
Bitcoin biggest bubble in history, says economist who predicted 2008 crash - dsr12
https://www.theguardian.com/technology/2018/feb/02/bitcoin-biggest-bubble-in-history-says-economist-who-predicted-2008-crash
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ve55
>Roubini said the sharp fall was the beginning of a crash that would see the
value of the digital currency plummet “all the way down to zero”.

It's really hard to take someone seriously when they say the price is going to
literally go to zero. It's possible to imagine crashes of 90% or even much
worse for an asset like Bitcoin, but a market price of zero would suggest not
a single person in the world is willing to pay anything at all for a Bitcoin.
Absent a world-changing event like hashing being completely broken, the price
will never be exactly zero. I can guarantee this since I myself would be
willing to pay at least 1 cent for every BTC that exists, and I know that many
would be eager to outbid me with that offer.

If someone is so good at calling the exact extent of this crash, then they
should place a short on Bitcoin. You don't have an excuse anymore. It's on
regulated markets, unrelated markets, and everything in between. If you really
think it's going to zero then put all of your money in a short and make sure
not to close it until it gets there. Options are also available for some
investors, which should be even more lucrative for you.

~~~
astrodust
How much money would Second Life currency be worth if Second Life went
bankrupt and offline?

How much money would World of Warcraft gold be worth when that game eventually
shuts down?

How much money will any amount of Bitcoin be worth when the Bitcoin network
frays apart and ceases to function?

~~~
ve55
The difference between your first two examples and the final one is that
Bitcoin is decentralized. It only takes a single miner to keep the Bitcoin
network functioning (in practice you'd need to wait for difficulty adjustment
and it wouldn't work out very well, but the point is you don't need to rely on
any single entity not going bankrupt).

It's true that is the price goes low enough mining would decrease
significantly, but after difficulty adjustment it would still exist to a
nonzero extent. Bitcoin can absolutely still function as a system even if 95%
or even 99% of all miners end up quitting it over the next few years.

~~~
astrodust
BitTorrent is truly decentralized. So long as there's one seed of something
you can repopulate the network, you can rebuild from that singular copy. Even
N partial copies could do it so long as the sum of all those parts is at least
one complete copy. This is because all you care about is data, and data can be
copied easily.

Bitcoin isn't. It's merely _distributed_ and it depends on having a singular,
healthy, functioning consensus network. Where that network splits you suddenly
have more than one blockchain, as is the case with Bitcoin Gold, and Bitcoin
Cash.

It also depends on having a healthy balance of mining power in that network so
that no one entity can take control and start to dictate terms.

If all that's left is a single miner then four other miners can easily take
charge of that network and effectively destroy it.

> Bitcoin can absolutely still function....

The blockchain component of Bitcoin can technically function, sure, there's no
problem there, but as a unit of value, as a unit of exchange, it's
functionally useless. You can't trust it, you can't use it for anything.

There is, by design, _one_ blockchain. When that assumption fails, the network
has to work to achieve consensus, and if that can't be achieved it splits.
That can be fine with things like IRC networks or peer-to-peer exchanges, you
can always do a messy reconciliation later, but with something that's supposed
to represent a medium of exchange that's a problem.

------
maxander
> “Policymakers and regulators are getting worried. Pretty much every G20
> policymaker is talking about a crackdown,” Roubini told Bloomberg
> Television. “We can’t allow it to become the next Swiss bank account for use
> by criminals and people evading tax.”

I've heard the "prevent the next Swiss bank account" thing a few times now,
and it still looks like the most baldly corrupt aspect of this whole show.
_Actual_ Swiss bank accounts are still a thing people have, and are still
being used by the wealthy to avoid taxes on a routine basis, and everyone
knows it. But _actual_ Swiss bank accounts have a stable legal status and no
one's really going after them.

What's the difference between "the next Swiss bank accounts" and the current
ones? Perhaps it's that Bitcoin is available to much less wealthy classes of
people. Or perhaps the right people have big Swiss accounts and haven't gotten
around to diversifying into crypto yet. But I haven't seen a _good_ account of
the difference.

~~~
Daishiman
Swiss banks can no longer rely on banking secret like they used to anymore.

------
adventured
It makes for a convenient headline, however I fail to see how Bitcoin takes
that crown versus Cisco in March of 2000. It was overvalued by a solid $450
billion, and that's coming up on two decades ago (for inflation adjustment
purposes).

Alternatively, there's PetroChina's trillion dollar valuation during the peak
of the commodity bubble:

[http://www.nytimes.com/2007/11/05/business/worldbusiness/05i...](http://www.nytimes.com/2007/11/05/business/worldbusiness/05iht-
petrochina.1.8190012.html)

And if we're not talking about more individualized entities, the mother of all
bubbles goes to the global real-estate market in 2004-2006. Or, possibly, the
bond market today. The global real-estate market was overvalued by tens of
trillions of dollars at its peak before the great recession. That rather
comical gap between Bitcoin's value at the top and the overvaluation in just
the US real-estate market in the Summer of 2005, speaks to the dramatic tone
of the article existing solely for clickbait.

If Bitcoin goes to zero, it will not matter very much on a global economic
basis. It impacts exceptionally few people, fortunately. When the real-estate
bubble collapsed, it nearly took down the global economy. That nearly
bankrupted half the largest banks on the planet. It has taken until just the
last few years for much of the developed world to truly recover or begin
properly recovering.

------
elliotec
People seem to conflate Bitcoin with cryptocurrency as a whole. It has been
clear for a long time that Bitcoin's pace is unsustainable, especially with
the exorbitant transaction fees and mining costs.

But if you look at other cryptocurrencies like Etherium for example, you'll
see an interesting differentiation. Not all cryptocurrency values are tied to
Bitcoin. Etherium, at the time that I write this, is up 2.4% over a month ago
while Bitcoin is down 37% over the same period.

So, while I do think Bitcoin especially is pretty much definitionally a
bubble, crashes and volatility are the nature of the game right now. We should
be careful to lump digital currency as a whole into the the same category as
Bitcoin. Bitcoin was the first, but probably wont be the last and certainly
isn't the best.

I think there is value in cryptocurrency that is difficult to see for many
people past the black market stuff and the gambling aspect people put to it.
If you've ever transferred Etherium to a friend to pay them back for the pizza
they bought you, you'll feel that value in a small way.

I'm certain there is a reason these currencies exist beyond the sketchy
reasons and I'm quite sure they are here to stay, bubble or not. There was a
massive housing bubble, but we still have houses and they are, mostly,
recovered above the peak of that bubble ten years later.

It's not hard to imagine a (near) future where cryptocurrencies are a primary
means of monetary transactions.

~~~
wgerard
> If you've ever transferred Etherium to a friend to pay them back for the
> pizza they bought you, you'll feel that value in a small way.

I think it's hard for people to appreciate this because this is already a
pretty trivial task using tools like Venmo (or whatever your choice might be).

> There was a massive housing bubble, but we still have houses and they are,
> mostly, recovered above the peak of that bubble ten years later.

There's not really an alternative to houses (assuming you include e.g.
apartments under that umbrella). You have to live somewhere, you don't have to
use cryptocurrencies.

I think a more apt analogy would be the dot-com bubble. If there truly is a
use for cryptocurrencies (as there turned out to be for internet-based
companies), they'll stick around and we'll see them again.

That said, I also think it's a bit dangerous to rely on historical bubbles for
predicting the future here. There are plenty of "bubbles" that never recovered
at all, and we just moved on to the next thing entirely. We tend to forget
about them.

~~~
icebraining
_I think it 's hard for people to appreciate this because this is already a
pretty trivial task using tools like Venmo (or whatever your choice might
be)._

Venmo is great - for people in the US who only transact with others in the US.
I had the same problem in Belgium - my local friends used Payconiq, which of
course only works if you have a Belgian bank account.

~~~
wgerard
Sure, and I think this problem of transferring small amounts of money
internationally painlessly is probably the strongest case for
cryptocurrencies. But:

1) I don't think that's what cryptocurrencies want to be relegated to (a forex
market essentially)

2) This also seems like a way around currency controls and things like AML
compliance. If that became a problem at some point, I have to imagine
governments will start putting the screws on any major exchange that interacts
with fiat (and to some extent they already have).

------
FreeRadical
Roubini was also advising to stay out of equities following the post crash
recovery in 2009...

------
ashelmire
"Ah, surely this professional, educated economist has not studied bitcoin and
doesn't understand crypto and the value of unregulated currency as well as me,
your local pothead with no economics or tech education! And in any case,
surely Etherium doesn't suffer from the same problems despite being
fundamentally similar!"

~~~
happyguy43
Pattern matching logic fails for both educated people and potheads alike.
Bitcoin is unlike anything seen before and no one knows what’s going to happen
with it.

------
OliverJones
Take a breath.

The biggest bubble in history? Compared to the mortgage and banking meltdown
in 2008?

History must be short.

------
polskibus
Recent drops in cryptocurrency valuation coincide with futures settlements
dates on CBOE and the other exchange. Perhaps someone is gaming the market and
exploiting arb opportunity?

------
hawktheslayer
Antecdotal, but I knew something was wrong when a coworker of mine who thinks
he can pick stocks bought into bitcoin at about 16k

