bitcoins ability to remain relevant.
I'm more bullish on Ethereum, pending successful transition to V2. Also bullish on some of the emerging competitors to Ethereum; heterogeneity provides a healthier ecosystem.
I know practically no one around me who has ever used Bitcoin for actual purchases other than buying drugs once. And I know literally no one who uses it in daily life. However I have a few dozen friends who bought Bitcoin because it's going to go to the moon or something.
Paradigm shift isn't too strong a terminology.
The planned limit on the total amount of Bitcoin in circulation, transaction fees and long transaction times seem to be quite a blocker for using it to buy a cup of coffee.
How is this gonna change human history more than dudes getting rich selling some stock?
Countries will still maintain their own currencies for legal tender/monetary policy purposes, but they will likely be in the form of CBDCs and have interoperability with public and private blockchains.
Was there some thing (or things) that happend in October/November that started the most recent growth in price? It seems to have bounced around $5-10k for over a year and then in early october just started to take off and is now 4-5x that and not showing any signs of stopping. I heard about the Tesla thing, but that was very recent. What did I miss?
Paypal announces you can buy and sell BTC IOU's (not real Bitcoins) on their platform.
Microstrategy declares they want to stash a sizable chunk of their treasury into BTC.
Elon makes a few grunts vaguely favorable to Bitcoin via twitter and stashes 1.5B of his Tesla treasury in BTC.
Mastercard makes vague claims they are going to "support" "some" cryptocurrencies.
A number of finance world pundits switch attitude from poo-poo-ing Bitcoin to "it's an interesting asset to watch".
A general feeling that "institutional money" (whatever that actually means) is coming to Bitcoin.
In the fall, Paypal adopted Bitcoin in their payment network.
Why couldn't something similar work for Bitcoin? I recognize that it's not a completely decentralized system anymore at that point, but it's still much less reliant on banks and the fed than our current system. It seems like something like this would be the obvious solution to the scaling issue.
Basically, if we think of Bitcoin as a replacement for cash, then why is there so much discussion of what effectively is the credit market?
(And, if you go to the ledger rarely, there's all kinds of complicated creditworthiness and double spend issues).
Decentralized, trustless version is the Lightning Network, https://www.lopp.net/lightning-information.html
Mark the amount you paid and its BTC value on the calendar and completely forget about it for one year until some out of the loop person (i.e. uncle at Thanksgiving) asks you if it's a good time to put some money into it.
If the cycle continues like it has a few times now, there will be a big crash / correction, things will be very quiet around BTC / Crypto again for a few years, and then the next surge will happen.
Not financial advice, but if you have BTC, sell now - or sell half, whatever. At least make sure you have your investment back. If you don't have BTC, don't expect to earn 10x your investment. I'd wait for things to settle again, buy, and hold for a few years. Then if things go crazy again, sell off a part.
And of course, don't be hard on yourself if the price keeps going up; you cannot know if it will. Take what you can. Greed is what makes people lose all their money.
But personally I'm waiting for the next 30-40% dip.
Banks in 2021: amnesia. Maybe it's worth it as a hedge. Our clients want it. Mainstream adoption. Regulatory interest to make it easier. Price goes to 50K. New funds being set up by hedge funds and banks. Bloomberg talking about it daily.
I never owned any BTC. But that sequence of events makes me very angry.
I’d be checking which companies (e.g. TSLA) and ETFs (e.g. ARKK, given their TSLA holding) are exposed to BTC risk and putting your money elsewhere.
Cash gets way too much emphasis in Bitcoin discussions, while ignoring the fact that investors aren't investing in cash anyway.
Like most financial crazes, when the clueless hoi-polloi start jumping in, it's time to grab the popcorn.
There's certainly some concentration, but I'm willing to bet it's much less than current fiat currencies.
Congratulations for the incredible insight. Now you can short Bitcoin in a futures market and make a huge amount of money with your brilliant observations.
Worse, bitcoin's massive electricity usage results in data center consolidation.
If a nation state just simply wanted to impair bitcoin, they could chop off electricity to a few warehouses. If they cut off 25% of miners, blocks would take 25% longer, and difficulty retargeting would take about three weeks. At 50%, blocks take twice as long and retargeting would take a month.
Worse, there's the "time travel attack". Say a nation state quietly amassed 51% of mining power. They could quietly mine blocks and release them all at once, reversing transactions for however long they were mining. This is not a double spend mind you, just simply release empty blocks. Mined for 2 weeks? Reverse 2 weeks of transactions. Then rinse and repeat.
But the entire idea behind it was to be a decentralized currency. Its absolutely failed at that. What its succeeded at is being a speculative gambling instrument like beanie babies or tulips.
So yes, it's "successful" currently in that its price is going up, but no, no one actually uses or cares about using it as a currency or buys it for any other reason than they think they can sell it to a greater fool sometime later.
wonder what satoshi would think
At some point, someone needs to step in and say "no more mining".
https://pd.coinshares.com/EN-Mining-Whitepaper-December-2019
My thought experiment to verify this is simple: Tomorrow bitcoin disappears. What happens? Tomorrow FAANG disappears, what happens? I don't think it is controversial to say that Bitcoin is NOT as impactful as you are stating. Of course lots of money will be lost, but practically no industry is dependent on Bitcoin so the rest of the world will not notice. So then I am not sure how you can say Bitcoin is so valuable.
>Bitcoin
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