
Bitcoin surges to all-time high above $1,700 - 16bytes
http://www.reuters.com/article/us-markets-forex-bitcoin-idUSKBN1852DL
======
kyledrake
The bull run going on with Bitcoin right now is very concerning to me. There's
been no recent improvements to the utility of Bitcoin, instead there's been
scaling issues and an ugly, contentious civil war over how to solve it. It's
utility if anything has dropped considerably, as mining fees have become far
higher than traditional methods and more unpredictable, leaving smaller
transactions to sometimes take 16+ hours to confirm, even with the default
fees set by the wallet.

Historically, a lot of this activity tends to be from unregulated exchanges in
Asia, many of whom could be engaging in some form of price manipulation (it
wouldn't be the first time - google for Willy Bot). My Bitcoin friends in town
have started to joke that the reason it's going up is just the word "China",
because it tends to be a repeated explanation of why the price is increasing,
suggesting to me that nobody really knows what's going on or even where the
demand is coming from.

I'm not anti-bitcoin, but I'd vastly prefer to see a slow, stable increase in
price based on the currency improving in utility, not these giant blasts of
speculation that, IMHO, only work to discredit Bitcoin as a serious instrument
for financial systems. An extreme example of how bad this is getting right now
that I seriously hope is just a joke:
[https://np.reddit.com/r/Bitcoin/comments/6a3lvd/today_i_took...](https://np.reddit.com/r/Bitcoin/comments/6a3lvd/today_i_took_out_a_325239_equity_loan_on_my_house/)

~~~
goodside
One way to read this is that every year that goes by without the discovery of
a major, world-ending flaw in the Bitcoin protocol should increase your
confidence that there won't be one soon, so you should expect growth even if
all else is equal. It's not just time either, as the "bounty" on such a
discovery is proportional to the market cap of Bitcoin.

~~~
codexon
All crypto will eventually be broken. SHA-1 seemed bulletproof a few years
ago, and now people are trying to phase it out.

If it becomes worth it to break bitcoin, these vulnerabilities will be used,
discovered faster, and likely won't be published before someone uses it to
profit off Bitcoin and crashing the price.

Bitcoin is priced this high because uneducated people expect it to replace
paypal and credit cards but it will never be able to because 1 transaction
take 30+ minutes and that is by design. The faster they make transactions
take, the higher chance of forgery. Other crypto-currencies that attempt to
have faster transactions are simply trading safety for speed.

~~~
placeybordeaux
For a merchant a CC transaction can take up to 30 days. A customer can
initiate a charge back any time between when they txed and when they pay their
bill.

With bitcoin the ~10m+ tx time is a cost, but is in material if you are
dealing with either a trusted party or a small amount of $

~~~
codexon
> For a merchant a CC transaction can take up to 30 days. A customer can
> initiate a charge back any time between when they txed and when they pay
> their bill.

Customers don't care how long a transaction takes for the merchant.

Have you ever tried selling anything for bitcoin? Nearly no one will use it
even when being told of all the "benefits". They don't want to wait 30+
minutes. When they see they need to give some exchange a scan of their
passport and wait 3-5 days to link their bank account, and losing the ability
to do a chargeback, they never think about using Bitcoin again.

~~~
placeybordeaux
I've only bought a couple things with bitcoin, never sold.

The current story for bitcoin is pretty sad, largely due to slow adoption and
not much of a good story for consumers.

The good thing is that bitcoin doesn't have to compete directly with CC
companies. There are cases that it solves that CC companies aren't interested
in.

There's all this concern about price volatility and tx rate, but it's been
used continuously in spite of price volatility, and saying no one wants to use
bitcoin because there's too many outstanding bitcoin transactions just isn't a
serious argument.

I care about bitcoin because it is an interesting piece of technology that
enables things that weren't possible before. I'll hold bitcoin so long as they
don't go to zero, none of the concerns listed about bitcoin that I have heard
are serious arguments on why it might go to zero, so I'll hold.

~~~
bubblethink
>The good thing is that bitcoin doesn't have to compete directly with CC
companies.

Current CC companies are essentially two products. One is the transaction
processing side of things, and the other is the financial + insurance product
which protects both parties from fraud, chargebacks etc. Crypto currencies
should be able to make transaction processing effectively free. All you need
is an insurance product that operates at margins lower than 2-3% (current
credit cards).

------
t0mbstone
Currency isn't SUPPOSED to be this volatile.

Currency is NOT supposed to be an investment mechanism in and of itself.

If I buy a loaf of bread for $1 now, I should be able to buy a loaf of bread
for $1, 10 years from now.

Currency inflation is BAD, and so is currency deflation.

Stability is GOOD.

The fact that bitcoin's value keeps skyrocketing proves that it is a
speculative currency which is too volatile for use. The only way I would trust
bitcoin for anything would be for short-term holding to transfer value from
point a to b, and then convert it back into a stable currency.

The only way I would invest in Bitcoin is if I was totally okay with
potentially losing every penny I invested. It could literally drop to zero
tomorrow if something happened to it (like a major country making it illegal,
for example).

~~~
hartator
Why stability is better than volatility?

It doesn't seem that obvious to me. Every time price stability is forced onto
something, it just destroyed its market.

~~~
dxhdr
> Why stability is better than volatility?

It's self-evident that a stable currency is preferable to volatile, though I'm
interested in reading an argument to the contrary.

volatile: liability to change rapidly and unpredictably, especially for the
worse.

stable: not likely to change or fail; firmly established.

~~~
chii
Let me play the devil's advocate, and day that volatility is an enabler for
gambling or betting, and people are known to want to bet.

------
flashmob
Interesting to note that at the same time bitcoin's dominance in the
cryptocurrency market is down to 55.5%, hugging historic lows.
[http://coinmarketcap.com/charts/#dominance-
percentage](http://coinmarketcap.com/charts/#dominance-percentage)

~~~
Taek
Market cap is a fairly easily manipulated statistic, and doesn't make a whole
lot of sense as a comparison anyway.

For one thing, a lot of those tokens are either centralized or represent
products that don't even exist.

For another, they are over-counted. Imagine the thought experiment: I create a
new eth token and sell a bunch, pumping the market cap of my new asset to
$100M. That eth that was paid for my asset was not sold - I'm still holding
onto it.

Now I've just added $100M+ to the 'dominance' factor by doing nothing. People
bought my token, and maybe even bought eth to buy my token, with no sell
pressure being added anywhere in the eth ecosystem. This extra dominance was
just sort of poofed out of nowhere.

So, 55% is not really as meaningful as some people ascribe.

~~~
flashmob
True, no statistic tells to whole story and should be taken with a grain of
salt. However, I think this metric has a lot of psychological value as it's
easy to grasp and has been generally accepted by the bitcoiners when it was
80%.

Do you think there could be any other metrics that can tell a better story?
(serious question, just wondering what your thoughts are)

------
vocatus_gate
Still remember when it was $7 per bitcoin and sort of a joke. Hard to believe
it's worth over $1700 now.

~~~
mikeash
It's amazing to think of the RoI you could have gotten for a few hours of
computer time if you were mining early.

Of course, for every Bitcoin, there's a million stupid schemes that don't work
out, and it's hard to tell them apart.

~~~
dibujante
I mined 50BTC back in college. My harddrive died and I discarded it, thinking
nothing of the ~$0.03 I was throwing away.

~~~
doubleunplussed
I wonder if in the future "bitcoin miners" might be a more literal name, for
those digging through landfill looking for hard drives like the one you threw
away.

~~~
mikeash
It's already been done at least once: [https://www.cnet.com/news/uk-man-tries-
to-retrieve-7-5-milli...](https://www.cnet.com/news/uk-man-tries-to-
retrieve-7-5-million-in-bitcoins-from-dump/)

------
joepour
The reason BitCoin has spiked is because it is the most supported crypto
currency and the easiest to get hold of when setting up your wallet with a
bank or exchange.

There has been and influx of people trying to buy Etherium but first they need
to buy BitCoin.

------
moneytalks
Where does the $52 billion market valuation come from? All BTC ever created or
those traded recently?

Any evidence of the # of coins lost forever? I know I had one or two from the
early days that got forgotten and lost with a hard drive wipe.

Also, do BTC disappearing from circulation affect the currency differently
than a fiat currency?

~~~
anonova
> Where does the $52 billion market valuation come from?

That seems to be a mistake in the article. $52 billion market cap is of all
currently tracked cryptocurrencies, not just bitcoin.[1] Bitcoin is ~$28.7
billion right now.[2]

[1]: [https://coinmarketcap.com/charts/](https://coinmarketcap.com/charts/)

[2]:
[https://coinmarketcap.com/currencies/bitcoin/](https://coinmarketcap.com/currencies/bitcoin/)

~~~
kbody
Also, beware that the marketcap figures are not quite true [1]. They calculate
based on the total supply rather than the circulated supply and on some
(scam)cases like the recent Gnosis ICO it results in crazy amounts.

[1]: [https://blog.sia.tech/want-to-deflate-the-token-bubble-
fix-t...](https://blog.sia.tech/want-to-deflate-the-token-bubble-fix-the-
market-cap-indicator-d50f7f1e1ec4#f4f4)

------
ggambetta
I'm still waiting for my MtGox coins to be returned :_(

~~~
tannerwj
it could actually happen

([https://www.reddit.com/r/BitcoinMarkets/comments/6a24et/if_p...](https://www.reddit.com/r/BitcoinMarkets/comments/6a24et/if_price_keeps_rising_mtgox_may_become_solvent/))

~~~
radarsat1
Something about this doesn't make sense. Either he pays in BTC or JPY. If he
pays in JPY, then he has to sell the BTC, which if he does that on market,
will tank the price. If he pays in BTC and the courts recognize it, then BTC
must be officially recognized as a currency, no? Not sure.

In any case, _if_ the courts recognize that he can pay back in BTC, and he has
enough BTC to do so, then I don't see why it's contingent on the BTC price. He
could do it today.

------
massaman_yams
It's not just bitcoin. ETH and LTC have both spiked in price recently as well
- ~2x for ETH, and ~3x for LTC, vs. prices 30 days ago.

~~~
DaiPlusPlus
LTC spiked because Coinbase added them to their trading service - I'm
surprised that making something simple and easy to use would bolster activity
like that.

Is it safe to say "Coinbase is the iPod of Bitcoin"? That's what it feels
like.

~~~
strictnein
Only if trying to buy songs on an iPod caused your bank to freak out. I'm at a
top 5 US bank for my checking and credit card. They were nonplussed with my
attempts to move money to Coinbase.

~~~
DennisP
I'm at a credit union and had no problems whatsoever.

------
dangero
For anyone who is interested in looking at some growth data take a look at
this chart showing the worldwide value transfer of Bitcoins through
localbitcoins denominated in USD:

[https://coin.dance/volume/localbitcoins](https://coin.dance/volume/localbitcoins)

------
dwaltrip
It's amazing to me how many people on HN don't really get why Bitcoin is
valuable.

The simplest way of putting it: if one doesn't believe gold is going to
imminently plunge in value, then there you go. That's why Bitcoin is valuable.
It's digital gold. The analogy isn't perfect, but as far as analogies go, it
is a very good one.

~~~
mcv
It's not digital gold, and it has plunged in value far more dramatically than
gold ever has.

That said, I don't grok the value of gold either. It doesn't have any
intrinsic value, it's only valuable because people agree they need something
that has value. Bitcoin is the same, except without the centuries of history
of people irrationally relying on its value.

~~~
dwaltrip
Value is socially constructed by people wanting things for complex, dynamic
reasons -- it is entirely dependent on the context, which is never static. My
understanding is that the concept of "intrinsic value" is flawed and leads
people astray. Gold has strong money like properties [0], which is why it has
remained valuable for so long (ornamental and industrial usage are a small
fraction). Bitcoin has all of these properties as well (perhaps with minor
caveats about fungibility), plus some of the very interesting benefits that
come from being digital. Being digital brings a few negatives as well, but it
seems the positives more than compensate.

There are other considerations -- gold is found in the ground and has limited
alternatives (platinum and silver, for example), while anyone can create their
own cryptocurrency. It appears to me that the huge network effects, first
mover advantage, and the principle of "well, it's good enough" are very
important dynamics that counteract the near infinite possible competitors.

[0] Recognizable, durable, fungible/uniform, and very hard to counterfeit. Two
other big ones are portability and divisibility, which it's alright at.

~~~
mcv
Intrinsic value is a real thing. Land has it. Labour has it. Companies and
machinery do. Anything that can produce useful things. And of course the
useful things themselves.

The real reason for the value of currencies is not the gold backing up that
currency, but the economy backing it up. And when that economy goes down, so
does the currency. And that's the problem with bitcoin and other
cryptocurrencies: they only have value when people accept them as payment for
something valuable. Without that, they are worthless, as shown by both the
history of bitcoins and other cryptocurrencies, and by the fact that anyone
can make a cryptocurrency.

Bitcoin works as long as there are enough people who have faith in it, and as
long as there are a lot of people accepting it as payment. But when nobody
accepts it because nobody trusts it, then bitcoin is worthless. Trust is the
only thing it's based on.

Of course being able to pay digitally is tremendously useful, but you don't
need bitcoin for that.

~~~
dwaltrip
Hey, I meant to reply earlier but got caught up.

> Intrinsic value is a real thing. Land has it. Labour has it. Companies and
> machinery do. Anything that can produce useful things. And of course the
> useful things themselves.

These things all have value but that value is not static or independent of the
context. The word intrinsic implies otherwise, which is problematic.

Valuable beach front property may become essentially worthless if the sea
level rises and the area becomes flooded. Varieties of labor can become mostly
irrelevant (and thus much less valuable) if technology provides a more
effective solution.

> Trust is the only thing it's based on.

People trust bitcoin as the protocol and immutability of its ledger have
proven to be impressively reliable, to name a few reasons. It isn't blind
trust.

Of course, it is an open question to see how this will play out in the future.
But the bitcoin experiment has been quite successful so far.

------
headcanon
It's killing me too because I'm waiting on the next correction to come before
buying any more, but I thought that was going to happen earlier and I'm
kicking myself for not buying some a week ago.

The future looks bright for cryptocurrencies, but I don't want to buy some at
1700 and feel like a fool when it crashes back down to 1100

~~~
xienze
So just wait. It's going to crash again, it always does.

~~~
Taek
The question is whether it will crash from 2000 to 800, or from 6000 to 2500.

~~~
mcv
And we can't know, because it has no intrinsic value and nobody even
understands why it's so high right now. It might drop from 6000 to 2500, it
might drop from 1800 to 300.

Its value only comes from the trust people put in it, and from nothing else.
If that trust evaporates, so does the value.

------
jameslk
Of course the price of Bitcoin is going to keep rising due to the fixed amount
of coins that can be mined and all the long forgotten stale accounts with
coins just sitting in them. There will be a real issue with the velocity of
coins exchanged decreasing over time as they're horded in this fashion.

------
Mendenhall
Some of these exchanges have come a long way and the volatility makes it great
to trade cryptos. I still view it as the wild west, so scammers everywhere,
but where there is chaos there is profit!

------
faragon
TL;DR: "sky is the limit", "this is not a bubble but a new paradigm", "the
price is going up because of China", "buy before it gets too late", etc.

------
petre
It's not just Bitcoin. I see most cryptocurrencies going up in recent months.
Probably people and organizations pouring money from other assets into
cryptocurrencies, as these are not taxed and not subject to state/central bank
control.

------
eternalvision
For speculation on short term direction, current price of BTC which is above
$1,750 is a SELL. This move is parabolic and looks to be complete. I'd put a
stop loss for a short trade at $1,875.

------
anon4this1
Went to a bitcoin conference recently and met a plumber who had quit his job
to margin trade altcoins. I think a lot of his positions would have been wiped
out in the beartrap 12 hours ago.

------
pishpash
I'd like to understand where the trade flow is coming from, it may have
something to say about other, legitimate markets. That's way more interesting
and valuable.

------
grizzles
Anyone know a creative way I could go short bitcoin over a long time period?
eg. >5yrs

~~~
stupidhn
Write your own call options.

The challenge will be finding a counterparty. But look at _The Big Short_ ;
they're out there.

~~~
grizzles
On what market? I don't think there are any on CBOE. I'd be skeptical of a
market run by a bitcoin company even if it raised VC because: 1) The failure
rate of VC in general, and especially in fintech bets. 2) It's probably "pre-
revenue" eg. not profitable company 3) It will probably be a low volume market
& therefore have few counterparties.

------
johnwheeler
[https://en.wikipedia.org/wiki/Tulip_mania](https://en.wikipedia.org/wiki/Tulip_mania)

~~~
clarkmoody
Previously on HN:
[https://news.ycombinator.com/item?id=2561043](https://news.ycombinator.com/item?id=2561043)
(May 2011, price $7.50)

------
syngrog66
its clearly going up now because... its going up. its a cycle.

------
fivestar
I can't tell you that Bitcoin is a scam, but I can tell you that if I were
going to devise a Ponzi for the 21st century, Bitcoin is what it would look
and feel like.

~~~
kentt
Can someone explain to me why Bitcoin is compared to a Ponzi scam so often. I
understand what a Ponzi scam is and have a decent understand of Bitcoin. I'm
curious if people just mean it's scam and a Ponzi scam is fresh in their
memory.

~~~
brut
Here's one way to see it: if you _need_ to use Bitcoin to pseudonymously
transfer large amounts of money anywhere in the world relatively easily, then
you should worry not about the price it's currently trading at. If you want to
transfer 1 million $'s, then you buy the appropriate amount of BTC and cash
out when the transaction is done. A lot of people who are "invested" in
Bitcoin are there to make money selling it for a higher price than they bought
it for.

~~~
kristofferR
By that standard all investments made for purely financial gains are scams.

~~~
Taek
No because a lot of investments intend to create value along the way.
Investing in a startup for example hopes that one day they will be profitable.
You may intend to sell or exit before that point, but the people who buy from
you are looking forward to real world profits from adding real value.

It's only ponzi-esque if each person just expects the next one to pay more
than the last, with no value-added at any point in the process.

------
billions
Historically, as soon as bitcoin makes national press, it drops. Amateur
investors jump on without the stomach for the hiccups, leading to the
subsequent virtual "bank run"

~~~
conistonwater
A bank run is a pretty specific thing
([https://en.wikipedia.org/wiki/Bank_run](https://en.wikipedia.org/wiki/Bank_run)),
you shouldn't use that term for any general situation where lots of people
decide to sell something at the same time, or where a price of something drops
precipitously.

~~~
billions
Feel free to contribute a more accurate term

~~~
acover
Price drop. Supply glut. Demand shortage. Investor flight. Fire sale.

------
tonydiv
I think I can claim that I wrote the 1st academic paper on Bitcoin in early
2011. Anyone else trying to claim that title? :)

Unfortunately I was broke in school so bought and sold only a few coins. Asked
my lawyer dad for money, he laughed, just as all my Wharton finance friends
did.

[https://www.scribd.com/document/86764784/Diepenbrock-
Bitcoin...](https://www.scribd.com/document/86764784/Diepenbrock-
BitcoinReport2011)

~~~
hueving
The bitcoin paper was the first academic paper on bitcoin.

