
The Prophets of Cryptocurrency Survey the Boom and Bust - latchkey
https://www.newyorker.com/magazine/2018/10/22/the-prophets-of-cryptocurrency-survey-the-boom-and-bust
======
hudon
The article compares Cryptocurrency to Religion, roughly speaking.

First, there was financial chaos in 2008. Then with a bang, our Lord Satoshi
Nakamoto solved the double-spend problem and created Blockchain, and He saw
that it was good.

Second, you have your prophets: Vitalik who is an "alien sent to help us all"
and Joe Lubin who has "seen the light". These are men that have been revealed
something about Blockchain that no one else understands, thus them being a "9
out of 10" in terms of how much they understand the Blockchain. You can never
truly be a "10 out of 10" because that spot is reserved for our Lord, Satoshi
Nakamoto. But Vitalik is a Higher prophet than Joe because of his closer
connection to Satoshi, having been so involved with Bitcoin so early.

Then you have your priests, there to aid the prophets: Vlad Zamfir, performing
the ritual of computational wizardry in the corner of the room as the common
folk surround him and praise Satoshi. Emin Gun Sirer interpreting the Holy
Whitepaper out loud and vulgarizing its content for the masses.

Then you have the Temple: Twitter. Great truths such as "ok can you guys stop
trading" are recorded in the Gospels (IRC archives), and propagated and
interpreted throughout the Twitter Temple by the priests.

Fourthly, you have your warriors, guarding the Temple: Jimmy Song with a
cowboy hat, planting his foot on the ground, pointing at the heretics entering
the Twitter Temple and charging with religious fervor: "Shitcoin! Scam! Get
out of the temple!".

All the while, the Blockchain glows mysteriously as our coal plants feed it
more and more energy. Perhaps when the Messiah comes, we'll learn that
Blockchain was a parody of Humanity all along...

~~~
bouncycastle
I think most national currencies are based on religious-like beliefs and mass
delusions to some extent. Take the USD for instance. With "in God we trust",
and you have your great leaders and "prophets" i.e. founding fathers such as
George Washington and Benjamin Franklin printed on the back, governed by a
government that is bound to the "commandments" i.e. the Constitution...

All the while, the Whitehouse mysteriously glows as the nation's printing
press is busy churning out a few more batches of fiat in secret.

~~~
kiba
It's all about manufacturing shared realities.

For example, a corporation doesn't really exist independently outside of human
minds, but we often act as if it does.

~~~
nineteen999
> For example, a corporation doesn't really exist independently outside of
> human minds, but we often act as if it does.

Not only that, we go so far as to enshrine its rights in law.

[https://en.wikipedia.org/wiki/Corporate_personhood](https://en.wikipedia.org/wiki/Corporate_personhood)

------
mrb
I find it strange that journalists tend to use singular boom and singular
bust, and rarely mention that there's been at least 4 major boom/bust cycles,
each one bigger than the previous ones.

[https://i.imgur.com/ZQJfwp3.png](https://i.imgur.com/ZQJfwp3.png) (Source:
[http://bitcoin.zorinaq.com/price/](http://bitcoin.zorinaq.com/price/))

~~~
scoot
I got out after the first bust in your chart. Should have doubled down.
Hindsight is 20:20!

~~~
tim333
Indeed but how about now?

~~~
scoot
No more clue now than then!

------
gomox
As someone fairly knowledgeable about the Ethereum ecosystem I am pretty
impressed by the mostly accurate portrayal of the social intricacies of the
scene. I wonder how long this took to research.

------
paulpauper
it's remarkable how stable bitcoin has been recently. It actually has less
volatility than even tech stocks. The vast majority of people who trade
bitcoin and other currencies seem to have very little (less than 10k or so) ,
so this is not enough move the price much. The only way bitcoin can go up a
lot is if institutions and large funds buy it at once. Otherwise it's just
stuck in a really tight trading range.

~~~
latchkey
The interesting bit about the stability is the fact that 12,000 new bitcoins
enter circulation every week. The miners have to sell in order to pay the
power bills (or they are simply holding since the mining has centralized to
the bigger players with deep pockets).

So, how is the price remaining stable then? The general thought I've seen is
that they are selling on private markets and it is the institutions and funds
that are buying them up.

~~~
Theodores
There are private individuals, a.k.a. 'whales', that have millions of dollars
worth of Bitcoin to sell. These people can't sell on the exchanges we hear
about because these exchanges do not have buyers on them wanting to buy huge
quantities of Bitcoin.

You can't just go along to an online exchange and sell millions of dollars
worth of Bitcoin, not only is there the problem of finding a buyer but there
is also the problem of price. You could find people only wanting to pay a
hugely discounted price with the 'market price' falling due to the surplus
availability. This is not in the interest of a 'whale' as a big sale could
render the rest of the portfolio to be worthless.

Instead of trading 'over the counter' these people are 'serviced' by an
entirely different breed of traders that attempt to match buyers and sellers.
These intermediaries try to get their percentage, however, as soon as buyer
meets seller the need for the middle man and his cut is eliminated. These
sales also take a long time to organise, so it is more like trying to sell a
house than buying some candy at a convenience store. In this sales environment
the price is different to the headline price and not as volatile. Much like
house sales though there is a huge likelihood that a given sale will not go
through.

Your stereotypical Bitcoin bore only really dreams of getting the 'Lambo to
the moon'. In the bigger scheme of things a fancy sports car isn't really that
expensive, it is just a bit of bent tin with a fancy paint job. These greedy
dreamers are not currently trading their little coin things, they are in the
same boat as the 'whales' that can't sell, they are just 'Holding On for Deal
Life', a.k.a. 'HODLing'. They might as well be praying for rain.

The price is 'stable' not only due to the problems of large and small
'investors'. There is always the hope that some regulatory approval will come
along to make it so that institutions and funds will enter the market. As
things currently stand Bitcoin is a 'commodity' whereas every s4itcoin is a
'unregulated security'. So it could be Bitcoin that is undervalued and, when
the institutional investors come along, the 'asset' will reach its true value
of '50K'. That is the dream and the hope that keeps small time Bitcoin bores
HODLing on to their imaginary stores of 'wealth'. This time next year they
will obviously be able to pay the deposit on that second hand 'Lambo' proving
them to be wealthy.

We are sharing this planet with a cargo-cult group of Bitcoin believers that
will not let their dreams be shattered. They no longer talk of 'ICO'
blockchain things, they have also kind of given up on the general population
becoming the 'greater fools' that will buy their imaginary coin things at a
huge premium from them. There really is just this belief in Bitcoin getting to
be magically approved by financial authorities and them being able to see a
return when mythical institutions buy big shortly thereafter.

~~~
latchkey
Despite the obvious jealousy? hatred? distaste?, a very interesting response.
I didn't consider that the ETF's might not actually be for the investors, but
might be more interesting for the people wanting to exit their large bitcoin
holdings. Good point on that.

Have you heard the news about the Coinbase/Circle stablecoin? What are your
thoughts there?

------
ppod
It's not transforming the world, but too many people who said bitcoin was
worthless when the price was $600 are claiming to be prophets because the
price is ten times that.

~~~
afdiognionio
They were half right. Bitcoin has been a monumental failure in every respect
except price. They hit the nail on the head about Bitcoin's technical and
economic merits even if they dramatically overestimated the rationality of the
market.

~~~
gomox
That is absurd. It's working Internet Money that you can use.

------
stewfortier
(Related) I've always gotten a chuckle out of this TechLoaf joke:
[https://www.techloaf.io/2018/05/29/bitcoin-enthusiast-in-
the...](https://www.techloaf.io/2018/05/29/bitcoin-enthusiast-in-the-office-
talking-about-bitcoin-62-34-less/)

------
rhacker
BTC still around $6K, wake me up when it's at 2k or 10k please.

~~~
mythrwy
How long are you planning on sleeping? Could be awhile.

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cfontes
So many words so little meat... I can't stand articles that read like books.

~~~
Kinnard
Stop reading books that are wordy and not meaty.

~~~
joejerryronnie
Selecting Fitzgerald was his first mistake.

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newswriter99
Story author is Nick Paumgarten. Staff writer at the New Yorker for 13 years.
Seems to favour stories on sports talk radio, internet dating, a bit on the
WEF (World Economic Forum). His Twitter (grand total of 20 tweets) has a
mugshot of a motorcycle.

Not what I would consider to be a credible authority on economic theory or
cryptocurrencies. I'll take this story like I have most from the New Yorker:
cursory homework done by an upper middle class person who was born and raised
on the US northeast coast.

~~~
CPLX
Did you read the article? The entire point of the thing is to talk about
crypto from the perspective of someone who doesn’t know much about it at the
outset.

He investigates it and reports back, as a proxy for the reader.

~~~
FabHK
> He investigates it and reports back, as a proxy for the reader.

And that's enormously valuable.

People are often dismissive of The Economist, since many of the writers in its
anonymous collective are young Philosophy, politics and economics (PPE)
graduates from Oxford, and what do they know. But they're smart, and by virtue
of their association with The Economist and its network have access to world
class experts, and they can talk to them on and off the record, and synthesise
the gist of some development or controversy in an excellent short article.

