The question that I keep coming back to is what are the implications of investing/speculating in a technology well before its implications are understood?<p>Adam Ludwin, the CEO of Chain, talks about how when the dot-com bubble happened, everyone knew at least to an extent that online retail would be a thing. Social networks would be a thing. Digital media would be a thing. The required ingredients were competition, Moore's Law, and time.<p>Bitcoin is different for a few reasons. It doesn't solve economic problems for most people in developed countries. It's also a development far deeper in the technology stack, a change in ledger management and accounting procedures. The last major update to this was double entry in the Italian Renaissance, which allowed the formation of corporations. The one before that was the invention of zero.<p>We don't know what the implications of Bitcoin will be. I think a much better analogy for the current bubble is the South Sea Company, since that was essentially people speculating on a new asset class (equity) that was poorly understood at the time. But saying that it's a bad investment because the use cases are not immediately obvious misses the forest for the trees.
The block chain is an interesting concept. I just don't think entropy should be a valid commodity currency. Here, let's trade spent compute cycles, and then spend more compute tracking where my compute has gone! Yo, dawg! I heard you like entropy so I put some entropy on your entropy so you can track entropy. Meta-Entropy is all the rage these days.
There are some huge differences between the dot-com bubble and cryptocurrencies.<p>Firstly, practically everyone who invests in cryptocurrencies knows that there is a chance that they could drop massively - Nobody is being deceived. If anything, I would say that most buyers tend to underestimate the technical accomplishments and the amount of vision behind most popular cryptocurrencies.<p>Secondly, unlike companies, cryptocurrencies can never* go bankrupt. They cannot be shut down by any single government. There will always be developers with machines somewhere willing to mine coins.<p>It's already possible to build businesses/services on top of blockchains and these businesses have a huge advantage over regular businesses; they can never go bankrupt. Also, they are completely autonomous. There was a lot of publicity around DAO (and its subsequent failure) but in spite of this, there are already value-creating businesses based on Blockchain technology which are currently operating under the radar: e.g. IOTA is a cryptocurrency but it's also platform that lets users buy and sell data directly from internet-connected sensors also Siacoin is a file-storage service, Power Ledger is an electricity marketplace... There are many others.<p>Another huge advantage of most blockchain-based businesses is that anyone with hardware (or virtual machines) can participate in the value-creation process and be rewarded for it.<p>* Unless maybe there is another massive Carrington Event... But even then it's unlikely that the blockchain of major cryptocurrencies will be completely wiped out.
I will say what I've always said about crypto...<p>Keep telling me it's a bubble. Keep writing long educated articles about it. All while I consistently get rich. All while it's getting late for you to get rich too.
<i>If you're interested in the concept of bubbles in general:</i><p>The economist John Kenneth Galbraith wrote about bubbles in his book <i>A Short History of Financial Euphoria</i>. If you're intrigued by such economics events, this is a good, quick read (on the "tulip craze", junk bonds, etc):<p><i>A Short History of Financial Euphoria</i><p>> <a href="https://www.penguinrandomhouse.com/books/321392/a-short-history-of-financial-euphoria-by-john-kenneth-galbraith/9780140238563/" rel="nofollow">https://www.penguinrandomhouse.com/books/321392/a-short-hist...</a><p>_<p>JKG's Bio:<p>> <a href="https://en.wikipedia.org/wiki/John_Kenneth_Galbraith" rel="nofollow">https://en.wikipedia.org/wiki/John_Kenneth_Galbraith</a><p>_<p>_-_ <i>UPDATE</i> _-_<p>Shiller also published <i>Irrational Exuberance</i>, each new edition filled with more analysis of recent "bubbles":<p>> <a href="https://en.wikipedia.org/wiki/Irrational_Exuberance_(book)" rel="nofollow">https://en.wikipedia.org/wiki/Irrational_Exuberance_(book)</a>
$16k lol wtf<p>bitcoin solved a problem..A few weeks ago I could not login to my paypal account due to verification BS, so I was able to pay instantly with Bitcoin. problem solved.
Big picture time:<p>1) Do you think in 50 years there will be 150 nation state currencies or mainly a single global one?<p>2) Do you think the world superpowers (china, russia, US) will refuse to let another superpower's currency become the single global currency?<p>3) What will the total market cap of this currency be?<p>4) What is the chance that bitcoin or some derived form in which current holdings are preserved is that currency?<p>Now put a value on probability or amount for each of these statements. Here's my personal belief for example:<p>1 x 2 x 3 x 4 = ?<p>50% x 70% x 30 trillion x 10% = 1.05 trillion
Bitcoin really worries me. I don't think cryptocurrency is a bubble, but I believe Bitcoin could be, and that its crash could cause a lot of market chaos, and hurt a lot of people.<p>What the general public doesn't understand about Bitcoin is that its promise was betrayed by its ruling elite. It is no longer peer-to-peer electronic cash, because it cannot scale to allow widespread peer-to-peer usage. It is increasingly becoming a pure speculative vehicle, with no utility other than as a store of value (and a very expensive to transact one at that).<p>In other words, the advocacy done years ago to put Bitcoin into the public consciousness was all based on a premise that turned out to be a lie. The investing public doesn't know any of this.<p>Why I say it 'could' be a bubble, rather than that it <i>is</i> a bubble, is that it could find utility as a form of central bank money. While the masses wouldn't be able to use it, it's conceivable that it could have enough utility to large financial institutions to maintain a very high value.
> ... whose backers posit its primary value as a way to avoid the rule of law ...<p>Sounds bad. But here's what Ari Paul actually said:[0]<p>> So there are quite a few use cases. I think the biggest and clearest, and easiest to understand, is as a store of value that can't be censored and is resistant to seizure. And so, the really clear example of demand for this, that I see, is the offshore banking system. Which is roughly 20 trillion dollars today. And it's not just people trying to dodge taxes. Apple, Amazon, every billionaire on the planet, has wealth stored there. And firms like JPMorgan collect fees to offshore law abiding citizens’ wealth. And people want to store their wealth securely, in a way that no single judge could freeze all of their assets. Right? Amazon doesn't want their entire global business operation to be shut down by one judge in Brussels. They want to be able to go through a lengthy appeals process and keep their business operating. So cryptocurrency performs that same task of the offshore banking, of keeping wealth secure an order of magnitude better. So we see massive real fundamental demand for this use case.<p>Makes sense to me.<p>0) <a href="http://www.businessinsider.com/cryptocurrency-value-explained-by-crypto-hedge-fund-cio-ari-paul-2017-11?IR=T" rel="nofollow">http://www.businessinsider.com/cryptocurrency-value-explaine...</a>
There are 2 basic things that the writer misses the point completely on that he uses to "prove" his point: Bitcoin isn't a business. ICO's are not Bitcoin.
people thinking "Oh I just get out when the price starts falling" are utterly mistaken:<p>Transactions now taking several hours might then take several days.<p>Already getting Error 520 on Kraken
It's official: Bitcoin bubble will burst in the next few weeks/months. Just wait for Goldman Sachs clients to buy enough shorts...<p><a href="https://www.bloomberg.com/news/articles/2017-12-07/goldman-sachs-is-said-to-clear-bitcoin-futures-when-they-go-live" rel="nofollow">https://www.bloomberg.com/news/articles/2017-12-07/goldman-s...</a>
The "it's a sure thing" posts have really been ramping up in recent days. Lots of talk on reddit about how people should take their money out of the evil banks and put it in Bitcoin where it's "safer" and "sure to make them more money".
I just think it's an amazing opportunity to be part of a bubble. I missed the last two bubbles (real estate and dot com). Bubbles pop, sure, but putting at least some money into them can pay off, of course I'm willing to lose whatever I put into it.
An article claiming bitcoin's a bubble? Wow, hadn't considered that before!<p>Just yesterday it came to light that the ECB was purchasing fraudulent bonds that are now worthless. The Bank of Japan is directly buying ETFs. The Federal Reserve increased the money supply to levels never seen before using QE, and has yet to reduce its balance sheet even slightly. Housing is more expensive than it's ever been. Stock markets are more expensive than they've ever been. Everyone knows the official rate of inflation is well below the real rate. Our savings accounts have effectively negatively interest rates. But bitcoin is the bubble.<p>Bitcoin is the only safe haven asset available for purchase right now. It's the only asset that doesn't require me to trust an institution or an individual. It can't be confiscated. It's rules are known.<p>I'll trust in Bitcoin, thanks.
(just read the title, couldn't get past the bylines)<p>I just saved this article so I can laugh at Tim in the future.<p>First off. This-is-a-bubble. I'm not saying it's not. But, bitcoin IS solving major problems and it WILL fix the problems it has. Will it still be worth ~$20K/BTC? Maybe not, but maybe it'll be more. Hard to say.<p>I can not imagine how Tim could think that cryptocurrencies, and more specifically blockchain technology, "doesn't solve anything." This is such a stupid statement to make.<p>How exactly does a way to do trustless computing around the world equal "doesn't solve anything?" Brain dead opinion.
Isn't the whole point of a bubble is that you don't know you're in one until it bursts ?<p>> Because it is often difficult to observe intrinsic values in real-life markets, bubbles are often conclusively identified only in retrospect.<p>[1] <a href="https://en.m.wikipedia.org/wiki/Economic_bubble" rel="nofollow">https://en.m.wikipedia.org/wiki/Economic_bubble</a>
The gaggle of articles on the Bitcoin bubble is amazing.<p>Most interesting thing is, at least for me, that these are not doing a great job convincing cryptocurrency supporters that there is a bubble. The logic goes - If everyone thinks it is bubble, it probably is not a bubble.<p>I wonder how much of this record rally can be attributed to the upcoming Futures market. Anyone has theories on this?