Cryptocurrency markets are so volatile that I would just stash that $1,000 a month away somewhere rather than trying to double down. I'd consider every penny I earned to be a win and hope it continued for a while. I'd expect it to end in tears if I didn't. I guess I'm just more risk-averse.
That doesn't even sound like much at all. Surely he would have more than that if he worked a job.
To be entirely free to burn $1,000 per month in that style, you would want an income at least four times higher than that median. That's a considerable salary in South Korea. At $1,500 you're going to roughly be at break-even on living costs.
> Mr. Kim, who is 27 and lives with his parents
- A lot of people in their twenties still live with their parents in S. Korea. It is very common.
> He has lost a lot of money, perhaps tens of thousands of dollars.
- S. Korea is very fashion and tech savvy. It is also very wealthy notable mostly in Seoul and Itaewon. Koreans are really into how they look including high end brands and cars (Mercedes, BMW's are rampant in the city). The women are infatuated with makeup, their appearance, and Instagram. It makes sense that S. Korea was a crypto hub and that it went absolutely wild there.
- There is a noticeable pro-America vibe in S. Korea and wearing clothes or fashion that has the American Flag is typically high end. They also love Whiskey, specifically Jack Daniels which I thought was funny because I live in Tennessee..
Well, that's a bit like saying there's a pro-Chinese vibe in America because so many people have random Chinese letters printed on their shirts or tattooed on their arms. It doesn't really mean anything.
Among nations, South Koreans have the third most favorable opinion of the US , only behind the Phillippines and Israel. South Korea's well-known love of the US goes back more than half a century. As an American, for me it's mutual, I love South Korea too.
My grandfather, having fought in WW2, re-enlisted and volunteered to fight in Korea. He always said the South Koreans were wonderful to him. I think he'd be proud of how amazing their country has become, knowing that putting his life in jeopardy was worth it.
I have to say, drawing a rather sweeping conclusion of a nation of 51 million after a month long visit to a small area (albeit much of the nation's population living there) is maybe worth some reconsideration.
It's like spending a month in Hollywood for a month eating out often, and concluding that every waiter/waitress in US is just working odd jobs while trying to break into the entertainment industry.
Edit: I've also met people who are well off enough that they don't have to work as waiter/waitress, but still moved to LA to get a script made into movie, go to usc for movie (like writing movie script) etc etc.
I'd think unmarried children living with parents until they marry or get a job that requires moving to another city is quite natural in most other countries.
I almost never recall seeing American cars out in the wild, although I did walk by a Chevy dealership often.
In the video you linked he does point out a bunch of German luxury cars.
It is common anywhere where the real estate price is high.
Funny how the zeitgeist can turn.
Well, IMHO, the subsequent collapse of bitcoin proved the government's point. Without timely intervention, there could now be millions who suddenly found their iron spoons turned to dirt.
No, it doesn't. It works only because less than 7 transactions per second worth of people want to use it. It works well because it’s collapsed. We saw how it reacted when people did want to use it. inb4 lightning, to open and close a single channel for everyone in the world will take 68 years.
(2) The price is going up! Then...
(3) Stop focusing on the price!
Yes, everyone's got it wrong because in the same breath you tell us the price is going up then not to look at the price. Not to mention all the basic problems with it: the rampant manipulation you can't stamp out by design, the actively user-hostile nature, the massive deflation because everyone keeps losing their keys and all the features people want like chargebacks being stripped out of it. Nobody wants to be their own bank, it’s so hard. Then there’s the economics of it, my lord, ECON 101 level stuff.
Inflation isn’t bad because you’re not supposed to hold cash. You’re supposed to use it to purchase productive assets, like stocks, bonds or real estate which track and exceed inflation. It’s even good for borrowers because debts become cheaper over time. It’s a regular haircut for unproductive capital, the mechanism by which capitalism allocates capital efficiently. Money isn’t supposed to become more valuable by virtue of you just having it. Under your bird bath, of course because it’s not safe anywhere else.
Even the hardcore coiners on reddit have started admitting it’s sole value is hiding your wealth offshore out of reach of the long arm of the tax man. Or for the narcos!
Yes, it's going swimmingly.
Chargebacks were never stripped out because they don't exist. Bitcoin has always had irreversible transactions, and many people view that as a feature.
Your argument would carry more weight if you didn't have inaccuracies in it.
It's then a bit disingenuous to say that it's "modern finance with features ripped out", I would say it's modern finance with a different set of priorities. Two of those priorities are reliability and verifiability, which are two features the current networks have absolutely none of.
To my knowledge, bitcoin just achieved 4 nines of uptime since the genesis block -- impressive in its own right to be sure.
Bitcoin may not be so verifiable itself, right, after all, the longest chain wins and over 50% of hash power is located in the PRC. I'd say a strongly worded memo from Beijing that a new longest chain needs to appear is a bigger weak point than the worlds largest payment network with 5 nines of reliability over the last few decades suddenly decides to stop working, or that they'd stop scribbling down transaction data and avoid getting audited/fined/shuttered.
That aside Bitcoin's real issue was never on-chain, but off-chain. Tether and Bitfinex aside, to get a real, truthful, accurate accounting of transactions within the bitcoin ecosystem the weak links by a country mile are the tumblers, the exchanges and so on. Their reporting data is, shall we say, far from tip top. Just ask QuadrigaCX.
Old boys network or not, the up and comer needs to be better, not "just different" or "measurably worse."
EDIT: Oh yea, and currencies inspired by BTC like XMR are making such economic activity easier and more anonymous than ever. So it's always going to satisfy this niche...
The number of transactions today are as high as January 2018, but the fees never been any lower.
If that isn't progress, what is?
Just to be clear, I think it's great to call out the scammers and educate the deluded. I just think that taking a binary stance of either it will work the way the scammers say it will or it's a useless pile of garbage is not a reasonable position. I think there are lots of serious problems with BTC, but as a proof of concept decentralised payment processing system it's actually pretty interesting. I wish the scammers would go away and let people work on it earnestly, though. In that way, I really thought that having the BCH guys go their separate ways was a true blessing.
As you say, it's probably a straw man to say that LN should accommodate everyone now. That said, bitcoin operates on a principal of anti-efficiency; the more we ask of it the worse it does. We can't apply the same standard that "of course it will get faster/better/stronger/more efficient" over time because it's designed to go the opposite way. We need active plans to scale, to move forward, to grow it. That's why I ask more of them -- not because they should know but they should have some conceptually cohesive idea to justify their $100B market cap -- exceeding Visas's at peak -- a decade into this experiment.
It's fair that my position could be more nuanced. I've yet to find a way to untangle decentralized (in as much as BTC hashpower is over 50% in Beijing's purview) from lawless.
In some ways that's the root of the issue. Aren't they synonymous? Without authority, whose to judge? Who's to say a transaction was legitimate? So what if it wasn't, it can't be reversed anyways. The scammers are, in my opinion, part and parcel. You can't have decentralized, trustless and permissionless without letting people do as they will with it. By definition, nobody in cryptocurrency is a scammer, the code is the law and they've found some loopholes. Or are they as intended? Who's to say?
51% attacks are part and parcel too. The longest chain wins. You've got more hash power, you've got the longest chain, you are truth. Beijing writes a strongly worded memo to the miners in China, and that happens immediately.
Without appealing to authority and the status quo there's a reason humans tend to organize hierarchically. Hierarchy is an abstraction and an optimization. Humans are messy, we make messy code, messy systems and as such we have to appeal to each other to undo them, and with this system, we can't.
I do wish you and the others forging ahead luck, of course.
I would like a decentralised payment system to emerge. I don't think it will be BTC in its present form, but I'm happy that they are working on the problem and demonstrating issues. I don't have enough time to argue effectively for why we need such systems (in first world countries, it is much less of an issue), so I'll just leave it at that :-)
You're a lot like a climate change denier. Just like there is a difference between weather and climate, there is a difference between short term volatility vs a long term trend.
> Inflation isn’t bad because you’re not supposed to hold cash. You’re supposed to use it to purchase productive assets, like stocks, bonds or real estate which track and exceed inflation. It’s even good for borrowers because debts become cheaper over time. It’s a regular haircut for unproductive capital, the mechanism by which capitalism allocates capital efficiently. Money isn’t supposed to become more valuable by virtue of you just having it. Under your bird bath, of course because it’s not safe anywhere else.
There isn't a "supposed to/not supposed to" argument. Cryptocurrency doesn't have to be something that is supposed to be anything. Inflation gives a currency pressure to be traded, yes, and being able to trade it easily makes it more useful, and hence adds to its popularity.
But it's not the only reason a currency becomes popular, and the other benefits that cryptocurrency have over little green pieces of paper are IMO enough so it can continue to grow.
> Even the hardcore coiners on reddit have started admitting it’s sole value is hiding your wealth offshore out of reach of the long arm of the tax man. Or for the narcos!
It can be easily transferred anywhere in the world almost instantly, and ownership very well hidden. These are great benefits, even if they haven't been completely capitalized on yet.
I'm not sure if Bitcoin or some other cryptocurrency is going to end up the leader, but I do believe that this industry is going to continue to grow. The cryptocurrency market has crashed and recovered 6 times in the last 8 or 9 years or so. All of your arguments had exactly the same amount of weight as they did the previous 5 crashes, yet the crypto market recovered and greatly surpassed even the weighty highs of the peak before the last crash. Are you really going to tell me that this time is different?
I will tell you this time is different in the same way you tell yourself on the way up each time it’ll be different and this time it won’t crash. What’s different this time is there are no new bag holders. They all lost their shirts last time around. The price relies on new bag holders because 1800 new BTC are generated by miners and then sold to pay the electricity bills. That’s $2.4 billion dollars per year in sales pressure. The more the price goes up the more the sales pressure goes up. $20K per bitcoin requires $13B in new bag holder money per year. $100K means $65B in new bag holder money per year.
You sidestepped all the issues I pointed out: usability, intentionally built to prevent stopping scams, fraud, illegal activity. How it can’t serve the needs of the public. Nothing. Just more religious/MLM/ponzi sales pitch of hope, pray, moon soon. You even said so where you mentioned it’s a good thing your idle useless capital is increasing in value for NO REASON.
> I’m no denier, I have facts. The declining hash rate
Please check the difficulty page on Bitcoinwisdom  and scroll to the bottom where the history of hash rate changes over the last year is shown. You will find that over the last year it has gone from 18,633,553,122 GH/s on January 25, 2018 to 43,390,041,906 GH/s on February 10, 2019. So more than doubled over the last year while the price was rapidly declining. You will also see that there was a drop in hash rate over November/December after a peak in Octeber last year but the trend is now back up again. And as I said above, the trend over the whole year is obviously up (it more than doubled).
I didn't sidestep your issues. I didn't address them directly, but that doesn't mean I didn't address them. They were as valid as they during the last crashes, and proven to not prevent a recovery then, so therefore the same issues do not prevent a recovery now. You weren't providing any reasons that a recovery like it did before, even in the face of all the issues you mentioned.
Now you respond with a new reason:
> What’s different this time is there are no new bag holders. They all lost their shirts last time around. The price relies on new bag holders because 1800 new BTC are generated by miners and then sold to pay the electricity bills. That’s $2.4 billion dollars per year in sales pressure. The more the price goes up the more the sales pressure goes up. $20K per bitcoin requires $13B in new bag holder money per year. $100K means $65B in new bag holder money per year.
By "bag holders" you talk as if it's a big scam. Only it's not. Everything is out in the open for people to see, and no one is lying about what it is. Whether people in the future will choose to invest or not, and whether the industry will continue to grow or not is what determines whether the price will recover.
You say there won't be any more of that, due to price pressure from miners, but again, there has always been pressure from miners and that didn't prevent recovery the last 5 times.
I grant you the selling pressure from the miners has increased, but the size of the market has also increased as well. Also, due to block reward halving, they do not increase at the same rate. So, even if the selling pressure is too much currently, for the market to grow enough and make up for it, it will eventually reduce so that won't be the case forever.
To repeat though, I also am not 100% sure bitcoin will be the dominate cryptocurrency. As I said before, I'm bullish on the cryptocurrency market in general, not just bitcoin.
Whether we call them bag holders or not, there's no guarantee there's another $2.4B/yr to maintain the current price let alone drive it up. It is not intrinsically a scam its just built in a way that explicitly makes it impossible to prevent scams. IMO by the transitive property, it's a scam. Let's say I own a coffee shop. I also know that it's a breeding ground for venomous cobras, but I refuse to let an exterminator in. If someone gets bitten there's no world in which I'm not going to prison. It's not fair to call what I have "just a coffee shop" is it?
It's also not an investment, as you're not obtaining a share of ownership in anything. It's like calling Subway sub stamps an investment. They're just tokens I can redeem at Subway, not a 401(k).
The market is now smaller than its been in terms of total market cap, in terms of transaction count, in terms of transaction volume, than it's been in 2 years: https://data.bitcoinity.org/markets/volume/5y/USD/coinbase?t...
All the other cryptocurrencies are even less used, less useful, and not even worth talking about, like Dentacoin -- your dental records but on the blockchain for no apparent reason.
You know Visa's market cap is "only" $300B? At $100K bitcoin you have to buy, in cash, one whole new Visa every 4.6 years just to maintain the price.
No, that's a subjectively awful currency.
> isn't [volatility] what [BitCoin is] supposed to be saving Venezuela from?
No, it's supposed to provide an alternative to those subjected to and abused by centralized currencies and/or their government. Bitcoin's creation happened way back when Venezuela was massively wealthy, -before- they did the exact thing cryptocurrency backers feared they would.
> Whether we call them bag holders or not, there's no guarantee there's another $2.4B/yr to maintain the current price let alone drive it up.
Of course there isn't - I don't believe anyone implied there was? So far, historically, there _has been_ enough to drive the price up. Just zoom out a bit. Even if there is not 2.4B/yr, wouldn't the bag holders be the first to lose? I do not understand your argument here.
> IMO by the transitive property, it's a scam. Let's say I own a coffee shop. I also know that it's a breeding ground for venomous cobras, but I refuse to let an exterminator in. If someone gets bitten there's no world in which I'm not going to prison. It's not fair to call what I have "just a coffee shop" is it?
I have _no idea_ what you're trying to say here.
> It's also not an investment, as you're not obtaining a share of ownership in anything.
This is also false.
> It's like calling Subway sub stamps an investment
Despite your value judgement, Subway sub stamps _are absolutely_ an investment. Maybe not a wise one, but that's my opinion.
> The market is now smaller than its been in terms of total market cap, in terms of transaction count, in terms of transaction volume, than it's been in 2 years
Yes, 2 years ago was the peak of the hype. This is expected. It's also up over the last 1 year, and up over the last 3 years. Zooming to a particular part of a graph to suit a theory is not a good way to look at the world.
> All the other cryptocurrencies are even less used, less useful, and not even worth talking about, like Dentacoin
Conjecture and straw-man argument. This is akin to saying "spacejam.com"? Useless! That INTERNET is going NOWHERE!
I understand you feel strongly about this, and I understand you will reply as if I am a strong die-hard crypto fan, but I want you to know that I am just a simple internet citizen and your line of argument is unhelpful at best and actively driving people the other direction at worst.
A currency has 3 objective functions: medium of exchange, unit of account and store of value. It objectively fails the third test. 
Re Venezuela: If Bitcoin is to replace the status quo it must show itself to be better than the existing. If it's effectively as good as the Bolivar who cares whether it's their government or a group of self-appointed open source finance champs who are doing it? I thought the goal was to avoid the ends, not the means?
Re $2.4B/yr, people who have no understanding of the system put their money in because a group of loud activists (existing "investors") are encouraging them to do so. This is to prop up their own "investments" at the expense of the new money. They are running out of people who are willing to throw down solely because "moon soon" which is what's forcing the price down in spite of all the rampant manipulation. It's unlikely to go anywhere but down due to the high new money requirement for even price maintenance. You don't hear anything bad out of crypto investors mouths because they require $2.4B in new money just to keep their bags afloat.
Re the snake den, I'm saying that in re: the idea that it's not a scam just because scams operate on it. It's designed in a way that precludes stopping scams, which makes it de facto complicit / transitively a scam. You may disagree, it's just an optimization to think of it that way.
Fine it's an investment, it's a bad one.
I'm not making the case that the internet is going nowhere because pets.com is going nowhere. The idea that you're buying into blockchain technology's future by owning bitcoin is like saying you're buying pets.com stock because you want to invest in TCP/IP, and that appears to be the MO for most blockchain investors. Finally, nobody's made a good case yet for a problem blockchain can solve better than any existing solution, whereas TCP/IP, I'd say, solved real problems from day 1.
If anything crypto is making the best case I've seen for accredited investor rules.
No. Value is subjective. I understand what you're saying, and for what ever its worth, I promise I don't sell old folks on crypto funds.
> Fine it's an investment, it's a bad one.
Good - we're on the same page. You have a value judgement. Don't pretend to be an authority on the subject beyond your _well heard_ opinion.
> The idea that you're buying into blockchain technology's future by owning bitcoin is like saying you're buying pets.com stock because you want to invest in TCP/IP
Yes, exactly. Money and industry turn out to be closely linked.
This has happened every previous cycle. When mining becomes less profitable, the hash rate declines and difficulty declines until it reaches equilibrium. Currently 1800 BTC are being created every day, but when the next "halvening" happens I wouldn't be surprised to see an increase in price as all of a sudden the same amount of demand is competing for half the daily supply (900 BTC).
If you look at past cycles, the "halvening" has precipitated many BTC bull runs.
You side step explaining why you think your money should be magically worth more over time.
The question is whether there’s still 2.4 or 1.2 billion in new cash to add every single year until the next “mooning” which if were using your own expectations will be followed by an equally horrific crash.
Why would we use that kind of thing as a currency?
Yet trading volume is way down:
And this is happening despite mainstream adoption for e-commerce etc having almost completely collapsed. Where is this volume coming from? Algorithmic trading, money laundering, something else?
A few exchanges (including a couple of South Korean ones) have been investigated recently by regulators and fined for faking literally hundreds of billions of dollars of volume over the last year or two.
~$250 billion USD worth of wash trading leading to arrests at Upbit (https://thenews.asia/en/2018/12/21/upbit-accused-of-fraud-wi...)
The adoption was slow (and IS slow) but it never "collapsed." The same places I used BTC to order stuff from 9 months ago are the same places I use BTC to order stuff from now. And there are new ones popping up slowly but surely.
Or put another way, can you point to some stats that show increased organic BTC spend for e-commerce?
If you use bitcoin for its ability to exchange money with anyone in the world, then you're right, it's doing fine.
On the other hand, if you borrowed fiat money to buy bitcoin and other assorted currencies you never heard about, believing that the price will go up, and if it became 1/3 of the price you bought, then for all practical purposes, it has collapsed, in the same sense a housing market would "collapse" if price went down by 2/3.
Unfortunately, the latter describes a lot of Koreans who bought cryptocurrencies last year. The number could've been much higher without government intervention.
When Bitcoin was going to be the future not just in South Korea but on Hacker News too.
I am still waiting for my world changing dApps to come along from the many promising projects that needed all of this money from ICOs to finance the change that my small ill-educated brain could not imagine.
Just as well I did not quit my job because my coding work was irrelevant because there would be a magic dApp coming along in two months time that would mean I could do everything effortlessly with smart contracts and the new fintech. Just as well I did not get all my money invested in [$altcoin] as I was pressured to do so.
Where have all the serious people gone who were the experts a year ago? Do they still exist thinking that the serious blockchain smart contract stuff has only just started? Do they still make analogies about the dot com bust and where Amazon is today? Do they blame the state of the altcoin on how governments clamped down? A conspiracy, a refusal by governments to let people be free from the shackles of 'fiat currency'?
A year ago you would not be able to write about how 'millions' of people in South Korea spared misery by their government in the tone you can freely write with today.
Plus that’s some seriously classic goalpost moving. Each time the price drops further shift the buy in a date a few months to the left. Yes people who bought in two years ago (basically a tiny fraction of the people who bought in after) are now break even. Classic success.
The S&P has returned 14% since August 2017.
And if they did, they likely bought petty amounts.
Most people bought before. We believe that there may be an alternative to government currency in a rare number.
I didnt lose 90% of my wealth.
I actually got an extra 0.6 BTC since Jan 2017. I consider that an increase.
They bought huge quantities, multiplication tells us that. And anecdota of people taking out massive loans because they couldn’t lose.
Most bought in the cumulative run up from mid to end of 2017, again, charts. 
You lost 90% of your buying power.
Loved your analysis in this thread, thanks.
Pretty great series.