I've made about $110k profit this year in crypto on a $21k investment earlier this year, and I think this is all a giant bubble. I was at my parents' house for Thanksgiving and a commercial with Ron Paul talking about Bitcoin came on, which coincided with around the time it went to $10k, and it hit me really hard that this isn't going to last forever (and probably will hurt sooner rather than later). I liquidated everything and just entertain myself doing some day trading on GDAX. I don't hodl anymore.
The entire thing is absolutely stupid, and isn't going to last forever. People are way too bullish on it. People who have no business investing in it are taking on debt to do so, with no clear exit strategy other than "the moon." A lot of people who don't have any money are going to get absolutely toasted when the pendulum swings the other way. They're in it to get rich. They have no idea what blockchains are. They just think they're buying magic internet money people get rich from.
To put a little perspective on how ridiculous this all is: Last night after Coinbase came back from maintenance, there was the (expected) sell-off, so I figured I'd make a quick buck and bought 300 LTC for about $241 each, then sold it a few minutes later for $251 after the instant rebound and went to bed with a nice $3k profit. I woke up this morning and was astonished to see that LTC was about $380. This was in the course of about 5 hours. Had I not sold it last night, I would have made almost $40k. I'm a little annoyed about that, but again: this is a stupid, irrational bubble that makes absolutely no sense. It's entirely speculative.
I think crypto and blockchain has a future, but it has to solve a few problems first (transaction fees/time and anonymity). None of the big three currencies do that well enough yet. This bubble is going to pop soon and I'm worried that a lot of people are going to get impacted badly.
Even if it is a bubble, that doesn't mean it can't go another 20x from here, depending which crypto you put your money in.
There's cheap liquidity (ho ho ho said the FED and the ECB), there are institutions (pension funds) that are starting to buy in, and in comparison, the dot-com bubble (which was mainly a US led bubble, not global) went to $5.7tn to $1.7tn. Gold is worth $8tn globally. Why couldn't Bitcoin get to part of that level, e.g. $2tn?
It sure looks like a bubble, and it probably is, but it could literally be the largest bubble in our lives -- unlike one stock in the market, this is a global phenomenon + you only have a few currencies that matter.
Bitcoin doesn't have fundamentals. Stocks are a claim on assets, buildings, inventories, and future profits. Real shit, like a parking lot full of trucks or something. Those are the fundamentals. Cryptocurrencies dont have anything like that.
To the extent that there is an analogous concept it's their utility as a means of exchange. Which outside of drugs and hard drive ransoms is minuscule at best.
Bitcoin has fundamentals though. Per the whitepaper it was designed to be just a means for individuals to transfer money to each other digitally without much friction. The further it gets from that the more we're asking the network to stretch to meet demands it was never designed to.
This only works if the value of BTC is pegged to one or more fiat currencies. As it is, people are basically speculating on blockchain address space on BTC.
And looking at this fundamental value, other cryptocurrencies have arguable superceded it in terms of better tech/efficiency, so the value seems incredibly hard to justify.
Look into DASH, it has a fundamentally different architecture than bitcoin. The biggest pros are instantSend, privateSend, and the DAO (A governance system).
In addition to the other response, another example is ethereum's ability to offer smart contracts, which is not possible with bitcoin. Transaction rate limits and power consumption also are more efficiently handled.
They're different, which is why I used the term arguable--there's no clear reason afaik that bitcoin should be so valued relative to others, but I could be wrong.
- if 1 BTC were $100 trillion, then it's clearly passed the fundamentals of "being a unit of exchange between commercial entities", since it would be way more than what any form of exchange would ever require.
The truth behind the pedantic answer:
- if it's a store of value, then the "fundamental" value is the amount of fiat that's gone into the system so far. If all the exchanges have roughly $100 in USD deposits, the base value of their bitcoin deposits will be at least $100, roughly.
- If it's as a means of transactions, then the fundamentals are linked to how much transaction volume is going on. For example the flow of USD into BTC and vice-versa. BTC <-> BTC exchanges in that universe probably help to define things as well, as it would be used as an alternative to USD.
The dollars don't come from nowhere, so there's at least some base numbers you can think about. Thinking of it as "USD going into the ecosystem" and "USD going out" is a good proxy for now I think. Obviously very fluid, though.
You’re forgetting currency control evasion. If a businessman from a country with tight controls wants to move money out of the country he would buy bitcoin and then sell it the other side of the border. This sort of activity is going on all the time, and it creates demand for crypto currencies.
If you have to do that, it doesn't seem particularly advantageous over existing methods. You're meeting in person, exchanging cash illicitly, etc. If someone is willing to do that, why not just buy USD in a foreign bank account directly? (That's my understanding of the current system; people with clean histories open accounts with varying amounts of money in USD / EUR / JPY jurisdictions, then transfer control of those accounts to someone else, for a small profit margin, who then transfers them again, in exchange for cash at a significant margin, in, say, China.)
Either way, someone ends up with cash CNY and the other person ends up with electronic USD or EUR or whatever.
The immediate limiting factor is the vulnerability of any in-person transaction to traditional law enforcement mechanisms, and the eventual limiting factor is that the exchange rate is going to be impacted by the demand for cash CNY. Eventually nobody is going to want to sell you USD (or whatever) for your cash-in-a-bag CNY, or will only do it at exorbitant rates.
I don't disagree with this, but if true, then it means that the value of cryptocurrency comes at the expense of other currencies. Every time someone in china sells their renminbi to buy bitcoin, bitcoin's value increases while the value of renminbi decreases. If that is the case, then bitcoin does indeed have value, and will reflect the differential of the cost of renminbi vis-a-vis its value on the world market.
Easy enough to rob someone for this amount of money too. As Eric Schmidt said (in the context of a hostile government, but it works here too): no passcode in the world is going to protect you from a man holding a gun to your head and demanding said passcode.
Split your loot into 100 pieces and convert to BC one by one. So you get robbed five time out of a hundred, no big deal. Eventually find a reliable trader and take your business to him.
You don’t have to make it totally safe, just safer compared to other methods of evading control.
> You’re forgetting currency control evasion. If a businessman from a country with tight controls wants to move money out of the country
Before you can move it out of the country, you have to get it out of the bank, and your bank will refuse to do that with currency control measures in effect.
What I don’t get is that you can’t buy a car with bitcoin. So surely this should also create a selling pressure, unless they just buy bitcoins with the intent to transfer money at a later stage.
The fundamentals are at the current price of $17,000/btc bitcoin mining costs are about $14.5B annually(144 blocks of 12.5 btc/block plus ~3.8 btc/block in fees) in electricity expenses due to paying off miners which is about on par with the 8th largest company in the world Facebook. Bitcoin's revenue/year is however much money people feel like FOMOing in + however much tether money bitfinex feels like printing which right now is more than the mining costs. Once this figure changes, the price will decline. For reference, Facebook has ~$24B in revenue/year.
It isn't crazy to imagine crypto becoming adopted for actual transactions. Even if people are currently speculating, they're still downloading wallets they can spend from and loading it up with currency. For all these users there is now nearly zero obstacles to spending. This isn't even to say bitcoin is the transaction layer, but bitcoin still provides liquidity to any alt/2nd layer solution.
The vast majority of novice speculators are using Coinbase. They at least attempt to maintain the appearance of compliance; but I suspect a large market run would wipe them out of USD fairly quickly.
The fact that “experienced” Bitcoin speculators are getting nervous is a sign the bubble is about to pop. Tether volumes are hockey-sticking up as a result. There has been enough technical analysis to show that USDT volume drives BTC price and not the other way around. USDT volume is hockey-sticking over the last few weeks. Feels like a Ponzi scheme and the whales are cashing out.
The price of one bitcoin is arbitrary. $1 is no more crazy than $1 million. It's all crazy. But the question is, what's the supply and what's the demand.
At some point there will be a correction. This velocity can't be maintained forever. But this is also a technology that heavily relies on going viral to become functional (payments/contracts) - and based on real world interactions I think crypto is heading towards an adoption curve that justifies its price.
This is incorrect. Firstly, it's 10 per second. Secondly, it shouldn't be all that hard to imagine "side chains" or even "local-party networks" being built to handle transactions and use the underlying blockchain as a settlement mechanism. This is, as I understand it, how the lightning network works/will work, and I see no reason to think it wouldn't improve Bitcoin's adoption, which is already orders of magnitude better than other cryptos.
>Croman, Kyle; Eyal, Ittay (2016). "On Scaling Decentralized Blockchains" (PDF). doi:10.1007/978-3-662-53357-4_8. Retrieved December 10, 2017. The maximum throughput is the maximum rate at which the blockchain can confirm transactions. Today, Bitcoin’s maximum throughput is 3.3–7 transactions/sec [1].
I’d be interested in seeing evidence that USDT “drives” the USD-BTC exchange rate. I do think it’s a good indicator of sentiment about the exchange rate. Typically it’s within $0.02 of its supposed $1.00 value, but today it reached at least $1.08 and is still at $1.06. That means people are willing to pay a 6% premium just to be able to cash out of BTC today.
But how far? Corrections of 30% in say Bitcoin are common. Does this matter? I would say not -- it's not something I lose sleep over. It's fine, boom and bust.
If you buy in, buy in during a consolidation phase, when you see the price is stable. Ethereum had a huge run up, yet then consolidated for around 6+ months around $300. I would say that is healthy. Now it's heading higher. "Fundamentals" aside, of course.
It's not that I love banks; it's that we rolled back all the banking regulation that kept that stuff in check prior to 2008. Replacing that with a system with zero regulation does not seem like progress...
I have heard many anecdotes about finance money coming in. We are witnessing it.
Also, rich Saudis are scared shitless about losing their wealth when political winds change. They put their money into crypto and it's much, much harder to take it from them, provided they own the private key. This is the best mechanism of wealth storage yet created, provided the value holds, which as more around the globe believe in, it becomes more likely. Bitcoin could be digital gold, but we shall see.
>>>They put their money into crypto and it's much, much harder to take it from them, provided they own the private key.
That's not exactly trivial - how do you store a private key in such a way that it's safe, accessible to you and only you, cannot be destroyed by your enemies, and can be passed on to your heirs upon your death?
It's comparatively safer than holding millions in government-controlled banks, property which can be seized with the stroke of a pen, physical wealth like gold which is tough to store and move, and has value anywhere in the world (not many people in Europe care about your franchise holdings in Riyadh).
In contrast, if you buy bitcoins, when you flee the country you can bring your wealth with a memorized 24-word code or a slip of hidden paper, and people in other places will accept your Bitcoin.
Maybe not yet as of today, but they're coming. I have a friend (wealthy family with a substantial family office) who bought into crypto at the beginning of last year.
His dad runs quite a large traditional investment fund and knows of people in his network working at pension funds that are looking at putting money into Bitcoin / Ethereum and others. The family has done private equity deals together with some of these funds (mostly raising debt financing from them).
I'm not an extreme crypto bull, but I honestly think it's still early. But there will be massive volatility along the way.
Note: not investment advice, obviously. Just my opinion.
Wow, pension funds should not be doing currency speculation. That's bad.
The problem with crypto-_currency_ is that it's not a productive asset. A share of a business pays dividends over time and thus has intrinsic value (and _some_ speculative value), while a currency does not. A currency transaction is a zero-sum game, which is good because it minimizes friction.
Buying cryptocurrency with the expectation of increases isn't investment, it's _speculation_.
Crypto has been one of the better performing asset classes in the last 5 years. That is just a fact -- if looking in percentage terms.
Pension funds generally allocate up to 5% of their portfolio to alternatives, which could be smaller funds investing in art, watches, music royalty rights, farmland, wine, and the likes. This also includes crypto.
If you're an investment manager, it isn't necessarily crazy to allocate 0.2 or 0.5% of your portfolio to crypto and try to capture some of those gains.
Absolutely -- To the parent: think of it this way. If you had $200 in your fund last year to invest last year, and put $1 into crypto, then at worst, you lose that entire $1, and your portfolio is down to $199 (notwithstanding what you did with the other money), a loss of 0.5%. If you happened to pick Litecoin, and bought 0.25 LTC when they were at a stable price of $4 a piece, today that 0.25 LTC would be worth $80, giving you $280 in your fund, or a gain of 40% in your total portfolio value. You can look at ETH, Bitcoin as well and also see large gains.
Even without perfect timing of the market, it's a pretty easy decision for a portfolio manager to look at this and say: "While, like any other asset, past performance isn't an indicator of future performance, given the price history and increasing trading volume over time, the risk/reward balance skews heavily in favor of putting at least some tiny bit of money into crypto for all but the most risk-averse."
You and your parent comment are describing a kind of hedge, not a material investment. That’s fine but did not seem to be what my parent was implying. Funds may just as well choose to maintain several points in cash (also not a productive asset).
The analysis presented is a bit disingenuous. If you put money into every thing that could pop 400x, you’d have no money. Pension funds in particular need to be conservative and even if they’re doing “risky” things like venture capital for example, they would want late stage funds — lower returns, lower risk.
I don't understand why you are being downvoted. Pointing out the difference between productive and non-productive assets is exactly what is needed at the moment.
Everyone is talking about what if scenarios where huge offshore money or sovereign wealth or whatever comes into Bitcoin YUGE. Well, ok, do you think that money is just parked somewhere or is actually invested somewhere in a productive business?
Most dollars which aren't spent on consumption are converted into equity in productive businesses. In this case, dollars are merely the unit of account. You aren't invested in dollars, you are invested in businesses that produce the things that people need and those investments are measured in dollars.
You know pension funds that spend a material portion of their holdings speculating on currencies? I’m skeptical. Currency trading is zero sum and highly risky. Pension funds may keep small amount as a hedge, but to actively speculate on currencies seems like a breach of fiduciary duty.
I used to work for a hedge fund. Now I'm in a different industry. While many individuals at the fund were interested in cryptocurrencies, they weren't going to put client money there. In order for pension funds to invest in cryptocurrencies there have to be very liquid securities that they can invest in. Futures don't count because almost no pension fund will use them directly (though pension funds do invest in hedge funds, which might have a futures strategy).
This is my belief too. I think if you can buy and hold for the next 5 years or so, massive volatility doesn't affect you. Volatility affects the day traders and the like.
To draw a parallel to the stock market is not appropriate, but those who bought into MSFT or AMZN even during the peak of the dot com bubble have nothing to regret today.
Most coins will become close to worthless, but many will survive and support whole new industries. And this time it looks like it wont be an ad supported future, thank $DIETY.
That was my point... OP had cherry picked the examples of microsoft and amazon to support the claim that buying and holding cryptocurrency through a bubble is a smart investment, which is of course absurd.
What I meant was that if you distribute your money across all cryptocurrencies even if some of them become worthlesss you won’t have anything to regret, in he long run. I don’t know if anyone who had the foresight to cherrypick MSFT and AMZN. Most of them invested in the tech basket. This is just general diversification principle nothing new
You're not wrong either. And the higher it goes, the riskier it gets. And while I'm seeing signs of a bubble, I don't think that (excluding a few volatile 30-40% corrections along the way) we will see an implosion in 2018 just yet. The entire crypto space "only" equals the value of Facebook.
In the end, if it goes another 30x from where we're at today, and then has an 80% correction, you'll still be up 6x. It only makes sense to exit if you think such a correction is imminent, or you believe the entire space is going to zero.
“Fiat” usually implies something different from the way you are using it. No government has issued Bitcoin via fiat, there are no treasuries or armies backing it.
Gold is a tangible commodity. I’ve been in the cryptoasset space for a while and I’m still not exactly sure how to cleanly classify it.
>I woke up this morning and was astonished to see that LTC was about $380. This was in the course of about 5 hours. Had I not sold it last night, I would have made almost $40k.
I can relate. If I'd done the exact paired trades i did this month (only between btc, bch, eth, and usd), only at different times than i did, i would have doubled my money yet another time, for a life-changing sum.
Instead I've been sleeping well every night for a month on a healthy exit. Even with hindsight, I don't have any regrets.
I didn't get into the space to get rich and sweat at night, I got in to socialize monetary control. Now crypto doesn't even want to be money. Once this bubble cools off I can start dreaming again.
Astonished, why? Capital is fleeing BTC to LTC probably because of BTC holders getting nervous about high volatility and exchanges going down or temporarily suspending transactions. Which in turn will also screw LTC. This article is a clear indicator about this.
The correct way to look at a missed investment in my opinion is to look back and consider if given the information you had at the time and the risk you were willing to take, you would have made any other decision. Ignoring these two factors is like regretting not having picked the right lottery number.
Do you feel any guilt that your profits are at the expense of naive speculators who "have no business investing in it are taking on debt to do so, with no clear exit strategy" ?
BTC will supplement gold for value storage and will hit a $5T market cap in a few years IMO. It certainly has utility for storing and moving value. Don't underestimate that.
BTC will not once it gets into multitrillion dollars. It's a young asset with no derivatives that the market isn't sure how to value. Also there are ways to hedge volatility.
This is really cool that you made a profit on this bubble, and if I were to take that point to heart and start investing USD in BTC, I guess I would just become part of that. As you say, I would just be out to get rich.
But what about all the non-fiat purposes of crypto currency? It seems that is what’s currently getting lost in the conversation.
For example, I simply want a way to accept electronic payments from people without dealing with middle men.
I want merchants and the general public to become aware of the inherent value in some blockchain by itself as a way for us all to spend “money” and get “paid” in a peer-to-peer manner.
I hope the people who are buying into this bubble come to see this. But I’m afraid if they do get burned, they will have missed the whole point.
Do you feel all crypto projects are included in the bubble you described?
Personally, I think many are extremely overbought (BTC, LTC, ETH, etc) but can't help but feel that those with real utility and industry value are (relatively) undervalued.
I only post limit orders and pay 0% maker fee on GDAX. I've never paid to make a trade. If you do pay as a taker, BTC is 0.25% and LTC is 0.3%, but I set relatively conservative exits for my positions and haven't had much trouble making them.
"it has to solve a few problems first (transaction fees/time and anonymity)"
Bitcoin Lightning currently works on testnet ... give it a few months and those problems will be solved. The price is exploding in anticipation of events like this.
Some people could be in it for the adrenalin.
People do dangerous things all the time, so it can still go on... what's the serotonin level for crypto users? :)
I had the exact same experience visiting family over Thanksgiving. They watched foxnews the entire time and I remember seeing that Ron Paul commercial and also another one that was throwing out buzzwords and phrases like "Built with blockchain technology."
I was just like wow, this is going to be pulling in a lot of people that have no idea what they are doing. Everything seems irrational. Who knows though.
There's a very nice library called ccxt that uses a code generator to produce python (async and standard), javascript, and PHP libraries that implement a standard interface for dozens (hundreds?) of crypto exchanges. I think a nice project would be an in-browser JS app that accessed each of the APIs in my exchanges (via logged in cookies or API keys or whatever) to pull trade history, deduct fees, and create a CPA-friendly tax form from all of my crypto exchanges.
This thread's audience is obviously a 'developed nations' one.
From our perspective yes, Crytpo's use case as currency make absolutely no sense
(yet), we tap our Visa card to pay instantly with no fees and no fraud liability, hard to beat.
As a store of value however there is a very strong use case in the western world. Of the top my head, it is estimated that 10% of our GDP is in off shore havens, think about that infamous 1% moving just half of that 10% into Bitcoin ..
I digress..
If you venture your mind a little outside the borders of our empire and think about the 'unbanked' parts of our planet, entire populations whom live under poverty for the sole reason that they do not have access to the equity and efficient markets directly.
If you look there, people are DYING for something like Bitcoin and other crypto's.
There is absolutely no reason an African farmer to have to sell his Oranges to Europe in Euro then buy it back from there (Sell Euro to local currency) for local use.
Currency is an abstraction, an expression of a market, just like language is.
Here we tap to pay and need everyone to protect us from fraudsters, pornographers, money laundry , <insert your favorite horse man of the apolocyple here>, in other parts of the world , that far out number the western world in population, they don't care to be protected by the above because quite frankly the price they pay for that 'protection' is insanely oppressive governments that use the above to legitimize the oppression.
It is exactly in those markets where you start to see a VERY stong use case as both store of value and currency for crypto and it is exactly that market that will drive the world's demand for good UI for crypto that will eventually usher in mass adoption.
The average "unbanked" person in a third world nation couldn't afford a $20 transaction fee for their ordinary transactions. But bitcoin certainly looks like a way for some portion of this group to protect their capital since it's not controlled by states want capital controls.
Of course, there's a reason third world countries want capital controls - a lot of the people seeking to export capital are corrupt non-owning possessors of resources. Just as an example, whatever rank administrators within state oil companies and such who want to take things that actually belong to the nations - because such nations have rather weak administrative classes (not that the US isn't moving closer to "kleptocracy" itself).
So everywhere, bitcoin certainly looks like a device for protecting value - except once all the money that wants to move in has moved, then bitcoin's lack of actual practical use (see $20 fees) will make it not terribly valuable and all that money in it will be at a bit of risk.
Plus, phone-based money systems already are coming/in Africa. They solve the ordinary transaction problem. The problem of "how do you get money out of X currency or resource" isn't a logistics problem, it's a power-struggle. The reason Y person is fighting to get money out of X currency is Z person wants to stop that happening. But overall, remember neither Y nor Z are likely to be less than fully corrupt.
Use as currency for Bitcoin (and other coin networks) is still in it's infancy and cannot scale the way it needs to should it want to replace fiat.
The important distinction I would draw though that stores of value have historically been cumbersome to transport and liquidate, Bitcoin solves that problem in a very good way.
I feel it's important to also address this 20$ bitcoin fee meme that seems to be going around. While based in truth it is not 100% accurate.
You have the capacity to set your own txn fee on the Bitcoin network. If you don't mind waiting a couple of blocks (1-3 hours) to get your transaction confirmed , then the fees fall down to single dollars and even lower.
If you're selling a bulk commodity to a distributor in another market , you don't need ecommerce style confirmation times. Same goes for transferring large sums of wealth.
With that said, things like the lightning network will resolve alot of issues with Bitcoin scaling and in my (humble) opinion this is why LTC is pumping. (Atomic swap + Transfer over LTC )
> You have the capacity to set your own txn fee on the Bitcoin network. If you don't mind waiting a couple of blocks (1-3 hours) to get your transaction confirmed , then the fees fall down to single dollars and even lower.
This is infeasible because of insane volatility that BTC is experiencing. You either pay through the nose for a fast confirmation, or you are overpaying, or underpaying your counterparty.
Not to mention that VISA tends to be able to handle a bit more then 3 transactions a second. For some reason, BCH's market cap has not surpassed BTC's crippled protocol... Perhaps it's because nobody is using Bitcoin to transact.
VISA max transactions per seconds around 65000 right now. With daily average 1700 per second and daily high around 25000 transactions per second during holidays and such. I just don't see any cryptocurrency to be able to handle that.
"Single dollars" is still a nosebleed-high fee for a simple electronic value transfer. Consider that pricing on something like an ach transfer is quoted in fractions of a percent (so like 75 cents for $100 USD sent - and caps out entirely at some low value like $5 per transaction regardless of the payment size.
There are cheaper forms of transfer, yes, but there are also much more expensive forms of transfer. A wire transfer will cost you $25 or more and yet there are still millions of them sent per day.
If you choose an arbitrary '3 hours' you can make that fee anything. Any transaction of 50c for a standard fee until one week ago (and they'll clear too) will have been committed to the blockchain.
>The average "unbanked" person in a third world nation couldn't afford a $20 transaction fee for their ordinary transactions.
Someone in a country, who has the equivalent of $800 is life savings, is experiencing hyperinflation (Venezuela let's say). Are you telling me that they're not willing to pay 2.5% (20/800) of their savings to save 97.5% of it? Why do you think someone would be willing to let hyperinflation destroy 100% of their life savings when there's an alternative?
If it were that simple to deal with hyperinflation, why won't they just buy USD?
Because the government will forbid it? They can forbid the purchase of BTC, or the exchange of it for goods, too.
Oh, in-person off-the-books transactions will solve the problem? Well, you don't need BTC for that, you can do in-person transactions of bolivars for USD, too.
Because there's a shortage of USD on that market, they buy it at a premium and also gov't crack down. So they are esentially forced to diversify: they buy BTC expecting to change it for USD at a later date.
Totally Kenya's mobile payment system evolution from SMSing minute refill codes, to an actual legally recognized form of payment is the original Blockchain in my mind :)
But that is exactly my point, in that market , there is demand and need for innovation that means crypto (while inflated right now) is here to stay.
People who call Bitcoin a 'Ponzi scheme' , type of plant or apply whatever reduction on a very complex and innovative product are just mind boggling to me.
M-Pesa is a centralized service run by Vodafone, quite the opposite of blockchain. It only resembles blockchain in that it involves electronics and it's recent, but by that standard, we'd call credit cards or PayPal "the original Blockchain".
And as far as I know, it's denominated in Kenyan shillings, not in its own currency (i.e., hype about M-Pesa does not result in something with Bitcoin's to-the-moon valuation relative to the prevailing currency in the land).
I suspect that most Bitcoin detractors, whether those who call it a Ponzi scheme or simply those who oppose proof of work, will be absolutely thrilled with the growth of more centralized electronic money transfer systems that are denominated in existing fiat currency. I know that I've been personally happy to use Square Cash, Apple Pay, EMV cards, etc. in the US. No mining, no or low fees, high security, quick, and suitable for small transfers.
And the fact that this is how M-Pesa works is an extremely strong existence proof that Bitcoin is not needed by the "African farmer".
What he said is that others countries that doesn't have a solid electronic transaction system are actively trying new stuff. In that case, M-Pesa won that race but the fact that it was centralized isn't why it won, it won because it was needed.
Now does Bitcoin is needed for another country? No idea, but I would have said the same for M-Pesa.
But he specifically used the word "blockchain." I'm making two claims: first, that blockchain-based systems (for most people's definitions of "blockchain" other than a meaningless buzzword) are worse for people in situations like that of the "African farmer" than centralized systems, and second, that the vast majority of Bitcoin detractors dislike it specifically because of things related (directly or indirectly) to it being a blockchain-based system.
For instance, "Bitcoin is a bubble" only makes sense if it's its own unit of currency. "M-Pesa is a bubble," "Square Cash is a bubble," etc. aren't meaningful statements to make; they just support transmission of the underlying currency. ("Kenyan shillings are a bubble" is a meaningful statement, but I've never heard anyone claim that you should use cryptocurrencies to insulate yourself from hyperdeflation of a fiat currency.)
"Bitcoin is environmentally dangerous" only matters if proof-of-work is relevant; in a centralized system, you don't have the problems that lead to you wanting to even consider proof-of-work.
"ICOs are a scam" doesn't make sense in a centralized system. "The transaction rate is too low" isn't a complaint anyone has about a centralized system (the usual complaint about the US markets is that the transaction rate is too high, and HFT should be throttled). And so on and so forth.
"bubble": stocks have been said to be in "bubbles". If a person claims "M-Pesa is [in] a bubble" he would be talking about the market cap of the company, in the same way that "Bitcoin is [in] a bubble" speaks to the market cap of Bitcoin on some exchanges. Quite meaningful, actually.
"environment": Proof of work systems ensure that the ledger is secure and worthy of trust. Proof of Authority systems require trust, where the ledger is secure "because we say so." Isn't this the major reason why people are fleeing from legal tender? People can't trust the issuers, the processors, or the banks because they're colluding with politicians who provide bailouts using taxpayer dollars?
"ICO scam": absolutely makes sense in a centralized system. Are you actually claiming that people don't create scam companies with centralized currencies? Because why? Even legitimate companies can be slandered for the same reasons that people call ICOs "scams". The Franklin Mint, for example, produces coins which are sold on late-night infomercials that have little-to-no intrinsic value, but people buy for speculative reasons. Are they a scam? The reasoning is identical.
"slow/expensive transactions": One of Bitcoins main value propositions is aiding in international transfers. The centralized systems were too slow and expensive, so a better alternative was developed. Saying that speed and expense aren't complaints that people have made about existing centralized systems is simply wrong.
I've seen a lot of people on HN take a middle ground - that blockchain and crypto have real use cases, but that crypto is currently way overhyped. I think the key is that people can have a negative outlook on the financial characteristics of BTC, while still believing in the underlying technology. Certainly I can agree with you that cryptos can solve real problems, while you say that they are currently inflated - we're essentially in agreement, it seems.
> People who call Bitcoin a 'Ponzi scheme' , type of plant or apply whatever reduction on a very complex and innovative product are just mind boggling to me.
You are mind-boggled because you have created a strawman; a caricature of what the "bitcoin non-believer" looks like.
Your mind would be less boggled if you accepted that there are valid points on both sides in this case. People who question bitcoin's current valuation or utility often have valid points, but if you immediately interpret their points to be as extreme as possible, of course they're mind boggling.
Similarly, people who are bullish on bitcoin often have good points and sound reasoning, but it's quite easy to also paint them with a brush which makes their positions and points mind boggling as well.
It's good to have some empathy and to actually listen, especially when it's about subjects that are so divisive. The most divisive things are the things that should least be divided further by constantly misrepresenting each side's points.
You are absolutely right. Again my comment was directed at :
> People who call Bitcoin a 'Ponzi scheme' , type of plant or apply whatever reduction on a very complex and innovative product.
Not at the one's who are raising very valid red flags on valuation and how hot the market is becoming. In my personal opinion it is absolutely 'bubble' like behavior right now.
The main point here is that there's absolutely nothing innovative about BTC anymore, if anything it's way behind. Which is why the valuation is so suspect; it's totally disconnected from the utility BTC provides compared to alts. Anything BTC does, alts do better, except for marketing.
> The main point here is that there's absolutely nothing innovative about BTC anymore
That demonstrates a fundamental lack of understanding of what makes bitcoin valuable, and what separates it from all other competitors. Bitcoin node decentralization is what keeps it censorship resistant, and in bitcoin node decentralization, it is ahead of any and all competitors. It likely has more fully validating nodes than all other cryptos combined, and by some margin.
There are a lot of people that want to sell you on a great new thing. Until they can get 150,000+ fully validating nodes to support their technology, they will be nothing more than a mildly distributed inefficient database. What is innovative about bitcoin is that it is the only real cryptocurrency, because it is the only one that isn't controlled directly by its creators, and also maintains its decentralization. The only ones that are even close are ethereum and litecoin, and ethereum is beholden to a single person who dictates changes to the network. Litecoin is simply a clone of bitcoin with minor changes to its implementation, but has a fraction of the fully validating nodes.
That service only includes a subset of listening nodes. That variant of node is only a fraction of the full nodes used to validate the bitcoin blockchain.
Ahh thanks frogo always enjoy your input on these crypto threads you really helped me have a deeper understanding of the consensus and game theory aspect of bitcoin that i never caught onto from the white paper.
It certainly took me some time to get my head around it, that's for sure. It wasn't even a 'penny drop' type of realization either.
It's why I'm sometimes so short with people who make statements with such confidence and finality. "Bitcoin IS this." without even really understanding the subject matter. I'm not thinking of one month/year timelines for its market penetration. I want to see what it is in another 10 years. I don't subscribe to the view that fiat is going to crash, or that type of apocalyptic talk. But I do think that we are in a 50-year-old debt-bubble, and I'm not sure it is going to be quite as difficult to 'shift', if that is even the correct word, from debt-fueled monetary instruments to credit-fueled monetary instruments. Most people don't even really understand the concept of a market-cap, and how the total value of the cap has no, or very little, relationship to the amount of capital that might be extracted from it. Bitcoin could easily be 10x or even 100x its current 'market-cap' and for it to still not really have any real relationship to monetary supply IMO. Bitcoin definitely has a relationship to gold, but more importantly, I believe bitcoin has a relationship to fixed-asset debt.
I wouldn't want to be entering a career in consumer banking though. Investment banking on the other hand... that is going to freak out over the next decade as the business of supplying debt for fixed assets that are depreciating in value reverses, and people start looking to place their investment dollars in industries that increase productivity.
Just remember bitcoin could lose 85% of its current value, and for it to only have doubled in value this year, and still be the best performing asset class in the market. Because a correction will happen. The only real question is when, and how deep.
Thanks again your insight is always refreshing. Also i don't think you saw my other comment what debit card service do you use that lets you keep balance in BTC and transfer to USD upon purchase? all the ones i have seen transfer to USD when you load them.
People who call Bitcoin a 'Ponzi scheme' , type of plant or apply whatever reduction on a very complex and innovative product are just mind boggling to me.
Plenty of things that were eventually successful products went into extreme bubble and correct mode before they were successful.
Blockchains may or may not be part of the finance of the future. But that doesn't mean that 99% of the price of a given blockchain product today isn't bubble based bunk to be avoided just as many 1800s railroad stocks and 90s dotcom stocks had value only from bubble-dynamics despite railroads and the Internet being technologies that went on the succeed massively.
There's lots of evidence it's overvalued (e.g. price vs. utility), and some evidence as well that it's undervalued (most the argument for future value as more people use it). It's not a matter of lack of evidence, it's an issue of which evidence you choose to give more credence.
"Totally Kenya's mobile payment system evolution from SMSing minute refill codes, to an actual legally recognized form of payment is the original Blockchain in my mind"
which aspect of that SMS technology in Kenya embodied a secure distributed ledger? Maybe blockchain doesn't mean what you think it means?
The valuation is what it is, and eventually it will become more clear what the "real" value is - way higher, way lower, or about the same. Until then, everyone is making stuff up.
Straw man for what? The "article" is just a link to a coinbase status page. I have heard several people, technical people, say that crypto is all around worthless.
It's divided the technology space, in particular HN. One of the reasons is due to its connection to profit and gain at the core and this does not follow the purist mantra of long time software engineering culture. Source: Me, software engineer for 30 years.
No it’s not. There are pockets, but virtually all of the innovation in Africa is happening in Kenya, Ghana, Nigeria, and South Africa. That’s a small slice of an enormous continent.
I don't know anything about fintech in Africa, but the countries you listed have a total population of 318 million people. That's about 26% of the total population in Africa, a pretty large slice isn't it?
Yes, but even the innovation in those countries is concentrated in a few key cities. Akkra, Nairobi, j'burg, etc. There are huge disconnected swaths of people in all of those countries.
It's nuts to imagine that Africa as a continent compares to the West in terms of fintech. We like to imagine Africa as a monolith; it's a terrible mistake.
Sure, I will concede that. Africa as a whole is not ahead. But there is financial innovation there to a degree that surprises a lot of people in the West - just meant to spread awareness of this
> we tap our Visa card to pay instantly with no fees
I hope you mean realize that merchants eat the fee and are contractually not allowed to offer discounts for cash payments. And many of them are not happy about this situation.
It's an economic compromise. They don't have to be happy about it, just sign the agreement. Or don't and forgo those customers who will only pay that way.
I doubt cypto currency is going to help that setup at all, and most likely it will just offer more avenues to do the same.
The solution to this is way easier than blockchain: Just regulate them. Personal credit card fees in the EU are capped at 0.3% and everybody is better off.
I think the necessity for regulation shows that unregulated payment processors leads to market failure (due to the nature of that market under current non-blockchain tech). Regulatuon fixes this market failure, but I see regulation as a last resort due to its being a high overhead solution (you rely on courts to interpret the regulations or check the statutory agencies, on the agencies to do their work, on lawmakers to keep the laws up to date). Of course, it is an open question as to whether blockchain tech can lead to the payment processor market not to suffer from market failure if unregulated.
> The solution to this is way easier than blockchain: Just regulate them.
Regulation is not easier. I & my merchant can use blockchain today, without any permission or buy-in from a regulatory body.
This is an example of automation taking a job. As an engineer and small(er, more efficient, more effective, more fair, more predictable) government enthusiast, it thrills me to see that we're automating away the jobs of bankers and regulators around the world.
But wouldn't transaction fees, which are already really rough for people making a first-world salary, be even more unsustainable if that fee is a whole day's wage (or more) in the places you're describing? And how would those areas of the world have that level of connectivity?
e: for making a huge sale of crops or something to another nation, then 1 transaction fee is not bad compared converting at a %, but you'd still need to convert from Bitcoin to a local currency to actually use the money you made.
> Of the top my head, it is estimated that 10% of our GDP is in off shore havens, think about that infamous 1% moving just half of that 10% into Bitcoin ..
The IRS would crack down on this as with any other tax avoidance scheme. Offshore havens are probably safer since many rely on loopholes.
More so that argument relies on magic thinking. Unless there's good reason to believe that bitcoin will be the goto for tax avoidance it's just wishful thinking.
If just 0.000000001% of all astroids made of solid platinum land in my back yard I'll be a gazillionaire!
We have information disclosure treaties with all of the offshore havens, re FATCA. They were actually the first targets and they acquiesced almost immediately.
If you're trying to hide assets, the U.S. is the place to be, as none of our treaties actually require us to share information back with the rest of the world.
Sure, but much of this depends on BTC exchanged for fiat. I suspect that if governments really try to put their foot down, they will inadvertently fuel a shadow economy similar to how failed states try to set an official FX rate.
> "we tap our Visa card to pay instantly with no fees"
That's just not true, these fees are baked into the prices, since the seller pays them.
That's one of the reason cryptocurrencies are advantageous in the long run, they can eventually provide the transaction fees close to what they cost in electricity and infrastructure amortization - pretty much sub-penny to transfer any amount.
Credit cards aren't an apples-to-apples comparison because of the risk to banks of default. An apples to apples comparison is ACH, which is free, and now same-day service is available.
No, it does not depend on which card you're using. Everything costs a few percentage points more because of fees for the merchant. You pay this no matter what card you're using. They don't offer you a different price for using a specific card, though a handful do for using cash (gasoline comes to mind).
Sure, but merchants can generally get fees that are only slightly higher than what you get in cash back. Square charges a 2.75% fee (and some of that goes to Square, presumably), and there are 2% cash back cards with no annual fee easily available (I use the Citi Double Cash one). So even if your store is raising prices by 2.75%, you're effective price only goes up by about .7%.
If you want to get upset, get upset at how if you have poor credit, you're not eligible for these cards, so really this is credit card companies stealing from poor people.
So what you're saying is I'm getting 0% cash back and paying .7% more for everything. Still doesn't sound like a win to me, and it still doesn't matter what card you get because no card is giving you more back than they're making off your use of it. That's not how money works.
You're paying 0.7% primarily for the ability to pay, and also for the ability to pay on credit, to get a chargeback if needed, to cover fraudulent use of your physical payment device including loss, etc.
This is a) a good deal on its own and b) a much better deal than Bitcoin, which provides only the first of those things, and only reaches 0.7% if your transaction is over about 3000 USD.
If you think this is a bad deal, I'm curious what you think is a better deal and who's offering it.
A better deal is a debit card (somewhat fewer protections but saves people probably a 1% fee on average) but unfortunately the banks have set it up as a tragedy of the commons where it makes sense for me to get my 1-2% cashback since the 2.7% credit card fee is already built into the price due to other people.
With regards to Bitcoin though, I agree you need a much lower fee coin to make it feasible. The lightning network brings the transaction fees on Bitcoin to zero though from what I understand so maybe thats the answer.
Now try sending some of that money to a third world country and see how much they get between the fees they pay western union and the thugs waiting outside to 'tax' you.
From sale to end point .. where'd my money go ? lol
The current Bitcoin transaction fee is $20+. Credit card processors charge you under 3%. If you're doing transactions of under about $700 USD, credit card fees are cheaper than Bitcoin fees.
Credit card processors also pay the user of the CC a cashback on a significant portion of that fee... And are also liable for fraud.
Who do I chargeback when an online merchant takes my BTC, and doesn't ship the goods I bought? BitPay will tell me to pound sand. VISA will process a chargeback, no questions asked.
By creating an off-chain payment processor called BISA, and we're back to charging merchants fees for cashback + fraud losses, except now we're for some stupid reason doing it on a blockchain.
I moved $1800 worth of LTC (Litecoin, one of the subjects of this thread) last night. The Tx fee was $0.01 and the funds were received in less than 1 minute. No more processing, no waiting for the next business day (or 3)... For 1 cent and 1 minute later the receiver can do whatever they want with it immediately.
That is cheaper than CC, faster than Venmo, or whatever.
Why are Litecoin's transaction fees multiple orders of magnitude smaller than Bitcoin's? Is this a result of genuinely better technical decisions than in Litecoin (mining is cheaper because it's less hardware-friendly, blocks are generated more quickly) or just lower transaction volume / demand for transactions because it's less well-known? That is, if Bitcoin somehow implodes tomorrow and everyone moves to Litecoin, would you still expect similarly low Litecoin fees?
Was this an on-chain transaction or a Lightning transaction?
As I continue to learn about the broader cryptocurrency scene and the emerging ecosystem, I have been looking at Bitcoin more and more as the Model T of crypto and less like the BMW i8...
If it wasn't working, people wouldn't be buying it. You are just going to have to accept that the great bulk of people who use bitcoin do not care about your use case.
> think about that infamous 1% moving just half of that 10% into Bitcoin ..
Please remember "that infamous 1%" is actually the 0.001% or much less. The top 1% income actually includes dentists, successful software engineers, etc. Normal successful people. An amount of wealth that can actually be attained regardless where you came from, given luck, talent, luck and in some cases, hard work[0].
The phrase "the 1%" was originally introduced to draw a line between people with such a ridiculous amount of wealth that it doesn't make sense and is really only attainable by being born in it, or being born with very rich family and learning the shibboleth over your lifetime. Becoming insanely wealthy by an insane stroke of luck is possibly but it only gets you in contact with this elite, not "in", but if you play your cards right your children might.
[0] don't be mistaken that "hard work" is any kind of predictor for wealth. just look around you. hard work may be considered virtuous, but that's it. it's not like "being a good person" gets you rich, either.
> From our perspective yes, Crytpo's use case as currency make absolutely no sense (yet), we tap our Visa card to pay instantly with no fees and no fraud liability, hard to beat.
Fees that are absorbed by the merchant, so not an entirely fair comparison. Still, I agree that the fees make the use cases for cryptocurrenies very limited personally. Right now, I can pay a fee to a third-party (CC fees in the form of slightly higher priced goods) BUT that third-party takes on a significant part of the liability (e.g. for goods not provided), and I can transfer money to a trusted (or untrusted providing I am OK with the risk) party in the same country for ZERO fees via my bank. For those use cases, using most cryptocurrenies would be strictly worse (I either give up the fraud protection or I am paying an unnecessary fee).
The only case where it makes sense is for international transfers, which typically do have higher bank fees, but personally they are so rare (I've used it once in the past decade) that they are barely worth considering for my personal use cases.
It seems to me like bitcoin is more comparable to a wire transfer than to the other forms . Like a wire transfer, but unlike nearly every other form of digital payment (credit card, debit card, ACH), it is irrevocable. It's fees are also competitive with the $20+ that sending a wire transfer will cost.
That would make it something of a niche form of payment compared to say credit cards. You aren't going to use it to pay for a cup of coffee, but there still are trillions of dollars worth of wire transfers per day. That is roughly one thousand times the amount currently transacted per day in bitcoin at the current valuation so even taking over a tiny portion of the wire transfer market would justify bitcoin's current valuation.
Kenya is the global leader in mobile money adoption for the same reasons you've stated. Smart money should be preaching the crypto gospel in Somalia, Zimbabwe, Venezuela etc. The average citizen from such countries is way more in tune with the need for alternative currencies
Clearly a "first-worlder" view. People in (most) oppressive regimes are not looking to move off their currencies, and nobody is looking for a decentralized solution for banking. M-pesa, Vodafone money, mobile wallets work great for people. There's no reason for costly decentralization that Bitcoin offers.
Maybe a case could be made for Venezuela where bolivars are useless, but USD is a far better candidate for their currency needs that Bitcoin, given how volatile Bitcoin is.
A lot of emotion with LTC. People are downloading Coinbase and buying LTC simply because it is the cheapest on Coinbase. This is definitely a bubble, really cant deny that anymore. All emotional, non-rational behavior.
I should start a business selling thin air. Thin air from France, thin air from Japan, thin air from Mexico, and so on, you can collect them all, it is super fun. Then I could introduce cold captured thin air, warm captured thin air, etc. Wet thin air, dry thin air for year 3. More fun every year.
Even better, I should sell just a paper (well, an electronic one) stating you own some thin air. Hey, geeks, how cool can this get?
I am sure I could find buyers in the same market as cryptocurrencies.
PS: This is not directed at you, but you expressed the level of pointlessness and... void that reigns in this 'market', so I picked your message to place my joke/rant.
That also reminds me of Yves Klein's Zone de Sensibilité Picturale Immatérielle::
In the performance piece, Zone de Sensibilité Picturale Immatérielle (Zones of Immaterial Pictorial Sensibility) 1959–62, he offered empty spaces in the city in exchange for gold. He wanted his buyers to experience The Void by selling them empty space. In his view this experience could only be paid for in the purest material: gold. In exchange, he gave a certificate of ownership to the buyer. As the second part of the piece, performed on the Seine with an Art critic in attendance, if the buyer agreed to set fire to the certificate, Klein would throw half the gold into the river, in order to restore the "natural order" that he had unbalanced by selling the empty space (that was now not "empty" anymore). [1]
You joke but I'd be happy to invest if I think that I could sell that thin air after a month for twice what I bought it for. So make THAT happen for thin air and we are good.
Of course, this just shows how bad the air pollution is in China. Then again, water bottle brands like Nestlé's Poland Spring Water are just using "Poland Spring" as a gimmick and a ad-bait. So you definitely can sell thin air at different price based on "where the air was collected."
I'm not kidding when I say that you would be surprised at the size of the market for canned air. I made this same joke several years ago and then looked into it and was blown away.
That typically isn't air (80% Nitrogen 20% Oxygen) but a liquefied compressed gas such as 1,1,1,2-tetrafluoroethane. They're very handy for cleaning things, especially computer heat sinks. Much more portable and cheaper than an air compressor.
This has been done! At least, as a joke. Back in the dot-com bubble the financial website IEX.nl announced an April first IPO for 'F/rite Air' (fried air).
Agreed, for someone with a relatively small amount invested in the crypto market (<1k) I find myself impersonating Gordon Gecko an awful lot. The only thing I can compare it to is my brief obsession with football stats when I used to play fantasy football.
> But I don't understand everyone's certainty that cryptocurrencies are a fraud-bubble-scam-Ponzi-mania.
When it blows up, you won't understand why the SEC didn't protect you. By then, you'll realize it was a mirage all along, and you'll want someone to blame for letting it get so out of hand. Every piece of news you interpret will tell you that losing money was not your fault, because that's what you'll want to believe.
On the flip side, the current price action is causing the same sort of confirmation bias--just in the opposite direction.
By way of an understanding of human nature. From the book Bull! A history of boom and bust:
“...A bubble, Galbraith observed, is always supported by the belief that there is something new in the world. The history of past cycles is dismissed as irrelevant.“
That’s it in a nutshell. It is a time-tested part of who we are, and it’s almost like you’re either born with the ability to see that or you’re not. I don’t know why.
I don’t know how much the price will go up, but it going up, even to a million dollars a coin, means little. It will eventually go down and violently so, and some people will be badly hurt. Just people being people.
Assets need to be productive in order to be true investments. Like farmland or businesses. Otherwise, you’re speculating on price appreciation. Look at gold over the last 100 years and overlay its price graph over the Dow Jones during the same period. They’re not even close.
Counterpoint: Galbraith confidently called the US stock market a "classic bubble" in April, 1999. At that time, the Dow Jones was at 10,494. Today it's at 24,504.
Looking back with 20/20 hindsight, it now looks like Galbraith was wrong.
> Assets need to be productive in order to be true investments
Counterpoint: Maybe assets need to be useful to have value. Land, copper, the balance on a Walmart gift card and my World of Warcraft gold don't produce anything, but they're useful, so they have value.
> Counterpoint: Galbraith confidently called the US stock market a "classic bubble" in April, 1999. At that time, the Dow Jones was at 10,494. Today it's at 24,504.
No! Current day valuation versus 1999 valuation has nothing to do with each other. In 1999 the market was over valued and the bubble soon popped.
> > Assets need to be productive in order to be true investments
> Counterpoint: Maybe assets need to be useful to have value. Land, copper, the balance on a Walmart gift card and my World of Warcraft gold don't produce anything, but they're useful, so they have value.
The key difference between an asset and investment is that investments produce returns.
> The key difference between an asset and investment is that investments produce returns.
Right, but an asset can go up in price and stay there if demand increases and/or the currency the price is denominated in is losing value over time. Especially true if supply is limited.
I don't expect BTC to stay at $17000 - it could go down or up, and I wouldn't be the least bit surprised if it's currently in a bubble that pops. It might then go to near-$0, or it might proceed to regain those levels and continue even higher over time, depending on how demand evolves against the ultimately fixed supply. I remember $500 for 1 BTC seemed insanely high at the time. $675 must have seemed crazy for gold in 2006, but I don't expect it to return there again despite the intervening ups and downs.
Because the fundamentals of Bitcoin and The Blockchain are complete garbage. Both are solutions in search of problems. Neither solve any real world problems outside of how to conduct shady, illegal business (murder for hire, crypto-ransomware, mail-order bath-salt delivery) and both do a pretty piss-poor job of even that.
This is why bitcoin will ultimately fail. It is a useless product. Full stop.
True. Only if they have zero leverage at play. No borrowed money, no loan to default on. If not then there is most definitely going to be some element of a bailout.
Anecdotal: but in the last month I have come across 6-8 people who have taken or know someone who has taken 2nd mortgages, maxed out their lines of credits, and credit cards to "invest" in crypto.
I'm generally a-ok with investment loans (not from credit cards), they are a good resource to reduce portfolio risk - if the loan remain tax deductible. But what is currently transpiring is insanity.
Someone will definitely get bailed out (hint: it will likely be the banks that's unknowingly provided the leverage).
The current leverage from mortgages are probably not that big. What i am worried is the combined effect of high housing prices & relaxed loan requirements, and upcoming stock market burst.
Bitcoin doesn't produce anything of use to most people. I can already transfer my money from my bank to a merchant with quite low fees.
Even in Africa, the possibility of phone-based money allows people to do this.
Bitcoin's risks don't balance its benefits for most users of currency and basically, it's a currency or a "technology", it's simply a unique commodity akin to art or Tulips. I mean, if the bubble was tulips today, I could sell them as "unique biotechnological value-preservation technologies". But that wouldn't change the well known financial/psychological/social dynamics involved.
I disagree. Buying can be 100% rational as long as you believe some other fool down the line will buy it off you. As soon as the supply of irrational buyers dries up it’s game over. But that doesn’t look like it will happen anytime soon, just look around!
It is as rational as playing roulette. Most of people buying at this point probably can't articulate what they are buying, just that it's probably going to be be worth more money soon. I had to sell my BTC on Sunday, I am waiting to get back in when the exuberance flips around and everyone says it's dead.
As a rational actor, buying Bitcoin right now is basically buying a bet that people will continue to be irrational long enough for me to make a good profit and get out. I don’t know how much faith you have in the market, but I predict the irrationality will continue until at least the stock market crashes and causes people to take a cold hard look at just what exactly it is they are doing. By the time people wake up, every rational actor better hope they’ve made their exit by then.
Sure I understand that. For BTC at least I am not sure I agree the rally will last as long as the stock market rally. I think we'll probably see a decent amount of selling in January when the gains are moved forward to the new tax year.
Litecoin is another animal. I think we'll continue to see a lot of what we're seeing now. People seeing a low price (compared to btc), sad they missed out on cheap BTC and dreaming this one is going to $15k.
Seeing as how dreamers are basically the only reason Bitcoin rose to $20k, I see no reason why the trend wouldn't replay itself with Litecoin. Great time to buy IMO.
Well one thing is Litecoin has a much larger supply (3.24x according to Coincap). In terms of market cap & supply as of today a $15k Litecoin is equivalent to ~$50k Bitcoin. The market cap of Litecoin alone would be 0.84 Trillion. It's possible I suppose but I think you'd need some pretty serious institutional buying (or gaming of the system which only lasts so long).
Until people actually run nodes to the same distribution of bitcoin, it will always be a reduced security option, and therefore won't command the same price.
and even then, crypto could be seen as a better store of value than the traditional market so even a bear market might not negatively effect the crypto space or at least not to the same degree as stocks
Is this the reason why? I've been scratching my head all day as to why LTC would pop today beyond the fact that the BTC rally cooled and people saw LTC as cheaper and thought "hey, thats cheap, let pump it!".
People were getting annoyed with the high fees and slow transaction times of Bitcoin. LTC is much faster, has cheaper fees, and has a higher cap on currency that can be mined. A few days ago Redditors on r/bitcoin (or maybe r/btc I cant remember) suggested people with these complaints switch to LTC. More and more posts started popping up to rally LTC. Some even mentioned that most coins had a tight correlation with Bitcoin, which LTC did not seem to have. If this were true, and Bitcoin were to crash, LTC would have the greatest chance of overtaking it. The next day LTC started to rise. Im not 100% sure of correlation, but I believe these reasons to be a part of the cause. It could also have to do with big name investors starting to research cryptocurrencies after CBOE went live, or something else entirely.
Until a week or two ago the correlation between LTC and BTC was very loose, but it seems that now that BTC is cooling off other coins are warming up... But LTC has been doing pretty good for a year, so who knows... Definitely seems that people are buying more LTC because is cheaper. Maybe in the hopes that one day is going to be as valuable as BTC (of course that's not happening).
The cryptocurrency bubble is still attracting a lot of attention and people want to buy into something. Bitcoin's pretty broken right now so people are being told to buy litecoin instead.
That's not emotional and non-rational. They were buying in a cheaper market looking to sell in a more expensive one. Unfortunately the cheap market often shuts down trading when volume gets too high so the people who got trapped are screwed.
Anecdotally, this weekend I've seen 4 (non-technical) friends throw $500 - $5,000 into the three CoinBase coins this weekend, all individually. Before this weekend, they were merely familiar with Bitcoin but no interest in investment, and they did not know what alt coins were. All it takes is for someone to see the hockey-stick growth on the coins to want in. It's too exciting to pass up. The atmosphere is "If I lose a few grand, that's OK, if I miss out on 100,000, that is not."
I think the really difficult part might be figuring out when to take it off the table. For example, let's say bitcoin goes up 10x. Then do you decide to sell, because it might crash back down the next week? But what if you miss out on another huge increase by selling?
Yeah, this is the dilemma, but can't beat yourself up too much over it. I mined my first bitcoin in February 2011 just out of interest in this cool experiment, not expecting it to go anywhere. I've always had a bit of btc in reserve but every time there's a big jump the impulse is "Better sell out of this silly bubble while I can". People who imagine that they'd have $50M today neglect that they'd most likely have had a similar reaction when it was $20, $100, $500, and so on, and it's unlikely they would've held a substantial portion until it hit $20k.
I think the part that's hard is that there is a stickiness to hype. Hype starts as baseless hype, but the belief and interest of others is frequently enough to sustain a company or project that has nothing of actual benefit to offer. This makes it hard to dismiss hype-fueled bubbles entirely. There's a circular effect somewhere here that converts the initial baseline hype into value just by the sheer force of will of "true believers".
This applies not only to bitcoin/litecoin, but also companies, software, and all sorts of other things. Generating hype, goodwill, and other mostly-positive forms of human attention is inarguably more valuable to a project or venture's long-term lifecycle than providing actual objective value. Get enough attention or interest on something and any objective value that may potentially exist is liable to materialize, at least in part.
Sell half after it doubles, then hold the rest until you need the money. Selling half returns your initial investment; what remains is pure profit and you can't lose money.
This is precisely what I did, so now I have a guaranteed net profit. Yes my potential earnings are lower but it feels good to be out of the group of potential "losers" in what looks to be a zero-sum game.
You most likely need to wait until it's close to 3 X the value you bought it because you'll need to pay short-term taxes after you sell it.
And once that happens, why sell half of it, vs all of it? 3 times the current value is a LOT of money and that usually takes at least 8-10 years in the equity market. Now that it happens, you're cashing out just to recoup your costs? Cash out everything, or cash out nothing and let it all ride until it's an even larger amount.
> And once that happens, why sell half of it, vs all of it? 3 times the current value is a LOT of money and that usually takes at least 8-10 years in the equity market. Now that it happens, you're cashing out just to recoup your costs? Cash out everything, or cash out nothing and let it all ride until it's an even larger amount.
I agree "just recouping your costs" is not really exciting by itself. The idea is that you think it might go much higher, but - crucially - you're not sure. It's just about reducing your exposure to risk at the cost of some upside potential. It all depends on your risk appetite.
This is a little fallacious because it assumes that the value of your money (Dollars or something?) won't continue to lose value against until it becomes worthless paper. This has happened in recent history e.g. Weimar Germany and is happening right now e.g. Venezuela.
At the end of the day, the rationality comes from a comparison of one currency against another. Just converting back from the currency you started with doesn't mean you "can't lose".
Exactly this. People should ask around for advice all the paper-millionaires from the 1999-2000 era. Lots of paper millionaires were made, most didn't materialize.
I’ve owned BTC for years, ETH for a little over a year but never had LTC until last week...just a single datum but would not be surprised if this is quite common.
Coinbase is an exchange, you're exchanging with other Coinbase users. Wallets only come into play if you're moving crypto in or out of Coinbase. That's a good thing, wallet transfers can be slow and would really make trading a pain.
I heard somewhere that they keep some of each digital currency on hand to help with price stabilization between when you buy and when transfer is done.
So like, you buy not from someone selling, but from Coinbase's stash, who then buys to refill from someone else.
No idea how accurate that is though, maybe someone can back me up or correct me here
I understand that at the moment it may seem like all the cryptocurrencies are in a bubble but honestly, I don't mind because it is forcing the banks to stop their stupid cash grab and loosen up some of their rules.
What about the stupid fees that bank charge you to have the privilege to have you as a customer?
What about the fact that at the moment it takes 3-5 business days to make a simple bank transfer to another bank?
What about those insane fees when you try to buy another currency through the banks?
What about the fact that I have to call my bank and plead my case when I want to transfer an unusually large amount of money to somebody else because of them blocking the transfer and now I have to spend 1 hour on the phone to solve that issue and prove that I am the one who initiated the transfer?
What about the fact the bankers have brought the world on the edge of a great depression due to their greed and left millions of people underwater on their mortgages?
Bitcoin/LTC/ETH may not solve all the problems that we are facing now, it may not have much practical use at the moment either, but I 'll be damned if I give more money to the banksters.
> What about the stupid fees that bank charge you to have the privilege to have you as a customer?
Might be worth using a credit union. To my knowledge, BECU isn't charging me any fees for my accounts with them.
Also worth noting that all governed digital payment systems (VISA, Paypal) are (1) prone to censorship and (2) leak information. Additionally, ACH and card transactions are based on debits that are initiated by the person requesting funds, as opposed to credits that are initiated by the owner of the funds. Not so terrible, but for the fact that the approval process for transactions is almost always one-sided. Anyone can debit my account and that transaction will go through by default.
If I give a bank my cash, it is I who am providing them the service of liquidity, so that they can have money to loan to others (as a service) for interest.
The only way I could find a "bank" with lower fees was to abandon banks altogether and switch to a credit union. I swear it's like all the banks collude to determine market rates for how many and how high of fees they can all charge their customers, to the point where—as a regular consumer—they're all indistinguishable.
Not only are the credit union's fees lower (or non-existent in some cases) the interest rates are higher and there are no shareholders to appease, except for other members of the credit union.
Watching this whole thing really has me scratching my head. Honestly - the value of BTC in a decade is anyone’s guess.
For me, I have a modest holding (in terms of its USD value today as compared to my other investments). After much wrestling, I’ve decided to just let it sit and be done with it. If it crashes back to pennies, oh well. If it goes to the moon, I’m glad I had a piece of the action.
As much fun as it seems, I’ve made the deliberate decision to not try to game / day trade it. It’s been possible to try to make money like that in Vegas for many years and that’s never been that interesting to me, either.
What's absurd about that concept is that it supposes that there's a day coming when people who haven't already bought Bitcoin will want it so badly that they'll be willing to enrich people who are buying in now. I think people who bought in a year ago will be the ones who can claim that sort of reward, at best.
When Bitcoin was $1,000 you could have made the same argument in suggesting it would never go to $15,000.
Buyers today are not considering “should I or should I not enrich those who bought earlier”. They are simply making a bet that the value might go up and want to own some if it does.
As an asset rapidly increases in value and the underlying driver of that increase is not well understood, all sorts of unexpected things can happen. The question is not how big will the bubble get, but who will be left standing when the music stops.
This means that people are investing small amounts and going for the cheaper coins using coinbase. which means that cryptocurrencies may be having their facebook moment at this time , and their network effect is about to get a LOT bigger over the next months. While people may only invest small amounts (and coinbase can and should make sure they do), cryptocurrencies will come out of this extremely strengthened if a significant number of people end up owning even a small amount of any coin. Unlike tulips which wither, these people are not likely to sell their bitcoins even if there is a correction. A world scale network of people owning coins can be a giant leap for the world economy, as coins are much more resistant to censorship than the internet itself proved to be, and unless a new kind of gold is discovered , they may prove to be a much better, easier to transfer store of value. This bubble may never burst. All of this is speculation (of course) - I wish coinbase (which seems to carry the bulk of the wave of newcomers) would release statistics about their number of users.
> Unlike tulips which wither, these people are not likely to sell their bitcoins even if there is a correction.
[citation needed]
Even long term investors in traditional securities often get panicky during bear markets. They sell their holdings, even if the underlying value hasn't really changed.
on the one hand bitcoins dont physically wither, on the other hand, it's about the personalities of people who own it. I don't know who pumps the bitcoin bubble, but much of the bitcoin is owned by people who can't quickly cash it out for USD or EUR because it's either illegal, not taxed or going to face big taxes. many of them are also ideologically driven. Sorry i dont have citations, i m (fittingly) speculating over these
> much of the bitcoin is owned by people who can't quickly cash it out for USD or EUR because it's either illegal, not taxed or going to face big taxes.
That's certainly an interesting aspect, but I thought you were talking about all the new, smalltime buyers of cryptocoins, which I assume don't fall into this category.
yes sorry about that. i assume however that people investing a small amount will not panic, because they really don't care. It's like buying an expensive fad fashion item, that is then left to collect dust rather than being sold. fear of missing out is driving adoption atm
Huh... that seems like a separate category from the domestic speculators I was thinking about.
But then, how does an influx of a large number of fad buyers strengthen cryptocurrencies in the long term, if these buyers just completely forget that they own cryptocoins after the hype dies down?
when facebook was growing they went all-in for growth, because they knew if they got the network effect enough, they would have won, and they did. Coins have to grab the opportunity to reach everyone before governments start clamping down on their growth (which i m sure will happen not long from now).
getting people to own cryptocoins (and having a wallet) is really a trojan horse. just like smartphones turned nontechy people to app buyers, the ownership of a wallet creates a platform for many things which i don't know yet or i would be rich.
That seems absurdly optimistic. It's like Facebook--if all anyone did was sign up for an account and not bother to populate it with friends or info. A vanishingly small number of people are using these coins for anything they couldn't otherwise do.
Today I went to one bank to transfer 60k from one account to an account in a different bank. I paid 7.50$ to get a certified check from Bank A. Went to the Bank B near my house to deposit it there. Unfortunately the branch near my house isn't where my account is. They tried faxing a photocopy of my certified check to the other branch but the line was busy. They're going to continue trying until 3pm today when they close. After 2 hours I see the funds are in my account but I'm not allowed to access it because I'm limited to only 2000$ per day. They didn't call me as per instruction once the funds were in my account.
During that same time I transferred 15k$ from one crypto-wallet to another. It took 10 minutes all told.
Sure there are lots of people who are buying crypto because they think they'll make loads of money but a significant portion of us are in it because we dislike the infantilizing ways the current banks hold us hostage.
My first hand experience (2017) is that US banking oferring (from a european guy perspective) is a eyes opening experience.
* There is no instant bank wires (free ones) between major banks. Or at least the same days ones, working reliably through most of banks.
* You get paper checks from your bank :)))))
* Small business (sold a car, got a return from landlord) give you money on checks, also accept only paper checks if you need to pay them on the spot (in the office).
* your bank charges you a monthly fee, to protect you from overdraft (wtf is this on debit account??), he shall block from happening at the begining - we call it "protection racket" in Italy.
* boa/citi and others have websites with design from 2005, not to mention mobile apps..
* you can't send money from bank account to a different
bank to your unsophisticated friend (plumber, maid, or mr sandwich) just knowing his phone.
* when you withdraw money from coinbase to your connected US bank account, you pay 1,5% of face value. WHAT? PERCENTAGE FEE? This is USA banking thing, as the very same coinbase, charges fixed 0.15 EUR fee per no matter how big wire if you're european.
* major us banks got two factor just two years ago in terms of security.
* tap to pay (we call it paypass) is also almost 10 years after europe.
* first chip card in citi was offered to me in 2015 or 2016? Still magnetic (easily copied) card is used in majority of points in the USA
etc..
Some of them are chaning in the last two years, but mostly for sophisticated customers, small banks, and people not being able to use those features between different banks. It will still take a lot of time to catch up with a Kenya from Africa...
I live in Canada but even when I lived in France banks were silly. I remember asking them to close an account and they said "Oh no... once you open an account we never close it."
> you can't send money from bank account to a different bank to your unsophisticated friend (plumber, maid, or mr sandwich) just knowing his phone.
Banks in the USA do not allow deposits into accounts without account holder permission. They won't let you stop by a branch and deposit into a friend's account (to pay them back) without a formal arrangement, so it's easier just to find your unsophisticated friend and give them cash directly. I'm not sure if this is due to a law, or our culture of security theater.
> Banks in the USA do not allow deposits into accounts without account holder permission. They won't let you stop by a branch and deposit into a friend's account (to pay them back) without a formal arrangement
This is not (universally) true. I've had many friends/family deposit checks for me at my local branch when I'm out of town/on vacation/whatever. I've done it myself for other people. I believe the banks in question were Wells Fargo and US Bank.
YMMV based on bank, but there is no regulation preventing this.
I was turned down by both Bank of America and Columbia Bank (local WA State bank), as it violated their security procedures at the time - this was about 10 years ago.
The reasoning presented was a little suspicious - they envisioned someone "forcing" you to unwillingly take a loan (of like $100) by depositing it into your account. Then they would demand their $100 back and use this as leverage to blackmail or otherwise disrupt your life.
But I don't totally disagree. To me, depositing money into another person's bank feels...improper - like performing an oil change on someone else's car, or taking someone else's books back to the library, or walking into your neighbor's unlocked house to lock all the doors. There are very good reasons someone would want these done for them, and also edge cases where these would cause an issue for the other person. It's a moral grey area to me.
>Sure there are lots of people who are buying crypto because they think they'll make loads of money but a significant portion of us are in it because we dislike the infantilizing ways the current banks hold us hostage.
...But if you were beaten and robbed on your way to the bank, that check would be worthless to the thief. If your bank went insolvent, the FDIC would cover your $60k. What happened to depositors when Mt. Gox went belly up? What happens when that same thief hacks your wallet instead? There are many positives to our current banking system which you seem to be dismissing. Namely accountability. Perhaps once these things are well regulated and backed by legitimate business it will see mainstream use. But crypto is literally nothing but a speculative game and means for laundering money at the moment.
Also I agree banks in the US really need to modernise their procedures, I don’t really see how this is an argument for cryptocurrncy.
Here in Europe I can make a payment to any other EUR bank account in Europe, for free and it’ll usually arrive the same or next day. All I need is the recipients bank account number, and to enter that and the amount on my online banking - I don’t need to go and see anyone or fax anything over.
Recently a new initiative was launched where (between participating banks) you can transfer up to €15,000 in a maximum of 10 seconds:
I had a similar experience recently. I finished a contract job and received a check too large to deposit over my banks mobile phone app and unfortunately my bank doesn't have any local branches. I have a backup bank to do local deposits, but the transfer took 5 days to fully clear at my primary bank.
I had to call my bank and explain that I needed a mobile deposit limit increase which took less than an hour to happen. Prior to that conversation I was cussing a lot though.
If we're talking about bitcoin I think ~$15 and ~4 hours average right now which isn't much better.
If we're talking about other currencies, you have a good point. I think lumen (XLM) is the best right now, ~$0.0000015 fee, ~3 second average right now
Not that much more actually. Given he paid the normal fee rate. I bet the additional dollars was cheaper than physically taking time off to go to a bank which is only open during (your) working hours.
>Sure there are lots of people who are buying crypto because they think they'll make loads of money but a significant portion of us are in it because we dislike the infantilizing ways the current banks hold us hostage.
Sure, but if someone scoops your crypto coins, or you leave them in an exchange that's hacked, you basically have no way to get it back.
This is trading a serious amount of security granted to us by world governments for convenience. It also increases your cognitive load of handling your crypto safely.
That bank sounds terrible, and it can vary from branch-to-branch which is frustrating.
I get that this doesn't happen every day but I paid for a certified check. Their method for certifying it involved 5 people and will take a few days before it clears.
People do certified checks whenever they buy a house, a car or transfer significant money from one institution to another.
And don't get me started on sending money to family members overseas!
That's an absurdly specific grievance that won't effect 99.9% of people in any given year, and it certainly doesn't answer why Bitcoin isn't in a bubble.
It is definitely a speculative bubble. I think we are in a similar position as 1998. The technologists can see that [the Internet]/[cryptocurrencies] are very interesting technologies, with the potential to change the world. But retail investors are pouring in, without any understanding of the tech, and inflating both good and bad [companies]/[coins] in a pure speculative frenzy.
If I had to bet, there is still lots of upwards runway left, but at some point, it will come crashing down, the bad [companies][coins] will be worthless, and out of the ashes will rise a more sensible market with some of these [companies][coins] truly changing the world.
There will be a lot of blood on the floor though. The rise of Bitcoin as a speculative asset (and its inevitable crash) will do some damage for sure.
I'm bullish on blockchain technologies over the next decade or two, but we're gonna have to clean up for awhile.
My hope is that blockchain enthusiasts are taking their profits and using them to invest in building something better.
(There's also a lot to be said here about the hucksterism, shilling, get-rich-quick schemes, and an almost-fanatical belief in the power of a pure free market inherent in the BTC community from the beginning, but that's best left to another post)
I totally agree. I'm confident a crypto coin crash is coming to eclipse any we've had before. The combination of volume, transactions/second limits, and weak exchange infrastructure; when people want to get out things are going to get ugly.
Also agree. It seems many people are convinced that others will just keep holding forever. Eventually there's less money flowing in and people will realize they aren't getting rich. When people aren't making more money they will start selling.
Worse, the people buying in now aren't true believers. They are "investing" because they think it is easy money. These folks represent a larger percentage of the market cap and are also least likely to have confidence in bitcoin for it's utility. They also stand to lose the most because their buy in point was so much higher. (people who bought in at say $1000, are just losing profits)
The cult-like “hodl” culture in the Bitcoin community exacerbating the already limited supply of Bitcoins (if it were a stock, it would be a “low-float” stock, which results in increased vol) has served as the perfect breeding ground for a bubble.
As Bitcoin becomes extremely mainstream, those who hodl Bitcoin with religious fervor are increasingly becoming a smaller minority. Eventually it’ll reach critical mass and there will be enough disloyal Bitcoin ownership to cause a panic at the first significant sign of selling.
Whenever someone says they're sure of a crash, I assume their true feeling is isn't confidence of a crash but frustration at having missed out. Have you shorted Bitcoin? That would help you to profit from your belief.
Sure I could short Bitcoin, but it cost me nothing to speculate about a crash. I also make the assumption when I see the FOMO argument that the person has a stake in Bitcoin/Crypto Currency. Perhaps both of our assumptions are wrong?
Once the bubble burst then no one argues that they were in a bubble.
I read somewhere that people are leveraging huge sums of money on crypto which may explain how it is going up by so much and so fast. If for whatever reason we start to see even a small downward trend then these people will be forced to sell their position and the whole thing will come tumbling down.
I believe BTC is here to stay, due to it being some form of "backing" currency for all other crypto currencies. I guess one could claim the same for ETH, since it's used for many ICOs.
But apart from that I am not sure what the future of ETH or LTC will be. To me it seems some adaptations of ETH have a much clearer use-case and therefore are likely to raise a lot in value in the future. One of the ETH based coins that I really believe in is OmiseGo[0] (OMG) which will bring banking capabilities to many people that currently don't have a bank account.
They're not a MLM because there isn't the "pyramid" aspect. If I buy bitcoin at $10 and sell it to you at $100, then I don't get a percent of your sales going forward or anything like that. It's a plain old bubble.
The part I’ve never liked is that Satoshi Nakamoto only mined for 10 days and got ~1M bitcoins. Today, if I mine for 10 days I’ll probably get 0.001 bitcoins. Even if you adjust for increased computing power, why are my hash calculations valued a billion times less than his? Why can’t I get 1M bitcoins for a similar effort? From a market value standpoint, his computing effort is worth $18B. If, today, I put the same computing effort in as he did, I only get enough for a nice lunch.
I understand the technical reasons why due to the 21M bitcoin limit, hashrate difficulty increasing, etc. It just seems like a rigged system with the people “on top” getting huge rewards for very little work whereas the people lower down who do many orders of magnitude more work are getting very little reward. From that perspective, it has the scent of MLM, if you will.
Wikipedia says he mined “at genesis and for 10 days afterwards”. Regardless of 10 or 139 (perhaps “genesis” includes several years of development), it doesn’t change the point.
Creation of bitcoin aside, what risk is involved in an early adopter letting their computer crunch numbers for a few weeks? If you were the third person ever to mine bitcoin, about the only risk I can think of is a bit of time & effort plus a slightly higher electric bill.
The risk of being starting the whole thing. If you think starting your own coin is easy, go ahead and start mining, the hard part is convincing others to adopt your coin.
That's not what makes MLM a "pyramid". Residuals are part of lots of legitimate business. What makes most MLM a pyramid scheme is the fact that growth is predicated on bringing new members into the scheme, rather than existing members growing their business.
They key thing about pyramids/MLM is that the growth is based entirely on getting more investors i.e. people who are putting money in with the intention of getting money out later (this also included MLM sellers who have to buy product upfront). Whereas a non-pyramid grows because it has more non-investor users, or some other source of revenue from people who don't plan to take that money out later.
I'd say it's more like a ponzi because the market volume is so far from accurate due to the chameleon hoardsters. They will dumptruck eventually, so anything gleaned from looking at current market stats is really just a facade. Wait till the whales start selling...And no disrespect to Satoshi who is most likely Finney but if he or his children ever decide to dump their share that most appraisers tend to consider "missing for good," you can bet the price will take a monstrous hit. Thats why I consider BTC a ponzi. The current dynamics are an ill reflection of the actual level of buyers and sellers. And there is no real way to assess number of hoarders due to not knowing how many BTC are lost or simply forgot about.
The bubble part of it is not their meteoric rise, it's that they can easily be replaced by the next best coin. There is no inherent reason why Bitcoin should be more popular than Litecoin as a store of value, except for the fact that it currently is.
There will be many hundreds of coins flooding the market. There is no such equivalent in the real (offline) world. You have gold, silver, platinum, etc. - but that's about it. No one is inventing/digging up new types of metals.
Does one cryptocurrency increase 20x in a month? Then yes, it's a bubble, and it will likely crash pretty hard in another month or two (but probably not as much as it rose).
Does it increase 20x in a few years? Not necessarily a bubble because its value may simply be related to its adoption and potential.
The thing about cryptocurrencies is they have rather limited supply once they are launched on the market. So if their userbase/number of adopters increases by 10x overnight, and most of them intend to keep those coins, then it doesn't really qualify as a bubble, even if the value explodes.
I bought BTC to use as currency for transactions not as an investment. It should be used for that purpose. MLM only has one purpose - to recruit others into it. I don't ask other people to buy BTC so I can make a profit. MLM usually has a pyramid commission structure.
If you don't mind me asking, what types of transactions do you currently use it for? Based on the current technology and fees, it is quite expensive to transact, and really doesn't make sense for me.
That said, I can see a future for it if something like lightning network ever gets released (and actually works).
Currently it doesn't make sense to use it for transactions with it changing wildly from one hour to the next which is a shame. I will be glad when it settles down. However I have in the past used it for online transactions and used it in small bars/restaurants and used BTC ATMs
Bitcoin has any fee you want per transaction, from 0 to all the bitcoin you control. The more you pay in fees, the more likely it is to be included on the blockchain sooner.
Yes, people may be able to live their life without going back to USD currency, so their will be no devaluation of a crypo X as long as people trust it (as gold). When a cryto X is not trusted anymore people are going to stop using it to go back to USD or another crypto thus devaluating the cryto X in respect to the USD.
A big advantage of cryptocurrencies (I think) is that there is no regulation (no central bank injecting billions), but it is also its Achilles's heel because it can't be used ha s a commodity currency because it miss the stability of a currency backed by a central bank.
But this behavior is happening. Go check out the bitcoin subreddits where you'll witness constant reinforcement to hold until your reach whatever your predetermined sell point is. Anyone who calls this behavior out is shouted down and ridiculed.
So like, there are a lot of problems with cryptocurrencies obviously, but they don't really resemble mlm in any particular way even if you consider them to be a scam?
In multilevel marketing, people are being sold downstream profits directly from people they sign up. If you sign up another person you take a cut of their revenue. If you sign up enough people and they sign up enough people you stand to gain a lot of money with very little work.
When it falls apart, assuming you're not deep enough in that you're indited yourself, you keep that profit. It's the people at the tail end who lose because the only way to really profit is to sign people up.
On the other hand when you sell someone on bitcoin you aren't taking a cut of their 'revenue'. If you're invested in bitcoin you're as in the hock for a crash as they are.
It's an asset, though a somewhat different one to traditional assets. As such it's subject to the same kinds of asset bubbles as any other asset (ie. gold is not as liquid as fiat, nor is it really used to buy things). But it's not the same kind of thing as MLM.
You should think about which fiat your likening it too. Its more liquid that certain fiat (Venezuela) and can definitely be used to buy things.
It's not being used to buy things because its a deflationary currency which along with an adoption curve means it's more advantageous to sit on it.
The adoption is definitely increasing the value of it, its a more liquid gold to me, but like any other currency or asset the value is derived from the trust and value that people put in it.
It is a bubble. In fact I'd venture so far as to say it's a Ponzi scheme. But in any successful Ponzi scheme, the early investors actually get a huge payout. I don't regret investing in it one bit.
Just think about crypto-backed real-world assets and compare that against "market capitalization" (which is ridiculous to even call it that in my view). This is why ICOs are nothing more than buying into pump-and-dump stocks or at best microcap biotechs.
It does have some similarities to an MLM scheme. Mainly the part where a bunch of obnoxious people are doing everything they can to con others to buy in and make them money.
That works, so long as you've refactored your infra to the point that the computational resources (whether server nodes or hard disks or or database shards) are modular enough that you can just add more stuff and it will play nice with everything else. That objective -- not a cute UI that lets you change one of the numbers -- is the hard part.
And yes, it is to Coinbase's discredit that they haven't done so, but (assuming you're not joking), they could very well not be at that stage. It's typical for startups to have technical debt like that.
Most scalable systems have some 'singletons' somewhere in the stack. At a certain scaling point, the singletons must be made scalable to multiple instances, which often entails making a new singleton to manage these instances.
In this way, scaling often gives you an order of magnitude or two of available additional capacity, but periodically requires new dev work to support further increases.
If that were the case it would be withdrawals that were temporarily disabled. There aren't any on-chain transactions made when you buy/sell on Coinbase, only when you deposit/withdraw.
Cold wallets don't scale, and that's the entire point of them.
"Hot Wallets" can be hacked, because they're connected to the whole system. "Cold Wallets" are offline, and require human intervention to transfer money into and/or out of.
Figuring how much money to keep in the "Hot Wallet" is a tradeoff in services, convenience, and security.
It's what happens when some businesses fail to act fast enough and use their loads of money to buy actual expertise. They had four outages in June. That's plenty of warning.
I wonder, what are these exchanges like GDAX, BitMex etc. doing with their dollar/euro/etc. reserves?
They obviously need to keep dollars on hand in order to cash everyone out. But what if Bitcoin goes up in price? If there is a run on the exchange later they may have to sell their bitcoins on the spot market to cash people out.
Banks reinvest money held into loans and other speculative investments. But what do you do when as an excuange / market maker you stand ready to buy and sell at any time?
Here is my concern: while it was just two guys meeting up to exchange $ for bitcoin, the $ kept circulating. But these exchanges may be locking up more and more USD just so they have enough to cash people out on demand. As a result, there is a real transfer of wealth to bitcoin and USD is getting frozen in exchanges.
If this continues for 5-10 years more, wouldn't bitcoin become millions of dollars and bitcoin holders would be able to buy up anything vs dollar holders? One bitcoin holder could buy half of NYC already, and who can stop them?
The exchange is not the market maker (it can be, but not always.)
If Coinbase is making the market prices by leaving large limit orders at certain prices, and Coinbase limit runs out, then the price moves past their limit. It's as simple as that.
Nobody can place limit orders with money they don't have (I understand there is a "margin trading" option, but I don't have that enabled on my account and I'm uncertain how many accounts on GDAX do have that feature.)
If Bitcoin price goes up, that just means that the supply of Bitcoin at a lower price point has evaporated.
Coinbase is not buying and selling coins (let's assume, but also assume that if they are buying and selling, they play by the same rules as everyone else. No imaginary wallets.)
The exchange are just playing matchmaker so that Market Order X that crosses Limit Orders Y, Z, P, Q, R... that intersect, are all matched and executed together. Then, GDAX can collect a fee from the person who placed the Market order, and GDAX Limit orders are fee-free. Coinbase-proper is 100% market orders with a slightly larger fee, so they can clean up even more on each transaction there, because Coinbase still does not need to sell some of their own currency for each buy; they are just the matchmaker.
Coinbase and GDAX are the same company. If Coinbase needs some of GDAX's liquidity so that it can match Coinbase customers with GDAX's limit orders, they can do that opaquely. The customers do not need to know where their cryptocurrency came from exactly.
If all of the liquidity on GDAX dries up, then there will be a problem (but still, the problem/opportunity is not Coinbase's problem, it is the whole market that comes grinding to a halt until someone opens up some more liquidity at a particular price point.)
Coinbase is not using their own money to buy/sell bitcoins, but the money of other people in gdax, taking a cut. They are not doing fractional reverse banking where a bank run could happen as far as I know.
Well, they probably moved some of those funds into longer term bonds, so there could be some liquidity issues. But those would be unrelated to the price of BTC, and would be only temporary. There should never be solvency issues for a vanilla exchange.
Things look different with margin trading though. Margin trading implicitly implies a loan from the exchange to the trader. If the market moves too much against the trader, exchanges typically automatically force their positions to be closed. The problem is that if the price moves too quickly, the proceeds from this transaction may not be enough to cover the loan to the trader. So then the trader can end up owing money to the exchange, and it may be difficult for the exchange to get that money. That can lead to solvency issues.
You know they will. But they should have no basis as this is an unregulated market and global, so local governments will have no incentive to socialize the losses of foreign citizens.
Governments need to quickly enforce suitability guidelines along the lines of accredited investor status asap (I believe some countries already working on this.) Some would argue this is unfair, but people just getting by have no business playing in this wild west.
Tezos wants a "bailout" from the foundation that they created.
The "bailout" is "please give us our own money that we raised during our own ico so that we can use it to build the product people gave it to us to build".
Yes obviously. But you earlier stated that "Already happened basically!" in reference to a crypto bailout. So again, how is "seek" equivalent to "ask" here?
Gotcha, I thought you were saying that a bailout already happened. It's obvious to me now that you were saying someone has already asked for a bailout.
While cryptocurrencies are mostly used for trading, I think it is a technology with great potential.
There are still several unsolved problems with cryptocurrencies like having to keep a large database on disk and slow transactions (and illegal status in some countries). They are not protected from 50% attack by governments. When they are resolved, it can become really good alternative to card systems.
VISA has many disadvantages compared to Bitcoin:
- it uses outdated technology and is absolutely insecure (card details are easily stolen and sold in large volumes, they still use unencrypted magnetic stripe)
- it can require paperwork and a deposit to accept payments. It is difficult if you do something legally gray (for example, related to porn)
- it is difficult to get a card without identification even if you are not going to do anything illegal
- transaction cost is high for small payments
- US government forbids to use VISA on some territories for political reasons
- merchants often refuse to accept cards from some banks or some regions (for example: Digital Ocean doesn't accept some prepaid virtual cards)
- companies can collect and exchange customer data when they pay with a card. Because it has your name.
- the data on transactions from all countries go through systems controlled by US
It is only natural to replace those outdated magnetic card systems.
The recent speculation spikes have been pretty remarkable. I wouldn't be shocked if they occasionally exhaust hot wallets. I'd love to know what the process is - do they have coins in cold storage in the offices in safes? Bank vaults? Multi-person signatures?
They don't really talk about it, but I'd imagine it's multi-signature offline wallets that require a few people and an assload of physical security to spend.
My guess is that the there are a lot of newbies now on Coinbase (#1 app in the Apple AppStore). They are buying the cheapest “bitcoin” without actually understanding what they are buying. This has increased demand for the cheaper of the only three options in Coinbase thus increasing price.
Yes, and I've cashed out handsomely as a result of being lucky enough to predict exactly this.
For clarification: I bought some $1000s worth of LTC when it was under $100 shortly after the Futures news hit. It was pure gamble on my part and I could have easily lost instead of the other way around.
I also bought a few ETH coins when it was around $400 but haven't cashed those out yet. I'm predicting my LTC gains will be wiped by ETH losses.
I wasn't complaining. The "only" was in response to suggesting I made "huge" amounts of profit. I didn't gamble that much, and so I didn't make that much even with the return. My profit was less than my paycheck. 2.5x is better than anything I've ever made in equities (in fairness 90% of my strategy there is selling covered calls on dividend paying stocks) and far and away my best gamble on a percentage return basis. I doubt I'll ever be as lucky as that again.
But I agree it does highlight how insane the crypto craze is.
I locked in gains with LTC a few weeks ago like a rube thinking there was going to be a correction :( Locked in some good gains but missed on 70 thou plus USD....sigh...gotta keep trying though right?
That isn't the way to look at it. Suppose LTC breaks $1000, or even $500. I'll have "missed out" on a lot. But I locked in gains, so I'm net ahead. Timing gambling like this is a fool's errand, in my view.
This is supported by the fact that there is $50-$100 difference between gdax/coinbase and other exchanges. This happened with BTC last week too: on gdax the price hit ~$19000, and remained close to $15000 on the others, before reverting.
I think there's a more nefarious reason. Some guys with deep pockets buying just to increase the price. I want to call it pump and dump, but same happened to bitcoin and it's still afloat.
> They are buying the cheapest “bitcoin” without actually understanding what they are buying.
I doubt people really understand what they are buying whether it's bitcoin or litecoin. If you think you do, well, then most people do. Don't look at "crytocurrency" as the future "payment method", invest it like an asset. Go in low, come out high.
I invested in litecoin because I believe the market is undervalued. It's like a blue chip but will continue to rise for a while. If litecoin is to continue to rise, my bet is stopping at 600 then stabilized until bitcoin pops again. Litecoin in my view will never pass Bitcoin, but it's nonetheless a fun investment to play with.
The same thing that will cause the "sudden rise in other cryptocurrencies" over the next few months = people seeing Bitcoin is stagnating, learning about other cryptocurrencies, and then converting their Bitcoins into those.
In Litecoin's case it's also because it's one of the very few cryptocurrencies that has been adopted by virtually all exchanges, and it has faster transaction times than Bitcoins (for which transaction times and fees are a big problem currently, after the big recent influx of users/investors).
Retail investors having little to no knowledge of Crypto, let alone having any position around Litecoin. A friend of friend invested around $15K in LiteCoin on purely speculation. This is not even in the US.
I have been asked my a few friends and family members about investing similar amounts in Crypto, not knowing much about it.
People want piece of the action. The return period is small, LiteCoin up 90% just in the last 24 hrs, up 10000% in the last year. These are bonkers results if you just want to play the market and cash out.
My understanding is that they are making some significant new releases which will allow for very fast transaction times and support for contracts. I have been expecting a big breakout from LTC but then again this all could have happened for other reasons. I'm not sure how I could really prove that this was the cause.
It's trying to settle itself as the silver of bitcoin's gold. Since it has solved the scalability issues bitcoin is now facing since its inception, the expectation is in the future people will use bitcoin only for big transactions and storing value, and litecoin for paying coffee.
Many here insist it's a speculative bubble. And while I might agree that perhaps BTC is in such a state (this may extend toward LTC, ETH, etc), I'm curious to know your thoughts on the less popular and lower market cap "alt-coins" such as the Y-Combinator backed Request Network and Quantstamp. It's hard to say anything in crypto is truly undervalued at the moment, but I believe if anything is, it's projects with real utility that extends beyond speculation.
For those that believe in the technology that blockchain, DAG and smart contracts offer there is a lot up and coming projects that might contribute a lot to the space (and beyond into the real industry world, potentially).
My .02 BTC (now worth $351.44) is that cryptocurrency is here to stay. The runup might be a bubble, might not, doesn't really interest me that much. The long run for this technology feels very strong to me so I'm buying to hold.
I think BTC and ETH are the lowest-risk coins right now. 99% of the coins are going to fade away, so that's where the real bubble is. Some random ICO pops up and within months their token market cap is hundreds of millions based on nothing other than a vague buzzword-laden plan?
While I agree that BTC and ETH are likely lowest risk long term, I'm not exactly throwing money at crypto for the low risk portion of my portfolio and don't mind doubling down on a more dangerous gamble since I've researched my holds pretty well, imo.
Further, I'd argue that BTC and ETH are both extremely overbought at the moment, and reflect more of what a bubble is than many of the lowly alt coins that have real use cases (not that BTC and ETH don't). I feel you're underestimating the potential of some of these smaller projects, the problems they aim to solve and the progress they've made towards solving them.
Which ones? There are hundreds of these things, and my personal view is that they're mostly worthless. I really don't think the hard part at this point is coming up with a cool use case for cryptocurrency, or even building the technology that works (though many of these alts have yet to even do that). The hard part is adoption, and my estimation is that almost all of them will fail at adoption. Time will tell, I guess.
I'd argue that BTC and ETH are both extremely overbought at the moment
You might be right, you might be wrong. It'll only be clear in hindsight. Which is why I don't time the market or trade. I just buy and hold for the long run. It's a small portion of my networth, weighted towards BTC and ETH, but I'm buying some other alts with 1-2% of my net worth (total).
In the long run, the cryptocurrency market will be worth $0 or trillions, so I'm not particularly worried about whether I got in when it was $10 billion or $500 billion or how it goes up and down in the meantime.
ChainLink, as this project is aiming to incorporate outside data into the blockchain and smart contracts. This has plenty of real world use cases. This could be what the internet is to a computer, but for blockchain. Zen Protocol is also working on a similar idea, but they incorporate smart contracts into their project and have improved upon ETH's model a bit (not charging gas for failed contracts to name one example). I see no reason why this wouldn't be adopted if they can deliver.
Request Network, a project backed by this very website, is working to create a currency agnostic payment platform that may compete directly with PayPal and demands far less fees. There is a pretty incentive to adopt this over vendors listing individual currencies for payment methods, and everyone saves money due to lower fees.
RaiBlocks and ByteBall diverge from the blockchain and instead rely on DAG tech, and have extremely fast confirmation times because of this, and scale upward excellently. There is incentive to use these in the crypto space because transfer times and tx fees are too high, but we'll see how the outside world reacts.
Ripio Credit Network is working on making a decentralized lending platform to allow (currently) South Americans access to reasonable lending solutions, but I see this extending to a much larger global scope if successful. There is pretty clear incentive for adoption here, you can read about their potential customer base.
Just to name a few, I invite you to research a little more as a lot of these products are pretty amazing, and I'd be curious as to why you think the above are "worthless". But yes, adoption is the biggest concern. Personally, I don't see cryptocurrency ever going back to $0, the technology is better than existing models of centralized banking and middle men. Unless something comes along that disrupts the disruptor, I think it's here to stay for the forseeable future.
I appreciate you sharing all this (genuinely), but you missed my point, which is that most of these will fade away. Having cool tech isn't enough.
Personally, I don't see cryptocurrency ever going back to $0, the technology is better than existing models of centralized banking and middle men. Unless something comes along that disrupts the disruptor, I think it's here to stay for the forseeable future.
I agree, but not enough to put more than a small slice of my net worth in at this point. Fortunately, if it doesn't go to zero, it'll probably 100x or 1000x again, so I'll be fine with just a small slice of my net worth :)
I understand your point of the likelihood of it fading away, but the tech's always being taken more and more serious on an industry level and becomes more robust after every crash. Many of these solve unique problems, even if the majority of the market leaves and cashes out, blockchain still needs oracles (ChainLink), and there is still demand for the others I listed (currency agnostic low fee payment platforms, decentralized lending for 3rd worlders, faster transaction times, etc etc).
Maybe I'm biased because I place more of my portfolio on these, but I have witnessed lot of these alts becoming more and more established everyday and predict this trend continue if industry adoption continues at it's current rate (and there is economic incentive for it to do so).
The way I see it, it's like investing in the currency of an extremely promising, extremely poorly-defended nation. You could do really well out of it, until they get invaded.
It all comes down to how effectively you think the distributed consensus on transaction history is protected. A consensus which is not based in human relationships is very easy to pervert, given enough wealth.
The doomsday scenario, from my perspective, is China expropriating the mining farms in its jurisdiction, and constructing double spends until nobody trusts BTC as a means of transferring value. If that happens, there will be a huge rush to the exits. And it would be cheap, quick, and easy for China to do so.
There's a lot of money to be made in the meantime, though.
If you are a value investor, everything on the S&P500 has been overpriced and overbought for the past several years. Best bet is all relative.
I think allocating a small percentage of wealth to an asset with 10% chance of going up 20x, and 90% change of going to 0 (net expected value 2x) is a rational diversification. Crypto seems to be fairly uncorrelated to broad market. (This is actually a more bearish perspective than I hold, but wanted to point out that it can be rational to hold an asset which is likely to fail as long as there exists a significant chance of order-of-magnitude returns)
The way I think about investment is that you should only invest if you have a clear and rational reason to do so.
There is a rational reason to use fiat: you need to pay taxes in it. The government also provides all sorts of guarantees about your cash when deposited in a bank. These are solid, irrefutable arguments.
Investment in bitcoin seems to be based on an argument along the lines of “we need to change currency because centralised is bad” or “it’s just another form of gold”, or worse: “because it will keep going up”. None of these arguments make sense. Yes, maybe bitcoin will become a big currency. But why? Can you give a watertight answer as for the value of fiat? Some people answer “it’s decentralised”, but that is clearly untrue. Miners and exchanges are the centralised concentrations of power in bitcoin, but they are unregulated.
The idea of cryptocurrency is interesting and exciting, but investing in something purely because it’s interesting or exciting is only a good idea if you’re happy to lose that money. No doubt bitcoin is important as a technological milestone, but that does not make it a good investment.
When bitcoin crashes, it could undermine various startups, which will have a knock-on effect to the startup bubble we’re in. Presumably that won’t be enough to crash a stock market, unless bitcoin reaches astronomical levels.
For those on this thread who still think Bitcoin as currency, try flipping this on its head and think of Bitcoin as a store of value and ask why it would not make sense. Like most things in this world, value is perceived- we attribute vakue to Gold, Diamonds, etc. Why wouldn’t Bitcoin be in the same bucket as a store of value?
I've just went by the link (never visited that site before) and it says "THIS REQUEST HAS BEEN RATE LIMITED You're making too many requests to our servers from this computer..." immediately.
The most obvious difference between cryptocurrencies and tulips is that tulips existed centuries before their rise. These coins are based on an effectively new technology. If you want to compare it to a bubble, compare it to the dotcom boom. How the tulip argument continues to be peddled on HN escapes me.
Basically it takes 8 days for your litecoin to be available (aka transferable) because otherwise you could just transffer your litecoin to another wallet and reverse the charge from your bank.
My guess is you are waiting 8 days for your bank transfer, not the litecoin. If you had money already in your account, or paid with a credit card it would be there immediately
I just used my credit card about 9 hours ago. I've had the money taken out of my credit card, but I've yet to see the coins appear in my wallet for sending or selling. It shows in coinbase that the transaction was "Completed", but I have nothing so far.
There's identity checks and SWIFT and lots of other possible points of slowness, but the fact that coinbase doesn't really circumvent them in practice is kinda the point being made.
No, I bought in 2013 for $10k at about $7 per BTC. I had about a $300k net worth at the time, so it seemed like a good play. Periodically sold and distributed into several alt coins over the years (eth, dash, monero, bitshares, etc.).
I could have made a lot more if I didn't sell so much, but at the time a 10x increase seemed like a one in a lifetime event. When it increased to $80 per btc, I sold 80% of my investment.
When it hit $1000, I felt bad about selling so much during the last run up, that I didn't sell at all. I took the crash back to $200 in stride. I was convinced that crypto was following a pattern of boom and crash, and then boom again and that in the coming years there would a final "big wave" as the last market (finance and retail) opened up to it. It appears that that is what happened. I've already sold a lot, avoided taxes by making a CRUT (a tax shelter) but still have about 50%. I plan to sell some more in January, because I think this wave is going to peak rather slowly (because, let's face it, finance and retail are dumb. It will take finance a long time to shift direction, and public perception is going to change slowly, IMO. For example, the housing bubble went on for a year after it seemed obviously to have reached its peak.). Also it works to my advantage considering taxes to wait.
My general advice now is if you see an investment you are unsure of but could pay off big time, you should invest a little at least. A basket of risky investments can be a huge windfall even if not all pay out.
Also, when you think a risky investment has run its course and is going to crash, it's usually a good idea to not sell all of it and leave maybe 10% just in case.
my coworkers and their families, who don't really know anything about bitcoin, are buying in like btc is water! when shit like that happens, you know the bubble is about to pop!!
Bitcoin has integration into a lot more payment options. But, that doesn't mean the price will come crashing down any time now. I think a drastic correction is due.
Coinbase is not prepped for the influx of traffic... it's enraging, especially when there is money on the line. Their reputation is tarnishing more and more every day.
would love to be a bubble, to drop in price so I can get in, but I don't think so, if you compare bitcoin with gold, bitcoin is better, the "gold" brand is stronger still with its history, but not so much among the new generation, unless bitcoin gets to 7 trillions, the gold market cap, I would not wory about being a bubble.
So much for a "decentralized" currency system. Actually coinbase and the other players are and will be worst actors than banks if this presque monopoly isn't solved
coinbase is just an exchange, or a way to buy/sell crypto. once you own crypto, you no longer need to use coinbase. coinbase never advertised itself of being decentralized
As i thought, money is backup by a government. It is represented for a country's power. But for Crypto currency, there is no country backup it. It's kind of scary though.
The entire thing is absolutely stupid, and isn't going to last forever. People are way too bullish on it. People who have no business investing in it are taking on debt to do so, with no clear exit strategy other than "the moon." A lot of people who don't have any money are going to get absolutely toasted when the pendulum swings the other way. They're in it to get rich. They have no idea what blockchains are. They just think they're buying magic internet money people get rich from.
To put a little perspective on how ridiculous this all is: Last night after Coinbase came back from maintenance, there was the (expected) sell-off, so I figured I'd make a quick buck and bought 300 LTC for about $241 each, then sold it a few minutes later for $251 after the instant rebound and went to bed with a nice $3k profit. I woke up this morning and was astonished to see that LTC was about $380. This was in the course of about 5 hours. Had I not sold it last night, I would have made almost $40k. I'm a little annoyed about that, but again: this is a stupid, irrational bubble that makes absolutely no sense. It's entirely speculative.
I think crypto and blockchain has a future, but it has to solve a few problems first (transaction fees/time and anonymity). None of the big three currencies do that well enough yet. This bubble is going to pop soon and I'm worried that a lot of people are going to get impacted badly.
There's cheap liquidity (ho ho ho said the FED and the ECB), there are institutions (pension funds) that are starting to buy in, and in comparison, the dot-com bubble (which was mainly a US led bubble, not global) went to $5.7tn to $1.7tn. Gold is worth $8tn globally. Why couldn't Bitcoin get to part of that level, e.g. $2tn?
It sure looks like a bubble, and it probably is, but it could literally be the largest bubble in our lives -- unlike one stock in the market, this is a global phenomenon + you only have a few currencies that matter.
To the extent that there is an analogous concept it's their utility as a means of exchange. Which outside of drugs and hard drive ransoms is minuscule at best.
They're different, which is why I used the term arguable--there's no clear reason afaik that bitcoin should be so valued relative to others, but I could be wrong.
- if 1 BTC were $100 trillion, then it's clearly passed the fundamentals of "being a unit of exchange between commercial entities", since it would be way more than what any form of exchange would ever require.
The truth behind the pedantic answer:
- if it's a store of value, then the "fundamental" value is the amount of fiat that's gone into the system so far. If all the exchanges have roughly $100 in USD deposits, the base value of their bitcoin deposits will be at least $100, roughly.
- If it's as a means of transactions, then the fundamentals are linked to how much transaction volume is going on. For example the flow of USD into BTC and vice-versa. BTC <-> BTC exchanges in that universe probably help to define things as well, as it would be used as an alternative to USD.
The dollars don't come from nowhere, so there's at least some base numbers you can think about. Thinking of it as "USD going into the ecosystem" and "USD going out" is a good proxy for now I think. Obviously very fluid, though.
Either way, someone ends up with cash CNY and the other person ends up with electronic USD or EUR or whatever.
The immediate limiting factor is the vulnerability of any in-person transaction to traditional law enforcement mechanisms, and the eventual limiting factor is that the exchange rate is going to be impacted by the demand for cash CNY. Eventually nobody is going to want to sell you USD (or whatever) for your cash-in-a-bag CNY, or will only do it at exorbitant rates.
You don’t have to make it totally safe, just safer compared to other methods of evading control.
Before you can move it out of the country, you have to get it out of the bank, and your bank will refuse to do that with currency control measures in effect.
It's the equivalent of you selling your BTC holdings at market rate and buying the car with USD.
The fact that “experienced” Bitcoin speculators are getting nervous is a sign the bubble is about to pop. Tether volumes are hockey-sticking up as a result. There has been enough technical analysis to show that USDT volume drives BTC price and not the other way around. USDT volume is hockey-sticking over the last few weeks. Feels like a Ponzi scheme and the whales are cashing out.
At some point there will be a correction. This velocity can't be maintained forever. But this is also a technology that heavily relies on going viral to become functional (payments/contracts) - and based on real world interactions I think crypto is heading towards an adoption curve that justifies its price.
Maybe other technologies will, but Bitcoin cannot.
1. http://www.comp.nus.edu.sg/~prateeks/papers/Bitcoin-scaling....
https://www.amazon.co.uk/This-Time-Different-Centuries-Finan...
-- said a million articles in 2000
If you buy in, buy in during a consolidation phase, when you see the price is stable. Ethereum had a huge run up, yet then consolidated for around 6+ months around $300. I would say that is healthy. Now it's heading higher. "Fundamentals" aside, of course.
edit: Oh you said "hope it is not" - my mistake.
Also, rich Saudis are scared shitless about losing their wealth when political winds change. They put their money into crypto and it's much, much harder to take it from them, provided they own the private key. This is the best mechanism of wealth storage yet created, provided the value holds, which as more around the globe believe in, it becomes more likely. Bitcoin could be digital gold, but we shall see.
That's not exactly trivial - how do you store a private key in such a way that it's safe, accessible to you and only you, cannot be destroyed by your enemies, and can be passed on to your heirs upon your death?
[1] yes, there's such a thing: https://www.goodreads.com/book/show/2211931.The_Bin_Ladens
In contrast, if you buy bitcoins, when you flee the country you can bring your wealth with a memorized 24-word code or a slip of hidden paper, and people in other places will accept your Bitcoin.
If you have enough trusted friends, that should work.
His dad runs quite a large traditional investment fund and knows of people in his network working at pension funds that are looking at putting money into Bitcoin / Ethereum and others. The family has done private equity deals together with some of these funds (mostly raising debt financing from them).
I'm not an extreme crypto bull, but I honestly think it's still early. But there will be massive volatility along the way.
Note: not investment advice, obviously. Just my opinion.
The problem with crypto-_currency_ is that it's not a productive asset. A share of a business pays dividends over time and thus has intrinsic value (and _some_ speculative value), while a currency does not. A currency transaction is a zero-sum game, which is good because it minimizes friction.
Buying cryptocurrency with the expectation of increases isn't investment, it's _speculation_.
Pension funds generally allocate up to 5% of their portfolio to alternatives, which could be smaller funds investing in art, watches, music royalty rights, farmland, wine, and the likes. This also includes crypto.
If you're an investment manager, it isn't necessarily crazy to allocate 0.2 or 0.5% of your portfolio to crypto and try to capture some of those gains.
Even without perfect timing of the market, it's a pretty easy decision for a portfolio manager to look at this and say: "While, like any other asset, past performance isn't an indicator of future performance, given the price history and increasing trading volume over time, the risk/reward balance skews heavily in favor of putting at least some tiny bit of money into crypto for all but the most risk-averse."
The analysis presented is a bit disingenuous. If you put money into every thing that could pop 400x, you’d have no money. Pension funds in particular need to be conservative and even if they’re doing “risky” things like venture capital for example, they would want late stage funds — lower returns, lower risk.
Everyone is talking about what if scenarios where huge offshore money or sovereign wealth or whatever comes into Bitcoin YUGE. Well, ok, do you think that money is just parked somewhere or is actually invested somewhere in a productive business?
Most dollars which aren't spent on consumption are converted into equity in productive businesses. In this case, dollars are merely the unit of account. You aren't invested in dollars, you are invested in businesses that produce the things that people need and those investments are measured in dollars.
Like real-estate?
To draw a parallel to the stock market is not appropriate, but those who bought into MSFT or AMZN even during the peak of the dot com bubble have nothing to regret today.
Sometimes its easier to describe this in terms of words, than numbers and symbols.
In the end, if it goes another 30x from where we're at today, and then has an 80% correction, you'll still be up 6x. It only makes sense to exit if you think such a correction is imminent, or you believe the entire space is going to zero.
Drawing comparisons between gold and a fiat currency (BTC) is completely confusing.
Gold is a tangible commodity. I’ve been in the cryptoasset space for a while and I’m still not exactly sure how to cleanly classify it.
I can relate. If I'd done the exact paired trades i did this month (only between btc, bch, eth, and usd), only at different times than i did, i would have doubled my money yet another time, for a life-changing sum.
Instead I've been sleeping well every night for a month on a healthy exit. Even with hindsight, I don't have any regrets.
I didn't get into the space to get rich and sweat at night, I got in to socialize monetary control. Now crypto doesn't even want to be money. Once this bubble cools off I can start dreaming again.
They are doing it willingly to get rich.
But what about all the non-fiat purposes of crypto currency? It seems that is what’s currently getting lost in the conversation.
For example, I simply want a way to accept electronic payments from people without dealing with middle men.
I want merchants and the general public to become aware of the inherent value in some blockchain by itself as a way for us all to spend “money” and get “paid” in a peer-to-peer manner.
I hope the people who are buying into this bubble come to see this. But I’m afraid if they do get burned, they will have missed the whole point.
Personally, I think many are extremely overbought (BTC, LTC, ETH, etc) but can't help but feel that those with real utility and industry value are (relatively) undervalued.
Buy: 300 LTC @ 241 = $72,300 + 1.49% fee ($1077) = $73,377 cost basis
Sell: 300 LTC @ 251 = $75,300 - 1.49% fee ($1122) = $74,178 gross
$74,178 - $73,377 = $801 net
and that's before accounting for taxes. What am I missing here?
Even if you don’t plan to trade, it might be a good idea to buy/sell through GDAX rather than Coinbase to avoid the fees.
I've just been told that hodl means "hold on for dear life".
LOL
Bitcoin Lightning currently works on testnet ... give it a few months and those problems will be solved. The price is exploding in anticipation of events like this.
https://play.google.com/store/apps/details?id=fr.acinq.eclai...
I was just like wow, this is going to be pulling in a lot of people that have no idea what they are doing. Everything seems irrational. Who knows though.
The exchanges have an export history feature, which I'm planning to put into a spreadsheet to calculate profit. That's gonna be a fun weekend project.
From our perspective yes, Crytpo's use case as currency make absolutely no sense (yet), we tap our Visa card to pay instantly with no fees and no fraud liability, hard to beat.
As a store of value however there is a very strong use case in the western world. Of the top my head, it is estimated that 10% of our GDP is in off shore havens, think about that infamous 1% moving just half of that 10% into Bitcoin ..
I digress..
If you venture your mind a little outside the borders of our empire and think about the 'unbanked' parts of our planet, entire populations whom live under poverty for the sole reason that they do not have access to the equity and efficient markets directly. If you look there, people are DYING for something like Bitcoin and other crypto's. There is absolutely no reason an African farmer to have to sell his Oranges to Europe in Euro then buy it back from there (Sell Euro to local currency) for local use.
Currency is an abstraction, an expression of a market, just like language is.
Here we tap to pay and need everyone to protect us from fraudsters, pornographers, money laundry , <insert your favorite horse man of the apolocyple here>, in other parts of the world , that far out number the western world in population, they don't care to be protected by the above because quite frankly the price they pay for that 'protection' is insanely oppressive governments that use the above to legitimize the oppression.
It is exactly in those markets where you start to see a VERY stong use case as both store of value and currency for crypto and it is exactly that market that will drive the world's demand for good UI for crypto that will eventually usher in mass adoption.
Of course, there's a reason third world countries want capital controls - a lot of the people seeking to export capital are corrupt non-owning possessors of resources. Just as an example, whatever rank administrators within state oil companies and such who want to take things that actually belong to the nations - because such nations have rather weak administrative classes (not that the US isn't moving closer to "kleptocracy" itself).
So everywhere, bitcoin certainly looks like a device for protecting value - except once all the money that wants to move in has moved, then bitcoin's lack of actual practical use (see $20 fees) will make it not terribly valuable and all that money in it will be at a bit of risk.
Plus, phone-based money systems already are coming/in Africa. They solve the ordinary transaction problem. The problem of "how do you get money out of X currency or resource" isn't a logistics problem, it's a power-struggle. The reason Y person is fighting to get money out of X currency is Z person wants to stop that happening. But overall, remember neither Y nor Z are likely to be less than fully corrupt.
Use as currency for Bitcoin (and other coin networks) is still in it's infancy and cannot scale the way it needs to should it want to replace fiat.
The important distinction I would draw though that stores of value have historically been cumbersome to transport and liquidate, Bitcoin solves that problem in a very good way.
I feel it's important to also address this 20$ bitcoin fee meme that seems to be going around. While based in truth it is not 100% accurate.
You have the capacity to set your own txn fee on the Bitcoin network. If you don't mind waiting a couple of blocks (1-3 hours) to get your transaction confirmed , then the fees fall down to single dollars and even lower. If you're selling a bulk commodity to a distributor in another market , you don't need ecommerce style confirmation times. Same goes for transferring large sums of wealth.
With that said, things like the lightning network will resolve alot of issues with Bitcoin scaling and in my (humble) opinion this is why LTC is pumping. (Atomic swap + Transfer over LTC )
This is infeasible because of insane volatility that BTC is experiencing. You either pay through the nose for a fast confirmation, or you are overpaying, or underpaying your counterparty.
Not to mention that VISA tends to be able to handle a bit more then 3 transactions a second. For some reason, BCH's market cap has not surpassed BTC's crippled protocol... Perhaps it's because nobody is using Bitcoin to transact.
Someone in a country, who has the equivalent of $800 is life savings, is experiencing hyperinflation (Venezuela let's say). Are you telling me that they're not willing to pay 2.5% (20/800) of their savings to save 97.5% of it? Why do you think someone would be willing to let hyperinflation destroy 100% of their life savings when there's an alternative?
Because the government will forbid it? They can forbid the purchase of BTC, or the exchange of it for goods, too.
Oh, in-person off-the-books transactions will solve the problem? Well, you don't need BTC for that, you can do in-person transactions of bolivars for USD, too.
Anyway, this is a straw man. Who is saying cryptos are useless? People are saying that they are a bubble, that the valuations are irrational.
And as far as I know, it's denominated in Kenyan shillings, not in its own currency (i.e., hype about M-Pesa does not result in something with Bitcoin's to-the-moon valuation relative to the prevailing currency in the land).
I suspect that most Bitcoin detractors, whether those who call it a Ponzi scheme or simply those who oppose proof of work, will be absolutely thrilled with the growth of more centralized electronic money transfer systems that are denominated in existing fiat currency. I know that I've been personally happy to use Square Cash, Apple Pay, EMV cards, etc. in the US. No mining, no or low fees, high security, quick, and suitable for small transfers.
And the fact that this is how M-Pesa works is an extremely strong existence proof that Bitcoin is not needed by the "African farmer".
What he said is that others countries that doesn't have a solid electronic transaction system are actively trying new stuff. In that case, M-Pesa won that race but the fact that it was centralized isn't why it won, it won because it was needed.
Now does Bitcoin is needed for another country? No idea, but I would have said the same for M-Pesa.
For instance, "Bitcoin is a bubble" only makes sense if it's its own unit of currency. "M-Pesa is a bubble," "Square Cash is a bubble," etc. aren't meaningful statements to make; they just support transmission of the underlying currency. ("Kenyan shillings are a bubble" is a meaningful statement, but I've never heard anyone claim that you should use cryptocurrencies to insulate yourself from hyperdeflation of a fiat currency.)
"Bitcoin is environmentally dangerous" only matters if proof-of-work is relevant; in a centralized system, you don't have the problems that lead to you wanting to even consider proof-of-work.
"ICOs are a scam" doesn't make sense in a centralized system. "The transaction rate is too low" isn't a complaint anyone has about a centralized system (the usual complaint about the US markets is that the transaction rate is too high, and HFT should be throttled). And so on and so forth.
"environment": Proof of work systems ensure that the ledger is secure and worthy of trust. Proof of Authority systems require trust, where the ledger is secure "because we say so." Isn't this the major reason why people are fleeing from legal tender? People can't trust the issuers, the processors, or the banks because they're colluding with politicians who provide bailouts using taxpayer dollars?
"ICO scam": absolutely makes sense in a centralized system. Are you actually claiming that people don't create scam companies with centralized currencies? Because why? Even legitimate companies can be slandered for the same reasons that people call ICOs "scams". The Franklin Mint, for example, produces coins which are sold on late-night infomercials that have little-to-no intrinsic value, but people buy for speculative reasons. Are they a scam? The reasoning is identical.
"slow/expensive transactions": One of Bitcoins main value propositions is aiding in international transfers. The centralized systems were too slow and expensive, so a better alternative was developed. Saying that speed and expense aren't complaints that people have made about existing centralized systems is simply wrong.
And so on and so forth.
You are mind-boggled because you have created a strawman; a caricature of what the "bitcoin non-believer" looks like.
Your mind would be less boggled if you accepted that there are valid points on both sides in this case. People who question bitcoin's current valuation or utility often have valid points, but if you immediately interpret their points to be as extreme as possible, of course they're mind boggling.
Similarly, people who are bullish on bitcoin often have good points and sound reasoning, but it's quite easy to also paint them with a brush which makes their positions and points mind boggling as well.
It's good to have some empathy and to actually listen, especially when it's about subjects that are so divisive. The most divisive things are the things that should least be divided further by constantly misrepresenting each side's points.
Not at the one's who are raising very valid red flags on valuation and how hot the market is becoming. In my personal opinion it is absolutely 'bubble' like behavior right now.
And i believe we both echo the same sentiment.
The main point here is that there's absolutely nothing innovative about BTC anymore, if anything it's way behind. Which is why the valuation is so suspect; it's totally disconnected from the utility BTC provides compared to alts. Anything BTC does, alts do better, except for marketing.
That demonstrates a fundamental lack of understanding of what makes bitcoin valuable, and what separates it from all other competitors. Bitcoin node decentralization is what keeps it censorship resistant, and in bitcoin node decentralization, it is ahead of any and all competitors. It likely has more fully validating nodes than all other cryptos combined, and by some margin.
There are a lot of people that want to sell you on a great new thing. Until they can get 150,000+ fully validating nodes to support their technology, they will be nothing more than a mildly distributed inefficient database. What is innovative about bitcoin is that it is the only real cryptocurrency, because it is the only one that isn't controlled directly by its creators, and also maintains its decentralization. The only ones that are even close are ethereum and litecoin, and ethereum is beholden to a single person who dictates changes to the network. Litecoin is simply a clone of bitcoin with minor changes to its implementation, but has a fraction of the fully validating nodes.
http://luke.dashjr.org/programs/bitcoin/files/charts/softwar...
160K and counting.
Thanks!!
It's why I'm sometimes so short with people who make statements with such confidence and finality. "Bitcoin IS this." without even really understanding the subject matter. I'm not thinking of one month/year timelines for its market penetration. I want to see what it is in another 10 years. I don't subscribe to the view that fiat is going to crash, or that type of apocalyptic talk. But I do think that we are in a 50-year-old debt-bubble, and I'm not sure it is going to be quite as difficult to 'shift', if that is even the correct word, from debt-fueled monetary instruments to credit-fueled monetary instruments. Most people don't even really understand the concept of a market-cap, and how the total value of the cap has no, or very little, relationship to the amount of capital that might be extracted from it. Bitcoin could easily be 10x or even 100x its current 'market-cap' and for it to still not really have any real relationship to monetary supply IMO. Bitcoin definitely has a relationship to gold, but more importantly, I believe bitcoin has a relationship to fixed-asset debt.
I wouldn't want to be entering a career in consumer banking though. Investment banking on the other hand... that is going to freak out over the next decade as the business of supplying debt for fixed assets that are depreciating in value reverses, and people start looking to place their investment dollars in industries that increase productivity.
Just remember bitcoin could lose 85% of its current value, and for it to only have doubled in value this year, and still be the best performing asset class in the market. Because a correction will happen. The only real question is when, and how deep.
Thanks again!
Plenty of things that were eventually successful products went into extreme bubble and correct mode before they were successful.
Blockchains may or may not be part of the finance of the future. But that doesn't mean that 99% of the price of a given blockchain product today isn't bubble based bunk to be avoided just as many 1800s railroad stocks and 90s dotcom stocks had value only from bubble-dynamics despite railroads and the Internet being technologies that went on the succeed massively.
And while we were kind of unsure whether it's a pyramid or a Ponzi, actually it _is_ something new: a Nakamoto scheme. https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/
which aspect of that SMS technology in Kenya embodied a secure distributed ledger? Maybe blockchain doesn't mean what you think it means?
It's nuts to imagine that Africa as a continent compares to the West in terms of fintech. We like to imagine Africa as a monolith; it's a terrible mistake.
I hope you mean realize that merchants eat the fee and are contractually not allowed to offer discounts for cash payments. And many of them are not happy about this situation.
I doubt cypto currency is going to help that setup at all, and most likely it will just offer more avenues to do the same.
Regulation is not easier. I & my merchant can use blockchain today, without any permission or buy-in from a regulatory body.
This is an example of automation taking a job. As an engineer and small(er, more efficient, more effective, more fair, more predictable) government enthusiast, it thrills me to see that we're automating away the jobs of bankers and regulators around the world.
Note that calling cryptocurrencies "crypto" doesn't make much sense either.
e: for making a huge sale of crops or something to another nation, then 1 transaction fee is not bad compared converting at a %, but you'd still need to convert from Bitcoin to a local currency to actually use the money you made.
The IRS would crack down on this as with any other tax avoidance scheme. Offshore havens are probably safer since many rely on loopholes.
If just 0.000000001% of all astroids made of solid platinum land in my back yard I'll be a gazillionaire!
If you're trying to hide assets, the U.S. is the place to be, as none of our treaties actually require us to share information back with the rest of the world.
That's just not true, these fees are baked into the prices, since the seller pays them.
That's one of the reason cryptocurrencies are advantageous in the long run, they can eventually provide the transaction fees close to what they cost in electricity and infrastructure amortization - pretty much sub-penny to transfer any amount.
If you want to get upset, get upset at how if you have poor credit, you're not eligible for these cards, so really this is credit card companies stealing from poor people.
This is a) a good deal on its own and b) a much better deal than Bitcoin, which provides only the first of those things, and only reaches 0.7% if your transaction is over about 3000 USD.
If you think this is a bad deal, I'm curious what you think is a better deal and who's offering it.
With regards to Bitcoin though, I agree you need a much lower fee coin to make it feasible. The lightning network brings the transaction fees on Bitcoin to zero though from what I understand so maybe thats the answer.
I guess it's businesses, who pay high enough fees on your transactions.
Who do I chargeback when an online merchant takes my BTC, and doesn't ship the goods I bought? BitPay will tell me to pound sand. VISA will process a chargeback, no questions asked.
The best thing I could say to you is that you need to do less talking about stuff you clearly know nothing about, and far more research.
No offense.
That is cheaper than CC, faster than Venmo, or whatever.
Was this an on-chain transaction or a Lightning transaction?
What does the price of bitcoin have to do with an objective assessment of how well the Bitcoin network is currently functioning?
Supply and demand. People pay more to transact in bitcoin, because it is more secure, because it is more decentralized.
Please remember "that infamous 1%" is actually the 0.001% or much less. The top 1% income actually includes dentists, successful software engineers, etc. Normal successful people. An amount of wealth that can actually be attained regardless where you came from, given luck, talent, luck and in some cases, hard work[0].
The phrase "the 1%" was originally introduced to draw a line between people with such a ridiculous amount of wealth that it doesn't make sense and is really only attainable by being born in it, or being born with very rich family and learning the shibboleth over your lifetime. Becoming insanely wealthy by an insane stroke of luck is possibly but it only gets you in contact with this elite, not "in", but if you play your cards right your children might.
[0] don't be mistaken that "hard work" is any kind of predictor for wealth. just look around you. hard work may be considered virtuous, but that's it. it's not like "being a good person" gets you rich, either.
Fees that are absorbed by the merchant, so not an entirely fair comparison. Still, I agree that the fees make the use cases for cryptocurrenies very limited personally. Right now, I can pay a fee to a third-party (CC fees in the form of slightly higher priced goods) BUT that third-party takes on a significant part of the liability (e.g. for goods not provided), and I can transfer money to a trusted (or untrusted providing I am OK with the risk) party in the same country for ZERO fees via my bank. For those use cases, using most cryptocurrenies would be strictly worse (I either give up the fraud protection or I am paying an unnecessary fee).
The only case where it makes sense is for international transfers, which typically do have higher bank fees, but personally they are so rare (I've used it once in the past decade) that they are barely worth considering for my personal use cases.
That would make it something of a niche form of payment compared to say credit cards. You aren't going to use it to pay for a cup of coffee, but there still are trillions of dollars worth of wire transfers per day. That is roughly one thousand times the amount currently transacted per day in bitcoin at the current valuation so even taking over a tiny portion of the wire transfer market would justify bitcoin's current valuation.
Maybe a case could be made for Venezuela where bolivars are useless, but USD is a far better candidate for their currency needs that Bitcoin, given how volatile Bitcoin is.
It'll be an interesting test case for the value cryptocurrencies can provide in third world countries.
Even better, I should sell just a paper (well, an electronic one) stating you own some thin air. Hey, geeks, how cool can this get?
I am sure I could find buyers in the same market as cryptocurrencies.
PS: This is not directed at you, but you expressed the level of pointlessness and... void that reigns in this 'market', so I picked your message to place my joke/rant.
https://cardsagainsthumanity.com/blackfriday/
In the performance piece, Zone de Sensibilité Picturale Immatérielle (Zones of Immaterial Pictorial Sensibility) 1959–62, he offered empty spaces in the city in exchange for gold. He wanted his buyers to experience The Void by selling them empty space. In his view this experience could only be paid for in the purest material: gold. In exchange, he gave a certificate of ownership to the buyer. As the second part of the piece, performed on the Seine with an Art critic in attendance, if the buyer agreed to set fire to the certificate, Klein would throw half the gold into the river, in order to restore the "natural order" that he had unbalanced by selling the empty space (that was now not "empty" anymore). [1]
[1] https://en.wikipedia.org/wiki/Yves_Klein
[2] https://en.wikipedia.org/wiki/Zone_de_Sensibilit%C3%A9_Pictu...
You just have to make sure not to be one of those idiotic idiots left holding the idiot bag like an idiot.
That reminds me of "Perri-Air" from the movie Spaceballs: https://www.youtube.com/watch?v=gzbIrb7LUJA
http://www.nytimes.com/1990/02/10/us/perrier-recalls-its-wat...
Of course, this just shows how bad the air pollution is in China. Then again, water bottle brands like Nestlé's Poland Spring Water are just using "Poland Spring" as a gimmick and a ad-bait. So you definitely can sell thin air at different price based on "where the air was collected."
That idea has been around for hundreds of years: https://en.wikipedia.org/wiki/Indulgence
https://en.wikipedia.org/wiki/Emissions_trading
It'll be able to handle 8x as much air transfer as yours and have a minority following that will always bite at your heels
It's already sold in France. "Air de Montcuq" -> air de mon cul ( air from my ass )
They received a significant sum in offers…
Source: https://web.archive.org/web/20050831124638/http://www.iex.nl...
http://www.airrightsny.com/
In concept, it's obviously not the joke you're making. In practicality, it's exactly the content of your joke.
That's basically what this is:
https://www.star-registration.com/
Have fun, but don't bet your life on it.
Mabye in the future it can be more than a speculation, but right now it's a game.
You could be right.
But I don't understand everyone's certainty that cryptocurrencies are a fraud-bubble-scam-Ponzi-mania.
The growth curve fits both exponential and logistic (S-curve) functions.
Exponential growth is unsustainable, while logistic growth describes most technology adoption. Halfway through the cycle they're indistinguishable.
When there's 98% agreement this is a bubble about to burst, my instinct is that the conventional wisdom is wrong.
When it blows up, you won't understand why the SEC didn't protect you. By then, you'll realize it was a mirage all along, and you'll want someone to blame for letting it get so out of hand. Every piece of news you interpret will tell you that losing money was not your fault, because that's what you'll want to believe.
On the flip side, the current price action is causing the same sort of confirmation bias--just in the opposite direction.
This is exactly my point.
Why are you so certain?
How can you tell the difference between this and any other technology adoption logistic curve?
People make statements like you do with 100% confidence, and you could very well be right! But where do you get your certainty?
And were you equally certain about the inevitable demise of cryptocurrencies when the market was 1% or 10% of its current size?
By way of an understanding of human nature. From the book Bull! A history of boom and bust:
“...A bubble, Galbraith observed, is always supported by the belief that there is something new in the world. The history of past cycles is dismissed as irrelevant.“
That’s it in a nutshell. It is a time-tested part of who we are, and it’s almost like you’re either born with the ability to see that or you’re not. I don’t know why.
I don’t know how much the price will go up, but it going up, even to a million dollars a coin, means little. It will eventually go down and violently so, and some people will be badly hurt. Just people being people.
Assets need to be productive in order to be true investments. Like farmland or businesses. Otherwise, you’re speculating on price appreciation. Look at gold over the last 100 years and overlay its price graph over the Dow Jones during the same period. They’re not even close.
http://www.macrotrends.net/1333/historical-gold-prices-100-y...
http://stockcharts.com/freecharts/historical/marketindexes.h...
That’s the difference between speculation and investment.
Counterpoint: Galbraith confidently called the US stock market a "classic bubble" in April, 1999. At that time, the Dow Jones was at 10,494. Today it's at 24,504.
Looking back with 20/20 hindsight, it now looks like Galbraith was wrong.
Source: https://www.theguardian.com/business/1999/apr/18/observerbus...
> Assets need to be productive in order to be true investments
Counterpoint: Maybe assets need to be useful to have value. Land, copper, the balance on a Walmart gift card and my World of Warcraft gold don't produce anything, but they're useful, so they have value.
> Counterpoint: Galbraith confidently called the US stock market a "classic bubble" in April, 1999. At that time, the Dow Jones was at 10,494. Today it's at 24,504.
No! Current day valuation versus 1999 valuation has nothing to do with each other. In 1999 the market was over valued and the bubble soon popped.
> > Assets need to be productive in order to be true investments
> Counterpoint: Maybe assets need to be useful to have value. Land, copper, the balance on a Walmart gift card and my World of Warcraft gold don't produce anything, but they're useful, so they have value.
The key difference between an asset and investment is that investments produce returns.
Right, but an asset can go up in price and stay there if demand increases and/or the currency the price is denominated in is losing value over time. Especially true if supply is limited.
I don't expect BTC to stay at $17000 - it could go down or up, and I wouldn't be the least bit surprised if it's currently in a bubble that pops. It might then go to near-$0, or it might proceed to regain those levels and continue even higher over time, depending on how demand evolves against the ultimately fixed supply. I remember $500 for 1 BTC seemed insanely high at the time. $675 must have seemed crazy for gold in 2006, but I don't expect it to return there again despite the intervening ups and downs.
Here's a chart of the Dow Jones Industrial Average. Please identify this bubble popping that you speak of.
https://imgur.com/a/4et6w
After 18 years we can say that Galbraith was objectively wrong.
When assets appear overvalued, sometimes they are, and sometimes people just don't see their potential at the time.
Because the fundamentals of Bitcoin and The Blockchain are complete garbage. Both are solutions in search of problems. Neither solve any real world problems outside of how to conduct shady, illegal business (murder for hire, crypto-ransomware, mail-order bath-salt delivery) and both do a pretty piss-poor job of even that.
This is why bitcoin will ultimately fail. It is a useless product. Full stop.
Anecdotal: but in the last month I have come across 6-8 people who have taken or know someone who has taken 2nd mortgages, maxed out their lines of credits, and credit cards to "invest" in crypto.
I'm generally a-ok with investment loans (not from credit cards), they are a good resource to reduce portfolio risk - if the loan remain tax deductible. But what is currently transpiring is insanity.
Someone will definitely get bailed out (hint: it will likely be the banks that's unknowingly provided the leverage).
Even in Africa, the possibility of phone-based money allows people to do this.
Bitcoin's risks don't balance its benefits for most users of currency and basically, it's a currency or a "technology", it's simply a unique commodity akin to art or Tulips. I mean, if the bubble was tulips today, I could sell them as "unique biotechnological value-preservation technologies". But that wouldn't change the well known financial/psychological/social dynamics involved.
Litecoin is another animal. I think we'll continue to see a lot of what we're seeing now. People seeing a low price (compared to btc), sad they missed out on cheap BTC and dreaming this one is going to $15k.
I have a high tolerance for risk, so I don't mind going in big (big for me) - if it works out great, if not, it's been a helluva ride.
Of course, that's assuming that don't end 2017 (or 2018) with a massive crypto bubble burst!
I think the part that's hard is that there is a stickiness to hype. Hype starts as baseless hype, but the belief and interest of others is frequently enough to sustain a company or project that has nothing of actual benefit to offer. This makes it hard to dismiss hype-fueled bubbles entirely. There's a circular effect somewhere here that converts the initial baseline hype into value just by the sheer force of will of "true believers".
This applies not only to bitcoin/litecoin, but also companies, software, and all sorts of other things. Generating hype, goodwill, and other mostly-positive forms of human attention is inarguably more valuable to a project or venture's long-term lifecycle than providing actual objective value. Get enough attention or interest on something and any objective value that may potentially exist is liable to materialize, at least in part.
https://en.wikipedia.org/wiki/Positive_feedback#In_economics
You most likely need to wait until it's close to 3 X the value you bought it because you'll need to pay short-term taxes after you sell it.
And once that happens, why sell half of it, vs all of it? 3 times the current value is a LOT of money and that usually takes at least 8-10 years in the equity market. Now that it happens, you're cashing out just to recoup your costs? Cash out everything, or cash out nothing and let it all ride until it's an even larger amount.
The net cost is 0 - cash in = cash out. And taxation is zero because your profit is (at the time) 0.
It also means you can do something else with your original investment.
If it goes up 100x - cash out whenever. If it goes down to 0 - you have lost nothing at all apart from some time.
you buy 2 at $5k it goes up to 10k and sell 1.
profit is current value - cost basis
10k - 5k = 5k profit that will be taxed
Because the 5k in the market is not a realized gain
Agreed
> And once that happens, why sell half of it, vs all of it? 3 times the current value is a LOT of money and that usually takes at least 8-10 years in the equity market. Now that it happens, you're cashing out just to recoup your costs? Cash out everything, or cash out nothing and let it all ride until it's an even larger amount.
I agree "just recouping your costs" is not really exciting by itself. The idea is that you think it might go much higher, but - crucially - you're not sure. It's just about reducing your exposure to risk at the cost of some upside potential. It all depends on your risk appetite.
This is a little fallacious because it assumes that the value of your money (Dollars or something?) won't continue to lose value against until it becomes worthless paper. This has happened in recent history e.g. Weimar Germany and is happening right now e.g. Venezuela.
At the end of the day, the rationality comes from a comparison of one currency against another. Just converting back from the currency you started with doesn't mean you "can't lose".
Except to inflation ;). But adjust for inflation and selling enough to cover that gets you back the initial investment and also you don't lose money.
I say that without sarcasm. A legitimate request.
https://www.coinbase.com/security?locale=en-US
So like, you buy not from someone selling, but from Coinbase's stash, who then buys to refill from someone else.
No idea how accurate that is though, maybe someone can back me up or correct me here
What about the stupid fees that bank charge you to have the privilege to have you as a customer?
What about the fact that at the moment it takes 3-5 business days to make a simple bank transfer to another bank?
What about those insane fees when you try to buy another currency through the banks?
What about the fact that I have to call my bank and plead my case when I want to transfer an unusually large amount of money to somebody else because of them blocking the transfer and now I have to spend 1 hour on the phone to solve that issue and prove that I am the one who initiated the transfer?
What about the fact the bankers have brought the world on the edge of a great depression due to their greed and left millions of people underwater on their mortgages?
Bitcoin/LTC/ETH may not solve all the problems that we are facing now, it may not have much practical use at the moment either, but I 'll be damned if I give more money to the banksters.
Might be worth using a credit union. To my knowledge, BECU isn't charging me any fees for my accounts with them.
Also worth noting that all governed digital payment systems (VISA, Paypal) are (1) prone to censorship and (2) leak information. Additionally, ACH and card transactions are based on debits that are initiated by the person requesting funds, as opposed to credits that are initiated by the owner of the funds. Not so terrible, but for the fact that the approval process for transactions is almost always one-sided. Anyone can debit my account and that transaction will go through by default.
Pardon my ignorance but don’t banks provide a service? If they charge too much, can’t I find a bank that charges less?
What makes their fees “stupid”?
The only way I could find a "bank" with lower fees was to abandon banks altogether and switch to a credit union. I swear it's like all the banks collude to determine market rates for how many and how high of fees they can all charge their customers, to the point where—as a regular consumer—they're all indistinguishable.
Not only are the credit union's fees lower (or non-existent in some cases) the interest rates are higher and there are no shareholders to appease, except for other members of the credit union.
For me, I have a modest holding (in terms of its USD value today as compared to my other investments). After much wrestling, I’ve decided to just let it sit and be done with it. If it crashes back to pennies, oh well. If it goes to the moon, I’m glad I had a piece of the action.
As much fun as it seems, I’ve made the deliberate decision to not try to game / day trade it. It’s been possible to try to make money like that in Vegas for many years and that’s never been that interesting to me, either.
Buyers today are not considering “should I or should I not enrich those who bought earlier”. They are simply making a bet that the value might go up and want to own some if it does.
As an asset rapidly increases in value and the underlying driver of that increase is not well understood, all sorts of unexpected things can happen. The question is not how big will the bubble get, but who will be left standing when the music stops.
[citation needed]
Even long term investors in traditional securities often get panicky during bear markets. They sell their holdings, even if the underlying value hasn't really changed.
That's certainly an interesting aspect, but I thought you were talking about all the new, smalltime buyers of cryptocoins, which I assume don't fall into this category.
But then, how does an influx of a large number of fad buyers strengthen cryptocurrencies in the long term, if these buyers just completely forget that they own cryptocoins after the hype dies down?
getting people to own cryptocoins (and having a wallet) is really a trojan horse. just like smartphones turned nontechy people to app buyers, the ownership of a wallet creates a platform for many things which i don't know yet or i would be rich.
Clearly, are shown by the site here, these aren't nearly as liquid as fiat currencies, nor are they really used to purchase anything.
So... What is it?
EDIT: upon thinking about it, MLM wasn't the term I meant.
During that same time I transferred 15k$ from one crypto-wallet to another. It took 10 minutes all told.
Sure there are lots of people who are buying crypto because they think they'll make loads of money but a significant portion of us are in it because we dislike the infantilizing ways the current banks hold us hostage.
My first hand experience (2017) is that US banking oferring (from a european guy perspective) is a eyes opening experience.
* There is no instant bank wires (free ones) between major banks. Or at least the same days ones, working reliably through most of banks.
* You get paper checks from your bank :)))))
* Small business (sold a car, got a return from landlord) give you money on checks, also accept only paper checks if you need to pay them on the spot (in the office).
* your bank charges you a monthly fee, to protect you from overdraft (wtf is this on debit account??), he shall block from happening at the begining - we call it "protection racket" in Italy.
* boa/citi and others have websites with design from 2005, not to mention mobile apps..
* you can't send money from bank account to a different bank to your unsophisticated friend (plumber, maid, or mr sandwich) just knowing his phone.
* when you withdraw money from coinbase to your connected US bank account, you pay 1,5% of face value. WHAT? PERCENTAGE FEE? This is USA banking thing, as the very same coinbase, charges fixed 0.15 EUR fee per no matter how big wire if you're european.
* major us banks got two factor just two years ago in terms of security.
* tap to pay (we call it paypass) is also almost 10 years after europe.
* first chip card in citi was offered to me in 2015 or 2016? Still magnetic (easily copied) card is used in majority of points in the USA
etc..
Some of them are chaning in the last two years, but mostly for sophisticated customers, small banks, and people not being able to use those features between different banks. It will still take a lot of time to catch up with a Kenya from Africa...
Banks in the USA do not allow deposits into accounts without account holder permission. They won't let you stop by a branch and deposit into a friend's account (to pay them back) without a formal arrangement, so it's easier just to find your unsophisticated friend and give them cash directly. I'm not sure if this is due to a law, or our culture of security theater.
This is not (universally) true. I've had many friends/family deposit checks for me at my local branch when I'm out of town/on vacation/whatever. I've done it myself for other people. I believe the banks in question were Wells Fargo and US Bank.
YMMV based on bank, but there is no regulation preventing this.
The reasoning presented was a little suspicious - they envisioned someone "forcing" you to unwillingly take a loan (of like $100) by depositing it into your account. Then they would demand their $100 back and use this as leverage to blackmail or otherwise disrupt your life.
But I don't totally disagree. To me, depositing money into another person's bank feels...improper - like performing an oil change on someone else's car, or taking someone else's books back to the library, or walking into your neighbor's unlocked house to lock all the doors. There are very good reasons someone would want these done for them, and also edge cases where these would cause an issue for the other person. It's a moral grey area to me.
Definitely not the case in many (most?) banks. I've done this multiple times and never been turned down.
...But if you were beaten and robbed on your way to the bank, that check would be worthless to the thief. If your bank went insolvent, the FDIC would cover your $60k. What happened to depositors when Mt. Gox went belly up? What happens when that same thief hacks your wallet instead? There are many positives to our current banking system which you seem to be dismissing. Namely accountability. Perhaps once these things are well regulated and backed by legitimate business it will see mainstream use. But crypto is literally nothing but a speculative game and means for laundering money at the moment.
Here in Europe I can make a payment to any other EUR bank account in Europe, for free and it’ll usually arrive the same or next day. All I need is the recipients bank account number, and to enter that and the amount on my online banking - I don’t need to go and see anyone or fax anything over.
Recently a new initiative was launched where (between participating banks) you can transfer up to €15,000 in a maximum of 10 seconds:
https://www.europeanpaymentscouncil.eu/what-we-do/sepa-insta...
If we're talking about other currencies, you have a good point. I think lumen (XLM) is the best right now, ~$0.0000015 fee, ~3 second average right now
Transfers are free and fast here in the UK.
You conveniently skipped over how much it cost in fees to transfer that much. I'd wager it was significantly more than $7.50.
Sure, but if someone scoops your crypto coins, or you leave them in an exchange that's hacked, you basically have no way to get it back.
This is trading a serious amount of security granted to us by world governments for convenience. It also increases your cognitive load of handling your crypto safely.
That bank sounds terrible, and it can vary from branch-to-branch which is frustrating.
People do certified checks whenever they buy a house, a car or transfer significant money from one institution to another.
And don't get me started on sending money to family members overseas!
If I had to bet, there is still lots of upwards runway left, but at some point, it will come crashing down, the bad [companies][coins] will be worthless, and out of the ashes will rise a more sensible market with some of these [companies][coins] truly changing the world.
I'm bullish on blockchain technologies over the next decade or two, but we're gonna have to clean up for awhile.
My hope is that blockchain enthusiasts are taking their profits and using them to invest in building something better.
(There's also a lot to be said here about the hucksterism, shilling, get-rich-quick schemes, and an almost-fanatical belief in the power of a pure free market inherent in the BTC community from the beginning, but that's best left to another post)
Worse, the people buying in now aren't true believers. They are "investing" because they think it is easy money. These folks represent a larger percentage of the market cap and are also least likely to have confidence in bitcoin for it's utility. They also stand to lose the most because their buy in point was so much higher. (people who bought in at say $1000, are just losing profits)
A panic sell will happen at some point.
As Bitcoin becomes extremely mainstream, those who hodl Bitcoin with religious fervor are increasingly becoming a smaller minority. Eventually it’ll reach critical mass and there will be enough disloyal Bitcoin ownership to cause a panic at the first significant sign of selling.
Once the bubble burst then no one argues that they were in a bubble.
But apart from that I am not sure what the future of ETH or LTC will be. To me it seems some adaptations of ETH have a much clearer use-case and therefore are likely to raise a lot in value in the future. One of the ETH based coins that I really believe in is OmiseGo[0] (OMG) which will bring banking capabilities to many people that currently don't have a bank account.
---
[0]: https://omisego.network
I understand the technical reasons why due to the 21M bitcoin limit, hashrate difficulty increasing, etc. It just seems like a rigged system with the people “on top” getting huge rewards for very little work whereas the people lower down who do many orders of magnitude more work are getting very little reward. From that perspective, it has the scent of MLM, if you will.
He took the risk initially so he gets to enjoy the spoils.
All asset appreciation is predicated on increases in demand for an asset. Asset appreciation isn’t a pyramid.
Pyramids have no source of value - even an ephemeral asset - just dues of new members being channeled into revenue for preceding members.
There will be many hundreds of coins flooding the market. There is no such equivalent in the real (offline) world. You have gold, silver, platinum, etc. - but that's about it. No one is inventing/digging up new types of metals.
Does one cryptocurrency increase 20x in a month? Then yes, it's a bubble, and it will likely crash pretty hard in another month or two (but probably not as much as it rose).
Does it increase 20x in a few years? Not necessarily a bubble because its value may simply be related to its adoption and potential.
The thing about cryptocurrencies is they have rather limited supply once they are launched on the market. So if their userbase/number of adopters increases by 10x overnight, and most of them intend to keep those coins, then it doesn't really qualify as a bubble, even if the value explodes.
That said, I can see a future for it if something like lightning network ever gets released (and actually works).
A big advantage of cryptocurrencies (I think) is that there is no regulation (no central bank injecting billions), but it is also its Achilles's heel because it can't be used ha s a commodity currency because it miss the stability of a currency backed by a central bank.
In multilevel marketing, people are being sold downstream profits directly from people they sign up. If you sign up another person you take a cut of their revenue. If you sign up enough people and they sign up enough people you stand to gain a lot of money with very little work.
When it falls apart, assuming you're not deep enough in that you're indited yourself, you keep that profit. It's the people at the tail end who lose because the only way to really profit is to sign people up.
On the other hand when you sell someone on bitcoin you aren't taking a cut of their 'revenue'. If you're invested in bitcoin you're as in the hock for a crash as they are.
It's an asset, though a somewhat different one to traditional assets. As such it's subject to the same kinds of asset bubbles as any other asset (ie. gold is not as liquid as fiat, nor is it really used to buy things). But it's not the same kind of thing as MLM.
It's not being used to buy things because its a deflationary currency which along with an adoption curve means it's more advantageous to sit on it.
The adoption is definitely increasing the value of it, its a more liquid gold to me, but like any other currency or asset the value is derived from the trust and value that people put in it.
And yes, it is to Coinbase's discredit that they haven't done so, but (assuming you're not joking), they could very well not be at that stage. It's typical for startups to have technical debt like that.
In this way, scaling often gives you an order of magnitude or two of available additional capacity, but periodically requires new dev work to support further increases.
"Hot Wallets" can be hacked, because they're connected to the whole system. "Cold Wallets" are offline, and require human intervention to transfer money into and/or out of.
Figuring how much money to keep in the "Hot Wallet" is a tradeoff in services, convenience, and security.
They obviously need to keep dollars on hand in order to cash everyone out. But what if Bitcoin goes up in price? If there is a run on the exchange later they may have to sell their bitcoins on the spot market to cash people out.
Banks reinvest money held into loans and other speculative investments. But what do you do when as an excuange / market maker you stand ready to buy and sell at any time?
Here is my concern: while it was just two guys meeting up to exchange $ for bitcoin, the $ kept circulating. But these exchanges may be locking up more and more USD just so they have enough to cash people out on demand. As a result, there is a real transfer of wealth to bitcoin and USD is getting frozen in exchanges.
If this continues for 5-10 years more, wouldn't bitcoin become millions of dollars and bitcoin holders would be able to buy up anything vs dollar holders? One bitcoin holder could buy half of NYC already, and who can stop them?
If Coinbase is making the market prices by leaving large limit orders at certain prices, and Coinbase limit runs out, then the price moves past their limit. It's as simple as that.
Nobody can place limit orders with money they don't have (I understand there is a "margin trading" option, but I don't have that enabled on my account and I'm uncertain how many accounts on GDAX do have that feature.)
If Bitcoin price goes up, that just means that the supply of Bitcoin at a lower price point has evaporated.
Coinbase is not buying and selling coins (let's assume, but also assume that if they are buying and selling, they play by the same rules as everyone else. No imaginary wallets.)
The exchange are just playing matchmaker so that Market Order X that crosses Limit Orders Y, Z, P, Q, R... that intersect, are all matched and executed together. Then, GDAX can collect a fee from the person who placed the Market order, and GDAX Limit orders are fee-free. Coinbase-proper is 100% market orders with a slightly larger fee, so they can clean up even more on each transaction there, because Coinbase still does not need to sell some of their own currency for each buy; they are just the matchmaker.
Coinbase and GDAX are the same company. If Coinbase needs some of GDAX's liquidity so that it can match Coinbase customers with GDAX's limit orders, they can do that opaquely. The customers do not need to know where their cryptocurrency came from exactly.
If all of the liquidity on GDAX dries up, then there will be a problem (but still, the problem/opportunity is not Coinbase's problem, it is the whole market that comes grinding to a halt until someone opens up some more liquidity at a particular price point.)
Things look different with margin trading though. Margin trading implicitly implies a loan from the exchange to the trader. If the market moves too much against the trader, exchanges typically automatically force their positions to be closed. The problem is that if the price moves too quickly, the proceeds from this transaction may not be enough to cover the loan to the trader. So then the trader can end up owing money to the exchange, and it may be difficult for the exchange to get that money. That can lead to solvency issues.
Governments need to quickly enforce suitability guidelines along the lines of accredited investor status asap (I believe some countries already working on this.) Some would argue this is unfair, but people just getting by have no business playing in this wild west.
The "bailout" is "please give us our own money that we raised during our own ico so that we can use it to build the product people gave it to us to build".
To which I replied that someone has in fact already asked for a bail-out.
Title of Article - "Record ICO Tezos Founders Seek Bail-Out From Foundation"
It's only a matter of time before someone in the cryprocurrency sphere asks for a bail-out for reason or another.
Disclaimer: I am not Peter Lawrey.
> Bubbles grow against walls of doubt. It is when the bubble must stand on it's own that it bursts.
If these markets level out, and people stop investing because you can no longer get 20% returns every week, that is when things are going south.
There are still several unsolved problems with cryptocurrencies like having to keep a large database on disk and slow transactions (and illegal status in some countries). They are not protected from 50% attack by governments. When they are resolved, it can become really good alternative to card systems.
VISA has many disadvantages compared to Bitcoin:
- it uses outdated technology and is absolutely insecure (card details are easily stolen and sold in large volumes, they still use unencrypted magnetic stripe)
- it can require paperwork and a deposit to accept payments. It is difficult if you do something legally gray (for example, related to porn)
- it is difficult to get a card without identification even if you are not going to do anything illegal
- transaction cost is high for small payments
- US government forbids to use VISA on some territories for political reasons
- merchants often refuse to accept cards from some banks or some regions (for example: Digital Ocean doesn't accept some prepaid virtual cards)
- companies can collect and exchange customer data when they pay with a card. Because it has your name.
- the data on transactions from all countries go through systems controlled by US
It is only natural to replace those outdated magnetic card systems.
Maybe they try to and couldn't keep up? Would be fascinating how this stuff is managed behind the scenes.
For clarification: I bought some $1000s worth of LTC when it was under $100 shortly after the Futures news hit. It was pure gamble on my part and I could have easily lost instead of the other way around.
I also bought a few ETH coins when it was around $400 but haven't cashed those out yet. I'm predicting my LTC gains will be wiped by ETH losses.
But I only made about 2.5x my wager, which wasn't much (less than $10000, more than $1000).
Also, as noted, much of a LTC gains could easily be eaten up by ETH losses. BTC is too expensive for my gambling taste.
Complaints of "only" making a 2.5x return.
Or proposed strategies elsewhere in this thread of buying a coin, selling half "when" it doubles, not "if".
But I agree it does highlight how insane the crypto craze is.
* Neophytes buying whatever they can put their hands on, because... mania
I doubt people really understand what they are buying whether it's bitcoin or litecoin. If you think you do, well, then most people do. Don't look at "crytocurrency" as the future "payment method", invest it like an asset. Go in low, come out high.
I invested in litecoin because I believe the market is undervalued. It's like a blue chip but will continue to rise for a while. If litecoin is to continue to rise, my bet is stopping at 600 then stabilized until bitcoin pops again. Litecoin in my view will never pass Bitcoin, but it's nonetheless a fun investment to play with.
In Litecoin's case it's also because it's one of the very few cryptocurrencies that has been adopted by virtually all exchanges, and it has faster transaction times than Bitcoins (for which transaction times and fees are a big problem currently, after the big recent influx of users/investors).
I have been asked my a few friends and family members about investing similar amounts in Crypto, not knowing much about it.
People want piece of the action. The return period is small, LiteCoin up 90% just in the last 24 hrs, up 10000% in the last year. These are bonkers results if you just want to play the market and cash out.
The people saying it is noobs buying on coinbase have no idea what they are talking about, or are mistaken about how big the crypto economy is.
For those that believe in the technology that blockchain, DAG and smart contracts offer there is a lot up and coming projects that might contribute a lot to the space (and beyond into the real industry world, potentially).
I think BTC and ETH are the lowest-risk coins right now. 99% of the coins are going to fade away, so that's where the real bubble is. Some random ICO pops up and within months their token market cap is hundreds of millions based on nothing other than a vague buzzword-laden plan?
Further, I'd argue that BTC and ETH are both extremely overbought at the moment, and reflect more of what a bubble is than many of the lowly alt coins that have real use cases (not that BTC and ETH don't). I feel you're underestimating the potential of some of these smaller projects, the problems they aim to solve and the progress they've made towards solving them.
Which ones? There are hundreds of these things, and my personal view is that they're mostly worthless. I really don't think the hard part at this point is coming up with a cool use case for cryptocurrency, or even building the technology that works (though many of these alts have yet to even do that). The hard part is adoption, and my estimation is that almost all of them will fail at adoption. Time will tell, I guess.
I'd argue that BTC and ETH are both extremely overbought at the moment
You might be right, you might be wrong. It'll only be clear in hindsight. Which is why I don't time the market or trade. I just buy and hold for the long run. It's a small portion of my networth, weighted towards BTC and ETH, but I'm buying some other alts with 1-2% of my net worth (total).
In the long run, the cryptocurrency market will be worth $0 or trillions, so I'm not particularly worried about whether I got in when it was $10 billion or $500 billion or how it goes up and down in the meantime.
ChainLink, as this project is aiming to incorporate outside data into the blockchain and smart contracts. This has plenty of real world use cases. This could be what the internet is to a computer, but for blockchain. Zen Protocol is also working on a similar idea, but they incorporate smart contracts into their project and have improved upon ETH's model a bit (not charging gas for failed contracts to name one example). I see no reason why this wouldn't be adopted if they can deliver.
Request Network, a project backed by this very website, is working to create a currency agnostic payment platform that may compete directly with PayPal and demands far less fees. There is a pretty incentive to adopt this over vendors listing individual currencies for payment methods, and everyone saves money due to lower fees.
RaiBlocks and ByteBall diverge from the blockchain and instead rely on DAG tech, and have extremely fast confirmation times because of this, and scale upward excellently. There is incentive to use these in the crypto space because transfer times and tx fees are too high, but we'll see how the outside world reacts.
Ripio Credit Network is working on making a decentralized lending platform to allow (currently) South Americans access to reasonable lending solutions, but I see this extending to a much larger global scope if successful. There is pretty clear incentive for adoption here, you can read about their potential customer base.
Just to name a few, I invite you to research a little more as a lot of these products are pretty amazing, and I'd be curious as to why you think the above are "worthless". But yes, adoption is the biggest concern. Personally, I don't see cryptocurrency ever going back to $0, the technology is better than existing models of centralized banking and middle men. Unless something comes along that disrupts the disruptor, I think it's here to stay for the forseeable future.
Personally, I don't see cryptocurrency ever going back to $0, the technology is better than existing models of centralized banking and middle men. Unless something comes along that disrupts the disruptor, I think it's here to stay for the forseeable future.
I agree, but not enough to put more than a small slice of my net worth in at this point. Fortunately, if it doesn't go to zero, it'll probably 100x or 1000x again, so I'll be fine with just a small slice of my net worth :)
Maybe I'm biased because I place more of my portfolio on these, but I have witnessed lot of these alts becoming more and more established everyday and predict this trend continue if industry adoption continues at it's current rate (and there is economic incentive for it to do so).
It all comes down to how effectively you think the distributed consensus on transaction history is protected. A consensus which is not based in human relationships is very easy to pervert, given enough wealth.
The doomsday scenario, from my perspective, is China expropriating the mining farms in its jurisdiction, and constructing double spends until nobody trusts BTC as a means of transferring value. If that happens, there will be a huge rush to the exits. And it would be cheap, quick, and easy for China to do so.
There's a lot of money to be made in the meantime, though.
I think allocating a small percentage of wealth to an asset with 10% chance of going up 20x, and 90% change of going to 0 (net expected value 2x) is a rational diversification. Crypto seems to be fairly uncorrelated to broad market. (This is actually a more bearish perspective than I hold, but wanted to point out that it can be rational to hold an asset which is likely to fail as long as there exists a significant chance of order-of-magnitude returns)
The way I think about investment is that you should only invest if you have a clear and rational reason to do so.
There is a rational reason to use fiat: you need to pay taxes in it. The government also provides all sorts of guarantees about your cash when deposited in a bank. These are solid, irrefutable arguments.
Investment in bitcoin seems to be based on an argument along the lines of “we need to change currency because centralised is bad” or “it’s just another form of gold”, or worse: “because it will keep going up”. None of these arguments make sense. Yes, maybe bitcoin will become a big currency. But why? Can you give a watertight answer as for the value of fiat? Some people answer “it’s decentralised”, but that is clearly untrue. Miners and exchanges are the centralised concentrations of power in bitcoin, but they are unregulated.
The idea of cryptocurrency is interesting and exciting, but investing in something purely because it’s interesting or exciting is only a good idea if you’re happy to lose that money. No doubt bitcoin is important as a technological milestone, but that does not make it a good investment.
When bitcoin crashes, it could undermine various startups, which will have a knock-on effect to the startup bubble we’re in. Presumably that won’t be enough to crash a stock market, unless bitcoin reaches astronomical levels.
Hmm. Maybe I should buy some gold.
https://en.wikipedia.org/wiki/Tulip_mania
They're pretty good at scaling to meet that crazy demand
Is this for real?
You still get your coins at the price you paid.
How long does the credit card process take?
It's funny because you're actually mad at ACH here.
Wow.
I could have made a lot more if I didn't sell so much, but at the time a 10x increase seemed like a one in a lifetime event. When it increased to $80 per btc, I sold 80% of my investment.
When it hit $1000, I felt bad about selling so much during the last run up, that I didn't sell at all. I took the crash back to $200 in stride. I was convinced that crypto was following a pattern of boom and crash, and then boom again and that in the coming years there would a final "big wave" as the last market (finance and retail) opened up to it. It appears that that is what happened. I've already sold a lot, avoided taxes by making a CRUT (a tax shelter) but still have about 50%. I plan to sell some more in January, because I think this wave is going to peak rather slowly (because, let's face it, finance and retail are dumb. It will take finance a long time to shift direction, and public perception is going to change slowly, IMO. For example, the housing bubble went on for a year after it seemed obviously to have reached its peak.). Also it works to my advantage considering taxes to wait.
My general advice now is if you see an investment you are unsure of but could pay off big time, you should invest a little at least. A basket of risky investments can be a huge windfall even if not all pay out.
Also, when you think a risky investment has run its course and is going to crash, it's usually a good idea to not sell all of it and leave maybe 10% just in case.
https://news.ycombinator.com/newsguidelines.html
If you have access to a computer that has many many gold plated connections.
Gold is still superior for restarting civilization after an apocalyptic event.