
Ask HN: Why is Bitcoin suddenly so popular? - forkLding
Taking a look below at price, you can see that 1 bitcoin is worth around $4400 US dollars.<p>https:&#x2F;&#x2F;www.coindesk.com&#x2F;price&#x2F;<p>I remember a time when they were giving out free bitcoin at hackathons and conferences etc.<p>For a casual outsider and a passive market speculator, whats going on with bitcoin and maybe the rest of cryptocurrencies, what are they seeing that we can&#x27;t?<p>And any clues as to whats with the recent surge in East Asian interest of bitcoin?<p>https:&#x2F;&#x2F;www.coindesk.com&#x2F;annyeong-bitcoin-south-korea-canada-changing-crypto-market&#x2F;<p>Note that I&#x27;ve tried googling but a lot of the urls are before May 2017 and are trying to explain about Bitcoin&#x27;s peak at ~$2000 which is not helpful much.
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garethsprice
It's a classic speculative bubble. People are making bets to position
themselves for a situation where Bitcoin will be worth a lot in the future,
but the valuation is untethered from any intrinsic value.

The surge becomes self-sustaining, in that as news stories of easy wealth
spread and more speculators bundle into the market, it fuels more demand from
new participants looking to get rich quick. This is not sustainable in the
long run, and as soon as the crowd gets spooked all the dumb money will bail
out very quickly, leading to a very fast crash.

The Gladwell book "The Tipping Point" is a good read about how ideas and fads
take hold in societies. It's more a function of the way information spreads
than about any secret knowledge about Bitcoin. Nobody can predict the future,
but Bitcoin speculation is an attempt to gamble on it.

There's an investment adage that's something like "When your barista's telling
you to invest in something, it's time to get out". Have had a number of non-
tech/non-finance friends ask about how to invest money into Bitcoin lately,
which is a signal to me that Bitcoin is becoming dangerously overheated.

Take a look at
[http://static4.businessinsider.com/image/515b40886bb3f7bd490...](http://static4.businessinsider.com/image/515b40886bb3f7bd49000013-620-/screen%20shot%202013-04-02%20at%204.29.11%20pm.png)
from the South China Seas bubble in the 18th Century. The first half of that
curve look familiar? Guessing we will see a lot of Newtons in the not so
distant future...

(Still, I have some crypto as part of my investment portfolio, about 2% of my
net worth... you never know...)

~~~
danielharrison
I'm not sure if a South China Sea bubble in the 18th century can really be
used as a valid comparison here.

We're talking about the rise of a self-contained, decentralised currency _and_
transactional system, all rolled into one. It literally has blatant potential
to be a game changer, 100%.

In saying that, I wouldn't be surprised if it all falls apart in the short
term.

~~~
garethsprice
There is a direct and educational correlation that can be drawn between South
China Seas, tulip bulbs, stocks in 1929, dotcom stocks, Beanie Babies,
subprime housing, Bitcoin, etc.

Time and time again some financial instrument has become unmoored from it's
intrinsic value and lax regulation allows speculative money to pour in, some
early adopters get rich, the financially naive jump on the bandwagon without
understanding the underlying instruments, they get spooked and the entire
thing plummets back to it's fundamental value (which may well be zero) leaving
some with fortunes and some with nothing. Bubbles appear to be a natural
occurrence in a lightly regulated market economy and typically follow a very
similar pattern.

I think that Bitcoin can be both a speculative bubble and a potentially world-
changing technology. The dotcom bubble is a fine prior example - huge classic
speculative bubble, also radically changed how we are all now living.

------
vanderZwan
Is anyone else having this feeling (and I'll immediately add the disclaimer
that I mean "irrational gut feeling with no factual back-up") that the current
cryptocurrency hype is going to end similar to the information superhighway
hype of the nineties, with a lot of disappointments, a few big new players,
and then a kind of "revival" a decade later where we get it right?

Again, I have no evidence to back this up, I just have a feeling that
_spectacular_ mistakes will be made, things will crash and burn when idealism
can no longer paper over the parts where naive hopes cannot be reconciled with
harsher realities, learn from that, and then get it right the second time
around.

EDIT: Note that this is basically a criticism of human nature, not of
cryptocurrencies

~~~
soneca
That bitcoin survived MtGoX espectacular crash and kept growing in value after
that shows some resilience. I'm not sure other pure financial bubbles survived
middle-of-the-way crashes before the final definitive crash.

That said, I believe there will be a lot of disappointments regarding
expectations of bitcoin sparking a revolution. My belief is that it will be
"only" one more tool among the several financial tools that exist in the
world.

~~~
vanderZwan
I had forgotten about MtGoX, good point.

It may be that cryptocurrencies are going through this boom/bust/rise-from-
the-ashes cycle on a much shorter timescale. After all, software development
is much faster than setting up internet infrastructure and adoption. So what
used to take decades to get right might now take years.

------
davidgerard
Plain bubble.
[https://en.wikipedia.org/wiki/Economic_bubble](https://en.wikipedia.org/wiki/Economic_bubble)
Non-speculative use is all but nonexistent. ICOs are a bad excuse whitepaper
attached to a tradeable ERC-20 token. There is no actual economic productivity
there, just money going into a whirlwind.

I'm getting emails from friends whose retired parents are being targeted by
crypto hucksters. My brother sent me an email this morning which was a
glaringly obvious scam a friend of his had fallen for and was trying to get
him in on.

I thought the bubble was bad a few months ago, right now it's clearly in
batshit insane territory. What they're "mining" is the money from normal
people who shouldn't be going within a mile of cryptos, and it'll be a
bloodbath. The 2017 bubble is so much bigger than the 2013 bubble.

~~~
quickthrower2
Are you saying dotn hodl?

------
xiaoma
Japan is a huge part of this. Since the government approved btc as a currency,
Peach Airlines has started taking bitcoin, huge chains of convenience stores
like FamilyMart have been accepting payments in bitcoin, etc.

It's still a tiny portion of total commerce but an absolutely massive jump
from previous bitcoin usage.

~~~
davidgerard
> Since the government approved btc as a currency,

i.e., regulated it in any way at all; specifically, they said exchanges could
trade BTC and ETH.

> Peach Airlines has started taking bitcoin,

no, they ran press releases saying they may well by the end of this year
probably.

> huge chains of convenience stores like FamilyMart have been accepting
> payments in bitcoin, etc.

no, one of their payment processors added a bitcoin option; there's so far no
evidence of non-negligible usage.

You're inadvertently parroting speculative bitcoin hype here. The general rule
with _all_ bitcoin (and blockchain) media coverage is that there's always much
less to it than there appears.

~~~
xiaoma
> _" You're inadvertently parroting speculative bitcoin hype here. The general
> rule with all bitcoin (and blockchain) media coverage is..."_

I was in Japan two weeks ago and saw for myself. I was actually surprised
about payments being taken in bitcoin when I heard a customer at a FamilyMart
talking about it and double checked with the clerks just to make sure I wasn't
misunderstanding.

I may have misunderstood the timing with Peach's support, since I wanted to
book in NTD (the currency of my bank account) anyway. That said, exactly none
of my comment comes from speculative media coverage. It's literally all from
first-hand experience interacting with companies as a customer.

------
chrisco255
I think Bitcoin has been growing in popularity since it began, but we first
saw mainstream interest in 2013...then interest waned in the wake of the Mt.
Gox disaster. Since then, I think the platform and tooling has matured. You've
got exchanges like Coinbase that have developed methods of securely storing
Bitcoin and have at the same time made it easy for the average person to link
to their bank accounts.

I think Ethereum has come up with a novel use case for Blockchain as a
distributed computer (as opposed to merely a distributed ledger). And all the
alternative cryptos are trying to show that there are use cases for other
protocols, too.

So the competition, the tooling, the ecosystem, all of these are exploding
right now. There's a lot of money pouring in, developers are getting excited
about it...It feels like a new paradigm, distributed apps have some exciting
implications. No one knows what this will look like, but it feels a bit like
the early dot com era right now.

~~~
forkLding
Thats actually the part I don't understand, one could argue that VR is in a
similar or even more advanced stage than Bitcoin/Blockchain in terms of
tooling and platforms simply because of the exposure on a day-to-day basis but
we've recently seeing VR die down, VR equipment price cuts to encourage sales
and HTC looking for a buyer for its Vive.

In fact one bitcoin is worth almost 6 HTC Vives. I'd argue that there was even
bigger interest in VR than Bitcoin specifically and yet Bitcoin has emerged
the winner recently.

~~~
nylonstrung
That's a weird comparison. VR is largely consumer entertainment at a point in
time when we have unlimited amounts of it and it requires hardware that most
consumers can't afford and lacks content.

Crypto is an investment that provides yield at a point in time where very
little can be found, equity markets are overvalued according to many
indicators and an increasingly wealthy population in China is seeking
investment opportunities not associated with the Yuan that they can't get in
any other form.

Crypto has the potential (however likely you think) to completely redefine the
world economy via decentralization. A decentralized, unregulated currency that
doesn't require intermediaries and can rapidly transfer and store massive
amounts of value with relatively limited transaction fees is unprecedented. VR
by comparison is largely a mere iteration on existing entertainment systems
right now.

~~~
forkLding
I guess what you are saying is right, I based my opinions mainly on the
companies backing which technology, it seemed like to me that Facebook, HTC,
etc. had a better advantage of turning a technology popular than Bitcoin which
is more open-source.

------
nikolay
It's, in fact, getting less popular outside of speculation - it's only
practical use. Most articles and news are about blockchain technology gaining
adoption, not Bitcoin per se, which is obsolete already. What's getting
popular is Ethereum, and Ripple which is a far more superior platform with
real potential but not as lucrative for speculation.

~~~
davidgerard
The "Blockchain" hype is totally being carried by the hype in cryptos, though.
And it is hype - there's endless hypothetical proposals, and endless bare
excuses for an ICO, and endless pilot programmes that IBM's managed to sell
someone on, but there's about 0 being put into production use.

~~~
badestrand
>> but there's about 0 being put into production use

Daimler for example is currently using Blockchain to manage a 100 million Euro
loan [1]. They will still use their old tech (faxes and lots of beaurocracy)
in parallel on this deal since is there is much at stake, obviously. But it is
a nice experiment that will certainly inspire others, if successful.

[1]
[https://www.daimler.com/investors/refinancing/blockchain.htm...](https://www.daimler.com/investors/refinancing/blockchain.html)

~~~
davidgerard
Literally the subheading on that page:

> Joint pilot project

------
doomjunky
Crtl + f "bubble" => 17 matches

Since no one mentioned it yet - deflation.

The total amount of bitcoins is limited. Although the last bitcoin has not yet
been mined, the available amount of bitcoin has stabilized, because the
bitcoin-mining-process has slowed down and is in parity with the bitcoin-got-
lost-process.

------
vram22
Coincidentally, there is a recent post on AVC.com (the VC Fred Wilson's blog)
about Bitcoin:

[http://avc.com/2017/08/store-of-value-vs-payment-
system](http://avc.com/2017/08/store-of-value-vs-payment-system)

Note: I don't have a position or view on this topic either way, just posting
it here to see if there are any interesting comments here on it, from which I
or others might learn something.

------
wnmurphy
What would happen to the long-term legitimacy of the bitcoin market if corrupt
state actors started investing heavily in order to hide money laundering?

------
fwdslash
It's the network affect. More people using it, the price rises, more people
buy, the price rises more, and on and on.

~~~
forkLding
It could be but whats the network effect about? Like I can see a network
effect coming out of Facebook for connecting friends, what would bitcoin do
thats so powerful, that more people use that the price would rise? Transfer
money internationally in a fast and cheap manner?

~~~
ramphastidae
The more people that are willing to accept Bitcoin in exchange for goods and
services, the more valuable Bitcoin is.

~~~
davidgerard
That's been less and less, though.

~~~
fwdslash
Mainly because of fees. I'd say crypto (as a whole) has had a huge increase in
acceptance overall, and with Bitcoin being the easiest to purchase and usually
the favored currency to trade alts with, it's natural that it's only grown in
popularity.

~~~
davidgerard
"acceptance" is a weasel word. It's an asset bubble, where the "acceptance" is
for the purpose of speculation in the hope of getting rich for free.

Note the actual comment I'm responding to:

> The more people that are willing to accept Bitcoin in exchange for goods and
> services, the more valuable Bitcoin is.

Approximately nobody accepts Bitcoin in exchange for goods and services except
to buy drugs. Which does count as a use case, but it's a trivial one compared
to the speculation; and even drug buyers and sellers are endlessly frustrated
by the transaction clogs.

------
wizeman
I especially like the way the following video explains the long-term vision of
why Bitcoin is valuable. Once you understand the long-term vision, and how
Bitcoin's fate is still very much up-in-the-air in some respects and still
subject to a lot of speculation and possible government interference, it's not
hard to understand that such large short-term upsides and downsides are to be
expected. The speaker is Andreas Antonopoulos, a particularly eloquent speaker
(IMHO) about all things bitcoin:
[https://youtu.be/ONvg9SbauMg](https://youtu.be/ONvg9SbauMg)

------
freech
Every day Bitcoin survives proofs that it works.

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2_listerine_pls
Suddenly?

~~~
forkLding
It jumped ~2000 dollars USD in less than 2 months

[https://www.coindesk.com/price/](https://www.coindesk.com/price/)

~~~
2_listerine_pls
We have seen that story over and over in the last few years. it goes from 1 to
2, then from 2 to 4, etc...

~~~
forkLding
Well press all on the timeline below:

[https://www.coindesk.com/price/](https://www.coindesk.com/price/)

and you will see what I mean.

A huge jump in pricing (~3500 USD) in less than 5 months is a jump in
popularity no?

Like individually it seems small, but once you realize the market cap, its
pretty big. If this was Apple stock price in the same scale of time (Apple's
market cap jumps 350% in 5 months, note that Apple stock price has always been
less than Bitcoin so it would be even greater if for Apple), people would be
running around screaming and asking why Apple stock suddenly became so
popular.

------
natch
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