Bitcoin's Rally Masks Uncomfortable Fact: Almost Nobody Uses It

I find it amusing that media doesn&#x27;t give a crap about Bitcoin until there&#x27;s price action. This was the exact same type of article that was dominating headlines back in the 2017 run-up.<p>Bitcoin has proved remarkably resilient over the last 10 years. It&#x27;s clear (to me, anyway) that this asset class&#x2F;set of technologies is here to stay, it&#x27;s really just a question of what comes of it.<p>It&#x27;s actually quite useful to be able to send large quantities of money anywhere in the world without needing a series of intermediaries. For that purpose alone I could see supply limitations leading to increased prices in the long haul. There are also some interesting &quot;layer 2&quot; projects that have been percolating for several years now with a lot of potential to make Bitcoin useful for smaller transactions.<p>The insane hype of the last cycle understandably turned a lot of people off from crypto, but I think it would be a mistake to ignore the progress that&#x27;s being made.

Even a quick look at CoinMarketCap shows you that there&#x27;s something a little odd about the current rally.<p>Look at the volume column and you&#x27;ll see that Tether has more volume than bitcoin and has had for a little while.<p>Tether has recently<p>a) Admitted that they don&#x27;t have 1:1 backing in USD<p>b) They use customer funds for investment rather than just storing them and<p>c) They&#x27;re currently under investigation by the New York Attorney General.<p>Against that backdrop they&#x27;ve increased the number of Tethers in circulation by $400 million in the last month...<p>Now it&#x27;s possible that they&#x27;ve got a load of companies who really believe in them to the point that they&#x27;re eager to invest in Tether (even when there are other 1:1 backed stablecoins available)<p>A different interpretation could be that Tether have worked out they can effectively just print money as much as they want and are using this to buy bitcoins, driving up the price...

HN is full of bitter commenters who have been predicting the death of cryptocurrency for a decade, and it hasn’t come true. A community that learned of Bitcoin right as it was invented, dismissed it, and missed out on huge fortunes.<p>Well, some people here thought for themselves and analyzed the technology and ideas on its merits. Just not the people who comment on these posts.

I&#x27;d just like to go on record saying I use it as a payment method for developer services for developers locked out of the western world&#x27;s banking system.<p>Of course most of these devs will take any of the top N cryptos.<p>As a very early bitcoin adopter who made and lost and made and lost a fortune; I can say that bitcoin and crypto is still &quot;ahead of schedule&quot; for realistic-optimistic timelines of adoption.<p>I still believe cryptocurrency will continue to grow and eventually eat gold; but I am less convinced that it will eat fiat.

There is a lot of work done in analyzing holding patterns. Would probably be interesting to see comparison to usage and price of gold as a store of value.<p>For me, buying and holding seems to be legitimate usage. I guess that would count as &quot;speculating&quot;. What else should you do with a store of value that you expect to appreciate in price because it has inflation going to 0?

I think part of the reason for the dearth of merchant transactions is the lack of a tax safe harbor to treat it like currency, at least for transactions under a certain size. So long as buying a cup of coffee requires one to keep detailed records and report it as a capital gains, it is really not worth the trouble to use Bitcoin as a currency.

The instability and the high fees make it useless for generic payment. The lighting network was supposed to fix latter problem.<p>As soon as the bitcoin price becomes stable it will be useful. As soon as it is useful it will swiftly rise in value and become unstable again. We have already seen several iterations of this cycle. Who knows when this will end.

I would like to see a comparison to the USD, and how much of the money flow is actually used for merchant transactions.

Can we talk for a minute about that first graph in the article? &quot;Bitcoin Activity By Category&quot; supposedly lists percentages on the Y axis, but they included the percent sign on the label, making the range go from 0% to 1% instead of from 0 to 1 like they intended. Bloomberg should know better!

The reason why I think Bitcoin&#x27;s success (read increasing in wealth infinitely against fiat, albeit slowing down over time) is more probable than its demise is not that it is some kind of replacement religion for me. It is just that I have so far not heard any good arguments why it would not succeed.<p>Of course opponents might say: why should it succeed if they see no reason for it to succeed.<p>That position is completely acceptable to me, but the risk of losing out seems too high for me, so I invest a little bit, just to hedge.<p>And because many people might do that, it could succeed. As long as there are no good arguments against holding a little bit. Which there aren&#x27;t.<p>Except maybe the ecological footprint. As soon as someone finds a solution to that without sacrificing the other qualities, a hardfork will surely succeed.

I’m not sure why anyone in their right minds thought bitcoin was going to be used by random civilians for their everyday transactions. Customers want the protections that banks and credit cards provide, and vendors don’t want to expose themselves to exchange rate risk when selling goods and services.<p>Oh, and 4 transactions a second is far too low a limit for any currency.

This is literally being pumped up by algorithmic traders and no oversight.<p>This rally is designed, as will the next downcycle and the next rally.

Media is clueless as usual. Are people spending gold bullion&#x2F;coins? Nope. The government independent value store is the value of bitcoin.

I have little doubt BTC price is being manipulated.<p>Its price was kept very low for the longest time so some very powerful organizations such as Bakkt (backed by the same people behind NYSE) could accumulate most of its market supply. At the moment the price is being artificially pumped up to build momentum until enough people from the public buy into it, then its price will once again start dropping faster than gravity.<p>You often can attribute the exact reasons why a stock price went up, but for BTC it seems to be a complete mystery black box that even the most well-versed traders couldn&#x27;t tell you the exact reasons why it went up.<p>For stock price for example, you just knew in advanced even from last year that Beyond Meat&#x27;s stock was going to be a hit. &quot;What The Health&quot;, an anti meat industry and pro vegans documentary film, was a HUGE success last year and you could see from miles away everything was set up for this trend to become mainstream in 2019 as public sentiments were beginning to swing very positively towards it. For BTC however, everything just seems like a wild guess as no one could pin point exactly what drives its price.

Bitcoin is now a religion.

People trading something back and forth is a form of usage. they are using it. The author just doesn&#x27;t like what they are using it for.