The article links to a post by Fitch Ratings[1] (from two months ago) about how the dumping of stablecoin reserves could affect the rest of the financial market. That still seems to be the most plausible mechanism for contagion.
If btc goes to zero a lot of stuff may have to happen, why do you think it would be so attractive to you then? Think of it this way: Are you rushing to buy forks that are dropping to zero now?
People with high risk tolerance move in when everyone is afraid (catching the falling knife). Knowing enough to trust Bitcoin's antifragile support structure and game theory is a market edge during a blackswan scenario.
If bitcoin went to zero it would imply some exploit in bitcoin allowing creation of an unlimited number of coins. If this happened, then someone would hard fork the chain before the exploit and fix the issue and anybody who had not transacted since the exploit would keep their coins, albeit at diminished (but not zero) value.
It could go to zero if all miners stopped.
People could still go back to mining on PCs but the network would become fragile and prone to a malicious take over.
If this ever happens, the sequence of events will be interesting to observe.
If btc goes to zero, and it's almost certain it will. Then it means other decentralised ledger tech have fulfilled the needs initially satisfied by btc. To the point where nobody wants btc even for the equivalent of a penny.
I wouldn't pay a penny to get telegraphs credits since there are no network available to me to use them for anything. And phone, then Internet supersedes all features of telegraphs.
Bitcoin is not magic, the opportunities it offers are also available to other technologies and if others solve the problems better than Bitcoin then it too will go the way of the Telegraph credits.
Social networks didn’t disappear and likely won’t disappear, but arguing that people “missed the opportunity of social networks” for saying that MySpace would go away is just plain silly.
Network effects are important but it is worth considering. Also worth considering what it would take for other large beneficiaries of network effects like Facebook, Apple, & Google to go to zero.
not to sound moronic, but the news cycles on cryptocurrencies is funny to watch
a nice stream of useless hyperbolic and very well timed pieces
on a more serious note, who thinks distributed supply chain management could really help things on large scale ? (supposedly free, consistent, 24/7 tracking of items and data) I see so much friction for that in companies .. it made me wonder.
I don't really know, to be honest. I haven't done much research on it. But I know the types of people that talk about it have little authority on the subject, so by that metric I'm not a fan.
Slightly off topic, but does economist never give the author of the article? There isn't one on this. One name mentioned on the cover art is I think the painter of the art. I find it weird that no author is mentioned.
Bitcoin mining hasn't relied on graphics cards in years. SHA2 calculations are highly amenable to ASIC speedups, so ASICs took over Bitcoin mining pretty early in its history.
I didn’t downvote you, but your point does not necessarily invalidate the point you responded to. The whale of cryptocurrencies more or less props up all of the smaller coins, which are relying on GPUs and even SSDs/HDDs in mining. It goes down, they could lose enough of value to suffer their own runaway effects, and crashes will make PC gaming and computing overall much more affordable.
It's actually possible. If taxes due get assigned and tracked to particular bitcoin fractions, and since taxes incur interest, we could be in a situation one day where you would get paid to accept ownership of btc.
It would be surreal, but if the IRS is given hope that it's a way to get people scared of btc, and that the KYC data all these exchanges have allow accurate enough accounting and tracking, they would do it, givin all sort of explanation as to why the new taxation rules are needed.
Hm.. if BTC is negative, then you’d be paying negative taxes on it (IRS paying you, or equivalently you paying less tax on e.g. income). A lot of people want that, so they’d want BTC, bringing it back into positive.
afaik the IRS doesn't pay you on losses. It does balance your revenue and business expenses, but interestingly regulations on crypto investments make them a category on their own. So if you have 0 overall revenue in a year, but earned say 100k from salaried/contract labor employment, but lost 100k on BTC because it reached zero, you still owe the IRS taxes on your 100k revenue.
Taxes are so absurd when looking a them more closely. Corporate entities get to offset expenses, only the net profit incur corporate tax on profit; but human entities have all their expenses ignored from the equation. So, buy BTC, and that's the same as gambling or have a serious drug addiction in term of expenses, make a profit and you end up having to pay the crypto tax, and also having to cover the cost of tracking all the transactions that may have occurred between btc and other tokens if you were adventurous and loved experimenting with the overall digital token market.
> But like other commodities can it go to negative 0?
If it went to near 0 it could be out paced by inflation. I guess also if fees outpaced it's extrinsic value could mean an overall negative valuation. But a actual value below 0 would be rather difficult.
It might just overshoot zero and go to a negative value.
0n a long enought time line bitcoin, in its current form at least, will 100% be worthless. That day is when its cryptographic backbone is either broken or surpassed by computing capacity to break the public / private keys.
So you think the chain will be attacked and all the devs with trillions invested (at that point in the future) will be completely blindsided and not defend the network by soft/hardforking/etc? I completely disagree.
Your reply reads like a 'complete agreement' rather than a disagreement - as at that point in time you suggest, the chain ... will no longer be in its current form.
>Your reply reads like a 'complete agreement' rather than a disagreement
Wrong, there have been a few soft forks already. You seem to not know the history of bitcoin or what makes bitcoin bitcoin. You need to do some studying before discussing this topic.
Because I know a large % of the supply will never be unlocked and I can own the remaining available supply at a reasonable price.
This is not a hypothetical, I will buy the remaining supply given a steep enough discount. At $1 BTC, the total supply would only cost $21M (not a lot of money). I can think of at least 5 peers that would do the same.
Crypto communities spread FUD about fiat all the time. Some of it justified.
But equally justified is looking at the -real- value that BTC and other crypto assets offer.
(Disclosure: As many people here on HN, I entered into the crypto space during the 2016-2017 rally. Still get paid in fiat. And my biggest assets are in real-estate.)
As for me my biggest asset was fiat until I realized how bad deal I'm getting, how much I was screwed by going to another country and saving all my money in fiat. That's why I was open to Bitcoin early on. For you, as your biggests assets are in real-estate, you're not in the danger that most people in the world are.
It’s clearly possible for a particular currency to go to go to zero with unlimited money printing as demonstrated in history - Germany, Serbia, Zimbabwe etc.
But it’s almost certain that not ALL countries would be that stupid to print infinite new money eg Switzerland.
Bitcoin will probably go to zero, when we have the next major crisis, such as when China invades Taiwan or before when the Tether Ponzi scheme inevitably implodes.
To me the most fascinating thing about Bitcoin is perfectly displayed in this comment thread. People act like simply because it’s computers and algorithms that it’s beyond the reach of law.
Imagine that mentality in other fields. Like “there’s no way we can make laws against murder, because people can just sail to international waters and kill their victim and then come back”
Bitcoin only has value due to people and those people are all subjects to some laws and regulations. It’s perfectly reasonable to expect over time that these laws will make bitcoin “just a boring currency” in which case it will go to zero, because it’s an absolutely horrible currency by all accounts. Anyone who has ever tried to buy a cup of coffee with Bitcoin will tell you. Bitcoins current valuation is a combination of speculation and illegal transfer of value. Both of which are extremely vulnerable to regulation, and “it’s algorithms running on computers” doesn’t protect against that, no matter how many cyberpunks have wet dreams that it does.
Bitcoin is most popular in countries with high inflation and countries with capital controls. That coincides with bad policies, mismanagement or even oppression.
As a citizen of such a country, I can see the attraction of Bitcoin. Bitcoin offers hard-working people a way out. (South Africa has relaxed it's capital controls to the point where I never considered buying Bitcoin. But there are some millionaires here who are not allowed to take all their money out)
> Bitcoin is most popular in countries with high inflation and countries with capital controls. That coincides with bad policies, mismanagement or even oppression.
Source please?
I would have guessed; by market cap the majority is held in the US and Europe.
I would have guessed: by transaction volume, the majority in the US and Europe.
China dominates Bitcoin mining and the latest crypto exchanges are either run by Chinese or are headquartered in Hong Kong.
China has capital controls and little press freedom.
Note that the US and Europe has highly evolved capital markets. They may have deep, liquid markets, but it does not reflect the relative popularity of Bitcoin.
It's even more difficult to buy a cup of coffee with a Treasury bond or a kilogram of gold, yet Treasury bonds and kilograms of gold somehow retain value even without this essential capability.
Presumably a lot worse than bitcoin to zero. And crypto fans get to advertise infinite percentage growth even if its value is a few pennies of todays dollars. But at least you can burn todays paper dollars. Cannot do that to bitcoin.
If something has zero intrinsic value, does it matter which units are used to expressed that (so long as the units themselves have some non-zero value)?
Are you sure that US Dollar or Gold or bread have some intrinsic value? Day to day they do have some stable price but on a longer time scale that changes a lot.
Let's take EURUSD for example - both currencies are loosing purchasing power but EUSUSD ranges from 0,9 to 1,6 within last 50 years.
In some sci-fi scenario US Dollar could also go to zero if for example USA looses major war with China as is left with crushing debt. This is a possibility. What would be the value of Bitcoin then?
If USD became worthless, people would stop denominating the value of bitcoin in USD. This (or less drastic but still major fluctuations of USD) would complicate questions about how bitcoin's value had changed over time, but I'm not seeing how it would create ambiguity over whether bitcoin had 'gone to zero' or not.
Why would it have value in relation to some of those and not others? Sure, state action could make it hard to exchange bitcoins for other currencies, but we could still infer a $ value by looking at the btc and $ prices of goods they can both buy. (And yeah there can be complications and imperfections in that process, but not enough to make the statements 'bitcoin does/doesn't have 0 value' particularly vague or ambiguous.)
Exactly, people who keep honestly earned currency in a bank can probably afford to laugh on the way there—they are used to paying tax, they don’t have to worry about new KYC measures somewhere or theft of their token device invalidating their savings, etc.
They can be made fun of by cryptocurrency holders here on HN, but interacting with the financial system is much less like a warzone for them.
I'm sorry, what? In many, possibly most jurisdictions, and certainly in the United States, there is nothing in the law that specifically stops you from having made a perfectly legal, legitimate fortune by holding bitcoin or other cryptocurrencies and then cashing them out into fiat through the same formal banks that any other investor uses with no worries about dodging KYC as long as they followed reporting requirements.
Unless they're actively evading taxes or laundering money, cryptocurrency holders on HN or elsewhere can interact with many parts of the financial system without any warzone traumas at all. You're blatantly misrepresenting the nature of how it's possible to make money with Bitcoin et al. The majority of it is a legal market and its completely legally possible to hold, gain, sell and cash out successfully.
How is the system supposed to be able to tell whether a cryptocurrency holder engaged in laundering money? I recall reading the evidence is easy to completely erase with a few conversions across coins/exchanges/tumblers. This would never be possible in the traditional financial system—except if you use cash, which in large transactions is considered itself a red flag for that reason.
Again, are you kidding? Aside from what you say about untraceability not being entirely true due to the much smaller overall ecosystem and finance pool of crypto, concealing dirty capital and assets also happens far, far more enormously in normal finance.. In the world of non-crypto banking, literally hundreds of billions of dollars of assets are regularly moved, labeled, washed and rewashed in ways that make it extremely difficult or costly to know about the dirty origins of much of that money, which is invested worldwide in all sorts of seemingly legitimate ways. This extremely common occurrence is positively global and doesn't even always require physical cash. More often than not it's purely electronic. I know that many people on this site hate cryptocurrency at any opportunity, but come on.. At least use better arguments.
> what you say about untraceability not being entirely true
Oh, OK. I have no idea, just true coin anonymity is something I regularly see cryptocurrency advocates brag about on HN. Some imply it's as easy as changing to Monero and back, others point to tumblers, etc.
> literally hundreds of billions of dollars of assets are regularly moved, labeled, washed and rewashed in ways that make it extremely difficult or costly to know about
Costly but possible, if one follows the money and studies the paperwork. Stories about shady manipulations and laundering do hit the news from time to time.
