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Comment by coinbased | Hacker News Reader

Interesting to see VCs like Chris Dixon desperately pumping Bitcoin in a last ditch effort to wipe the egg off their faces.

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If you're referring to the recent price drop - you should learn about what causes price fluctuation in Bitcoin. It's actually largely due to the fact that Bitcoin is actually rapidly becoming USED rather than HELD which causes downward pressure on it. This causes miners to become un-profitable btw which will eventually cause upward pressure on the price (but that problem is worrying as it's getting really expensive to produce BTC - just a side note).

But while the price dropping is somewhat concerning, it is extraordinarily clear to anyone paying attention that BTC and crypto generally is growing in utility rapidly.

For context: I'm a fairly neutral observer who does not own Bitcoin. I do have USD on the Ripple ledger.

Why would unprofitable mining cause a upward pressure on price? There is a fixed amount of bitcoin distributed per day cumulatively to all miners regardless of their number.

I doubt the recent price drop is due to people buying and selling in bitcoin since it's way too steep a decline.

I'm guessing that most miners themselves also happen to be investors as well. After all, if you believe in bitcoin enough to purchase equipment to mine it, you must also believe that the price will at least stay constant or rise. So it seems natural to keep some of your profits in bitcoin.

So people mining and investing together are heavily dependent on price, more than those doing one or the other. With the constant slow decline, it left a lot of miners languishing, and they not only need to convert all their current profits to their local currency to pay the bills, but their bitcoin investments as well. This creates a feedback loop and an ever increasing rate of price decline until enough miners run out of bitcoin to sell and/or close up shop.

:-) Well said. I read this after I posted elsewhere on this thread about how the price drop is caused by adoption so in fact we are buying _utility_ with the value that we lost. Once we've bought enough utility the price trend will likely reverse.

I do own bitcoin, and I buy lots of stuff with it all the time. I can't recommend it enough.

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