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[flagged] It's Not Just a Bitcoin Bubble – It's Far Worse (seekingalpha.com)
51 points by joeax on Dec 7, 2017 | hide | past | web | favorite | 54 comments

Seekingalpha needs to seek a better quality content and better quality writers.

Researching stocks - I finding these "wisdom" advisory gems from seekingalpha:

"While I wish I had held on to [stock that shoot up] until now (instead of selling post-Q2), I wouldn't be holding past this point."

In other words the writer affirms that he is a bad stock picker and immediately offers stock picking advise.


I don't think you should take stock picking advice from any writer on SA. A lot of articles are conjecture and a fun read, nothing more.

It is a content farm. Definitely not HN worthy.

> That being said, blockchain technology is not Bitcoin. Blockchain technology will likely be revolutionary, while Bitcoin is essentially worthless.

People keep saying this but what exactly is the value proposition of blockchain again?

Triple-entry accounting, basically. There was an article on here a few months ago that went into depth on the issue.

Double-entry accounting made it much harder to cook the books (a record of where money is coming from and a record of where it is going). Blockchains store every transaction within the coin itself and are validated by the entire network as valid transactions.

People promote Bitcoin as anonymous, but it's actually the opposite - every transaction is traceable and open source, even if the accounts are not tied to a person directly.

There are uses for this but I think the unintended consequences remain to be seen. I think of how people were able to be identified by that Netflix ratings datadump a few years ago, so imagine how easy it would be if Bitcoin became a common currency? I am not positive this is possible (I think it is?) but imagine I buy an apple from Whole Foods and pay with Bitcoin. Now I know what account they use and I can go back through the blockchain to see every other transaction they've ever made: bam, now I know all financial data about Whole Foods over Bitcoin including which accounts pay them the most and the datestamps of those transactions.

Is this the article you're referring to?


> but imagine I buy an apple from Whole Foods and pay with Bitcoin. Now I know what account they use

An application like this would use a new address for every transaction, and never use it again. There are desktop software wallets that do this, in the interests of privacy.

Just a quick point here, but

>Blockchains store every transaction within the coin itself and are validated by the entire network as valid transactions.

Is true for bitcoin, but is not necessarily true for all blockchains. Bitcoin != blockchain, even though Bitcoin is the original blockchain.

When I think of Etherium - it is about transparency.

For Etherium contracts to be useful they need to interface with the outside word. That means you need to trust someone to insert that data (e.g. a stock price) into the contract, and they might cheat and put bad data in.

However, if they do it is publicly visible and they are shamed and not trusted.

If they do stay honest, everything else about the contract will execute as expected and they can be no shenanigans (modulo bugs in the contract).

This isn't perfect but it is arguably better than company takes your money, hopefully they give you back what they owe.

Andreas Antonopoulous has a great talk on this: https://youtu.be/SMEOKDVXlUo

Spoiler: nothing, “blockchain” is one piece of what makes Bitcoin interesting.

It's a global store of data that synchronizes using a global random number generator.

Compare this:

"Let's all meet on avenue A at noon to protest the panopticon."

to this:

"If some function applied to block 1234 reduces to zero, let's meet at avenue A at noon, or else let's meet at avenue B at noon."

By using a blockchain you just increased the number of barricades that must be constructed from 1 to 2.

But nobody has an incentive to mine the chain unless there is a reward. Hence, the value proposition of Bitcoin. The genius of the design lies in the incentive structure, not just the blockchain.

A perfect blockchain would be like having a massive, decentralized, global database from which anyone could read and write to and the information would always be guaranteed to be true. Imagine any app being able to use such a database anytime, anywhere. It would be a perfect single source of truth, that could never be destroyed or hacked.

The information is not guaranteed to be true, it is guaranteed not to have been adultered after the write. The blockchain by itself can't verify the information it gets. After all no blockchain robot looks at your ID card.

Hmm, that’s true I guess. I’m not sure how you would verify truth, but at least knowing it hasn’t been altered is halfway toward solving the problem.

You could try to design the system that it is in the best self-interest of parties creating records to be truthful.

An example is Bitcoin. It is in your best interest not to spend too much. Spend exactly the amount required, not more, and you are done.

As a developer I've had many people reach out to me on how they can "bring their business to the blockchain". It's a stretch for most of them but there seems to be some fever among non-technical CEOs that they need to ride this wave.

When I hear this my eyes roll back so far in my head they come back around.

Why? Its a new technology, people (who are unable to understand or grasp technology are curious) want to get involved with it. Mobile phones, computers, lots of things fell into this category at some point. You should pardon their ignorance.

If you replace "blockchain" with "database" and the application still makes sense, then you should not do "blockchain", at least for now.

Not all apps benefit by being on blockchain, on the contrary they are needlessly complicated.

There is a reason Netflix does not use torrents, centralized systems are efficient. Unless the application demands "trustless", no point touching it.

You are missing my point entirely.

Speaking from experience, decentralization is not a feature. There are very few situations where decentralization provides free features and advantages over centralization.

Contrastingly, decentralization is an extremely complicated way of achieving your goal, and anyone who is building an application should be 100% honest with themselves about whether it truly needs to be decentralized.

Especially when that decentralization is both technological and political, both of which have their own unique difficulties.

You are missing my point entirely.

Perhaps your point is poorly made.

I was trying to indicate that people who don't understand technology want to adopt new technology and be part of the newest trends. Their lack of understanding means they think they need an axe when a butter knife might suffice.

Instead of technologically literate individuals being ignorant towards a lack of comprehension we should treat this as an opportunity to educate them. Why would I want to use blockchain, why would I not want to use it?

Its condescending to expect everyone to understanding technology.

Half of the message is made of your pre-conceptions.

Maybe so, but could you please not post unsubstantive comment here?



Each Bitcoin transaction uses 100 - 200kwh. It's absurd if you think about it. Isn't this going to be what dooms block chain let alone Bitcoin?

A bitcoin transaction does NOT use mining energy. Transaction rate and energy use are independent. The media always gets this wrong. It's like saying each bit on a CD-ROM "use fuel" when it's shipped on a mail truck.

But there is a cost for each bit. It's amortized. Because at some point you need a second cd, which increases fuel a tiny bit, and lowers the amirtized cost per bit. At some point you need a bigger truck and then a second truck, suddenly the cost jumps up a whole lot.

Transactions are limited in number. Each transaction costs.

No. Transactions are NOT limited by the energy consumption of miners. Miners hash a fixed size 80-byte block header, regardless of how many transactions are in the block.

It’s not just doing transactions. It’s maintaining $300billion in global wealth and rising every day, without any institutions or government. I’m sure the traditional financial system uses a lot of power as well...

The IBM mainframes that run most of the global financial system and maintain a few orders of magnitude more of global wealth are reasonably power hungry, yes, but I don't think the system averages consumption of kilowatt hours of energy every single time I swipe my credit card.

The act of transferring BTC doesn’t magically cause hundreds of megawatts of power to be wasted. Your transaction happening or not happening doesn’t alter the electrical useage of the system. The system uses electricity to protect itself from being taken over by a malicious actor.

Not all blockchains use PoW algos, or are decentralised in the bitcoin sense, or use the same hashing tools.

Proof of stake is one example of how that doesn't "doom" blockchains.

Not if it's mining running on solar.

I hear this argument from my colleague who runs his mining rigs on a solar PV setup.

Given how quickly we as a civilisation need to be moving away from fossil fuels, I don't buy that this is a better use than using your solar PV panels to feed back into the grid and thus reduce demand on non-renewable generators.

The amount of energy used for BTC is nothing compared to energy used for Internet.

It's equivalent to 0, compared to usage for heating and cooling.

For what it’s worth, there are 2 insights here:

1. Cryptocurrency is a bubble.

2. Surface-level associations or mere mentions of associations with cryptocurrency is a bubble.

Both are reliant on the vague “bubble” term, but I think #2 is the conversation that not enough people are having. Most people I know who discuss cryptocurrency on a daily basis care next to nothing about what it is for, or the technology involved. They are entirely captivated by something limited to buzz, and anything beyond that or in oppositition to it is processed by them as unsavory.

This observation, at least, decidingly bysteps debate over whether cryptocurrency has value, and points to the incredible amount of willful delusion invited by it’s fans. This phenomenon is of course attributed to so much of how late capitalism persists. But, when it happens on such a bloated level around something that should by any sober account be a critical ordeal, there is some significance to that conversation.

The particular observations of mere phonetical and marginal associations with blockchain leading to overnight exhorbitant values should be understood as a very seperate discussion from “Is crypto a bubble?”.

Have the greedy every changed the world, for the better?

Bitcoin adopters continue to religiously engage the same fraud that was adopted by initial promoters, peddling fantasies about decentralization, anonymity, transaction costs and taking on the global banking system. None of this is real, and on the last the slightest hint of adoption by the establishment send prices soaring and palpable excitement among supporters.

So if it has no utility, with supporters who lie, then where are the absurd valuations coming from? Bitcoin exists without relation to economics, demand, utility or value, and with negative externalities for efficiency and the environment making rational discussion redundant.

Why bother creating value to generate revenue, when you can print the revenue, literally. It's like a group of people get together to make IOU tokens and are convinced the world will one day accept their paper. Well if it has some utility the world may, but not simply because you want to gain something for nothing.

You don't know what you are talking about.

I use Bitcoin to transact with my brother overseas. It's decentralized. It works.

Yes there is an absurd bubble going on. But bubbles are expected with revolutionary technologies (18th century train companies, 19th century car companies, 1990s dot com bubble...)

> So, if it can’t be used as a currency to buy anything, and when you “invest” in it you’re not having any ownership in a company, what is it truly worth? What is a fake coin in your electronic wallet truly worth?

What is SeekingAlpha.com truly worth? What is a fake newspaper on your electronic screen truly worth? What is the software you used to write the article worth?

The value of digital assets lies in their usefulness, and how many people use them. The usefulness of the software "Bitcoin" is that it allows people to store a record of value -- like the numbers in your bank account -- in a reliable, secure, trust-worthy, fungible way that is practically immune to corruption, control, and seizure, and can be transferred to anyone else anywhere in the world almost instantly, for practically free.

But that's just Bitcoin, the very first of its kind. The thriving technology ecosystem that Bitcoin birthed is boiling over with potential.

Far too simplistic view IMHO.

Outline link for those who run into the signup wall:


This has been said over and over again among enthusiasts — I don't really know what value this article adds, in all honesty.

He is drawing comparisons to the dot-com bubble, specifically adding "Blockchain" to the company name vs added "e" or "com" in the 90's to dramatically increase valuations.

I worked during the dot-com bubble when my company added a ".com" to the company name. I remember being told to drop what I was doing and go through all our UI and make sure the .com branding was there so marketing can UAT it by 3pm.

I think the point the post you were replying to was making is that comparisons to the .com bubble have been made for years and years.


Here come the naysayers.

>What is a fake coin in your electronic wallet truly worth?

How much is the piece of paper in your wallet worth?

Maybe bitcoin will burn and crash or maybe it will be a million dollars a piece. We don't know. People are buying bitcoin and that is driving the prices up. South Korea has been the biggest buyer of BTC (perhaps fear of NK?)

Don't confuse the value of a cryptocurrency (Bitcoin) with companies that are riding it's wave

The piece of paper in my pocket is backed by the full faith and credit of the United States, an institution that has kept that faith for 241 years and that has the faith of the world. The planet is absolutely full of greater fools that have, do, and will continue to value the dollar.

That "fake coin" in my electronic wallet is backed by algorithms. The greater fools giving it value are and have been, as far as I can see, excited mostly by profiting on the speculation of it. Who actually uses bitcoin outside of trying to profit from the bubble or just for the novelty of using it?

The dollar is backed by the wealth and economy of the nation, the coin exclusively by greater fools and it's rarity.

Gold still holds value across centuries. A legionary from the Roman empire will be making $40k with his pay from back in the days. A key to a hash will be worthless in the future, specially when SHA2 will get broken.

Register for FREE to finish reading this article

I don´t think so, clickbait

Bitcoin is not a bubble, it's a pin.

I made the huge mistake of not investing more when I first heard about it back in 2011... back then, investing a month of rent could have now made me rich forever.

Bitcoin has some serious problems to overcome as a real consumer currency, but it seems clear that some crypto-currency will eventually become ubiquitous.

As far as the speculation game, Bitcoin is just barely starting to reach consumer investors. Whether it's a bubble or not, I'm not sure, but it has a long way to go.

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