Comment by TeeWEE | Hacker News Reader

Comment by TeeWEE | Hacker News Reader

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Bitcoin itself has its value, but the current price surge is a bubble, it can be easily explained why the growth is exponential:

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.

> The fact that there is a limited supply will ensure the prices keeps raising, because nobody can "make more bitcoin"..

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.

If you own a Monet you had better hope the value doesn’t one day crash down to he price of used canvas and recycled heavy metals from paint pigments.

The "price" of two coins in terms of fiat currency is not comparable. It depends on the total supply. The current total supply of ETH is ~120M vs BTC's 21M. If ETH was limited to, say, a total supply of 1000 coins the price would be astronomical.

Also ETH doesn't have an upper limit to the total supply, therefore its scarcity is not the same as BTC.

So if there was a cryptocurrency with only one coin, the value of that coin would be even more astronomical, right?

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

If you can get people to buy/use it (like BTC, ETH, and countless others did), yes it would be.

The number of coins is just a definition. Bitcoin has satoshis (similar to cents) that represent one millionth of a Bitcoin. You could have defined it such that Bitcoin is actually a single coin worth $1T, and BTC is 1/21,000,000th of it.

It can get worse. When the price is going up, up, up, people borrow money to buy. That makes the bubble blow even faster - it's not limited to peoples' cash on hand. But when the price dips, and people bought with borrowed money, they sprint for the exit. The crash is much faster than it would be if "I could lose some of my gains" is the motivation.

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.

Exactly. Like in 2017, it's mostly fueled by hype. All big companies that invest in BTC are NOT "hodlers", after a threshold they sell everything or a majority. I don't believe tesla will keep bitcoin if goes below 30%-50% of what they bought at.

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.

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