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Bitcoin just passed $5,000 (techcrunch.com)
86 points by chanfest22 8 months ago | hide | past | web | favorite | 71 comments

It is amazing to think that only a few years ago you could take an old laptop, download a miner, stick it in a closet and it would spit out something now worth a quarter of a million dollars every few days. There are a lot of problems with Bitcoin. If you look at my comment history you will see I am pretty down on it for all sort of reasons I won't go into at the moment. However sometimes you just have to take a step back and admire how crazy impressive it is that Bitcoin has reached this point.

If you go back far enough, you didn't even need to download a specific mining software, just download the Bitcoin client at the time and you could generate bitcoin (or mine) using it. So crazy to think about now in hindsight. Back then you had to really try hard to find someone that would accept any amount of them.

and we all feel stupid we weren't doing it then

Disclaimer: I'm invested in Ethereum, and not Bitcoin. There is no good reason that Bitcoin is still going up once Ethereum came on the scene. Transaction times, transaction cost, decentralization, future development work, consensus under one leader all favor Ethereum. The only reason I see for Bitcoin to still be strong is that it has name recognition and first mover advantage. People talk about "Bitcoin" and "cryptocurrency" as synonyms. If you want to "get into cryptocurrency" you buy Bitcoin. I think this is a bad thing, but I don't know what it means. Anyone have any insight with a differing opinion as to why I am wrong? Does anyone know a good reason (technical or economic) Bitcoin is going up while Ethereum is not?

Saying that Ethereum is strictly superior to Bitcoin is a very bold statement. I would certainly not invest based on that assumption.

First, Bitcoin is already as good as it will ever need to be to function as a practical store of value. Even without scaling, it can support enough transactions to effectively work this way. This can support price growth for a long time, and first-mover advantage is critically important here.

Second, Bitcoin development, as fraught as it is, isn't dead. If such changes come about as to make Bitcoin seem obsolete, there's still a good chance that Bitcoin would adopt those changes. Also consider that a solution for an effective 2-way swap would make protocol differences essentially moot.

Finally, I admire Vitalik and other Ethereum developers and think their musings about cryptocurrencies in general have advanced the field as a whole. However, I'm still skeptical that Ethereum, as envisioned by Vitalik, can be made to work through sheer force of engineering. It's stunning how far it's come, but it still faces very real problems. A successful move to proof of stake would be the first indication that it might happen.

Footnote: "consensus under one leader" is probably the most critical weakness for Ethereum right now. Not only for legal/state interventions with the DAO precedent, but as a single point of failure. I think it's fair to say that Satoshi left Bitcoin precisely because it needs to "stand on its own feet" if it's to be truly decentralized. In this way, I consider Bitcoin to be far more mature.

There is one practical difference between Bitcoin and Ethereum that i like to think about - Ethereum is actually creating a platform. In theory Bitcoin is capable of that too, but in practice the core community is quite religious about keeping it as money. Meanwhile Ethereum is creating more surfaces of research and engineering (e.g. token standard, identity standard, swarm network).

It's interesting to compare to all the altcoins that were created after bitcoin to OS era in around 80s and early 90s. Now we are closer to Web era. It's not that the research in OS's is no longer there. It's just that the next abstraction layer is an enabler for simply more people.

You make good points, but I think where having Vitalik makes a difference is evident in the large number of contentious hard forks Bitcoin has had/will have this year. Obviously the Ethereum model isn't perfect, or else we wouldn't have Classic, but I think it helps to have one person who says "follow me, this is the way we are going".

"Bitcoin is already as good as it will ever need to be to function as a practical store of value."

Bitcoin is the worst possible 'store of value'in any financial scenario.

It's highly volatile, subject to unknown future regulations, competition from other things - and of course, it could go to zero tomorrow.

Moreover - there are any number of other, better opportunities for 'store of value' - most notably real-estate.

There has been demand for real-estate in London for at least 1000 years.

So think, in 100 years, will there be at least some demand for real-estate in London. Probably. Probably more than today - but at least some.

What will the demand be for BTC in 100 years? Will it even exist? Will anyone even remember what it is?

The volatility alone makes it really not something you want to 'store a lot of value for the future'.

Just because there is pragmatically a 'fixed number of BTC's that will ever be created, and that it has some crypto-viability - does not inherently make it a 'good store of value' - or a 'store of value at all'.

It's probably most useful to compare Bitcoin to gold (apparently the Biggest Bubble in Stock Market History: http://gainspainscapital.com/2017/08/08/officially-biggest-b...).

Let's take a random sample of reasons why gold is a store of value: https://www.quora.com/How-did-gold-become-the-historical-sta...

Pretty much every of those attributes can be created in most cryptocurrecies (or made obsolete), with arguably these exceptions:

- Universal (as of now) - Bitcoin is indeed universally recognisable and tradable, compared to other cryptos.

- Stable - very unknown, but so far the long age of Bitcoin made it a bit more stable than most other well-known alternatives. Though that could be challenged if an inherently stable cryptocurrency mechanism is invented.

Perhaps universality will be always there and will be enough. But overall that makes me bend in the direction that inherently there is nothing special about Bitcoin in the long term, while other cryptocurrencies are researching and reinventing very foundations of value, trust and finance in general.

Imagine if there will be no reason for any currency to be a store of value in the future. Why choose that, versus some kind of automatically diversified crypto-index or other portfolio, that is for example bound assets related your interests and beliefs as a person.

Just take a micro-sized chunk of it each time you make a payment.

Here's a big difference - Bitcoin requires the existence of a computer network and all that entails about global stability (computers, electricity, infrastructure). Gold (or any physical medium of exhange) doesn't.

Those people that hold gold as a hedge don't hold gold. They hold a database entry on a computer somewhere that assigns them ownership of some gold (supposedly) in a vault somewhere.

This requires global stability, and a great deal of blind trust in multiple third-parties.

There is a good reason; Bitcoin has a known supply and is a financial constant. To serve the ‘world’ the money supply in bitcoin has to increase in USD terms. Think of the market cap as the money supply of bitcoin in USD terms. In a simple model, one would expect the price to increase proportional to what it is at a given moment due to the rate of new people learning about it and passing on knowledge. On a long term trend an exponential model is a good proxy so far. Why is BTC going up and ETH not? This is purely mean reversion on the ETHBTC ratio. Look at momentum indicators on the ratio and the recent breach of the 200day after multiple lower bounces off it. ETH was up 50x at one point this year, you need to factor that in also.

I think you have the right answer, this is a multi-year event and some mean reversion is to be expected.

Bitcoin is the first, the biggest, the sanest, the nopremine, no tricks blockchain. Bitcoin has the biggest amount of brainpower behind it. Bitcoin has the biggest market cap, liquidity, and brand. Bitcoin is the best crypto for government resistance, and the victory over Bcash, and soon over segwit2x, shows the determination of the community to ability to fully utilize it all over the world and behind anonymization network like Tor etc. Bitcoin has its scalability vision ready (Lighting Networks). Bitcoin is the killer-feature of the blockchain, and the only reason blockchain makes any sense.

Ethereum is just a pump for people that think they've missed the boat on Bitcoin. That's why it grew up so quickly, and people are willing to throw so much money at whitepapers with nothing behind them. Ultimately, Bitcoin can do anything that Ethereum can - it's just a matter of time before it will suck the marketcap out of ETH, just like it did with many other cryptos.

I completely agree, I love bitcoin.

I got paid a few BTC for remote work when the price was about ~600 USD per BTC, I will never sell.

Because people actually use bitcoin. It’s heavily used for transactions for gray market activities (its very popular for online gambling transactions).

Why is it so popular among online gambling transactions? Afaik to be able to withdraw money from a gambling site you will go through a screening (id, address verification) so anonimity is broken anyway.

US banks aren't allowed to process transfers directly from gambling sites to players. So poker sites etc use Bitcoin as an intermediary step.

Some sites do not require full blown identification for gambling when you use bitcoin. Coupled with the fact that it is a super convenient way to move large sums of money in and out (without waiting for wire transfer delays and whatnot), it’s a bit of a no brainer, at least in terms of convenience.

"There is no good reason that Bitcoin is still going up once Ethereum came on the scene. Transaction times, transaction cost, decentralization, future development work,"

BTC is not popular because it's a currency - though 'it can be a currency' and people like to think about it as such, that's just what gives it the veneer of 'utility' and therefore value.

'That it is technically a currency' is a necessary aspect of getting some kind of valuation - that's not what is driving the valuation.

BTC is popular because it's a speculative thing that has 'gone up' which creates a further dynamic of that, at least for some time.

It's really not used as a currency, there's no underpinning value, there's no 'ownership of anything' - and so there is no way to actually value BTC. It's the most purely speculative thing ever.

To compare Coins on their 'technical merit' misses the underlying premise of their valuation, which has nothing to do with technology, valuation or finance - and everything to do with mass psychology and memes.

'Some people are willing to pay $X for a number'.

That is the beginning and end of it's valuation at any given moment.

In the last year Bitcoin is up 7x while Ethereum is up 38x.

The reason for the recent Bitcoin pump is most likely the upcoming fork. Everyone wants to hold, in hopes that the Bitcoin gold will rise like Bitcoin Cash did in the last fork - Although, I doubt it will

I also invest in Ethereum over Bitcoin, along with a few other cryptos. However, it is pretty awesome seeing the prices a coin can reach.

Ethereum isn't a store of value

How is it any more/less of a store of value than BTC?

The supply of Ether isn't algorithmically capped, while the supply of Bitcoin is. This makes Bitcoin more resistant to the greatest long-term threat to a store of value, namely, currency dilution via the creation of new money.

No, store of value by definition cannot be diluted. Possession is the biggest risk, which seems low mathematically at this time based on prevailing wisdom. That could change, and if done so in secret for long enough, could render the validity of ownership null and void.

"No, store of value by definition cannot be diluted"

This not correct, it also misses the point.

Assuming a fixed amount of BTC's some day in the future - they could be valued at $5K one day and $0 the next day - without any 'dilution' at all.

This whole issue of the fixed supply of something does not give it any financial valuable properties at all. A BTC is 'just a number' - after all.

A 'store of value' is something that you can hold, and be sure that in 'x period of time' - it will be 'roughly worth the same amount' of whatever you want to measure it in.

That's it.

There are a lot of decent 'stores of value' available to anyone today. BTC's volatility alone - and risk of nobody caring about it in the future - make it not a very poor 'store of value'. Volatile, speculative things are the opposite of 'stores of value'. A 'store of value' is something you could buy now, and be 99% confident you could give to your great-great-great-grandchildren - and it would still have value.

Seems like you read too many articles, and not enough white papers.

Blockchain has real promise, but Is anyone using Bitcoin for anything other than speculation?

Payment obfuscation (which is not inherent in the protocol, but how you use it).

International money transfers. I've personally met a few backpackers who use bitcoin ATMs in SE Asia in addition to the traditional banking system.

FWIW I suspect that these use cases are negligible compared to speculation.

How do the ATMs get around money laundering laws?

There are a ton of cryptocurrencies with practical real world use cases. Instant micro-payments is an interesting area where a more recent coin like IOTA could have application. Etherium smart contracts solve a lot of problems in the transfer of wealth. You can even get a credit card to spend your crypto if you want.

its considered actual (gov't approved) currency in Japan and South Korea... beyond that, I don't know.

It's hard to find real numbers on this but it certainly seems like most of the money is coming from speculators. Of course Bitcoin is also used in actual sales transactions sometimes and in black markets etc but it's mostly speculation.

Drugs and ransomware.

"Intranet has real promise, but Is anyone buying domains on the Internet for anything other than speculation?"

Absolutely no one ever said this.

.. God?

If you have to say that to defend your position, then clearly it wasn't conventional wisdom. Find me newspaper articles that are calling domain names useless and a bubble.

ITT: effective consensus that the utility of Bitcoin today is its popularity in the "gray" (or black) market.

How does anyone not believe this is a bubble which will burst as previous ones have, at the first sign of the next inevitable crack down?

Blockchain is here to stay. Bitcoin at its current value is surpassing poppy level speculative inflation.

I get the notion of accepting high risk of loss and incredible transactional friction when trying to move back to a fiat currency.... but only for people who are either desperate to exfiltrate funds etc.

For everyone else it seems like a comically bad time to be buying in. Beyond comical, really.

Years ago my boyfriend at the time said "hey we should buy some of these bitcoins, they're only a few pennies each, it'll be fun!" Boy do I regret missing that boat...

you mean you didn't marry her?

Him I suspect.

No, I didn't marry him.

I am really curious if the situation will be the same after November. At the moment it seems people are eager to buy into Bitcoin in order to have the extra chain that will come out of the forking as Bitcoin Gold.

The precedent with Bitcoin Cash was bad in this aspect, because it created a valued blockchain (albeit of lower value!) out of the blue. People want this to happen again.

Invention of the money tree... :)

All aboard the hype train.

And that valuation is based on ..?

The price people are currently paying for it on exchanges [0], with > $1 Billion in volume over the past 24 hours.

[0] https://coinmarketcap.com/currencies/bitcoin/#markets

Ok, but why? Why are people willing to pay that much for it?

Mainly because they believe it will stay valuable. Which is what backs all stores of value - gold and diamonds are definitely not bought for their practical applications.

Now why exactly people believe it is and will stay a good store of value is more complicated, but mostly a mix of trust in how miner self interest will keep the keys safe and general desirability of online currency

Because some other nerds got really rich on Internet fun bucks and other people want in on it too.

shhhh you'll burst the bubble

And now it's at $5,280

It's hit a milestone.


I think it's the perfect time to buy :)

You’re either right or wrong and your opinion is valid. Downvote isn’t justified IMO.

good lord why?

Things are worth what people are willing to pay for them.

Fools and their money are soon separated.

Here's some good evidence. Increase in the Monetary Base 1984 - 2010: https://www.aftershockpublishing.com/pub/images/c03f002.jpg

Exactly this. Yes, Bitcoin is having another bubble moment because folks are trying to get rich quick. But, the underlying technology—the reason why Bitcoin has stuck around despite countless "deaths"—is that the existing financial system is a glass floor on the verge of shattering. We can live in denial all we want about what that means.

Bitcoin, though not perfect, is the first viable solution we've ever seen as a means for preventing financial corruption. Not to mention, it enables banking access for billions of people who don't have it. It makes transfer of large sums to _anywhere on the planet_ inexpensive. It's divisible down to 8 decimal places (a satoshi), making it a great fit for micropayments. These are just the top of mind solutions.

There are ideas we haven't even thought of yet. Bitcoin is programmable money, meaning the possibilities are seemingly endless.

"making it a great fit for micropayments" except that you currently have to pay about $4 for any transaction to come through ... eventually

Absolutely not true. I paid $0.40 cents on a $5.00 transaction yesterday that was confirmed within an hour. I could've easily paid the same $0.40 cents to move $50,000,000.00.

> $0.40 cents on a $5.00 transaction

Visa or Mastercard is cheaper than that

Actually it is in the same ballpark. 2.9% + 30¢ is a usual price in US for a small business.

Yea let me transfer money to another account through ACH....

3 day....

Let me transfer it with Eth or BTC...

1 hour or 40 seconds later...

ACH vs BTC is a strawman battle that glosses over Paypal, Venmo, Square Cash, Facebook Messenger Payments, Zello, AliPay, and a few dozen others.

bitcoin won't censor or freeze your transactions tho.

Wouldn’t that cause every asset (real estate, oil, gold, shares of S&P 500) to go up in price 50x, not just Bitcoin?

Had you considered that your people are simply not “investment people” and that’s why you chose not to invest when you first heard of it?

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