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[flagged] Bitcoin just passed $4,000 (techcrunch.com)
53 points by janober 7 months ago | hide | past | web | favorite | 59 comments

One thing I think a lot of people get wrong about tech is a "fear of large numbers". Our mind is trained to think linearly (ex. Path prediction when we're trying to get somewhere), and so when things don't align to it, it's very hard to comprehend. A friend gave a great example demonstrating this - would you bet that Uber/lyft will grow revenues by 25% next quarter or a boring newspaper company will grow by 3%. Doesnt the 3% seem like such a tempting answer, even though the former bet is most likely better?

I think something similar is happening when looking at cryptocurrencies (and several tech phenomenons). This fear of large growth numbers can inhibit clearer thinking (and you see that among public equity tech investors)

Seems it would be difficult to use Bitcoin for the payment of goods and services if its value is changing all the time, or is this not its intended purpose?

If transactions were close to instantaneous, it wouldn't be an issue. Buy in USD -> Pay in Bitcoin -> Receive Bitcoin -> Convert to USD needs to happen in under a minute.


Those transactions frequently take a substantial chunk of real time in which time the value fluctuates more than a currency normally would.

It's almost impossible given the Bitcoin network can only process 3 transactions per second.

While Bitcoin fans say it's both, their behavior is usually divided between using bitcoin as a form of value sink or value transfer. The former is good for an asset, the latter is good for a currency.

Right now, the volatile behavior of bitcoin shows it being much more of a speculative asset than a currency.

Currently, Bitcoin is used as a store of value not so much for day to day transactions. It's still evolving, its software, and it's upgradable.

That's exactly what you'd expect from a deflationary currency...

Whats your point?

That you shouldn't expect Bitcoin to ever behave any differently. It's specifically set up not to function well as a currency.

Why? How does this make sense?

The way I think about it is by dividing folks into populations to make sense of the surge:

- There are the people who get it. They get the technology and the implications of this. They've been wanting something like this (not specifically this and not a clear idea maybe) for a long, long time and sort of know what to do with it.. The idea has had time to mature and they were mentally ready. They may have problems deciding on which flavor or "crypto currency company" to bet, but they're 100% backing the concept.

- There are the astrologers/traders who have no grasp of the concept but have no trouble explaining it in expert interviews on CNBC/Bloomberg/CNN Money. Traders are expert at trading: selfie sticks or the greatest "money thing" since Fibonacci's injection of Hindu-Arabic numerals into Roman banking, it's the same different thing. More crudely: if there were a market for excrement, they'd sell the shit out of it. [there actually is]

- Then there's the rest of us. A sucker is born every day. We see all these tulip bulbs and want in on the action.. Oh my, I remember when it was less than $250, if only I had bought then. What? I remember when it was like $40, imagine if I had bought then.. I didn't buy at $300 because it seemed excessive and no profit was to be made, but now, I see it's $4000! So if it went from 300 to 4000, surely it can go up [this reasoning here].. And bam...

So I think these are some of the populations driving the surge.

It doesn't. Especially considering all the other cryptocoin networks which facilitate the same service the bitcoin network does.

The very limited number of exchanges essentially have an oligopoly, and as price climbs slowly the fall in price and 'runs on the banks' can happen extremely rapidly as the exchanges have no obligation to buy your coins for anything other then 'market rate' which assumes there's a buyer.

Oh, and market demand is largely driven by bots and speculators - not the actual functionality of the BTC network.



BTC is a store of value. How does the functionality of gold figure into its value?

BTC doesn't store value.

What value is it?

Why is it good that bitcoin is so inefficient?

What are the alternatives and is it possible to improve any of the failures of bitcoin?

Are you speaking with a bias because you have invested in bitcoin and you want to cash out some day?

The Bitcoin network stores numbers in a distributed database. Why is that valuable?

Take a look at http://coinmarketcap.com/

What makes BTC rare or valuable?

Bitcoin is capable of storing value because its features allow value to be exchanged. Of course that doesn't endow it with value. But we endow it with value because we inherently value a decentralized method for the exchange of value. Bitcoin's existence bootstraps its value.

>Why is it good that bitcoin is so inefficient?

It helps increase the confidence in bitcoin. We value the energy used to create bitcoins so that helps us recognize the value of the coins. It's no different than rare stones being valuable because of the work expended to find them.

Bitcoins are not valuable because it requires extreme amounts of electricity to sustain each transaction. Most people are unaware of that detail.

   at the time of Malmo's piece, he calculated that a single 
  bitcoin transaction requires as much electricity as the 
  daily consumption of 1.6 American households, and that 
  number has increased since then. "Adopting Bitcoin as a 
  major currency anytime in the next few decades," he wrote, 
  "would just exacerbate anthropogenic climate change by 
  needlessly increasing electricity consumption until it's 
  too late." 
Other distributed ledger networks have designs which offer the same service to users, and in many cases are vastly more efficient in terms of electrical usage and actual speed of transactions.

Kidney stones are rare and require lots of work expended to find them. Don't confuse those precursors with establishing value.


Either you can keep on asking those questions or you can buy it. The value of BTC is what the world makes it to be.

Is there an incentive to buy it though, beyond pure speculation? Maybe as a buy and hold investment I suppose?

At the moment it has very limited use as a practical currency - I can't buy my groceries with Bitcoin, I can't put fuel in my car with Bitcoin, I can't pay my rent or bills with it, and I can't use it at my local pub or any pub for that matter.

Sort of like Beanie Babies

And yet you are ignorant of a decade long gold bubble and insist these things don't happen.

The same reason Lycos was worth $12B and Global Crossing was worth $50B.

Bubbles don't have to make sense.

Why do a TechCrunch article get flagged?

Somehow there are a lot of flagged news on HN lately.

What's wrong? I don't think the direction is good

Nothing with BTC ever makes sense. If you've ever seen American Beauty, just think of BTC like that plastic bag caught in the wind - of little real value, and flying around all over the place in an uncontrolled and unpredictable manner.

$67,285,852,182 market cap. That's how the sense is made.

Those "market cap" numbers are utter garbage and completely inaccurate.

How is that number calculated?

The actual market rate is only determined by active users who send a buy order though an exchange. If there's no demand, the price instantly tanks to 0 in a few seconds - the exchanges guarantee nothing.

What's the demand behind BTC? Speculators?

What happens when the speculators cash out because something better comes along?

The number is calculated by number of bitcoins in existence * price of bitcoin.

Same as the stock market.

Not that I think it is worth near that much cause it is 99% speculators, but I would assume it is based on current market price * current BTC withstanding just like how stocks market cap is based (subbing BTC with shares).

> What happens when the speculators cash out because something better comes along?

It'll crash super hard but I still think this is fine metric.

The demand seems to be "institutionalised" since a couple of years. VC-like money coming in through cryptocoin service startups and disposable income from rich nerds and richer finance types looking to beat the market. It'll pass and/or stabilise.

It's the notion of what is stable here that's novel and interesting

It's strange that nobody thinks that the war with North Korea has anything to do with this. I believe chinese people is buying bitcoins in fear of a nuclear war.

Wheres the logic in that. How do you buy food or medicals in postapocalyptic world with BTC?

Wait for a crash. Buy bitcoins. Sell at this bubble high. Get rich quick. Repeat...

But is $4000 the high before the crash? Or will it go up to $6000 first? And when it crashes, will it go up again? Or is it just the start of a 6 month bear market?

Attempting to time the market will cause you to lose you money roughly 50% of the time.

If you believe Bitcoin is undervalued, buy it. If you think it is overvalued and you own some, sell it.

Honest question: Why should I care?

Because something is happening. Large trades from Korean exchanges are driving very high prices worldwide. It means people are fearful of the existing financial system and are pouring their savings into "cryptocurrency".

more like, people want to double their spare money/likes to read news where they see how much "they won" by gambling on cripto.. not their savings

Interesting trend. Def a gamble though.

There are posts here about business valuations all the time. Would you make the same comment for those?

I can't of any one single business where the day-to-day news fluctuates between "Oh no! It's worth nothing!" and "NEW RECORD HIGH". Basically, BTC fluctuating wildly because of [current event] is not new s it's just a normal and expected function of the "currency".

If Google went from being worth nothing to being worth double it's current value every 48 hours then I'd probably get sick of hearing about that too.

Business valuations are different than currency exchange rates IMO. What's wrong with my comment? Is asking about something I don't understand wrong?

Currency exchange rates affect businesses as well. It affects buying power between countries and can give companies in one country an advantage over companies in another country.

Not knowing everything there is to know about Bitcoin is verbotten on HN. So is having a differing opinion apparently, as I re-discover every few weeks.

Do you care about everything on HN? Other people care.

I didn't say I don't care. I'm asking to be educated, unfortunately instead I'm being downvoted.

Your phrasing is perceived as passive aggressive. If you wanted to be educated a better phrasing could be: "what makes this event important?", or "can anyone explain why is this on the front page?"

The phrase "why should I care?" Is most often used simply to say you don't care, kinda like a rhetorical question

And I thought prefixing it with "Honest question:" would convey tone. Thanks for the lingo tips, next time I'll type more eloquently.

you care enough to post this, could just ignore it.

Maybe that person is actually asking an honest question, as their comment alludes to?

People look at price history of Bitcoin, see the hockey stick, and immediately call bubble. http://imgur.com/a/ifk2b

What they fail to realize is that these linear charts plot a $5 change the same distance when Bitcoin is $10 as when Bitcoin is $4000. Yet for Bitcoin to go up to $15 when it was $10 it had to increase in market cap by 50%. For bitcoin to go up from $4000 to $4005 it doesn't need jack squat, it's a rounding error.

A better view of Bitcoin's price is in log scale. Here you can see that the growth is steady: http://i.imgur.com/R9yQ8Dk.png

There is nothing special happening now, as there was nothing special when it went from $5->$10, $50->$100, $100->$200, $500->$1000, $1000->$2000. People just want them, and they are a finite resource.

> There is nothing special happening now, as there was nothing special when it went from $5->$10, $50->$100, $100->$200, $500->$1000, $1000->$2000. People just want them, and they are a finite resource.

Realistically, Bitcoin is less than 10 years old and bubbles have lasted 10+ years before.

The real estate bubble, for instance, started around 1997 and didn't really complete its popping until 2012. That was 15 years and 10 of which people were 100% oblivious to it.

I'm not saying its nesc. the case in this instance but your "evidence" is no different than what people tried to argue to justify housing prices and such in the past.

Even with your log graph, there is a substantial disconnect from the trend line you drew vs. prices.

I don't see how you can compare Bitcoin to the housing market. The fundamentals are completely different.

If you refuse to admit history exists and bubbles have lasted longer than Bitcoin had existed, please stop talking.

The relevance is the duration, not the store of value in question.


There is another one that co-existed with Bitcoin before dropping like a rock.


There is a guy in 2009 making similar arguments to you.

Please stop misleading people by pretending Bitcoin is somehow different when it has real competitors that have executed on the idea far more competently.

Bitcoin is in a 100 year bubble. Happy? Taking about misleading people, yet here you are trying to convince people it's a bubble. If you're so sure why not short Bitcoin? I dare you.

I believe in Crypto, I believe it has a future and its need in this world. If you don't that's ok, stay in the side lines getting grumpier and grumpier as time passes.

Cryptocurrencies are not mutually exclusive, this is not Highlander, there can be more than one. Look at Ethereum, already at half the market cap of Bitcoin and it hasn't affected Bitcoin's price in the least. What Bitcoin has over the others is wide adoption and mind-share. Smart money will diversify regardless.

I am not grumpy but your talking points are based on an ignorance of history many people share.

I genuinely do not care if I convince you. I just don't want people to buy into people like you like they did with people who promoted the past couple of bubbles as sure things.

I understand you are a true believer and nothing I say will convince you.

As far as shorting Bitcoin? I don't expect it to implode in the next 3-6 months.

If you don't expect something to drop substantially in the next 90 days, shorting is a terrible idea.

I am not sure why I should buy a lottery ticket when I can reliably make substantial returns in other markets.

Bitcoin is ultimately intended to facilitate transactions and other crypto currency does it better.

>If you're so sure why not short Bitcoin? I dare you. >I believe in Crypto, I believe it has a future and its need in this world.

What do you make of people who fall into both categories? I use bitcoin as part of my payment processor in some cases and in that way I recognise its use as store of value (if only transiently). However, I also recognise that there is a market for the token that we call bitcoin, with a wide variety of people willing to buy and sell them in reasonable volume at a (very) dynamic price for my use case.

Why do you seem to propose that bitcoin does not behave as other assets that can be described in the same way?

Actually the log chart shows a substantial dip after every spike.

Well it wouldn't be a spike if there wasn't a dip after it.

You can say pretty much the same thing about any stock.

And what happens after the dips?

So you acknowledge the dips exist?

I'm neither blind or deluded. After catastrophes like the MTGox theft where trust was lost with Bitcoin, and the recent uncertainty with Segwith2x, the market has taken a dive but has always turned around. There are billions of dollars waiting in the side lines for opportunities to buy cheap Bitcoins. Weak hands lose their money to opportune investors when these things happen.

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