Hacker News Reader

Comment by kens | Hacker News Reader

My prediction is that bitcoins are midway through a short-lived bubble and then rapidly fall to approximately 0, and in a few years people will look back with the disbelief now reserved for pets.com. The hype - get in right now and get rich, or you'll miss out and kick yourself - reminds me of 1999. My in-laws were talking about bitcoins yesterday, so bitcoins are getting the attention of the public at large; I take this as a bubble sign rather than a sign of success. Other factors: ease of switching crypto currencies to something else. Zero intrinsic value (unlike e.g. gold). Price manipulation. Risk of theft. Possibility of spectacular software bug blowing everything up.

[I'm not interested in debate; I just want to give my prediction. And if I'm wrong, I will be sure to add this to my list of spectacular mistakes.]

View on HN

There is no such thing as intrinsic value, all value is subjective, only existing if there is a conscious being that can provide a valuation. These beings have shifting, impermanent, prefecerences, and non-uniform preferences. The many factors which affect their considerations also change quite frequently: a glass of water is worth very little when I'm boating across a large pristine lake, yet it is worth an enormous sum as I stumble across a scorched desert.

BTW, the majority of gold's current market price does not stem from industrial/ornamental usage, but a collective "delusion" of monetary value (that has lasted thousands of years). Not to say gold shouldn't have any monetary value, as it is one of most useful materials in that regard. But the intrinsic value argument against bitcoin seems silly to me, given the story of gold.

Uhh, yes there is such a thing as intrinsic value and... you just proved it!

"a glass of water is worth very little when I'm boating across a large pristine lake"

So you're saying that when someone is offering you 1 dollar, doesn't matter much to you, if you sleep in a bed made of dollars. No way!!!

I hope you understood that water didn't lose its intrinsic value. Because you can(and want to) still drink it and it will still keep you alive. Whether you have lots of it, or none at all, your body will keep asking for its usual dosage.

This only because humans need water to live, and they are the ones performing the valuation. There is nothing "intrinsic" about it. Water has very large demand that is extremely entrenched due to its biological importance. This is unlikely to change, and this confusingly may seem like some sort of intrinsic value. But it isn't.

Value is an extrinsic property, meaning it stems purely from entities outside of the object itself. If humans evolved to not need any water, then perhaps they wouldn't value it at all. How can the intrinsic value of object A depend on the nature of some external object B?

You would have saved a lot of typing if you had just read the definition of "intrinsic value" as a finance term. Basically in your first paragraph you explained why it has intrinsic value.

You obviously brought a philosophical argument to an economics debate :P

This is EC-101

Haha ok glad we are on the same page now. I was originally responding to a comment about the intrinsic value of gold. How does one apply http://en.m.wikipedia.org/wiki/Intrinsic_value_(finance) to gold? It produces no cash flow or income. This is why I used a philosophical approach :p

Heh, approaching economics from a philosophical standpoint is the road to madness. I'd argue that sociology is a better approach to understanding economics, but then I would have fallen into your trap; because then we'd have a philosophical discussion :P

I'm far from an expert in economics, but if you're interested in the (very dirty)history of gold, the wikipedia page of the "Gold Standard" is a good start.

Time to sleep :)

What I think a lot of people are missing when comparing bitcoin to the dot-com bubble is that while it was followed by a spectacular crash, not only did the internet 'succeed' anyways, just later, a whole bunch of companies succeeded right along with it.

I think there's a big crash coming, but I think that won't say much about the long-term success of bitcoin. The most likely case I see for bitcoin failing is that it's replaced by another cryptocurrency, and that's still great in my book.

(I got my original investment back with btc to spare, so thankfully my finances will be unaffected either way)

I wish there was a reputable market for shorting bitcoins. It'd be nice to earn some interest on my long position while providing the naysayers a chance to bet against it. It'd also help with the volatility.

I would be very happy if there was bitcoin shorting. It would become less volatile so we could actually use it for stuff without guessing if we are getting a 10% discount or 10% haircut compared to the next day. If there were a reputable market that did bitcoin futures I would take a very long position in bitcoin because that would make it useful for commerce and therefore incredibly valuable.

A business opportunity.

Shorting bitcoin seems like a bad idea.

http://i.imgur.com/GOYWUMo.png

It would help if, for example, you needed to have BTC on hand for your business but you wanted to hedge away your exposure to the exchange rate with the USD.

Would you abandon investment into networking equipment companies if your in-laws started talking about this new thing called internet?

Would you abandon your investment into lcd manufacturers bacause your in-laws started talking about those thin TVs?

Would your grand grand ancestor abandon his investment in railroad comapnies if his in-laws started talking about this strange horseless carriage that can only travel on pair of metal rods placed on the ground?

Reply on news.ycombinator.com