Respectfully, I think a lot of comments on this topic are missing the point of the author's advice. Whether there is or is not a bubble, and if there is, how big that bubble might get, are irrelevant here. That's not what this article is about.
First, the author assumes there is a bubble brewing. That's not his thesis; that's his background assumption. His thesis is that, assuming there is a bubble, you should do X, Y, and Z, and not do A, B, and C.
So yeah, after reading this, we could argue once again about whether there's a bubble or not. But the more interesting argument is about whether his advice is sound. Not whether his assumption is sound.
Can we tell if BitCoin and other cryptocurrencies has any vanity metrics? If so, what would that be?
My uneducated guess would be how valuable the currency is in Dollars. The currency seems virtually inflated as we don't know how much of that would translate to real purchasing power. It doesn't seem that it would be possible to many people to sell it all out. Thus, who invested in it would be supposed to keep using within the coin's network, and given that a transaction takes awhile and there are not many shops accepting it, it would be hard to get some return.
In addition, BitCoin has fluctuated a lot since 2012 and there were several issues in its way, like the lead maintainer stepping out, capacity limit being reached because of block chain monopoly, Mt Gox bankruptcy etc.
Current vanity metrics seem to include "market capitalization" and amount raised during ICO. It is true that those have become signal in the current noise but it speaks about how frothy things are.
Crytocurrencies simply are hard to value because you don't know how many users they've got.
It can also be the number of threads about bitcoin (or cryptocurrency) on Hacker news being upvoted to the top 10/20?
I was there when the last time bitcoin reached record highs. Surely the USD conversion rates play a large part when suddenly people get interested in block chain or bitcoin at all.
Other metrics can be the glut of "altcoins" with very high "genesis block" or ICO rates.
"Market cap" is the most-quoted vanity metric of the cryptocurrency market.
A more reasonable measure of the value of a cryptocurrency would be the following: if it were possible to create an infinite number of currency units, how much USD/EUR/etc. could be earned by selling everything into the market? In other words, the more reasonable metric is the sum of all (cryptocurrency) buy orders.
If we use the Bitcoin/USD market as an example, the four most liquid USD exchanges (using data from https://bitcoincharts.com) are --
in descending order -- Bitstamp, Coinbase, itBit, and Kraken.
The sum of all USD buy orders for these exchanges is $43 million (22583567.85[1], 9551529.73[2], 9310393.07[3], 1679397.01[4], respectively).
I'm not sure what this figure is for Ethereum, but my guess is that it's around 1% of that of Bitcoin -- whereas Ethereum's market cap is around 50% of Bitcoin's.
EDIT: On GDAX/Coinbase alone (https://www.gdax.com/trade/ETH-USD) it's possible to sell Ethers for over $12 million USD. So I guess I was wrong about the 1% figure. Although I believe $43MM USD for Bitcoin is an underestimate.
The difference is the dot-com stocks had some theoretical value - even Pets.com, people buy pet supplies online after all.
Unlike commodities, equities and so forth, cryptocoins have no value whatsoever. So to try to make it sound like it has worth, its pushers have to cast about for anything they can and finally come upon the only thing they can - the dollar. In fact, they say, it's even better than the dollar.
It would take too long to explain here why the Bitcoin is not like the only thing they have left to compare it to, the dollar. Also, an explanation won't sway anyone who has already had a drink of the kool-aid any how.
May I recommend another message board for all those high on cryptocoins here - 4chan ( http://boards.4chan.org/biz/catalog ). 4chan /biz/ is filled with uneducated, poor kids all looking to get wealthy with little work on the cryptocoin get rich quick schemes.
I think it's a much better message board for all of you of this bent. Here on HN there are still some people who believe in studying math and science and engineering and CS at universities, and then going and doing a lot of hard work and creating wealth. 4chan is mostly filled with your types - the get-rich-quick scam artists. Go read 4chan /biz/ right now - it's filled with no work, no study, get rich quick types like yourself. Leave and go there. HN will be stuck with those "out of it" old fogies who actually believe in study, hard work, that commodities need value to have worth in the long-term, and old-fashioned, out of touch ideas like that.
This is not to say that there isn't an absurd amount of hype and froth right now, but if nothing else cryptocurrencies will continue to serve a purpose for anybody who needs to send money outside capital controls.
If you read the thread you find out that the Venezuelan guy lives in the US has never done what he described and knows no one who has used it as he described.
/biz/ has been great for me, I bought some MOONCOINS at 1 satoshi and I will sell next week at 5 sat at least once the current sell walls have been broken. There also is a very active community behind MOONCOIN.
Why are you so dismissive of this new technology? Can you expand on your idea?
> Why are you so dismissive of this new technology?
I'm skeptical of the idea that Bitcoins have value in the way commodities and other things which can be traded and exchanged have value.
People might find some use for blockchain technology, but the speculation around the value of Bitcoins is ridiculous. It's a bubble like any other bubble. The notion that a Bitcoin can remain at a $2000 value is absurd.
The current top comment says "Internet companies during the dotcom bubble had market value of several trillion dollars. The total market cap of crypto-currency is still only ~$70 billion. I agree with the principle, but this boom is still pretty modest." Well there you go. I have an old worn sock with a hole in it that I am throwing away. It is worth $500. It is worth $500 because I am willing to pay $500 for it. I am capable of creating a bubble of that size. Even a $70 billion bubble can be created apparently. Once it reaches a certain point it will pop. Your point about Mooncoins points to it - as a Bitcoin is worthless, clones like Mooncoins can be created as speculative bubbles. Eventually it will no longer be a micro-economic oddity like my $500 sock, but will bump up against the market as a whole and collapse like every other speculative bubble.
It's not blockchain technology, which may or may not have worth at some point. It's the speculative bubble on cryptocoin choice.
As I said, Pets.com and Webvan made sense on some level. Just not the valuations they had at the time. And Bitcoins valuation is even sillier than theirs, since Webvan was not a bad idea, it just had a few problems including being ahead of its time.
I agree with your skeptical sentiment, for the most part.
However, dismissing Bitcoin as a bad commodity (because it cannot be used for anything) misses the mark. Instead, look at Bitcoin not as a commodity, but as money. Money (particularly paper money) has no intrinsic worth. What makes it valuable are its properties, and functions bestowed on it by consensus: counterfeiting resistance, fungibility, medium of exchange for payments, storage of value, unit of account.
Can Bitcoin fulfil those functions? That remains to be seen, and I'm skeptical on storage of value (too volatile) and unit of account (too volatile, nothing is denominated in it), but it works to an extent as a payment mechanism (though worse and worse now, with the increasing transaction fees).
If we look at the past 10,000 years of history - commodities are useful things, objects with utility. Currencies are commodities which people begin to favor for use in trading. Currencies are commodities which have properties that make them good currencies - they have properties such as uniformity, durability, divisibility, portability. This is why precious metals like gold have been favored as currencies through history - gold is uniform, durable, divisible and portable.
The paper dollar bill is, and always has been, completely worthless in and of itself. It is just a piece of paper. Just like Confederate bills were and are pieces of paper, just like the Papiermark was and is a piece of paper. US bills have a history, just as German bills do.
In 1914, the German Mark, or "Goldmark" was redeemable for gold. The Mark/gold link was broken in 1914 and the Mark became the "Papiermark". By 1923, hyperinflation had made the Papiermark near worthless and it was replaced by the Rentenmark and then in the next year this was replaced by the Reichsmark.
Swinging back to the USA, the words "redeemable in gold" were removed from the hundred dollar bill in 1934, and then by 1971 Nixon had closed the gold window entirely. Sort of. Because if he really had, he could have just taken the thousands of tons of gold in Fort Knox and paid down the US debt. But he couldn't. Because that gold still backs the dollar. The dollar was an abstraction of gold before 1934 and 1971, a promise. Then it became an abstraction of the abstraction. It's still on some level backed by the gold in Fort Knox, Trump and the Fed chair could just reopen gold/dollar reconversion if need be, and a hard floor would suddenly appear under the dollar.
Bitcoin has no such floor. There are no thousands of tons of gold waiting in the wings for Bitcoin, no nuclear armed #1 (going on #2) world economy with the power to tax and receive tax payments backing it. We don't even know who created Bitcoin.
It's an odd argument - the only commodity people can find which has no apparent value is the dollar (or euro), so that's what people compare it to.
If this was 1917, you might be asking me why the Papiermark had worth when it was not backed by something, and thus Bitcoins must have value. What people found out was that the Papiermark unhooked from gold did not have value, as the German government of the time didn't give a damn about its value. It's kind of the same argument - Papiermarks in 1917 had value, so Bitcoins must have value. People found out in the 1920s that Papiermarks didn't have value as the implicit promise of government gold conversion went away.
I believe that the deflationary nature of cryptocurrencies is the real problem in replacing money. Also the fact that a trail is left behind transactions is unlike it is with cash. This property is cool for the government, but the users may not want to have it.
On question that bugs me, but don't have enough knowledge bout Bitcoin: are the transactions public? (I believe they are). So anybody could map the wealth of the members of the bitcoin network? If it were used instead of cash my money movements could me monitored by anyone, eg. my employer?
Deflationary is not a bad thing at all - though I realize that most of mainstream economics thinks it is.
A few thoughts on that:
- Real wages rise when the currency deflates (good for working class, think about the effect of wealth inequality)
- Debt becomes a problem (bad for indebted, such as government)
The main official reason why deflation would be a bad thing is that it discourages spending. I think it discourages non-necessary spending. People will still eat, they just wait a few months more to buy their TV. However, they can buy more TVs now or other things because they have more disposable income.
I don't think forcing people to spend is in any way a good thing, neither economically nor ecologically.
But enough of this, I want a non-inflationary currency to save in. If there are enough of me, that's sufficient to make something "have a value".
Re the public transactions, I assume that sooner or later it can be tracked to a high probability. However, I also think this is the case with other non-cash transactions, so while it's not relatively better than fiat in that sense, it's still not worse either. For me that's ok since I'm not in the money laundering or tax evasion business.
I agree with the traditional view about deflation. It is bad, especially for the workers, who have almost no money to save, thus they do not get any of the benefits, but they take the most burden, as they must spend almost all of their income on survival. On the other hand others with more income have their savings growing in value, thus not spending, making consumption fall, which renders workers unneeded, etc...
about public transactions I beleive this is a real privacy problem. The government can track my spendings every day (well, not cash, but eletronic transactions which are the bulk of my money movements) even now (when a judge has signed a permit for them). The problem is if anyone can do that. I have given up some privacy to the government, but not to the random guy.
Now my question is: is this concern of mine about public traceability existing with bitcoin technology, or not? (only the technical aspects please. the philosophical side is out of scope here)
So I am no expert in this field but I think the traceability by the random guy is not necessarily a problem because:
- until an amount in your possession has been spent, you can avoid that anyone knows who the corresponding BTC belong to (= you) by just using a new address when receiving the coins. Public knowledge about "having possessed coins" is only after a transaction and only if the random guy new that at least one of the last sources belonged to you.
- when you send BTC somewhere, nobody knows if these still belong to you if all outgoing amounts are sent to new addresses.
- There are "mixing services" that intend to "mix" amounts of several addresses, so traceability can be mitigated but IMO people have mixed feelings about them.
- There might be legal issues in case traceability becomes much better. E.g., coins might be blacklisted because they were gained illegally. Since you can trace those coins, it could be legally possible (though technically challenging) to "forbid" these coins and accuse of money laundering whoever accepted them anyway.
- There are other coins that are more concerned with this, I think monero (See sibling comment) is the most popular. You can always check what the dark market accepts to see what's good for you :)
- Finally, one mitigation is to keep only small amounts in many addresses, so all your counterparties only know a subbranch of your "transaction DAG" ("directed acyclic graph").
My own take is that all this means that nobody can ever track with certainty how much you have, only your "turnover". This holds as long as your counterparties (e.g., exchanges or employer) are not compromised and sufficiently well intended.
Oh and regarding deflation (I know, you didn't ask for this):
If prices deflate 5%, a worker can buy 5% more of his salary, making him effectively richer (ceteris paribus). There is no need for savings, future income is sufficient.
Secondary effects like unemployment are likely to occur but still you'd need to show that 5% of deflation cause 5% workers dismissed so that the net effect is the same. If only 3% of the workforce are dismissed, the poorer got effectively richer.
Tech products have been deflating constantly, yet no one stopped buying them (to the contrary, they got cheap enough so that a lot of people were able to buy them, think smartphones).
So you might not agree with me on a general rule but bear in mind deflation has positive effects. All innovation causes deflation.
I think I can answer your question, because I asked an identical one on bitcoin.stackexchange.com about a year back.
The transactions are public because that's the only way account balances can be tracked in this system. There's no 'amount' associated with an account id at any point in time, as there is for a banking database. In Blockchain, all the money an account has to spend is the net of the transactions made to and from that account. In traditional banking, even if you deleted the transaction history, it would work, because the account balances would be correct. This incentives people to fudge the history and the final balance via fraudulent transactions. Blockchain prevents that, since it never stores the balance, and old transactions are set in stone.
As to your second point, yes, mapping the wealth is possible. But so is obscuring the account holder's ID. To get your money, you just need a private key, a little string of characters, to verify that account. Also, account creation is incredibly easy (literally just a function call returning a 256-bit hash). So, no one knows who is who on the network. Some transactions may go from a person to themselves, others may go from a person to another for services rendered. It's basically impossible to tell once the transaction volume grows large enough.
I think you're right mostly but missing a key point. Crypto's value is inversely proportional to faith in government backed currencies in places with high internet penetration. So in the US, it's actual value is quite low because we have an extremely strong currency and well developed payment systems. In China, faith in the government-backed currency (renminbi) and the investment options available in that denomination are relatively low. Coupled with reasonably high access to internet connections and government restrictions on expatriating capital, crypto becomes a valuable alternative denomination.
Crypto has no inherent value except as a policy failure. At least so far. I have yet to see a large scale proof, but potentially at least block chain tech has value for reducing transaction costs in shipping or other fields.
> China...government restrictions on expatriating capital, crypto becomes a valuable alternative denomination
Money is expatriated via Bitcoin from the PRC to, say, Vancouver. The point is that with a currency, people would be comfortable leaving it as Canadian dollars or US dollars. This is not what happens though, the Bitcoin is converted to Canadian dollars, and is then perhaps converted into other things, such as real estate.
It is more like a concert ticket or gallon of milk in this case - something which might be valuable for a time, but then loses its value. The Papiermark in the early 20s could be used to move money around as well.
>Money is expatriated via Bitcoin from the PRC to, say, Vancouver. The point is that with a currency, people would be comfortable leaving it as Canadian dollars or US dollars.
No one is OK leaving their money in hard currency. That's why we invest it, or put it in interest bearing accounts. Leaving it under your mattress leads to losses to inflation. In that sense, currency is very much like a gallon of milk or a concert ticket, though it loses its value much more slowly in a healthy economy.
With BTC, we actually have the opposite problem, deflation. It is increasing in value every day, whereas with a normal fiat currency it is more efficient to have a low, stable rate of inflation (where the individual unit of currency loses its value over time).
So I don't disagree with you completely. You're right that BTC should be more like a concert ticket than it is. The important question is why it isn't.
Why do diamonds have value then? They have no intrinsic value. They are not a scarce resource. They don't have many industrial applications. Labs can grow diamonds that look pretty much identical to the real thing. Yet people still pay a ton of real money for diamonds.
Diamonds have value because we all have agreed that they have value. That's a really powerful concept to internalize. Similarly why does Gold have any value? Why does the American Constitution have any power?
I have no personal position in bitcoins or any other cryptocurrency but it seems to me bitcoin is the first internet native "money like thing". Based on how powerful and distruptive the internet has been to various industries in the past few decades I'm not sure I would bet against an internet native version of "money".
Actually, only the -coin currencies have no actual value aside from transactions, which as can be shown, is very easily duplicable. I would say that Ethereum is an application platform, and that does have value (see WordPress, AWS etc).
Ripple also has value for ForEx settlement, which currently can take on the order of days. Also, it can function as a universal liquidator.
The -coins though, are ephemeral. Only the underlying Blockchain tech is of any use.
One value of Bitcoin is keeping money save from the authorities. For anonymous donations and microdonations it is also usefull. Speculation or insurance against the Fiat money economy is another usecase.
Uneducated poor kids? The ironic thing is a lot of people have become rich from /biz and are now millionaires. Seems like your version of hard work is to pay out the nose for a degree to be a debt serf in this stagnant, corrupt economy... suddenly buying into this crypto meme sounds like a much better alternative. Once again, 4chan is prescient. Sure things will probably return to earth soon and some crypto-memers will be holding some heavy bags, but in the long term I think this hype has created some real value, and cryptocurrencies may end up being a real way out of the fiat scam
I think it is not absolute value what defines a bubble.
It should be relative.
E.g. perceived value of an asset compared to it's real value/revenue/growth.
Prices only remain flat (0% inflation) if no increase in productivity occurs.
2% inflation doesn't mean the currency has been debased by 2%, it means: if it has become x% cheaper to produce a basket of goods -- and the price of this basket of goods has increased by 2% -- the currency has been devalued by (2+x)%.
Producers are constantly competing to cut the costs of production, in order to gain market share at the expense of competitors, so I don't see how flat prices can be a reasonable assumption.
Increase in production increases supply, so prices fall -> deflation.
Yes, inflation can have other reasons than debasement (for example, productivity decrease) but this affects both types of "money" - fiat and bitcoin, so I left it out to keep it simple
I have had multiple affluent friends who are absolutely non-tech non-geek ask me what are the hot coins. They're shoveling tens of thousands of dollars into Bitcoin, Ethereum, and Ripple based entirely on the fact that there's a run up happening. They have no understanding of what it is and the intention is sell to the greater fool after another 10x move.
Maybe it isn't a bubble, but it sure does walk like a duck and talk like a duck.
Tens of thousands of dollars can be shovelled into low-probability high-risk outcomes nightly at a single Vegas table, of which there are many, at a single casino, of which there are many. The state lottery jackpot can swell by tens of millions of dollars in a single day when the potential payout reaches nine digits.
This is just high-stakes gambling, it's not a systemic bubble until pension funds, university endowments or state sovereign funds get significant exposure.
are these guy all gonna sell at 10k? I'm not rich and love the idea of BTC, but the gambler in me is looking to 10k - mainly b/c I think thats what the ppl with real money on the table are looking to
Please do yourself a favor and invest in other things too. I'm also a bitcoin believer, but it's a relatively small part of my holdings, which are mostly in real estate.
It's entirely possible it might be the catalyst for a large unwinding. Let me just set up a hypothetical scenario:
Bitcoin prices begin to unwind (trigger: emotion? unknown unknown?).
Chinese holders of bitcoin, who have been using them to get out of the yuan and avoiding capital regulations, start selling, accelerating the problem.
Chinese WMPs (wealth management products) that may hold bitcoin start to default or go under, accelerating the deflation of the current Chinese debt and borrowing bubble.
Global market contagion risk from China causes markets to rethink what is going on? The US has been calling for a correction for months, and the VIX is stubbornly low. Central banks have interest rates very low but are trying to tighten, and if they tighten into weakness it might cause a recession.
How many Chinese buyers of BTC are buy-and-hold investors into BTC itself versus just using cryptocurrency as a transfer mechanism for real estate, commodities or fiat currency investments?
I'd say the causality is more likely to go in the opposite direction. A slowdown in China provokes a slowdown in capital flight via crypto which triggers the crash. It might actually be the canary in the coal mine of a global recession. Barring significant positive reform in Chinese capital markets as an alternative explanation, I am going to start getting scared when I see a crash in the Vancouver, BC real estate market coinciding with a crypto crash.
I would expect to see a surge and then a rapid drop off, but I think we've been in the surge for a while now. The surge reflects people not having faith in native Chinese markets, which has already been the case for most well-off, well-informed Chinese. They know their stock markets are a joke and that the government has been driving investment toward pointless building projects. The real estate market has been irrationally exuberant, in no small part because of the absence of alternative long-term savings vehicles such as interest bearing accounts or a reliable stock market. They also don't have complete faith in their government's respect for property rights and know having the option to flee abroad if things go south is invaluable.
And the PRB has been slowly ratcheting down the markup they pay on US dollars as an export subsidy, so the incentive to convert US dollars to renminbi relative to offshoring earnings via bitcoin or other channels has been declining over the past few years. Just to clarify what I mean because a lot of people don't realize this, but many Chinese exporters receive payment for goods in US dollars (or other foreign currency). The People's Republic Bank of China (their central bank) purchases those dollars with renminbi at a markup over the fair market value, basically giving the Chinese exporters a subsidy. That's part of why the PRB has such enormous US Treasury holdings. They bought so many US dollars that they couldn't invest them in anything other than US Treasuries. A billion dollars in cash is an asset. A trillion is an unmanageable inflation risk.
The PRB has been trying to move away from that model because they know it isn't long-term sustainable. So as that implicit subsidy declines, Chinese manufacturers receiving US dollars find alternative methods for converting their excess currency, such as BTC or other foreign currencies (e.g. the Canadian dollar), relatively more attractive.
The bottom line is that anyone who can afford to expatriate their capital has been doing so at the maximum viable rate for a long time now. A slowdown would simply reduce the amount that is available to expatriate, decreasing the US dollar -> BTC purchases and accelerating the BTC -> hard foreign assets such as real estate, reducing the total market cap for BTC. It's also possible the PRB might react to a slowdown by once again increasing the implicit export subsidy, which would divert funds from BTC transactions back into renminbi and further accelerate a crypto crash.
Do you have any idea what is going on here or are you ignoring away in bliss? This is as much a pyramid scheme as VC industry is in that early investors make disproportionate gains (and losses). Finding the right tokens to invest in is the challenge.
Well I will gladly change my mind anytime someone can provide a convincing argument against the "bitcoin pyramid scheme" that is nor an ad-hominem attack, neither a cryptic response like "value come from scarcity induced by the growing complexity of the arbitrary mathematical problem solving that require big amount of current tech silicium mostly running in a non-democratic country who don't care about power efficiency...(goes on with technical gibberish)"
My theory is that if MasterCard roll-out a "masterbyte" crypto-currency that can automagically convert to real cash usable in all MasterCard enabled retails, bitcoin will loose all value almost overnight. Prove me wrong using strong arguments and I'll change my mind.
PS: needless to say, downvoting me don't count as an argument. It just keep me thinking that you are in lack of a better one.
Your statement indicates that you don't know what a pyramid scheme is, or that you do and you're expanding its definition to generalize its negative connotation to something else that doesn't fall under the proper definition of a pyramid scheme.
A company using credit card technology in combination with bitcoin and other cryptocurrencies is simply leveraging existing technology interfaces for companies that want to accept cryptocurrency without said companies having to deal with alternative payment systems. The payment system handles everything related to the cryptocurrency and the payee simply sees the USD (or other fiat currency) value in their accounts.
I will stick to the pretty basic definition that a pyramid scheme cannot sustain itself when less foreign currency enter the system. That is because the system is blatantly unable to produce value and only produce virtual currency from foreign currency.
I stil don't see any argument, just as-hominem as usual when defending bitcoin: "Pheeww you know nothing...".
No one needs to prove you anything. You are free to believe what you want. The world doesn't have the responsibility to convince a stranger of a concept s/he hasn't taken time to read or finds too difficult to understand.
Still, but nicer, ad-hominem "you don't deserve explanation, because you don't know enough" followed by a link of endless references.
I don't deny that cryptocurrencies might play a huge role in the future. And algorithms are indeed pretty clever. But I don't see why that prevent current bitcoin implementation to be a pyramid scheme and thus I ask. And haven't been answered so far.
It's like arguing that tulips madness wasn't a buble because tulip are beautifull and still sells today. Evrything can be used by speculators to build a buble, even rice or corn (and that's even worse than bitcoin because lots of people don't eat as much as needed as of today).
Luck has nothing to do with that. Thanks for trying. Still hope someone can come with a better argument. But I follow bitcoin new since a few year and still nothing tangible in sight.
Some like you find my lack of faith disturbing, but I don't "believe" anything. I prefer scientifical skeptiscism.
Only disproportionate gains, not losses. When a startup goes bust, every investor can only lose what they put in. No one loses multiples on their investment.
Leverage is a multiplier in both directions. People do borrow money to invest in bubbles which is what can make the eventual pop so economically devastating.
It is generally a portfolio investment approach in which you would invest in multiple coins in the hopes one of them gains 100x and you lose your money in the rest. If you think it is so easy and there are only gains to be had, why don't you go ahead and make a few investments and come back with results?
I try to think of crypto-currencies, and their collectors as a class not unlike POG collectibles and POG collectors. The age bracket associated with each probably experiences significant overlap too, so the idea seems fitting.
Taken to extremes, if any given POG collector suddenly went bankrupt, due to a crash in values in the POG collector's price guide, how many people are associated with a particular POG collector? Would they notice, when that POG collector's business failed, because of an inability to meet obligations, now that all POG collections are worthless?
If banks and businesses accept The POG as legal tender, how many transactions disappear with the POG craze, leaving them unpaid, or stuck holding worthless assets?
1999 wasn't a bad time to sell Amazon stock, actually, since it got punished in the bust and took years to return to 1999 levels. But Amazon is a huge exception because it was a real company and most dotcoms weren't.
If governments start to actually fear that their monopoly on creating currency is in danger, they will destroy crypto currency.
Bitcoin may be decentralized, but they can go after currency converters. They can make holding it illegal. They can make mining it illegal. They can make trading it illegal.
They can manipulate the market to crash the value of bitcoin with (to them) pocket change.
Only in their own jurisdiction. The US already goes after those, but it won't help as long as other countries don't.
> They can make holding it illegal.
Unenforceable. Making the knowledge of a secret key illegal would simply be weird. Bitcoins have no physical incarnation. So, you cannot "hold" them in your hand.
> They can make mining it illegal.
Unenforceable. It is very easy to hide that a machine is mining. Furthermore, such machines can be located in any country of the world.
> They can make trading it illegal.
They already try to do that. It doesn't help.
> They can manipulate the market to crash the value of bitcoin with (to them) pocket change.
They would first have to buy up a lot of bitcoin in order to dump them and crash the market. While buying up the coins, they are pushing its value up. When selling them, they just go back to the point they came from. Hence, the strategy would be totally ineffective.
What's more, if governments attack the internet, people will discover that the reverse is much, much easier. Using the internet to orchestrate attacks against the government, is simply trivial to organize.
I will make a prediction so I can come back and make fun of myself in a month. It is a bubble and it will pop real soon going down back to $500 bringing down all the alts with it, then it will slowly go up again at a normal pace for the next couple of years.
Don't borrow to invest in something? Ever heard of leverage? Such a stupid argument. How about you talk about why that carries so much risk and teach people something instead of this click bait shit
Sounds like you're conflating the value of the coins with the corporate value being invested. Corporations are dedicating a desk or a lab or a few staff to Crypto. There may be a decrease in the value of coins but there's no bubble to pop on the organisational side.
First, the author assumes there is a bubble brewing. That's not his thesis; that's his background assumption. His thesis is that, assuming there is a bubble, you should do X, Y, and Z, and not do A, B, and C.
So yeah, after reading this, we could argue once again about whether there's a bubble or not. But the more interesting argument is about whether his advice is sound. Not whether his assumption is sound.