Ask HN: Why is Bitcoin rising but ethereum remaining stagnant? - aecorredor
======
vessenes
I’ve been watching this actively, and have a few theories:

The last major forks (ETH:ETC, BTC:BCH) both created net positive value; that
is, the total value held after the split was greater than the value of a
single chain.

So, I think the so-called ‘smart’ money ahead of the fork has been to buy BTC,
since history seems to show it will be worth more post-fork. Fork looks more
likely -> more buying.

And of course the rising price creates its own momentum. There are three
general outcomes from the fork: one or the other side ‘wins’, and there’s a
shit-chain spawned, or they both coexist.

In the coexist world, we have a pretty interesting set of market moves ahead;
if the debate is as divisive as it looks on twitter, then the whole crypto
world will be holding ‘shit coins’, but not ones others think are shit, along
with their preferred fork.

It seems possible that they may turn some of those into Ethereum, and it seems
likely to me that some traders will ‘get back’ to Ethereum post-fork; all
those would indicate some cautious optimism about ETH prices later this fall.

And of course if BTC just totally nukes itself, then I think you’d see a major
flippening back to ETH.

~~~
panarky
1) The gargantuan Chicago Mercantile Exchange says they'll start trading
futures contracts on Bitcoin later this year.

2) There's a "flight to safety" quality to Bitcoin. It's proven secure in the
face of 9 years of constant attacks. Ethereum is newer and not as proven yet.

3) Bitcoin has a much more powerful mining network, currently cranking 10
exahashes per second and growing fast. Ethereum is at 100 terahashes per
second (about 100,000 times less), and growing slowly.

4) Bitcoin is scarce and deflationary. Ethereum is abundant and inflationary.

~~~
mrfusion
Why is it inflationary?

~~~
panarky
The bitcoin network rewards miners with 12.5 new BTC every 10 minutes or so
(~1,800 per day).

The ethereum network rewards miners with 5 new ETH approximately every 15 to
30 seconds (~18,000 per day).

Bitcoin's total supply is now about 17 million BTC, and will never exceed 21
million BTC.

Ethereum's total supply is now about 96 million ETH with no upper limit.

~~~
endangered
> The ethereum network rewards miners with 5 new ETH approximately every 15 to
> 30 seconds (~18,000 per day).

This is _not_ true. After the last hard fork, the reward for miners went down
to 3 ETH.

~~~
panarky
It's a little complicated with uncles, etc., but the net result is more than
20,000 brand new ETH created every day.

Here's a chart of daily block rewards.

[https://imgur.com/a/JG9W5](https://imgur.com/a/JG9W5)

------
psion_
Firstly Ethereum could only be considered "stagnant" from a price perspective
as a great deal of development is definitely ongoing.

So a better question might be: why is Ethereum not experiencing the same
levels of hype and price growth as Bitcoin right now?

My guess would be that rising ICO anxiety is causing enough flight from Ether
to other currencies to suppress any hype-induced price bumps.

~~~
saas_co_de
After an ICO the companies have to start cashing out Ether to fund their
business plans so the success of ICOs puts downward pressure on Ether unless
the ICOs are successful enough to bring new money into the ecosystem.

The ICO craze seems to have peaked and to be in rapid decline now with many
governments cracking down or threatening to crack down on fraud so it is
doubtful that ICOs can really bring new money to the table at this point.

The other big question on Ether (for me) is the talk about going from proof-
of-work to proof-of-stake. That sounds like something that would sharply cut
the price of Ether, which is good if you want the network to actually be
useful, but bad if you are a speculator.

~~~
Mouse47
>The other big question on Ether (for me) is the talk about going from proof-
of-work to proof-of-stake. That sounds like something that would sharply cut
the price of Ether, which is good if you want the network to actually be
useful, but bad if you are a speculator.

Why is that? I'm pretty uninformed on this stuff...I get that POS basically
replaces risk via electricity cost with risk via an Ether stake...but I don't
get how it changes the supply or demand...

------
rudiger
Supply and demand.

There is no limit on the supply of ETH, whereas there will only ever be 21
million bitcoins in existence.

It doesn't make sense to speculate on the price of ETH, because it's never
going to be scarce. Even the current price of ETH makes no sense, except you
need it to buy into ICOs.

~~~
victorquinn
"It doesn't make sense to speculate on the price of ETH, because it's never
going to be scarce."

This is totally not true. I hate seeing people post FUD like this about ETH.
It does not grow unbounded.

Here's a post from Vitalik himself describing it in more detail

[https://www.reddit.com/r/ethereum/comments/5izcf5/lets_talk_...](https://www.reddit.com/r/ethereum/comments/5izcf5/lets_talk_about_the_projected_coin_supply_over/)

~~~
RaleyField
> I hate seeing people post FUD

I hate people accusing others of spreading FUD. What happened to people being
simply mistaken? Do you have any proof his or her ill intent?

~~~
victorquinn
Fair point but when someone says "X will never ..." as a justification for it
not meeting that qualification and there being no evidence that their
assertion is true, there is either (a) a fundamental misunderstanding of X or
(b) malicious intent.

I don't think suggesting FUD is explicitly saying that (b) is present, it
could well be (a) but if that's the case it is still harmful and one can
spread FUD without the malice. But it is reckless and irresponsible to state
something which is simply not true as if it were fact. This is a problem in
our current world and one which has run rampant and I think it is necessary,
particularly in forums such as this, to question the assertion of unverified
facts.

------
indubitable
I think there's a straight forward explanation. Bitcoin has fundamentally
proven its stability this year. It's already had one fork and China cracking
down on it hard. It was a major test for Bitcoin and the net result was
Bitcoin came out literally stronger than ever after a drop that was, in
hindsight, just a blip. If that news didn't trigger a devastating sell off
it's somewhat difficult to imagine what would.

Another key point is that Bitcoin also has inherent value as a currency. You
can pay for things easily and quickly _directly_ with Bitcoin in an increasing
number of places. Should somewhere like Amazon decide to start directly
accepting Bitcoin, the price would go through the roof.

And one more debatable issue is that Bitcoin is in a way a sort of metronome
or heartbeat for cryptocurrencies as a whole. Almost like a reserve currency.
If Bitcoin fails, it would likely have a devastating ripple effect throughout
the entire crypto community. "If Bitcoin fail - anything can fail." is
something that would likely be uttered rapidly in response to any other
crypto. So an investment in Bitcoin can in a way be seen as an abstract
investment in cryptocurrency itself. If you accept this, then the corollary is
that other coins are indirectly marked against Bitcoin. So you would be
implicitly taking on additional risk for unclear gains.

------
bbarn
Because the people buying it and driving up the price don't care about block
chain or alternate economics or anything like that. It looks like stock that
keeps going up. Plenty of people are buying it purely as an investment.

------
fernandopj
I'd say two things at this point in time: 1) All-time high, it's pre-fork
time, Bitcoin is still a long position, so people who have a lot of
cryptocoins are trying to expand their portfolio BTC %. And all new investors
are coming to BTC. ETH, like every other altcoin right now, is being traded in
favor of BTC, so no way value will go up pre-B2X. 2) ICO banning, regulations,
and general uncertainty at new coins make Ethereum & ETH, as far as price
speculation goes, a less favorable proposition, since its speculative driver
(ETH for ICO) lost momentum. IMHO it's remarkable the ETH/USD price is still
stable, hovering at US$300.

------
andrewla
It's meaningless to speculate on these short-term price movements.

There's a possibility that the pricing is being determined by macroeconomic
forces, but then it seems like you'd see price movement in traditional
commodities as well (like gold) and we're not seeing that. In all likelihood
this is the combination of some set of factors -- the CME group's involvement
or more people looking to enter the market, etc., and Bitcoin's preeminence in
the cryptocurrency space.

There's the movement of Bitcoin Cash, which is going up at an even faster clip
(now) after stagnated for a while after the post-fork excitement. This is not
obviously connected to any of the CME-based news.

Most likely is that each coin is acting somewhat independently. As much as you
can say that Ethereum is stagnating, it's not stagnating any more than Bitcoin
was a year or so ago.

Only time will tell if the current pricing changes are reflecting some deeper
reality, but I'd hesitate before attributing anything like that until we have
more information.

------
mbrock
Why did a red and blue colored canvas by Mark Rothko sell for 75 million
dollars?

Memes are weird and money is even weirder.

~~~
r0fl
Easy way to launder $75,000,000 out of China by buying the canvas,
transporting it out of China and then selling it.

That's why it's worth $75,000,000.

~~~
solotronics
I find it odd that everyone thinks Chinese money laundering is the source of
high valuations and not unprecedented amounts of central bank money creation.
It is a function of their own efforts to devalue their currency more than the
foreign ones so that they stay competitive exporting. Bubbles all around.

------
rafiki6
Not a very scientific theory, and not much collected evidence but based on my
observations Bitcoin get's much more press, more people know about it and want
to buy it. It's all very speculative. To say 1 bitcoin is worth 7000 USD is
the same as saying I can manage to sell all my bitcoin for that much which is
likely not the case. As with all assets, the moment a major player loses
confidence and signals such in the market, there will be a sell off and major
crash in the value.

EDIT: anectodal evidence, this week more than 10 non-tech people who ask me
for investing advice asked "should i buy bitcoin". The moment non-experts
begin to ask if they should be buying something is generally a good signal
that something is bubbling

------
Sevii
There is a fork coming up, people are hoping to profit off of both chains.

------
xiphias
Ethereum just had a hard fork where a ,,quick patch'' for a bug was created 2
days before the fork. The developers didn't agree if there should be a hard
fork or no at that point. I would never put my money on a system like this,
and I would never roll out a system like this where I can make tens of
billions of dollars of damage so easily.

Also people who were using an official Ethereum multi-sig wallet to be extra
safe lost real money, because the devs don't even bother testing the smart
contracts that they provide (while Bitcoin devs just created a language from
ground up that allows proving properties of smart contracts)

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krisives
Because BTC has had many changes in available supply. With BCH and 2X a lot of
people that otherwise would happily hold their coins in cold storage have been
"forced" into moving their coins around for "flippening" of the forked coins.

Also consider that a very large amount of coins was seized when BTC-E (corrupt
exchange working with criminals) and AlphaBay (defunct darknet drug website)
were shutdown around the same time. It's not just the capital that was seized
(and is still be processed by many governments that co-operated) but also the
flow of money that was interrupted.

------
Top19
I would say brand recognition among amateur investors. Amateur investors, just
like in the dot-com era, drive huge upsurges in prices, and tend to be
indicative of the late stages of a bubble. Even Richard Shiller though, a
really brilliant economist, does not even try to attempt when bubbles will
"pop", but a good rule of thumb is they don't last longer than 10 years. It's
hard to argue when this all started, but if you date the rise of the "start-up
era" (which I am lumping in here with bitcoin) to say 2010, that gives you
about 2 years max.

BTW this was all very common in the 90's with the rise of day-trading. People
would literally give a company 50k and they'd be given a terminal at some
rent-a-office to start trading (but with their own money not the firm's!!!).

One guy lost so much money, he killed as many people as Columbine:
[https://en.wikipedia.org/wiki/Mark_O._Barton](https://en.wikipedia.org/wiki/Mark_O._Barton).
I wonder if this will happen again.

------
vita17
Ethereum is stagnant because it's no longer profitable to mine with a GPU as
it was during the summer.

Bitcoin is rising because it's about to fork.

~~~
mizzack
Still plenty profitable to mine if you already have a rig. A 6 card RX470/480
setup will gross about $9/day.

~~~
Lon7
Even with a rig like that it will take around 10 months to break even.
Ethereum will be moving to proof of stake in the future. There is no set date
but it could be in approximately 1 year. At that point all these gpu rigs will
need to switch to other less profitable cryptocurrencies.

We're reaching the point where it may not be possible to break even before
Ethereum switches to proof of stake. Consequently, it's recently become easier
and cheaper to buy gpus suited to mining.

~~~
mizzack
I did say "if you already have a rig". For the time being, it still makes more
sense to mine than liquidate cards.

The market is all over the place right now for mining altcoins. NiceHash-
Cryptonight (pays out in BTC) will currently gross ~$18-20 a day with the same
mentioned setup.

------
sandGorgon
This is my theory - Proof of Stake.

Ethereum is going to hard fork (whenever they can figure out) to a proof of
stake model - CASPER.

[https://www.coindesk.com/shifting-changing-ethereums-
casper-...](https://www.coindesk.com/shifting-changing-ethereums-casper-code-
takes-shape/)

This means that there is no serious investment on the farm side of things. No
chinese miners running to invest millions of dollars to build mining farms.

To a large extent ETH is centralized in its stewardship through Buterin. So,
the whole ecosystem is holding its collective breath. The next phase of growth
(or fall) will only come after CASPER.

------
readhn
Getting my pop corn ready for first at least a 50% hair cut on BTC value.

~~~
icelancer
You and everyone else predicting it since it was $200.

~~~
readhn
The mania phase is pretty clear here. What goes up like that must come down.
It's simple as that.

Study currencies, stocks and commodities price histories before and after they
entered parabolic phases. Nothing lasts forever.

~~~
icelancer
>>Study currencies, stocks and commodities price histories before and after
they entered parabolic phases. Nothing lasts forever.

Right. Except the ones that do. And even if you correctly predict that BTC is
going to collapse... when? At $2000? At $5000? At $7100? Are you doing
anything to bet on it by shorting it? Or are you just prognosticating and
trying to timestamp a comment so in [x] months/years you might be able to link
back to Hacker News and say: "A-ha! I knew it," ignoring all the other
predictions you may or may not have made that didn't come true.

It's easy to say BTC is going to collapse. A lot harder to have some
conviction behind it and act.

------
paulgb
I'm surprised nobody has mentioned the CME news:
[http://www.cmegroup.com/media-room/press-
releases/2017/10/31...](http://www.cmegroup.com/media-room/press-
releases/2017/10/31/cme_group_announceslaunchofbitcoinfutures.html/)

(My own explanation is that it's all a big speculative bubble and price moves
are essentially momentum on top of noise, but nobody came here to read that
:))

~~~
brianbreslin
I understand how Futures work in commodities. Can you give me a TLDR primer on
how this works for currencies?

~~~
panarky
Just like any other cash-settled commodity.

[http://www.cmegroup.com/media-room/press-
releases/2017/10/31...](http://www.cmegroup.com/media-room/press-
releases/2017/10/31/cme_group_announceslaunchofbitcoinfutures.html)

------
bmcusick
My theory is that ETH is a useful medium of exchange for buying compute
resources from "the world computer", but BTC is better as a store of value.
And the dollar continues to be better than both of them as a unit of account.

Basically, competing forms of money are breaking down into specialized kinds
of money. Automatic atomic swaps between blockchains will make the
specialization even more obvious over time.

------
muzani
Market value is based mostly on emotion. A lot of people buying into the hype
have heard of BTC, but not as many have heard of ETH.

People are mostly buying it to resell it. BTC price goes up because BTC price
is going up. ETH price is not going up because it's not going up.

Sometimes the inferior technology wins too as long as it's been adopted more
widely. Cryptocurrency value is based heavily on network effects.

------
emerged
Bitcoin is still the word most strongly associated with blockchain. So
whenever someone wants to make money off that new blockchain thing Chad made a
million buying, they default to Bitcoin.

Then Phil and Susie also made money since Tammy and Jeff bought in as well, so
Tom and Jennifer buy it too. Etc.

------
richardknop
More people are buying bitcoin than ethereum. Therefor the price goes up
faster. Supply / demand.

------
sharemywin
Does nicehash have an effect on how alt coins are priced compared to bitcoin.
It's a market where you mine altcoins for bitcoins. Not sure how large it is,
but wondered if it was affecting the relation to prices.

------
libovness
No different than asking "Why is the internet service Facebook growing but the
internet service Twitter isn't?" or "Why did the internet website Facebook
grow but the internet website WebVan didn't?" Bitcoin and Ethereum serve
different purposes (a store of value and maybe a currency vs. a computing
platform, respectively).

------
romanovcode
Because Etherium is altcoin while BTC is the main one.

------
onecooldev24
Cause ETH requires all the servers to process a single transaction to validate
it. The tech makes no sense.

------
celticninja
Ethereum has no defined use case, bitcoin is at the least a store of value.
ETH is no different to LTC, NMC or any of the myriad other alt coins. You
would be better asking why LTC is stagnant rather than ETH. Further ETH is an
unlimited coin so it could never see the scarcity that BTC has built in to it.

~~~
fernandopj
Two use cases: 1) Smart contracts (currently the most used blockchain to run
one); 2) New tokens/cryptocoin (most used blockchain to run ICOs). Disagree
with Ethereum value proposition/implementation all you want, but saying
"there's no defined use case" is nonsense.

~~~
celticninja
Smart contracts have not exactly been successful as far as I can see. the
biggest news in ETH was the fork to ETC and the reasons behind it. Combined
with the limitless supply it means it will never be worth more than bitcoin.

~~~
celticninja
also ICOs seem to be the newest fraud on the block, thats not ETHs problem,
just like darknet market use wasnt BTC's problem, but the 2 use cases you have
provided are not shining examples.

I agree it has some potential uses but its main uses have to date been quite
flawed. It would need to restore confidence in its uses before it attracts
some serious interest.

