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)
Those transactions frequently take a substantial chunk of real time in which time the value fluctuates more than a currency normally would.
Right now, the volatile behavior of bitcoin shows it being much more of a speculative asset than a currency.
- 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.
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.
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?
>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.
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
Kidney stones are rare and require lots of work expended to find them. Don't confuse those precursors with establishing value.
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.
Bubbles don't have to make sense.
Somehow there are a lot of flagged news on HN lately.
What's wrong? I don't think the direction is good
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?
Same as the stock market.
> 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.
It's the notion of what is stable here that's novel and interesting
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.
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.
The phrase "why should I care?" Is most often used simply to say you don't care, kinda like a rhetorical question
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.
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.
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.
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 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.
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?
You can say pretty much the same thing about any stock.